GO TONG ELECTRICAL SUPPLY CO., INC.
and GEORGE By way of special and affirmative defenses, petitioners
C. GO, Petitioners,
vs.
BPI FAMILY SAVINGS BANK, INC., substituted by
PHILIPPINE INVESTMENT ONE [SPV-AMC],
INC.,*Respondent.
Doctrine:
"[t]he admission of the genuineness and due execution of a
document means that the party whose signature it bears
admits that he voluntarily signed the document or it was
signed by another for him and with his authority; that at the
time it was signed it was in words and figures exactly as set
out in the pleading of the party relying upon it; that the
document was delivered; and that any formalities required by
law, such as a seal, an acknowledgment, or revenue stamp,
which it lacks, are waived by him. Also, it effectively
eliminated any defense relating to the authenticity and due
execution of the document, e.g., that the document was
spurious, counterfeit, or of different import on its face as the
one executed by the parties; or that the signatures appearing
thereon were forgeries; or that the signatures were
unauthorized."50
Facts:
On October 4, 2002, respondent filed a complaint5against
petitioners Go Tong Electrical and its President, George C.
Go seeking that the latter be held jointly and severally liable
to it for the payment of their loan obligation in the aggregate
amount of ₱87,086,398.71, inclusive of the principal sum,
interests, and penalties as of May 28, 2002, as well as
attorney’s fees, litigation expenses, and costs of suit. 6
As alleged by respondent as early as 1996, Go Tong
Electrical had applied for and was granted financial
assistance by the then Bank of South East Asia (BSA).
Subsequently, DBS7 Bank of the Philippines, Inc. (DBS)
became the successor in interest of BSA. The application for
financial assistance was renewed on January 6, 1999
through a Credit Agreement. On even date, Go Tong
Electrical, represented by Go, among others, obtained a loan
from DBS in the principal amount of ₱40,491,051.65, for
which Go Tong Electrical executed Promissory Note for the
same amount in favor of DBS, maturing on February 5, 2000
Under the PN’s terms, Go Tong Electrical bound itself to pay
a default penalty interest at the rate of one percent (1%) per
month in addition to the current interest rate, as well as
attorney’s fees equivalent to twenty-five percent (25%) of the
amount sought to be recovered. As additional security, Go
executed a Comprehensive Surety Agreement (CSA)
covering any and all obligations undertaken by Go Tong
Electrical, including the aforesaid loan. Upon default of
petitioners, DBS – and later, its successor-in-interest, herein
respondent– demanded payment from petitioners, but to no
avail, hence, the aforesaid complaint.
In their Answer with Counterclaim18 (Answer), petitioners
merely stated that they "specifically deny" 19 the allegations
under the complaint. Of particular note is their denial of the
execution of the loan agreement, the PN, and the CSA "for
being self-serving and pure conclusions intended to suit
[respondent's] purposes."
argued, among others, that: (a) the real party-in-interest
should be DBS and not respondent; (b) no demand was
made upon them; and (c) Go cannot be held liable under the
CSA since there was supposedly no solidarity of debtors.
Petitioners further interposed counterclaims for the payment
of moral and exemplary damages, as well as litigation and
attorney's fees in the total amount of ₱1,250,000.00.22During
trial, respondent presented Ricardo 0. Suñio 23 (Suñio ), the
Account Officer handling petitioners' loan accounts, as its
witness. Sunio attested to the existence of petitioners' loan
obligation in favor of respondent, 24 and identified a
Statement of Account25 which shows the amount due as of
June 16, 2004.
On cross-examination, Suñio nonetheless admitted that he
had no knowledge of how the PN was prepared, executed,
and signed, nor did he witness its signing27
For their part, petitioners presented Go Tong Electrical's
Finance Officer, Jocelyn Antonette Lim, who testified that Go
Tong Electrical was able to pay its loan, albeit partially.
However, she admitted that she does not know how much
payments were made, nor does she have a rough estimate
thereof, as these were allegedly paid for in dollars.
HELD:
The Court concurs with the CA Decision holding that the
genuineness and due execution of the loan documents in this
case were deemed admitted by petitioners under the
parameters of Section 8, Rule 8.
