THIRD DIVISION
[G.R. No.
138739. July 6, 2000]
RADIOWEALTH FINANCE COMPANY,
petitioner, vs. Spouses VICENTE and MA. SUMILANG DEL ROSARIO, respondents.
D E C I S I O N
PANGANIBAN, J.:
When a demurrer
to evidence granted by a trial court is reversed on appeal, the reviewing court
cannot remand the case for further proceedings. Rather, it should render judgment on the basis of the evidence
proffered by the plaintiff. Inasmuch as
defendants in the present case admitted the due execution of the Promissory
Note both in their Answer and during the pretrial, the appellate court should
have rendered judgment on the bases of that Note and on the other pieces of
evidence adduced during the trial.
The Case
Before us is a
Petition for Review on Certiorari
of the December 9, 1997 Decision[1] and the May 3, 1999 Resolution[2] of the Court of Appeals in CA-GR CV
No. 47737. The assailed Decision
disposed as follows:
“WHEREFORE, premises considered,
the appealed order (dated November 4, 1994) of the Regional Trial Court (Branch
XIV) in the City of Manila in Civil Case No. 93-66507 is hereby REVERSED and
SET ASIDE. Let the records of this case
be remanded to the court a quo for further proceedings. No pronouncement as to costs.”[3]
The assailed
Resolution denied the petitioner’s Partial Motion for Reconsideration.[4]
The Facts
The facts of
this case are undisputed. On March 2,
1991, Spouses Vicente and Maria Sumilang del Rosario (herein respondents),
jointly and severally executed, signed and delivered in favor of Radiowealth
Finance Company (herein petitioner), a Promissory Note[5] for P138,948. Pertinent provisions of the Promissory Note
read:
“FOR VALUE RECEIVED, on or before
the date listed below, I/We promise to pay jointly and severally Radiowealth
Finance Co. or order the sum of ONE HUNDRED THIRTY EIGHT THOUSAND NINE
HUNDRED FORTY EIGHT Pesos (P138,948.00) without need of notice or
demand, in installments as follows:
P11,579.00
payable for 12 consecutive months starting on ________ 19__ until the amount of
P11,579.00 is fully paid. Each
installment shall be due every ____ day of each month. A late payment penalty charge of two and a
half (2.5%) percent per month shall be added to each unpaid installment from
due date thereof until fully paid.
x x x x x x x x x
It is hereby agreed that if default
be made in the payment of any of the installments or late payment charges
thereon as and when the same becomes due and payable as specified above, the
total principal sum then remaining unpaid, together with the agreed late
payment charges thereon, shall at once become due and payable without need of
notice or demand.
x x x x x x x x x
If any amount due on this Note is
not paid at its maturity and this Note is placed in the hands of an attorney or
collection agency for collection, I/We jointly and severally agree to pay, in
addition to the aggregate of the principal amount and interest due, a sum
equivalent to ten (10%) per cent thereof as attorney’s and/or collection fees,
in case no legal action is filed, otherwise, the sum will be equivalent to
twenty-five (25%) percent of the amount due which shall not in any case be less
than FIVE HUNDRED PESOS (P500.00) plus the cost of suit and other litigation
expenses and, in addition, a further sum of ten per cent (10%) of said amount
which in no case shall be less than FIVE HUNDRED PESOS (P500.00), as and for
liquidated damages.”[6]
Thereafter,
respondents defaulted on the monthly installments. Despite repeated demands, they failed to pay their obligations
under their Promissory Note.
On June 7, 1993,
petitioner filed a Complaint[7] for the collection of a sum of
money before the Regional Trial Court of Manila, Branch 14.[8] During the trial, Jasmer Famatico,
the credit and collection officer of petitioner, presented in evidence the
respondents’ check payments, the demand letter dated July 12, 1991, the
customer’s ledger card for the respondents, another demand letter and
Metropolitan Bank dishonor slips.
Famatico admitted that he did not have personal knowledge of the
transaction or the execution of any of these pieces of documentary evidence,
which had merely been endorsed to him.
On July 4, 1994,
the trial court issued an Order terminating the presentation of evidence for
the petitioner.[9] Thus, the latter formally offered
its evidence and exhibits and rested its case on July 5, 1994.
Respondents
filed on July 29, 1994 a Demurrer to Evidence[10] for alleged lack of cause of
action. On November 4, 1994, the trial
court dismissed[11] the complaint for failure of
petitioner to substantiate its claims, the evidence it had presented being
merely hearsay.
