Case Summary (G.R. No. L-47045)
Petitioner, Respondent and Claims
Petitioner before the Supreme Court (private respondent in the lower courts): Nobio Sardane, who defended against collection actions based on promissory notes and vales.
Respondent before the Supreme Court (plaintiff in lower courts): Romeo Acojedo, who sued for recovery of P5,217.25 based on several promissory notes and vales, claiming nonpayment despite demands and an extrajudicial demand letter.
Key Dates and Procedural History
- Promissory notes and vales were executed on various dates in the 1970s (examples: May 13, 1972; August 25, 1972; September 12, 1972; May 31, 1977).
- Case filed in City Court of Dipolog (action for collection). Default entered May 18, 1976; order lifting default May 24, 1976. City Court decision: September 14, 1976, judgment for plaintiff for P5,217.25 plus legal interest and P200 attorney’s fee.
- Defendant (Sardane) appealed to the Court of First Instance of Zamboanga del Norte, which reversed and dismissed the complaint and awarded damages and attorney’s fees to Sardane.
- Plaintiff (Acojedo) sought review in the Court of Appeals, which reversed the Court of First Instance and reinstated the City Court judgment.
- The present appeal to the Supreme Court followed; the Supreme Court affirmed the Court of Appeals. (Applicable constitutional framework: the 1987 Constitution, given the decision’s chronological context.)
Applicable Law and Doctrines Invoked
- Rule 130, Section 7 (parol evidence rule) — exceptions for mistake, failure to express true intent, or intrinsic ambiguity.
- Rule 8, Section 8 (actionable documents rule) — admission of genuineness and due execution when not denied under oath.
- Civil Code, Article 1769(4) — receipt of a share of profits is prima facie evidence of partnership but not conclusive where profits are wages.
- Procedural statutes and resolutions affecting appellate jurisdiction and mode of appeal: Republic Act No. 296 as amended by RA 5433; Republic Act No. 6031; Court of Appeals en banc Resolution (August 12, 1971); and transitional provisions cited (B.P. 129, Interim Rules and Guidelines).
Factual Background and Trial Evidence
Acojedo sued Sardane on several written instruments: printed promissory notes (Exhibits B, C, D) and vales (Exhibits E, F, G, H) totaling P5,217.25. Petitioner alleged repeated extrajudicial demands (including a lawyer’s demand letter, Exhibit I) and instituted the collection action after nonpayment. Sardane initially defaulted but later filed an answer shortly after ex parte trial evidence was presented; the City Court ultimately rendered judgment for Acojedo based on the written instruments and petitioner’s evidence.
City Court Judgment
The City Court of Dipolog rendered judgment on September 14, 1976, in favor of Acojedo, ordering Sardane to pay P5,217.25, legal interest from April 23, 1976, P200 attorney’s fee, and costs.
Court of First Instance Reversal and Its Rationale
The Court of First Instance reversed and dismissed the complaint, awarding Sardane damages and attorney’s fees. Its dispositive reasoning was that the writings (promissory notes and vales) were ambiguous or imperfect insofar as they could be construed as receipts of contributions to an alleged partnership rather than loans; consequently, the CFI permitted parol evidence to show the instruments were not loans but receipts reflecting partnership contributions.
Issues Presented on Review
- Whether oral testimony that a partnership existed between the parties was admissible to vary or contradict the promissory notes (i.e., whether exceptions to the parol evidence rule applied).
- Whether the petitioner’s failure to cross-examine on sur-rebuttal testimony waived the presumption accorded by Rule 8, Section 8 regarding genuineness and due execution of the written instruments.