A reading of the Answer shows that petitioners failed to
specifically deny the execution of the Credit Agreement,
PN, and CSA under the auspices of the above-quoted
rule. The mere statement in paragraph 4 of their Answer, i.e.,
that they "specifically deny" the pertinent allegations of the
Complaint "for being self-serving and pure conclusions
intended to suit plaintiffs purposes," 44 does not constitute
an effective specific denial as contemplated by
law.45Verily, a denial is not specific simply because it is
so qualified by the defendant. Stated otherwise, a general
denial does not become specific by the use of the word
"specifically."46 Neither does it become so by the simple
expedient of coupling the same with a broad conclusion
of law that the allegations contested are "self-serving"
or are intended "to suit plaintiffs purposes."
how to deny the genuineness and due execution of an
actionable document?
The defendant must declare under oath that he did not sign
the document or that it is otherwise false or fabricated.
Neither does the statement of the answer to the effect that
the instrument was procured by fraudulent representation
raise any issue as to its genuineness or due execution. On
the contrary such a plea is an- admission both of the
genuineness and due execution thereof, since it seeks to
avoid the instrument upon a ground not affecting either.49
To add, Section 8, Rule 8 of the Rules further requires
that the defendant "sets forth what he claims to be the facts,"
which requirement, likewise, remains absent from the
Answer in this case.
Thus, with said pleading failing to comply with the "specific
denial under oath" requirement under Section 8, Rule 8 of
the Rules, the proper conclusion, as arrived at by the CA,
is that petitioners had impliedly admitted the due
execution and genuineness of the documents
evidencing their loan obligation to respondent.
Accordingly, with petitioners' admission of the genuineness
and due execution of the loan documents as above-
discussed, the competence of respondent's witness Suñio to
testify in order to authenticate the same is therefore of no
moment.
The Court clarifies that while the "[ f]ailure to deny the
genuineness and due execution of an actionable document
does not preclude a party from arguing against it by evidence
of fraud, mistake, compromise, payment, statute of
limitations, estoppel and want of consideration [nor] bar a
party from raising the defense in his answer or reply and
prove at the trial that there is a mistake or imperfection in the
writing, or that it does not express the true agreement of the
parties, or that the agreement is invalid or that there is an
intrinsic ambiguity in the writing,"53 none of these defenses
were adequately argued or proven during the proceedings of
this case.
JUANA VDA. DE ROJALES, SUBSTITUTED BY HER
HEIRS, REPRESENTED BY CELERINA ROJALES-
SEVILLA, Petitioner, v. MARCELINO DIME,
SUBSTITUTED BY HIS HEIRS, REPRESENTED BY
BONIFACIA MANIBAY, Respondent.
Facts:
Petitioner Juana Vda. de Rojales owned a parcel of land
In a petition dated May 30, 2000 filed before the RTC of
Nasugbu, Batangas, Branch 14, respondent Marcelino
Dime alleged that on May 16, 1999, petitioner conveyed
under a pacto de retro contract Lot 4-A in favor of
respondent for and in consideration of the sum of
P2,502,932.10.5 Petitioner reserved the right to repurchase
the property for the same price within a period of nine (9)
months from March 24, 1999 to December 24,
1999.6 Despite repeated verbal and formal demands to
exercise her right, petitioner refused to exercise her right to
repurchase the subject property.7
In her answer, petitioner denied the execution of
the pacto de retro sale in favor of respondent and
alleged that she had not sold the subject property.8 She
claimed that the document presented by respondent was
falsified since the fingerprint appearing therein was not hers
and the signature of the Notary Public Modesto S. Alix was
not his.9 She also averred that she filed falsification and use
of falsified documents charges against respondent.10
In her sworn statement attached to her Answer,
petitioner alleged that she mortgaged the subject
property with the Batangas Savings and Loan Bank for
P100,000.00 when her daughter Violeta Rojales Rufo
needed the money for application of overseas work; Antonio
Barcelon redeemed the property and paid P260,000.00 for
the debt plus the unpaid interest with the bank; when
Barcelon entered the mayoralty race, he demanded payment
of the debt, then mortgaged the title of the subject property
with respondent; and the signatures appearing in the
documents were falsified.11
During the pre-trial, the parties agreed that petitioner is the
registered owner of the subject property, and that she once
mortgaged the property with the Batangas Savings & Loan
Bank in order to secure a loan of P200,000.00 from the
bank.12 They also submitted the following issues for
resolution: whether the pacto de retro sale was executed by
petitioner; whether the consideration of the sale has been
paid to petitioner; and whether the contract of sale con pacto
de retro is genuine.
