Case Summary (G.R. No. 187487)
Key Dates
• January 6, 1999 – Execution of Credit Agreement, Promissory Note (PN No. 82-91-00176-7), and Comprehensive Surety Agreement (CSA)
• February 5, 2000 – Maturity of loan obligation
• October 4, 2002 – Filing of complaint for collection of sum of money
• September 6, 2005 – RTC decision in favor of respondent
• February 17, 2009 – CA decision affirming RTC
• April 13, 2009 – CA resolution denying reconsideration
• June 29, 2015 – Supreme Court decision
Applicable Law
• 1987 Philippine Constitution
• Rules of Court: Rule 8, Section 8 (specific denial under oath); Rule 132, Section 20 (proof of private documents)
• Civil Code: Article 2047 (solidary liability of surety)
• Jurisprudence on burden of proof and implied admissions (e.g., Permanent Savings & Loan Bank v. Velarde)
Background and Loan Documents
Go Tong Electrical obtained a PHP 40,491,051.65 loan on January 6, 1999 under a Credit Agreement and executed a promissory note maturing February 5, 2000, with a 20% per annum interest rate for the initial 31-day period, default interest at 1% per month, and attorney’s fees at 25% of the amount recovered. George C. Go signed a CSA binding himself as surety for all obligations of the borrower. Upon default, respondent—successor-in-interest to BSA/DBS—issued demand letters in July 2002.
Default, Complaint, and Counterclaims
After petitioners failed to pay, respondent filed suit for PHP 87,086,398.71 (principal, accrued interest, penalties, attorney’s fees). Petitioners denied under oath the execution of the loan documents without specifying facts, raised various defenses (real party-in-interest, lack of demand, no solidarity), and counterclaimed for damages and fees.
Trial Court Findings
The RTC found the loan documents authentic and demandable. Petitioners did not prove payment, and their generic denial failed to comply with Rule 8, Section 8. Go’s liability as surety was upheld under Article 2047. The court reduced the penalty interest to 1% per month and attorney’s fees to PHP 50,000.00, and ordered joint and several payment of principal, interest from filing, penalty interest, and fees.
Court of Appeals Findings
The CA affirmed the RTC, holding that petitioners’ failure to specifically deny under oath deemed the loan documents admitted. It ruled that SuAio’s testimony sufficed to establish the existence and authenticity of those documents and upheld the liability of both petitioners. A motion for reconsideration was denied.
Issue Presented
Whether the Court of Appeals erred in affirming the RTC’s decision.
Supreme Court Analysis
Admission of Genuineness and Due Execution
• Under Rule 8, Section 8, a general denial is insufficient; petitioners’ “specific denial” without factual allegations constituted a general denial, resulting in deemed admission of the loan documents.
• Implied admission obviated further proof of authenticity under Rule 132, Section 20.Burden of Proof on Payment
• Petitioners bore the burden to prove partial payment. Their testimony lacked evidence of amount or dates; respondent’s poss
Case Syllabus (G.R. No. 187487)
Facts
- In 1996, Go Tong Electrical Supply Co., Inc. (Go Tong Electrical) secured financial assistance from Bank of South East Asia (BSA).
- Development Bank of Singapore (DBS) succeeded BSA as lender.
- On January 6, 1999, Go Tong Electrical executed a Credit Agreement and Promissory Note No. 82-91-00176-7 in the principal amount of ₱40,491,051.65, maturing February 5, 2000.
- The Note stipulated:
- Default penalty interest at 1% per month in addition to the current interest.
- Attorney’s fees of 25% of the amount recovered.
- George C. Go executed a Comprehensive Surety Agreement covering all Go Tong Electrical’s obligations under the loan.
- Petitioners defaulted; respondent (successor-in-interest of DBS) sent demand letters on July 1 and 12, 2002; no payment was made.
- On October 4, 2002, respondent filed Civil Case No. 02-1203 for collection of ₱87,086,398.71 (principal, interests, penalties) plus attorney’s fees and costs.
Procedural History
- Regional Trial Court (Makati, Branch 143) rendered judgment on September 6, 2005 in favor of respondent.
- Petitioners appealed to the Court of Appeals as CA-G.R. CV No. 86749.
- The Court of Appeals issued its Decision on February 17, 2009, affirming the RTC ruling in toto.
- Petitioners’ motion for reconsideration was denied by Resolution dated April 13, 2009.
- Petitioners filed a petition for review on certiorari before the Supreme Court.
Issue
- Did the Court of Appeals err in affirming the RTC’s decision ordering petitioners to pay respondent’s loan claims?
RTC Ruling
- Held respondent proved existence of petitioners’ valid and demandable obligation by undisputed documentar