Supreme Court’s Analysis — Parol Evidence Rule and Ambiguity
The Supreme Court agreed with the Court of Appeals that the exceptions to the parol evidence rule did not apply. Rule 130, Section 7 permits extrinsic evidence only where the pleading puts in issue a mistake, imperfection, or intrinsic ambiguity. The Court found Exhibits B, C, and D to be ordinary printed promissory notes promising to pay a sum certain; the vales plainly reflected obligations to return sums. On their face, the instruments were neither vague nor ambiguous, and their terms clearly indicated loans repayable upon demand. The Court emphasized factual findings that contradicted Sardane’s claim of being misled (e.g., Sardane’s longstanding business experience, his responsibility for printing the promissory notes). Therefore, testimonial evidence asserting that the writings were mere receipts for partnership contributions could not be admitted to alter the clear written terms.
Supreme Court’s Analysis — Evidentiary Weight and Partnership Claim
The Court of Appeals’ factual determinations that no partnership had been established were sustained. Although Article 1769(4) creates a prima facie inference of partnership from the receipt of a share of profits, that inference is rebuttable — particularly where the receipts represent wages. The record showed that Acojedo’s alleged 50% share of net profits did not equate to participation in management or control; Acojedo had no voice in running the basnig, and other facts (e.g., Acojedo not joining prior suits asserting business-related claims, Sardane seeking an accounting) supported the finding of an employment or concession relationship rather than a partnership. Prior jurisprudence (cited Fortis v. Gutierrez Hermanos and Bastida v. Menzi & Co.) supported denying partnership status under similar facts.
Actionable Documents Rule and Waiver Argument
Under Rule 8, Section 8, when an action is founded on a written instrument attached to the pleading, genuineness and due execution are deemed admitted unless specifically denied under oath. The record showed that Acojedo did not deny under oath that he executed or that the promissory notes were genuine; accordingly, genuineness and due execution were deemed admitted. Sardane’s attempt to introduce parol evidence to change the legal import of the writings conflated the parol evidence rule and the actionable documents rule. Admission of genuineness does not permit extrinsic testimony to alter clear written terms.
The Court addressed the contention that the presumption could be waived by failure to cross-examine on sur-rebuttal. It explained that waiver of the Rule 8 presumption requires conduct showing express or tacit waiver, generally where the case is tried in disregard of the rule and the party presents oral evidence to prove due execution without objection. That factual scenario was abs
...continue readingCase Syllabus (G.R. No. L-47045)
Citation and Panel
- Reported at 249 Phil. 478, Second Division, G.R. No. L-47045, decided November 22, 1988.
- Decision authored by Justice Regalado, J.
- Concurring: Melencio-Herrera (Chairperson), Paras, Padilla, and Sarmiento, JJ.
- Cited intermediate decisions and authorities within the decision include: Court of Appeals Special Fifth Division opinion (CA-G.R. No. SP-06464-R), City Court of Dipolog decision in Civil Case No. A-1838 (dated September 14, 1976), and the decision of the Court of First Instance of Zamboanga del Norte (which reversed the City Court). Bench and doctrinal authorities cited: Fortis v. Gutierrez Hermanos (6 Phil. 100, 1906), Bastida v. Menzi & Co., Inc. (58 Phil. 188, 1933), Yu Chuck, et al. v. Kong Li Po (46 Phil. 608, 1924), Central Surety & Insurance Co. v. C. N. Hodges, et al. (38 SCRA 159, 1971), Manila Railroad Co. v. Attorney-General (20 Phil. 523, 1911), and statutory/procedural references including Section 7, Rule 130; Section 8, Rule 8; Section 29, Republic Act 296 as amended by Republic Act 5433; Republic Act 6031; Sec. 22 B.P. 129; and relevant paragraphs of the Interim or Transitional Rules and Guidelines.
Parties and Nature of the Action
- Plaintiff in the municipal action / appellee in subsequent appeals: Romeo J. Acojedo (herein referred to in parts of the record as the petitioner in the City Court suit).
- Defendant in the municipal action / appellant in subsequent appeals / petitioner before the Supreme Court: Nobio Sardane.
- Relief sought below: collection of a sum of money (P5,217.25) based on several written instruments described in the complaint (promissory notes and vales).