On July 11, 2006, the heirs of respondent filed a
Manifestation and Motion to Dismiss the Complaint on
the ground that it was Rufina Villamin, respondent's
common law wife, who was the source of the fund in
purchasing Lot 4-A.17 They alleged that the consolidation
of ownership and title to respondent would be prejudicial to
Villamin and would unjustly enrich them.18 Consequently, the
RTC, through Judge Christino E. Judit, in an Order dated
July 12, 2006, dismissed the case with prejudice on the
ground that the case was not filed by an indispensable party,
Villamin.19
However, on August 2, 2006, Atty. Pedro N. Belmi, the
counsel of respondent, filed a Motion for Reconsideration
praying to set aside the dismissal with prejudice on the
ground that Villamin and the daughters of petitioner, Manilyn
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
without his verification that the motion was indeed freely
and voluntarily executed by the parties.21
Thereafter, the RTC ruled in favor of the petitioner.
RTC considered the unverified motion for reconsideration
filed by Atty. Belmi as an unsigned pleading.26 It further held
that the manifestation and motion to dismiss deserved the
presumption of validity since there was no sufficient proof
that the compulsory heirs who substituted respondent were
made to sign such motion without knowing its content… the
CA reversed and set aside the decision of the RTC.
The CA rejected the ruling of the court a quo that Villamin
was an indispensable party. It ruled that the person who
provided the funds for the purchase of the property is not
considered as an indispensable party in a case of
consolidation of title filed by respondent, the vendee, in
whose favor the petitioner sold the subject property under
the contract of sale con pacto de retro.
HELD:
This Court notes that the RTC relied on the bare assertions
of the heirs in dismissing the case with prejudice. The
records are bereft of evidence to support the allegation
that Villamin has indeed provided the consideration. Not
being a privy to the pacto de retro sale, Villamin cannot be
considered to have been prejudiced with the consolidation of
title in respondent's name. Assuming arguendo that she was
indeed the source of the consideration, she has a separate
cause of action against respondent. The legal obligation of
respondent to her is separate and distinct from the contract
of sale cow pacto de retro, thus, the award of consolidation
of title in her name would be untenable.
Anent the issue on verification, Section 4, Rule 7
Sec. 4. Verification. - Except when otherwise specifically
required by law or rule, pleadings need not be under oath,
verified or accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has
read the pleading and that the allegations therein are
true and correct of his personal knowledge or based on
authentic records.
We do not agree with petitioner's assertion that the
motion for reconsideration should not have been
allowed since the respondent failed to pose a reasonable
explanation on the absence of verification.
Non-compliance with verification or a defect therein does not
necessarily render the pleading fatally
defective. Verification, like in most cases required by the
rules of procedure, is a formal requirement, not
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
court may simply order the correction of unverified pleadings
or act on it and waive strict compliance with the rules in order
that the ends of justice may thereby be served."
The RTC waived the strict compliance for verification when it
acted on the motion for reconsideration in the interest of
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
retro sale between the petitioner and the respondent. Hence,
the case should not have been dismissed because Villamin
is not an indispensable party in an action for consolidation of
ownership and title emanating from the contract of pacto de
retro sale.
Petitioner's allegation that respondent should have executed
affidavits in denying what was written in the manifestation
and motion to dismiss based on Rule 8, Section 850 of the
Rules of Court is unfounded. Such rule is applicable in
contesting an action or defense based on a written
instrument or document copied or attached to the
pleading. In the case at bar, it is the motion to dismiss that
is being contested and not a written instrument or document
which an action or defense is based on.
Petitioner avers that the CA erred in relying on the NBI
Fingerprint Examination. She alleges that the opinion of one
claiming to be an expert is not binding upon the court.
There is nothing on record that would compel this Court to
believe that said witness, Fingerprint Examiner Gomez, has
improper motive to falsely testify against the petitioner nor
was his testimony not very certain. His testimony is worthy of
full faith and credit in the absence of evidence of an improper
motive. His straightforward and consistent testimonies bear
the earmarks of credibility.
