G.R. No. 153867 - Wood Technology Corp. vs. Equitable Banking Corp.

Respondent Equitable Banking Corporation (now Equitable PCI Bank) filed a Complaint for Sum of Money against petitioners Wood Technology Corporation (WTC), Chi Tim Cordova, and Robert Tiong King Young before the RTC of Manila, Branch 29, on October 21, 1996.
The complaint alleged that on December 9, 1994, WTC obtained a loan in the amount of US$75,000 at an interest rate of 8.75% per annum, evidenced by Promissory Note No. FXBD94-00881.
Cordova and Young, acting as representatives of WTC, executed the promissory note and a Surety Agreement, binding themselves as sureties for the said loan.
A final demand for payment was made by the respondent on April 19, 1996 when petitioners failed to pay the obligation incurred.

That WTC indeed secured a US$75,000 loan from respondent.
That the promissory note and surety agreement were duly executed by Cordova and Young.

Only one demand letter was issued (dated April 19, 1996).
The promissory note did not provide a definite maturity date; it was purposely left blank for later agreement, meaning the loan had not yet matured.
The absence of a fixed maturity date rendered the complaint premature and devoid of a sufficient cause of action.
Both the promissory note and the surety agreement were contracts of adhesion containing terms on interest, penalties, and other charges that were excessive, unconscionable, and not reflective of the parties’ true intent.
Petitioners requested reformation of the contracts to adjust these terms to be fair, just, and reasonable, and further sought damages from respondent.

On May 5, 1997, respondent moved for judgment on the pleadings.
The RTC of Manila, Branch 29, rendered judgment ordering WTC, Cordova, and Young to pay solidarily the sum of US$75,000 plus interest at 8.75% per annum from the date of contracting until suit filing; thereafter, the legal rate applies.
Petitioners appealed the RTC’s decision.
The Court of Appeals affirmed the RTC judgment, noting:

Petitioners admitted the material allegations of the Complaint, including the due execution of the pertinent documents and receipt of the final demand.
The promissory note, though lacking a set maturity date, was deemed payable on demand.
The special and affirmative defenses regarding the loan’s maturity and the alleged contract of adhesion were not genuine issues of fact requiring evidence or trial.

Petitioners argued that although their Answer included special and affirmative defenses, it did not entirely admit the material allegations of the Complaint, thereby precluding summary judgment.
They contended that given the chance, evidence (testimonies or otherwise) should have been presented to substantiate their defenses.
Central issues revolved around whether:

The Answer tendered genuine, material issues needing trial or was effectively an admission of the adverse pleading.
The absence of a fixed maturity date and the provisions of the promissory note and surety agreement warranted reformation and constituted a case of contract of adhesion.

Whether the petitioners’ Answer, which raised special and affirmative defenses, effectively failed to dispute the material allegations in the Complaint thereby justifying a judgment on the pleadings.

Did the petitioners’ Answer, despite asserting defenses, amount to an admission of the key allegations that warranted summary judgment?
Were the alleged defenses (prematurity of the complaint, absence of a maturity date, and contract of adhesion claims) genuine issues of fact that required a full evidentiary trial?
Should petitioners have been allowed to present evidence to contest these defenses, or were they strictly a matter of legal interpretation resolvable from the pleadings?