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RADIOWEALTH FINANCE v. SPS.

DEL ROSARIO
July 6, 2008 | Panganiban, J. | Demurrer

PETITIONER: Radiowealth Finance Company


RESPONDENTS: Spouses Vicente and Ma. Sumilang del Rosario

SUMMARY: Radiowealth filed to collect P138,948 from spouses del Rosario under a
Promissory Note. Upon presentation of evidence by Radiowealth, the spouses filed a demurrer to
evidence for lack of cause of action, and the TC accordingly dismissed the complaint. On appeal,
CA reversed the TC and remanded the case, hence this petition which the SC granted.

DOCTRINE: 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.

FACTS:

1. On March 2, 1991, respondents-spouses jointly and severally executed a Promissory


Note for P138,948 in favor of petitioner.

a. Such payment under the Note was to be without need of notice or demand, in
P11,579 monthly installments for 12 months.

b. 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.

c. If default be made in the payment of any of the installments or late payment


charges, the entire unpaid debt and late payment charges shall become due.

d. If at maturity the amount due is not paid and the Note is given to an attorney or
collection agency to collect, 10% would be paid as collection fees when no action
is instituted; otherwise the sum due would be subject to payment of 25% plus
costs of suit and 10% of said amount as liquidated damages.

2. Despite repeated demands, respondents failed to pay under the Promissory Note.

3. On June 7, 1993, petitioner filed for collection before RTC Manila.

a. Jasmer Famatico, the credit and collection officer of petitioner, presented in


evidence the respondents check payments, the demand letter dated July 12, 1991,
the customers ledger card, another demand letter and Metropolitan Bank dishonor
slips. Famatico said he did not have personal knowledge of the transaction or the
execution of any of these evidences, which had merely been endorsed to him.

b. On July 4, 1994, TC ordered termination of the presentation of evidence for the


petitioner, which in turn rested its case the next day.

4. Respondents filed on July 29, 1994 a Demurrer to Evidence for lack of cause of action.

5. On November 4, 1994, the TC dismissed the complaint for failure of petitioner to


substantiate its claims, the evidence it had presented being merely hearsay.

6. The CA reversed the TC and remanded the case for further proceedings.

a. The judicial admissions of respondents established their indebtedness to the


petitioner, on the grounds that they admitted the genuineness of the Promissory
Note and the July 12 demand letter, and that their only defense was the absence of
an agreement on when the installment payments were to begin.

b. Articles 19 and 22 of the Civil Code provide 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.

c. 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.

ISSUES/HELD:
1. WON defendant should be deemed to have waived the right to present evidence when the
demurrer to evidence is reversed on appealYES.
2. WON the whole amount of respondents debt and the interest thereon was due after they
defaulted on the monthly installmentsYES.

DISPOSITIVE: Decision modified, remand set aside and respondents ordered to pay. CA
correctly reversed TC, but should not have remanded given enough evidence to resolve the issue.

RATIO:
1. If the defendants motion for 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
plaintiffs 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 plaintiffs
evidence (Rule 33, Section 1 of the 1997 Rules of Court, Villanueva Transit v. Javellana).
a. On appeal, the appellate court reversed the trial court because the genuineness and
due execution of the disputed pieces of evidence were admitted by defendants.
b. CA had sufficient evidence on record to decide the collection suit. A remand is
frowned upon by the Rules and logically unnecessary on the basis of the facts.
2. The Note expressly stipulated that the debt should be amortized monthly in installments
of P11,579 for twelve consecutive months. 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.
a. 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 Note.
b. 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.
c. Tbe contemporaneous and subsequent acts of the parties manifest their intention
and knowledge that the installments would be due and demandable each month.
Respondents started paying on the Note, even if the checks were dishonored.
d. The obligation of the respondents 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.
PEFLGC (now TIDCP) v. AMDC
September 28, 2011 | Bersamin, J. | Pre-trial

PETITIONERS: Philippine Export and Foreign Loan Guarantee Corporation (now Trade and
Investment Development Corporation of the Philippines)
RESPONDENTS: Amalgamated Management and Development Corporation, Felimon R.
Cuevas, and Jose A. Saddul, Jr.

SUMMARY: PEFLGC issued a letter of guaranty in favor of NCBSA when AMDC obtained a
huge loan to buy hauling trucks for its Middle Eastern project. AMPI, AMDCs sister company,
executed a REM and a deed of undertaking to pay PEFLGCs liabilities by reason of the
guaranty. AMDC defaulted, so PEFLGC paid to NCBSA and sued AMDC, Cuevas and Saddul.
RTC absolved Cuevas and Saddul, and made AMDC pay, and CA affirmed. SC said that the CA
correctly affirmed the RTC ruling that Cuevas and Saddul were absolved of personal liability on
the deficiency claim as such issue was deemed necessarily included in or inferred from the stated
pre-trial issue of whether there was a deficiency still to be paid by AMDC, Cuevas and Saddul.

DOCTRINE: Issues to be tried between the parties in a case shall be limited to those defined in
the pre-trial order (Section 7, Rule 18) except issues that are impliedly included among those
listed or that may be inferable from those listed by necessary implication which are as much
integral parts of the pre-trial order as those expressly listed.