Settled is the rule that generally, a notarized document
carries the evidentiary weight conferred upon it with respect
to its due execution, and documents acknowledged before a
notary public have in their favor the presumption of
regularity.55 In other words, absent any clear and convincing
proof to the contrary, a notarized document enjoys the
presumption of regularity and is conclusive as to the
truthfulness of its contents.56 Irregularities in the notarization
of the document may be established by oral evidence of
persons present in said proceeding.57
We rule that petitioner failed to present clear and convincing
evidence to overcome such presumption of regularity of a
public document. Petitioner submitted the specimen
signature of the notary public but the same was never
presented during the trial nor was authenticated. Records
disclose that after she admitted to being bound with
conclusion of the NBI regarding the issue on the thumbmark,
petitioner did not present any evidence to rebut the due
execution of the notarized contract of sale con pacto de retro.
Instead, she presented her testimony and the testimony of
her daughter Josefma Rojales to prove that she never
intended to sell her property.
SPOUSES RAMON SY AND ANITA NG, RICHARD SY,
JOSIE ONG, WILLIAM SY AND JACKELINE DE
LUCIA, Petitioners, v. WESTMONT BANK (NOW UNITED
OVERSEAS BANK PHILIPPINES) AND PHILIPPINE
DEPOSIT INSURANCE CORPORATION, AS ASSIGNEE
OF UNITED OVERSEAS BANK
PHILIPPINES, Respondents.
Facts:
The present case stemmed from a Complaint for Sum of
Money, filed by respondent Westmont
Bank (Westmont), now United Overseas Bank
Philippines (UOBP), against petitioners Spouses Ramon Sy
and Anita Ng, Richard Sy, Josie Ong, William Sy, and
Jackeline de Lucia (petitioners) before the RTC.
Westmont alleged that on October 21, 1997, petitioners,
doing business under the trade name Moondrops obtained a
loan in the amount of P2,429,500.00, evidenced by
Promissory Note payable on November 20, 1997. Barely a
month after, or on November 25, 1997, petitioners obtained
another loan from Westmont Bank in the amount of
P4,000,000.00, evidenced by Promissory Note payable on
December 26, 1997. Disclosure Statements on the
Loan/Credit Transactions8 were signed by the parties.
Earlier, a Continuing Suretyship Agreement,9 dated
February 4, 1997, was executed between Westmont and
petitioners for the purpose of securing any future
indebtedness of Moondrops.
Westmont averred that petitioners defaulted in the
payment of their loan obligations. It sent a Demand
Letter,10 dated August 27, 1999, to petitioners, but it was
unheeded. Hence, Westmont filed the subject complaint.
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
and promised that he would notify them immediately
regarding the status of their loan application.
In September 1997, Lao informed Ramon Sy and Richard Sy
that their application was disapproved. He, however, offered
to help them secure a loan through Amado
Chua (Chua), who would lend them the amounts of
P2,500,000.00 and P4,000,000.00, both payable within three
(3) months. Ramon Sy and Richard Sy accepted Lao's offer
and received the amounts of P2,429,500.00 and
P3,994,000.00, respectively, as loans from Chua. Petitioners
claimed that they paid Chua the total amount of their loans.
Petitioners insisted that their loan applications from
Westmont were denied and it was Chua who lent them
the money. Thus, they contended that Westmont could
not demand the payment of the said loans.
In the pre-trial conference, the parties agreed on one issue -
whether or not the defendants obtained loans from
Westmont in the total amount of P6,429,500.00.12 During
trial, Westmont presented, among others, its employee
Consolacion Esplana, who testified that the proceeds of the
loan were credited to the account of Moondrops per its loan
manifold.13 Westmont, however, never offered such loan
manifold in evidence.14
On the other hand, petitioners presented a Cashier's
Check,15 dated October 21, 1997, in the amount of
P2,429,500.00, purchased from Chua, to prove that the said
loan was obtained from Chua, and not from Westmont. The
cashier's check for the subsequent loan of P4,000,000.00
could not have been obtained from Westmont.
The RTC ruled in favor of Westmont…the RTC opined
that petitioners admitted the genuineness and due
execution of the said actionable documents because
they failed to make a specific denial in the answer. It
added that it should be presumed that the two (2) loan
transactions were fair and regular; that the ordinary course
of business was followed; and that they were issued for a
sufficient consideration.
The CA affirmed the ruling of the RTC.
CONTENTIONS:
Petitioners argue that: they specifically denied the
allegations of Westmont under oath in their answer filed
before the RTC; although they signed blank forms of
promissory notes, disclosure statements and continuing
suretyship agreements, they were informed that their loan
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
original copy of the promissory notes were never presented
in court.
