Facts:

• In 1984, Casent Realty Development Corporation (petitioner) executed two promissory notes in favor of Rare Realty Corporation for PhP300,000 (PN No. 84-04) and PhP681,500 (PN No. 84-05).
• The notes stipulated interest rates of 36% and 18% per annum, respectively, with a penalty of 12% for non-payment by their due dates in June 1985.
• On August 8, 1986, these notes were assigned to Philbanking Corporation (respondent) through a Deed of Assignment.
• Despite demands, Casent Realty failed to pay the notes upon maturity.
• Philbanking filed a complaint on July 20, 1993, before the Makati City Regional Trial Court (RTC) for the collection of PhP5,673,303.90.
• In its Answer, Casent Realty raised several defenses, including the execution of a Dacion en Pago on August 27, 1986, which allegedly extinguished its obligations, and a Confirmation Statement from April 3, 1989, indicating no loans as of December 31, 1988.
• Casent Realty also claimed overpayment and sought moral and exemplary damages.
• The RTC granted Casent Realty's demurrer to evidence and dismissed the complaint.
• The Court of Appeals (CA) reversed this decision, ruling that the promissory notes were not covered by the Dacion and that Philbanking had the right to collect on them.

Issue:

• (Unlock)

Ruling:

1. The Supreme Court ruled that the failure to file a Reply and deny the Dacion and Confirmation Statement under oath constitutes a judicial admission of the genuineness and due execution of these documents.
2. Judicial admissions should be considered in resolving a demurrer to evidence. However, the admissions in this case were not sufficient to warrant ...(Unlock)

Ratio:

• The Supreme Court held that under Rule 8, Section 8 of the Rules of Court, the failure to specifically deny under oath the genuineness and due execution of the Dacion and Confirmation Statement constitutes a judicial admission.
• This admission should have been considered by the appellate court in resolving the demurrer to evidence.
• However,...continue reading