On appeal, the
Court of Appeals (CA) reversed the trial court and remanded the case for
further proceedings.
Hence, this
recourse.[12]
Ruling of the Court of Appeals
According to the
appellate court, the judicial admissions of respondents established their
indebtedness to the petitioner, on the grounds that they admitted the due
execution of the Promissory Note, and that their only defense was the absence
of an agreement on when the installment payments were to begin. Indeed, during the pretrial, they admitted
the genuineness not only of the Promissory Note, but also of the demand letter
dated July 12, 1991. Even if the
petitioner’s witness had no personal knowledge of these documents, they would
still be admissible “if the purpose for which [they are] produced is merely to
establish the fact that the statement or document was in fact made or to show
its tenor[,] and such fact or tenor is of independent relevance.”
Besides, Articles
19 and 22 of the Civil Code require that every person must -- in the exercise
of rights and in the performance of duties -- act with justice, give all else
their due, and observe honesty and good faith.
Further, the rules on evidence are to be liberally construed in order to
promote their objective and to assist the parties in obtaining just, speedy and
inexpensive determination of an action.
Issue
The petitioner
raises this lone issue:
“The Honorable Court of Appeals
patently erred in ordering the remand of this case to the trial court instead
of rendering judgment on the basis of petitioner’s evidence.”[13]
For an orderly
discussion, we shall divide the issue into two parts: (a) legal effect of the
Demurrer to Evidence, and (b) the date when the obligation became due and
demandable.
The Court’s Ruling
The Petition has
merit. While the CA correctly reversed
the trial court, it erred in remanding the case "for further
proceedings."
Consequences of a Reversal, on Appeal, of a Demurrer to Evidence
Petitioner
contends that if a demurrer to evidence is reversed on appeal, the defendant
should be deemed to have waived the right to present evidence, and the
appellate court should render judgment on the basis of the evidence submitted
by the plaintiff. A remand to the trial
court "for further proceedings" would be an outright defiance of Rule
33, Section 1 of the 1997 Rules of Court.
On the other
hand, respondents argue that the petitioner was not necessarily entitled to its
claim, simply on the ground that they lost their right to present evidence in
support of their defense when the Demurrer to Evidence was reversed on
appeal. They stress that the CA merely
found them indebted to petitioner, but was silent on when their obligation
became due and demandable.
The old Rule 35
of the Rules of Court was reworded under Rule 33 of the 1997 Rules, but the
consequence on appeal of a demurrer to evidence was not changed. As amended, the pertinent provision of Rule
33 reads as follows:
“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.”[14]
Explaining the
consequence of a demurrer to evidence, the Court in Villanueva Transit v. Javellana[15] pronounced:
“The rationale behind the rule and
doctrine is simple and logical. The
defendant is permitted, without waiving his right to offer evidence in the
event that his motion is not granted, to move for a dismissal (i.e., demur to
the plaintiff’s evidence) on the ground that upon the facts as thus established
and the applicable law, the plaintiff has shown no right to relief. If the trial court denies the
dismissal motion, i.e., finds that plaintiff’s evidence is sufficient for an
award of judgment in the absence of contrary evidence, the case still remains
before the trial court which should then proceed to hear and receive the
defendant’s evidence so that all the facts and evidence of the contending
parties may be properly placed before it for adjudication as well as before the
appellate courts, in case of appeal.
Nothing is lost. The doctrine is
but in line with the established procedural precepts in the conduct of trials
that the trial court liberally receive all proffered evidence at the trial to
enable it to render its decision with all possibly relevant proofs in the
record, thus assuring that the appellate courts upon appeal have all the
material before them necessary to make a correct judgment, and avoiding the
need of remanding the case for retrial or reception of improperly excluded
evidence, with the possibility thereafter of still another appeal, with all the
concomitant delays. The rule,
however, imposes the condition by the same token that if his demurrer is granted
by the trial court, and the order of dismissal is reversed on appeal,
the movant losses his right to present evidence in his behalf and he shall have
been deemed to have elected to stand on the insufficiency of plaintiff’s case
and evidence. In such event, the appellate
court which reverses the order of dismissal shall proceed to render judgment on
the merits on the basis of plaintiff’s evidence.” (Underscoring supplied)
In other words,
defendants who present a demurrer to the plaintiff’s evidence retain the right
to present their own evidence, if the
trial court disagrees with them; if
the trial court agrees with them, but on appeal, the appellate court disagrees with both of them and reverses the
dismissal order, the defendants lose the right to present their own evidence.[16] The appellate court shall, in
addition, resolve the case and render judgment on the merits, inasmuch as a
demurrer aims to discourage prolonged litigations.[17]
In the case at
bar, the trial court, acting on respondents’ demurrer to evidence, dismissed
the Complaint on the ground that the plaintiff had adduced mere hearsay
evidence. However, on appeal, the
appellate court reversed the trial court because the genuineness and the due
execution of the disputed pieces of evidence had in fact been admitted by
defendants.