In a Resolution,20 dated July 4, 2012, the Court initially
denied the petition for failure to show any reversible error in
the challenged decision and resolution of the CA. In a
Resolution,21 dated June 15, 2015, however, the Court
granted petitioners' motion for reconsideration, reinstated the
petition and required the respondents to file their comment.
In its Entry of Appearance with
Compliance/Manifestation,22 dated October 19, 2015,
UOBP, formerly Westmont, informed the Court that all their
interests in the present litigated case were already
transferred to the Philippine Deposit Insurance
Corporation (PDIC).
In its Comment,23 dated September 23, 2015, the PDIC
stated that the CA correctly ruled that petitioners failed to
specifically deny the actionable documents in their answer
and were deemed to have admitted the genuieness and due
execution thereof Citing Permanent Savings and Loan Bank
v. Velarde,24 the PDIC underscored that the specific denial
meant that the defendant must declare under oath that he
did not sign the document or that it was otherwise false or
fabricated.
In their Reply,25 dated November 2, 2015, petitioners
insisted that they made a categorical specific denial in their
answer and never admitted the genuineness and due
execution of the promissory notes, disclosure statements
and continuing surety agreements; the promissory notes
presented by Westmont were mere photocopies; and
Westmont failed to establish that they received the proceeds
of any loan.
HELD:
petition meritorious.
Whenever an action or defense is based upon a written
instrument or document, the substance of such
instrument or document shall be set forth in the
pleading, and the original or a copy thereof shall be
attached to the pleading as an exhibit, which shall be
deemed to be a part of the pleading, or said copy may
with like effect be set forth in the pleading. The said
instrument or document is called an actionable document
and Section 8 of Rule 8 provides the proper method for the
adverse party to deny its genuineness and due execution, to
wit:
Sec. 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. [Emphasis supplied]
Accordingly, to deny the genuineness and due execution
of an actionable document:
(1) there must be a specific denial in the responsive pleading
of the adverse party;
(2) the said pleading must be under oath; and
(3) the adverse party must set forth what he claims to be the
facts.
 Failure to comply with the prescribed procedure results in
the admission of the genuineness and due execution of the
actionable document.
In Toribio v. Bidin,27 the Court expounded that the purpose
of specifically denying an actionable document "appears
to have been to relieve a party of the trouble and expense of
proving in the first instance an alleged fact, the existence or
non-existence of which is necessarily within the knowledge
of the adverse party, and of the necessity (to his opponent's
case) of establishing which such adverse party is notified by
his opponent's pleading."28 In other words, the reason for the
rule is to enable the adverse party to know beforehand
whether he will have to meet the issue of genuineness
or due execution of the document during trial.29
in Titan Construction Corporation v. David, Sr.,30 the Court
relaxed the rules of procedure regarding Section 8 of Rule 8.
In that case, the respondent failed to file a responsive
pleading under oath to specifically deny the special power of
attorney, the actionable document therein, which was
attached to the answer of the petitioner therein.
Notwithstanding such deficiency, the Court ruled that there
was substantial compliance because the respondent therein
consistently denied the genuineness and due execution of
the actionable document in his complaint and during trial.
In fine, although Section 8 of Rule 8 provides for a
precise method in denying the genuineness and due
execution of an actionable document and the dire
consequences of its non-compliance, it must not be
applied with absolute rigidity. What should guide judicial
action is the principle that a party-litigant is to be given the
fullest opportunity to establish the merits of his complaint or
defense rather than for him to lose life, liberty, honor, or
property on technicalities.
In the present case, the actionable documents attached to
the complaint of Westmont were PN 5280 and PN 5285. The
CA opined that petitioners failed to specifically deny the
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.
After a judicious study of the records, the Court finds that
petitioners sufficiently complied with Section 8 of Rule
8 and grants the petition.
Petitioners specifically
denied the genuineness
and due execution of the
promissory notes
The complaint of Westmont alleged, among others, that:
3. On or about October 21, 1997, defendants Richard Sy and
Ramon Sy, under the trade name and style of "Moondrops
General Merchandising," obtained a loan from the plaintiff in
the principal amount of Two Million Four Hundred Twenty-
Nine Thousand Five Hundred Pesos (P2, 429, 500.00),
Philippine Currency, in evidence of which said defendants
executed in plaintiffs favor Promissory Note No. GP- 5280,
xxx.