Primary Facts (as set out in the City Court decision and recited in the appellate records)
- The City Court record, as summarized in the assailed decision, sets out that:
- The plaintiff sought collection of P5,217.25 based on instruments identified as Exhibits B, D, E, F, and G (and Exhibits C and H referenced in the record).
- Exhibit B: printed promissory note for P1,117.25 dated May 13, 1972.
- Exhibit C: printed promissory note showing P1,400.00 on its face.
- Exhibit D: printed promissory note dated May 31, 1977 for P100.00.
- Exhibit E: a "vale" reading: "Good for: two hundred pesos (Sgd) Nobio Sardane."
- Exhibit F: a writing in tenor: "Received from Mr. Romeo Acojedo the sum Pesos: Two Thousand Two Hundred (P2,200.00.) ONLY, to be paid on or before December 25, 1975. (Sgd) Nobio Sardane."
- Exhibits G and H: vales for P100.00 each, dated August 25, 1972 and September 12, 1972 respectively.
- The plaintiff made multiple demands for payment; after extrajudicial demands failed, the plaintiff caused a lawyer to send a formal demand letter (Exhibit I).
- The case was filed in the City Court of Dipolog; the record shows the case was filed April 23, 1976 (interest in the City Court judgment was ordered to commence from that date).
Trial Court Proceedings and City Court Judgment (City Court of Dipolog)
- On the scheduled trial day, private respondent (Sardane) initially failed to appear and file an answer.
- On motion, the City Court issued an order dated May 18, 1976 declaring Sardane in default and permitted plaintiff to present evidence ex parte.
- Sardane filed a motion to lift the order of default; the City Court granted the motion on May 24, 1976, noting an answer was filed within two hours after the ex parte evidence hearing.
- After trial on the merits, the City Court rendered judgment on September 14, 1976, with the dispositive portion ordering:
- Defendant to pay plaintiff P5,217.25 plus legal interest from April 23, 1976 (date of filing);
- Defendant to pay plaintiff P200.00 as attorney's fee; and
- Defendant to pay costs of the proceeding.
Court of First Instance (CFI) Ruling
- Sardane appealed to the Court of First Instance of Zamboanga del Norte.
- The CFI reversed the City Court’s decision, dismissed the complaint, and ordered plaintiff-appellee Acojedo to pay defendant-appellant Sardane P500.00 each for actual damages, moral damages, exemplary damages, and attorney’s fees, in addition to costs of suit.
- The CFI’s key legal reasoning included a finding that the pleadings put in issue "imperfection or ambiguity" of the written instruments, thus permitting parol evidence to show the instruments were not loans but receipts of contributions to an alleged partnership.
Court of Appeals Proceedings and Ruling
- The plaintiff-appellee sought review in the Court of Appeals from the CFI decision.
- The Court of Appeals (Special Fifth Division) reinstated the City Court decision and reversed the CFI: it found no reversible error in the City Court’s conclusions and held the promissory notes and vales were not ambiguous on their face and thus not subject to parol evidence to vary their meaning.
- The Court of Appeals also found the evidence insufficient to establish the existence of a partnership between the parties.
Issues Presented on Review to the Supreme Court
- The petition for review to the Supreme Court condensed into two principal issues (as assigned and outlined in the appellate petitions):
- Whether oral testimony by Sardane that a partnership existed between him and Acojedo was admissible to vary or contradict the clear terms of the promissory notes (i.e., applicability of the parol evidence rule and its exceptions).
- Whether the petitioner’s (Acojedo’s) failure to cross-examine Sardane on his sur-rebuttal testimony constituted a waiver of the presumptions accorded the plaintiff under Section 8, Rule 8 of the Rules of Court (i.e., presumed genuineness and due execution of the attached written instruments).
- A third issue was later raised in Sardane’s motion for reconsideration and repeated in the present appeal: whether the petition for review to the Court of Appeals should have been dismissed for lack of jurisdiction because the lower court’s decision did not affirm in full the municipal court judgment (a procedural jurisdictional point under RA 296 as amended by RA 5433 and later developments).