FACTS:
1. PEFLGC is a government-owned and controlled-corporation created by P.D. 1080 to
guarantee foreign loans granted to any domestic entity with the majority of the capital
owned by Filipino citizens. AMDCs business was the hauling of different commodities
within the Middle East countries, Cuevas being President and Saddul as Vice President.
2. In early 1982, AMDC obtained from the National Commercial Bank of Saudi Arabia
(NCBSA) a SR3.3 million loan equivalent to P9,000,000 to finance the working capital
requirements for capital and down payment for hauling trucks. PEFLGC issued a letter of
guaranty in favor of NCBSA as the lending bank upon the request of AMDC.
3. As the security for the guaranty, Amalgamated Motors Philippines Incorporated (AMPI),
a sister company of AMDC, acted as an accommodation mortgagor, and executed
a. a REM over two Dasmarinas parcels of land
b. a deed of undertaking dated April 21, 1982, with Cuevas and Saddul as its co-
obligors to jointly and severally pay to PEFLGC, as obligee, whatever damages or
liabilities that the petitioner would incur by reason of the guaranty
4. AMDC defaulted on the obligation.
5. Upon demand, the petitioner paid the obligation to NCBSA. By subrogation and pursuant
to the Deed of Undertaking, the petitioner then demanded that AMDC, Cuevas and
Saddul should pay the obligation, but its demand was not complied with. Hence, it extra-
judicially foreclosed the real estate mortgage.
6. PEFLGC sued respondents in the RTC to collect the deficiency of P45,839,219.95.
7. AMDC and Cuevas admitted the existence of the real estate mortgage and deed of
undertaking in their Answer but raised defenses such as exorbitant fees, lack of demand,
sufficiency of foreclosure proceeds. Saddul Answered that he did not benefit from the
guaranty and averred a cross-claim against AMDC. All three moved to dismiss.
8. RTC ruled against AMDC and absolved Cuevas and Saddul from the obligation as well as
from the deficiency claim. CA affirmed.

ISSUES/HELD:
1. WON the CA erred in affirming the RTCs ruling that Cuevas and Saddul were absolved
of personal liability on the petitioners deficiency claimNO.
2. WON Cuevas and Saddul had been notified of the guaranty period extension, and had not
therefore been exonerated from liability on the deficiency claimYES.
3. WON Cuevas and Saddul received any demand letter from the petitionerYES.
4. WON the petitioners claim against Cuevas and Saddul, Jr. had already prescribed as
reckoned from the date of foreclosureNO.
5. WON the CA erred in declaring that AMDC was liable to pay interest and penalty charge
at the rate of only 6% per annum instead of 16% per annumNO.

RATIO:
1. Whether Cuevas and Saddul were liable on the deficiency claim was proper for the
ascertainment and determination by the RTC as the trial court and the CA as the appellate
tribunal, notwithstanding the silence of the pre-trial order on it, because such issue was
deemed necessarily included in or inferred from the stated issue of whether there was a
deficiency still to be paid by AMDC, Cuevas and Saddul.
a. The pre-trial order nowhere stated that Cuevas and Saddul already admitted their
liability on the petitioners deficiency claim. Their admission appearing in the pre-
trial order referred only to the fact that they and AMDC had received advances in
large amounts from the petitioner, and that the real estate mortgage securing the
loan had already been foreclosed.
b. As Cuevas and Saddul are parties to be affected by the judgment, it was right for
the RTC to determine their liability in complete determination of the suit.
2. Cuevas and Saddul, as President and Vice-President of AMDC, admitted their letters on
the extension of the guaranty period and cannot feign ignorance.
a. They separately wrote to the petitioner to request the extension of the guaranty
period because AMDC could not pay the obligation on its due date, and the
petitioner granted each request and correspondingly sent letters to NCBSA
informing it of the extensions of the guaranty period.
b. The deed of undertaking specifically stated that the grant of the extension of the
guaranty period did not extinguish or diminish the obligation of Cuevas and
Saddul under the guaranty. Hence, whether or not the guaranty period was
extended, and whether or not they were notified of the extension, Cuevas and
Saddul remained liable under the guaranty.
3. Cuevas and Saddul bound themselves to reimburse or to pay to the petitioner their
obligation under the guaranty upon the latters demand.
a. Article 1169, Civil Code provides that the obligor incurs in delay from the time
the obligee judicially or extrajudicially demands the fulfillment of the obligation
b. The deficiency claim from obligors AMDC, Cuevas and Saddul, being a judicial
demand, sufficed to render Cuevas and Saddul in delay in the payment of the
deficiency claim.
4. The prescriptive period of the petitioners deficiency claim is ten years under Article
1144 of the Civil Code.
a. Such period is reckoned from the date of the foreclosure (Quirino Gonzales
Logging Concessionaire v. CA).
b. In view of the real property mortgage having been foreclosed on February 22,
1988 and March 24, 1988, the petitioners filing on February 17, 1994 of its
complaint was well within the 10-year prescriptive period.
5. Reducing the interest rate and penalty charge from 16% to 6% per annum was justified.
a. The law empowers the courts to reduce interest rates and penalty charges that are
iniquitous, unconscionable and exorbitant. Whether an interest rate or penalty
charge is reasonable or excessive is addressed to the courts discretion.
b. Although the market value of the two parcels of land at the time of the foreclosure
sale and acquisition by the petitioner totaled P15,225,000, the parcels were sold to
the petitioner for only P4,758,000, a price much lower than the market value.
c. The huge disparity between the market value and the price realized at the
foreclosure sale became more defined considering that the original amount of the
guaranteed obligation was only P9,000,000.
d. The RTC and the CA still granted the petitioners deficiency claim
for P45,839,219.95, plus interest and attorneys fees. In view of these, to still fix
the interest rate and penalty charge at 16% per annum each would be plainly
inequitable and oppressive.