4. Again, on or about November 25, 1997, defendants
Richard Sy and Ramon Sy, under the trade name and style
of "Moondrops General Merchandising," applied for and
were granted another loan by the plaintiff in the principal
amount of Four Million Pesos (P4, 000, 000.00), Philippine
Currency, in evidence of which said defendants executed in
plaintiffs favor Promissory Note No. GP- 5285, xxx.
6. The defendants Anita Ng, Josie Ong, William Sy and
Jackeline De Lucia, for purposes of securing the payment of
said loans, collectively executed a Continuing Suretyship
Agreement, xxx, whereby they jointly and severally bound
themselves to plaintiff for the payment of the obligations of
defendants Richard Sy and Ramon Sy/Moondrops General
Merchandising thereto.
7. The defendants defaulted in the payment of the
aforementioned loan obligations when the same fell due and,
despite demands, continue to fail and/or refuse to pay the
same, to the prejudice of the plaintiff, xx.
8. As of November 9, 1999, the defendants' outstanding
obligation to the plaintiff on both loans amounted to Fifteen
Million Six Hundred Thirty-Nine Thousand Five Hundred
Eighty Nine and 25/100 Pesos, xxx.31
chanrobleslaw
On the other hand, petitioners alleged in the answer, under
oath:
2. Paragraphs 3, 4, 5, 6, 7 and 8 are specifically denied, the
truth of the matter being those alleged in the Special and
Affirmative Defenses hereunder.
3. Paragraph 9 is specifically denied for want of knowledge
or information sufficient to form a belief as to the truth or
falsity thereof. Besides, the plaintiff has no one to blame
except itself and its personnel for maliciously filing the instant
complaint for collection knowing fully well that the alleged
loan obligations were not consummated; and by way of -
SPECIAL AND AFFIRMATIVE DEFENSES
4. The complaint does not state a cause of action.
5. While the limited partnership Moondrops General
Merchandising Co., Ltd. (Moondrops for brevity) appears in
the alleged loan documents to be the borrower and,
therefore, the real party in interest, it is not impleaded as a
party, xxx.
6. The alleged loan obligations were never consummated for
want of consideration.
7. Sometime in August, 1997, Moondrops desperately
needed additional working capital, thus it applied for a loan
of P6,500, 000.00 with the plaintiff Westmont Bank through
the Manager of Grace Park Branch William Chu Lao.
8. Manager William Chu Lao required herein defendants to
sign blank forms of plaintiffs promissory notes, Disclosure
Statements and Continuing Suretyship Agreement.
9. Sometime in September, 1997, Manager William Chu Lao
informed herein defendants that the application of
Moondrops for an additional working capital was
disapproved by Westmont Bank but that, however, he
offered to lend the defendants, through Mr. Amado Chua, the
initial amount of P2,500,000.00 payable in three (3) months,
and then another P4,000,000.00 likewise payable in three (3)
months, against customers' checks.
10. Since Moondrops desperately needed the additional
working capital, defendants agreed to and accepted the offer
of Manager William Chu Lao, thus Mr. Amado Chua loaned
to defendants the amounts of P2,500,000.00 and P4,000,
000.00.
11. Pursuant to the agreement between Mr. Amado Chua
and the defendants, the latter delivered to the former
customers' checks in the total amount of P6,500,000.00.
12. Defendants have fully paid Mr. Amado Chua the loan
obligations in the amounts of P2,500, 000.00 and
P4,000,000.00, including the interests thereon.
The answer above readily shows that petitioners did not
spell out the words "specifically deny the genuineness
and due execution of the promissory notes."
Nevertheless, when the answer is read as whole, it can be
deduced that petitioners specifically denied the paragraphs
of the complaint regarding the promissory notes. More
importantly, petitioners were able to set forth what they
claim to be the facts, which is a crucial element under
Section 8 of Rule 8. In particular, they alleged that
although Ramon Sy and Richard Sy signed blank forms
of promissory notes and disclosure statements, they
were later informed that their loans were not approved.
Such disapproval led them to seek loans elsewhere, through
Lao and Chua, but definitely not with the bank anymore.
Verily, petitioners asserted throughout the entire
proceedings that the loans they applied from Westmont
were disapproved, and that they never received the loan
proceeds from the bank. Stated differently, they insisted
that the promissory notes and disclosure statement attached
to the complaint were false and different from the documents
they had signed. These significant and consistent denials by
petitioners sufficiently informed Westmont beforehand that it
would have to meet the issue of genuineness or due
execution of the actionable documents during trial.
