G.R. No. 138739 - Radiowealth Fice Co. vs. Spouses Del Rosario

Case Summary (G.R. No. 138739)

Key Dates and Procedural Milestones

Promissory Note executed: March 2, 1991. Complaint for collection filed: June 7, 1993. Plaintiff rested case: July 5, 1994. Demurrer to evidence filed by respondents: July 29, 1994. Trial court dismissed complaint: November 4, 1994. Court of Appeals reversed and remanded: December 9, 1997 (resolution denying partial reconsideration: May 3, 1999). Supreme Court decision resolving the petition on review: July 6, 2000.

Facts Established by the Record

Respondents jointly and severally executed a Promissory Note in favor of petitioner for P138,948, payable in twelve monthly installments of P11,579. The Note contained an acceleration clause, a 2.5% per month late payment penalty on unpaid installments, and a provision for attorney’s/collection fees (10% if no suit filed; 25% if suit filed, but not less than P500) plus an additional 10% as liquidated damages. Respondents defaulted on monthly payments; they tendered checks that were dishonored. Petitioner presented documentary evidence (checks, demand letters, customer ledger card, bank dishonor slips) and testimony by its credit and collection officer, who admitted lack of personal knowledge of the underlying transactions for some documents he had endorsed.

Trial Court Proceedings and Demurrer to Evidence

After petitioner rested, respondents filed a demurrer to evidence asserting lack of cause of action. The trial court granted the demurrer and dismissed the complaint on the ground that petitioner’s proof consisted merely of hearsay. The court terminated plaintiff’s presentation of evidence before ruling on the demurrer.

Court of Appeals Ruling

The Court of Appeals reversed the trial court’s dismissal, concluding that respondents had made judicial admissions during pretrial and in their answer regarding the genuineness and due execution of the Promissory Note (and the demand letter). The CA held that the documentary exhibits should have been admitted and that admission of the documents diminished the hearsay objection. The CA ordered the remand of the case to the trial court “for further proceedings.”

Issue on Review

The narrow issue presented to the Supreme Court was whether the Court of Appeals erred in remanding the case to the trial court instead of rendering judgment on the basis of petitioner’s evidence after reversing the trial court’s grant of respondents’ demurrer to evidence.

Legal Standard on a Demurrer to Evidence on Appeal

Rule 33, Section 1 of the 1997 Rules of Court provides that if a demurrer to evidence is granted by the trial court but the order of dismissal is reversed on appeal, the movant shall be deemed to have waived the right to present evidence. The appellate court that reverses an order of dismissal should render judgment on the merits on the basis of the plaintiff’s evidence. The decision reiterates established jurisprudence (e.g., Villanueva Transit v. Javellana) explaining that permitting the defendant to demur protects judicial economy and avoids repeated trials, but carries the consequence that a reversal on appeal deprives the defendant of the opportunity to present further evidence so that the appellate court must decide on the evidence then in the record.

Application of the Demurrer Rule to the Present Case

The Supreme Court found that the CA correctly reversed the trial court’s dismissal because respondents had, by their answer and pretrial admissions, conceded the genuineness and due execution of the Promissory Note and demand letter. However, the CA erred in remanding the case for further proceedings. Under Rule 33, Section 1, respondents—having had the trial court grant their demurrer—were deemed to have waived the right to present evidence on appeal once that dismissal was reversed. Hence the appellate court should have rendered judgment on the merits based on the evidence proffered by petitioner rather than remand.

Determination Whether the Obligation Was Due and Demandable

Respondents argued that the installment dates were left blank in the Note and that this rendered the obligation not yet due and subject to fixation by the court under Arts. 1180 and 1197 of the Civil Code. The Supreme Court rejected this contention. The Note expressly specified monthly amortization (twelve consecutive monthly installments of P11,579), included an acceleration clause and a monthly late payment penalty, and thus evidenced an intention that installments be due at definite monthly intervals despite omission of the specific day. Contemporaneous and subsequent acts — specifically, respondents’ tender and attempted payment by checks (which were dishonored) — supported the conclusion that installments had become due and demandable. The bounced check for the first installment triggered the acceleration clause such that the entire principal became due as of April 2, 1991.