Applying Rule
33, Section 1 of the 1997 Rules of Court, the CA should have rendered judgment
on the basis of the evidence submitted by the petitioner. While the appellate court correctly ruled
that “the documentary evidence submitted by the [petitioner] should have been
allowed and appreciated xxx,” and that “the petitioner presented quite a number
of documentary exhibits xxx enumerated in the appealed order,”[18] we agree with petitioner that the
CA had sufficient evidence on record to decide the collection suit. A remand is not only frowned upon by the
Rules, it is also logically unnecessary on the basis of the facts on record.
Due and Demandable Obligation
Petitioner
claims that respondents are liable for the whole amount of their debt and the
interest thereon, after they defaulted on the monthly installments.
Respondents, on
the other hand, counter that the installments were not yet due and
demandable. Petitioner had allegedly
allowed them to apply their promotion services for its financing business as
payment of the Promissory Note. This
was supposedly evidenced by the blank space left for the date on which the
installments should have commenced.[19] In other words, respondents
theorize that the action for immediate enforcement of their obligation is
premature because its fulfillment is dependent on the sole will of the
debtor. Hence, they consider that the
proper court should first fix a period for payment, pursuant to Articles 1180
and 1197 of the Civil Code.
This contention
is untenable. The act of leaving blank
the due date of the first installment did not necessarily mean that the debtors
were allowed to pay as and when they could.
If this was the intention of the parties, they should have so indicated
in the Promissory Note. However, it did
not reflect any such intention.
On the contrary,
the Note expressly stipulated that the debt should be amortized monthly in
installments of P11,579 for twelve consecutive months. While the specific date on which each
installment would be due was left blank, the Note clearly provided that each
installment should be payable each month.
Furthermore, it
also provided for an acceleration clause and a late payment penalty, both of
which showed the intention of the parties that the installments should be paid
at a definite date. Had they intended
that the debtors could pay as and when they could, there would have been no
need for these two clauses.
Verily, the
contemporaneous and subsequent acts of the parties manifest their intention and
knowledge that the monthly installments would be due and demandable each month.[20] In this case, the conclusion that
the installments had already became due and demandable is bolstered by the fact
that respondents started paying installments on the Promissory Note, even if
the checks were dishonored by their drawee bank. We are convinced neither by their avowals that the obligation had
not yet matured nor by their claim that a period for payment should be fixed by
a court.
Convincingly,
petitioner has established not only a cause of action against the respondents,
but also a due and demandable obligation.
The obligation of the respondents had matured and they clearly defaulted
when their checks bounced. Per the
acceleration clause, the whole debt became due one month (April 2, 1991) after
the date of the Note because the check representing their first installment
bounced.
As for the
disputed documents submitted by the petitioner, the CA ruling in favor of their
admissibility, which was not challenged by the respondents, stands. A party who did not appeal cannot obtain
affirmative relief other than that granted in the appealed decision.[21]
It should be
stressed that respondents do not contest the amount of the principal
obligation. Their liability as
expressly stated in the Promissory Note and found by the CA is “P13[8],948.00[22] which is payable in twelve (12)
installments at P11,579.00 a month for twelve (12) consecutive months.”
As correctly found by the CA, the "ambiguity" in the Promissory Note
is clearly attributable to human error.[23]
Petitioner, in
its Complaint, prayed for “14% interest per annum from May 6, 1993 until fully
paid.” We disagree. The Note already
stipulated a late payment penalty of 2.5 percent monthly to be added to each
unpaid installment until fully paid.
Payment of interest was not expressly stipulated in the Note. Thus, it should be deemed included in such
penalty.