Accordingly, petitioners substantially complied with Section
8 of Rule 8. Although their answer did not indicate the exact
words contained in the said provision, the questionable loans
and the non-delivery of its proceeds compel the Court to
relax the rules of procedure in the present case. Law and
jurisprudence grant to courts the prerogative to relax
compliance with procedural rules of even the most
mandatory character, mindful of the duty to reconcile both
the need to put an end to litigation speedily and the parties'
right to an opportunity to be heard.
BP OIL AND CHEMICALS INTERNATIONAL
PHILIPPINES, INC., Petitioner
vs.
TOTAL DISTRIBUTION & LOGISTIC SYSTEMS, INC.,
Respondents
Facts:
A Complaint for Sum of Money was filed by petitioner BP Oil
against respondent Total Distribution & Logistic Systems,
Inc. (TDLSI) on April 15, 2002, seeking to recover the sum of
₱36,440,351.79 representing the total value of the moneys,
stock and accounts receivables that TDLSI has allegedly
refused to return to BP Oil.
The allegations of the parties, as summarized by the RTC,
are as follows:
According to the allegations in the complaint, the defendant
entered into an Agency Agreement (the Agreement) with BP
Singapore on September 30, 1997, whereby it was given the
right to act as the exclusive agent of the latter for the sales
and distribution of its industrial lubricants in the Philippines.
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
Agreement.
When the defendant did not meet its target sales volume for
the first year of the Agreement, the plaintiff informed the
defendant that it was going to appoint other distributors to
sell the BP's industrial lubricant products in the Philippines.
The defendant did not object to the plan of the plaintiff but
asked for ₱10,000,000.00 as compensation for the
expenses. The plaintiff did not agree to the demand made by
the defendant.
the defendant through its lawyer, wrote the plaintiff a letter
where it demanded that it be paid damages in the amount of
₱40,000,000.00 and announced that it was withholding
remittance of the sales until it was paid by the plaintiff… The
plaintiff also demanded that the defendant pay the plaintiff its
outstanding obligations and return the unsold stock in its
possession.
On April 15, 2002, the plaintiff filed the instant complaint for
collection against the defendant. The defendant initially filed
a Motion to Dismiss the complaint on the ground for [sic] lack
of cause of action because of the existence of an arbitration
agreement, as well as a previously filed arbitration
proceeding between the parties. This Court denied the
defendant's Motion to Dismiss for lack of merit
The Defendant went up to the Court of Appeals to question
the denial of its Motion to Dismiss via a Petition
for Certiorari and Prohibition.
On June 9, 2003, the Defendant filed its Answer Ad
Cautelam with Compulsory Counterclaim Ad Cautelam.
In its answer, the defendant alleged that it was appointed as
the exclusive agent of the plaintiff to sell BP brand industrial
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.
Delays on the part of the plaintiff in shipping the products
moved the commencement of the Agreement from January
1997 to August 1997, making the stipulated sales target no
longer applicable.
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
Reconsideration on August 16, 2004. The Decision of the
Court of Appeals sustaining this Court attained finality with
the denial by the Supreme Court on November 10, 2004 of
the Petition for Review on Certiorari filed by the defendant as
well as its Motion for Reconsideration from the said denial.
the RTC ruled in favor of the petitioner
The CA ruled, among others, that the admission made by
respondent in Exhibit "J ," that it was withholding moneys,
receivables and stocks respectively valued at
₱27,261,305.75, ₱8,767,656.26 and ₱1,155,000.00 from
petitioner, has no evidentiary weight, thus, petitioner was not
able to preponderantly establish its claim.
CONTENTIONS:
A document, therefore, is actionable when an action or
defense is grounded upon such written instrument or
document. The complaint filed by petitioner is an action for
collection of sum of money arising from the termination of the
Agency Agreement with TDLSI. The CA, therefore, was
correct when it stated that petitioner's cause of action is
primarily based on the alleged non-payment of outstanding
debts of respondent as well as the unremitted
collections/payments and unsold stocks, despite demand.
Thus, petitioner'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 TDLSI.
Noteworthy is the denial of respondent TDLSI' s Demurrer to
Evidence by the RTC because it clearly discussed
petitioner's cause of action and the sufficiency of the
evidence it presented

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

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.