Admissibility of Documentary Evidence

Although petitioner’s witness admitted lack of personal knowledge regarding some documents, the Court agreed with the CA that the documentary exhibits were admissible to establish their tenor and the fact of their existence, particularly because resp

Case Syllabus (G.R. No. 138739)

Procedural Posture

Original case filed as a Complaint for collection of a sum of money by Radiowealth Finance Company (petitioner) against Spouses Vicente and Maria Sumilang del Rosario (respondents) in the Regional Trial Court (RTC), Manila, Branch 14, presided by Judge Inocencio D. Maliaman.
Complaint filed on June 7, 1993.
Petitioner formally offered evidence and rested its case on July 5, 1994 after presentation of documentary exhibits and witness testimony.
Respondents filed a Demurrer to Evidence on July 29, 1994.
RTC rendered an order dismissing the complaint on November 4, 1994 for failure of petitioner to substantiate claims, characterizing petitioner's evidence as hearsay.
Court of Appeals (CA) reversed the RTC decision and remanded the case to the trial court for further proceedings by its December 9, 1997 Decision; petitioner’s Partial Motion for Reconsideration was denied by CA on May 3, 1999.
Petition for Review on Certiorari was filed in the Supreme Court contesting the CA’s remand instead of rendering judgment; decision promulgated July 6, 2000 (G.R. No. 138739).

Facts (Undisputed)

On March 2, 1991, respondents jointly and severally executed, signed and delivered in favor of petitioner a Promissory Note for P138,948.
Promissory Note provided for amortization in twelve (12) consecutive monthly installments of P11,579 each, with blanks left for the specific commencement date and monthly due day.
Note included: 2.5% per month late payment penalty on each unpaid installment from due date until fully paid; acceleration clause making the entire outstanding principal and late charges due upon default; attorney’s/collection fees clause (10% if no legal action; 25% if legal action is filed, not less than P500) plus cost of suit and further 10% as liquidated damages (not less than P500).
Respondents defaulted on monthly installments despite repeated demands; some payments were attempted by check but were dishonored (Metropolitan Bank dishonor slips).
Petitioner presented at trial: respondents’ check payments, the demand letter dated July 12, 1991, customer ledger card, another demand letter, and bank dishonor slips. The petitioner’s witness, Jasmer Famatico (credit and collection officer), testified that he had no personal knowledge of the underlying transactions and that the documents had merely been endorsed to him.
Respondents admitted the genuineness and due execution of the Promissory Note and the July 12, 1991 demand letter during pretrial and in their Answer.

Promissory Note — Material Provisions

Principal: ONE HUNDRED THIRTY EIGHT THOUSAND NINE HUNDRED FORTY EIGHT Pesos (P138,948.00).
Installment plan: P11,579.00 payable for 12 consecutive months.
Late payment penalty: 2.5% per month on each unpaid installment from due date until fully paid.
Acceleration clause: default in payment of any installment makes total principal and agreed late payment charges immediately due without notice or demand.
Collection/attorney’s fees: 10% if no legal action; 25% if legal action is filed (not less than P500), plus costs of suit; additionally 10% as liquidated damages (not less than P500).

Trial Court Ruling

On November 4, 1994, the RTC granted respondents’ Demurrer to Evidence and dismissed the complaint on ground that petitioner’s trial evidence was mere hearsay and petitioner failed to substantiate claims.

Court of Appeals Ruling

CA reversed the RTC, finding respondents’ judicial admissions (admission of genuineness and due execution of the Promissory Note and the July 12, 1991 demand letter) established indebtedness.
CA held that documentary exhibits, though presented through a witness lacking personal knowledge, were 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.”
CA found petitioner presented a number of documentary exhibits sufficiently enumerated in the appealed order.
CA remanded the case to the trial court “for further proceedings.”
Petitioner’s Partial Motion for Reconsideration in CA was denied.

Issue Presented to the Supreme Court

Whether the Court of Appeals erred in ordering remand of the case to the trial court instead of rendering judgment on the basis of petitioner’s evidence after reversing the RTC’s grant of respondents’ Demurrer to Evidence.

Applicable Rule on Demurrer to Evidence (Rule 33, Section 1, 1997 Rules of Court)

The Rule as quoted in the source: “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 h