In addition, the
Note also provided that the debtors would be liable for attorney’s fees
equivalent to 25 percent of the amount due in case a legal action was
instituted and 10 percent of the same amount as liquidated damages. Liquidated damages, however, should no
longer be imposed for being unconscionable.[24] Such damages should also be deemed
included in the 2.5 percent monthly penalty.
Furthermore, we hold that petitioner is entitled to attorney’s fees, but
only in a sum equal to 10 percent of the amount due which we deem reasonable
under the proven facts.[25]
The Court deems
it improper to discuss respondents' claim for moral and other damages. Not having appealed the CA Decision, they
are not entitled to affirmative relief, as already explained earlier.[26]
WHEREFORE, the
Petition is GRANTED. The appealed Decision is MODIFIED in that the remand is SET ASIDE and respondents are ordered
TO PAY P138,948, plus
2.5 percent penalty charge per month beginning April 2, 1991 until fully paid,
and 10 percent of the amount due as attorney’s fees. No costs.
SO ORDERED.
Melo, (Chairman), Vitug,
Purisima, and Gonzaga-Reyes, JJ., concur.
[1] Rollo, pp. 23-30. Promulgated by the Third Division composed of J. Ramon Mabutas Jr., ponente; JJ Emerito C. Cui, Division chairman, and Hilarion L. Aquino, member, both concurring.
[2] Rollo, p. 20. In this Resolution, J. Cui was replaced by J. Corona Ibay-Somera.
[3] Assailed Decision, p. 7; rollo, p. 29.
[4] Rollo, p. 20.
[5] Annex “C;” rollo, p. 31.
[6] Annex “C;” rollo, p. 31.
[7] Rollo, pp. 32-34.
[8] Presided by Judge Inocencio D. Maliaman.
[9] Appellant’s Brief before the CA, p. 4; rollo, p. 48.
[10] Rollo, pp. 37-38.
[11] Rollo, pp. 40-41.
[12] This case was deemed submitted for decision upon receipt by this Court on April 28, 2000 of the petitioner’s Memorandum, signed by Atty. Allan B. Gepty of Singson Valdez & Associates. Respondents’ Memorandum, signed by Atty. Eduardo V. Bringas of Romeo R. Bringas & Associates, was received earlier, on April 3, 2000.
[13] Memorandum for the Petitioner, p. 4; rollo, p. 96. Original written in capital letters.
[14] In the old Rules, the same provision is
worded in Section 1 of Rule 35 as follows:
“SECTION 1. Effect of judgment on demurrer to evidence.—After the plaintiff has completed the presentation of his evidence, the defendant without waiving his right to offer evidence in the event the motion is not granted, may move for a dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. However, if the motion is granted and the order of dismissal is reversed on appeal, the movant loses his right to present evidence in his behalf.”
[15] 33 SCRA 755, 761-762, June 30, 1970, per Zaldivar, J.
[16] Siayngco v. Costibolo, 27 SCRA 272, 284, February 28, 1969; Tison v. Court of Appeals, 276 SCRA 582, 599-600, July 31, 1997.
[17] Atun v. Nuñez, 97 Phil. 762, 765, October 26, 1955; Arroyo v. Azur, 76 Phil. 493.
[18] CA Decision, pp. 4-5; rollo, pp. 26-27.
[19] Respondents’ Answer, p. 1; rollo, p. 35.
[20] Article 1371 of the Civil Code provides that “[i]n order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered.”
[21] Lagandaon v. Court of Appeals, 290 SCRA 330, May 21, 1998; Dio v. Concepcion, 296 SCRA 579, September 25, 1998. Filflex Industrial & Manufacturing Corporation v. National Labor Relations Commission, 286 SCRA 245, February 12, 1998; Philippine Tobacco Flue-Curing & Redrying Corporation v. National Labor Relations Commission, 300 SCRA 37, December 10, 1998; Quezon Development Bank v. Court of Appeals, 300 SCRA 206, December 16, 1998.
[22] There was a typographical error in the CA Decision. As reflected in the Promissory Note, the amount should be P138,948 not P130,948.
[23] CA Decision, p. 5; rollo, p. 27.
[24] Article 2226 of the Civil Code provides that “[l]iquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable.”
[25] Law Firm of Raymuncdo A. Armovit v. CA, 202 SCRA 16, September 27, 1991, Pascual v. CA, 300 SCRA 214, December 16, 1998.
[26] See note 21.