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Radiowealth Finance Company vs. Del Rosario

*
G.R. No. 138739. July 6, 2000.

RADIOWEALTH FINANCE COMPANY, petitioner, vs. Spouses

VICENTE and MA. SUMILANG DEL ROSARIO, respondents.

Actions; Demurrer to Evidence; Pleadings and Practice; Defendants

who present a demurrer to the plaintiff’s evidence retain the right to present
their own evidence, if the trial court disagrees with them, but if the trial
court agrees with them, but on appeal, the appellate court disagrees with
both of them and reverses the dismissal order, the defendants lose the right
to present their own evidence; Demurrer aims to discourage prolonged
litigations.—In other words, defendants who present a demurrer to the
plaintiff’s evidence retain the right to present their own evidence, if the trial
court disagrees with them; if the trial court agrees with them, but on appeal,
the appellate court disagrees with both of them and reverses the dismissal
order, the defendants lose the right to present their own evidence. The
appellate court shall, in addition, resolve the case and render judgment on
the merits, inasmuch as a demurrer aims to discourage prolonged litigations.
Same; Same; Remand of Cases; Where the Court of Appeals reversed a
demurrer to evidence rendered by a trial court, it should render judgment on
the basis of the evidence submitted by plaintiff instead of remanding the
case for further proceedings.—Applying Rule 33, Section 1 of the 1997
Rules of Court, the CA should have rendered judgment on the basis of the
evidence submitted by the petitioner. While, the appellate court correctly
ruled that “the documentary evidence submitted by the [petitioner] should
have been allowed and appreciated x x x,” and that “the petitioner presented
quite a number of documentary exhibits x x x enumerated in the appealed
order,” we agree with petitioner that the CA had sufficient evidence on
record to decide the collection suit. A remand is not only frowned upon by
the Rules, it is also logically unnecessary on the basis of the facts on record.
Obligations and Contracts; The act of leaving blank the due date of the
first installment does not necessarily mean that the debt-

_______________

* THIRD DIVISION.

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ors are allowed to pay as and when they could.—Respondents, on the other
hand, counter that the installments were not yet due and demandable.
Petitioner had allegedly allowed them to apply their promotion services for
its financing business as payment of the Promissory Note. This was
supposedly evidenced by the blank space left for the date on which the
installments should have commenced. In other words, respondents theorize
that the action for immediate enforcement of their obligation is premature
because its fulfillment is dependent on the sole will of the debtor. Hence,
they consider that the proper court should first fix a period for payment,
pursuant to Articles 1180 and 1197 of the Civil Code. This contention is
untenable. The act of leaving blank the due date of the first installment did
not necessarily mean that the debtors were allowed to pay as and when they
could. If this was the intention of the parties, they should have so indicated
in the Promissory Note. However, it did not reflect any such intention. On
the contrary, the Note expressly stipulated that the debt should be amortized
monthly in installments of P11,579 for twelve consecutive months. While
the specific date on which each installment would be due was left blank, the
Note clearly provided that each installment should be payable each month.
Same; The fact that an acceleration clause and a late payment penalty
is provided for shows the intention of the parties that the installments should
be paid at a definite date.—It also provided for an acceleration clause and a
late payment penalty, both of which showed the intention of the parties that
the installments should be paid at a definite date. Had they intended that the
debtors could pay as and when they could, there would have been no need
for these two clauses. Verily, the contemporaneous and subsequent acts of
the parties manifest their intention and knowledge that the monthly
installments would be due and demandable each month. In this case, the
conclusion that the installments had already become due and demandable is
bolstered by the fact that respondents started paying installments on the
Promissory Note, even if the checks were dishonored by their drawee bank.
We are convinced neither by their avowals that the obligation had not yet
matured nor by their claim that a period for payment should be fixed by a
court.
Appeals; A party who did not appeal cannot obtain affirmative relief
other than that granted in the appealed decision.—As for the disputed
documents submitted by the petitioner, the CA ruling in

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favor of their admissibility, which was not challenged by the respondents,

stands. A party who did not appeal cannot obtain affirmative relief other
than that granted in the appealed decision.
Interests; Where payment of interest is not expressly provided in the
Promissory Note, then it shall be deemed included in the stipulation for a
late payment penalty.—Petitioner, in its Complaint, prayed for “14%
interest per annum from May 6, 1993 until fully paid.” We disagree. The
Note already stipulated a late payment penalty of 2.5 percent monthly to be
added to each unpaid installment until fully paid. Payment of interest was
not expressly stipulated in the Note. Thus, it should be deemed included in
such penalty.
Damages; Where the Promissory Note provides for a late payment
penalty of 2.5 percent monthly attorney’s fees equivalent to 25 percent of the
amount due in case a legal action is instituted and 10 percent of the same
amount as liquidated damages, said liquidated damages should no longer
be imposed for being unconscionable.—The Note also provided that the
debtors would be liable for attorney’s fees equivalent to 25 percent of the
amount due in case a legal action was instituted and 10 percent of the same
amount as liquidated damages. Liquidated damages, however, should no
longer be imposed for being unconscionable. Such damages should also be
deemed included in the 2.5 percent monthly penalty. Furthermore, we hold
that petitioner is entitled to attorney’s fees, but only in a sum equal to 10
percent of the amount due which we deem reasonable under the proven
facts.

PETITION for review on certiorari of a decision of the Court of

Appeals.

The facts are stated in the opinion of the Court.

     Singson, Valdez & Associates for petitioner.
     Romeo R. Bringas & Associates for private respondents.

PANGANIBAN, J.:

When a demurrer to evidence granted by a trial court is reversed on

appeal, the reviewing court cannot remand the case for further
proceedings. Rather, it should render judgment on

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the basis of the evidence proffered by the plaintiff. Inasmuch as

defendants in the present case admitted the due execution of the
Promissory Note both in their Answer and during the pretrial, the
appellate court should have rendered judgment on the bases of that
Note and on the other pieces of evidence adduced during the trial.

The Case

Before us is a 1Petition for Review on Certiorari of2 the December 9,

1997 Decision and the May 3, 1999 Resolution of the Court of
Appeals in CA-GR CV No. 47737. The assailed Decision disposed
as follows:

“WHEREFORE, premises considered, the appealed order (dated November

4, 1994) of the Regional Trial Court (Branch XIV) in the City of Manila in
Civil Case No. 93-66507 is hereby REVERSED and SET ASIDE. Let the
records of this case be remanded to the court a quo for further proceedings.
3
No pronouncement as to costs.”

The assailed Resolution

4
denied the petitioner’s Partial Motion for
Reconsideration.

The F acts

The facts of this case are undisputed. On March 2, 1991, Spouses

Vicente and Maria Sumilang del Rosario (herein respondents),
jointly and severally executed, signed and delivered in favor of
Radiowealth Finance Company (herein

_______________

1 Rollo, pp. 23-30. Promulgated by the Third Division composed of J. Ramon

Mabutas, Jr., ponente; JJ. Emerito C. Cui, Division chairman, and Hilarion L.
Aquino, member, both concurring.
2 Rollo, p. 20. In this Resolution, J. Cui was replaced by J. Corona Ibay-Somera.
3 Assailed Decision, p. 7; rollo, p. 29.
4 Rollo, p. 20.

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5
petitioner), a Promissory Note for P138,948. Pertinent provisions of
the Promissory Note read:

“FOR VALUE RECEIVED, on or before the date listed below, I/We

promise to pay jointly and severally Radiowealth Finance Co. or order the

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sum of ONE HUNDRED THIRTY EIGHT THOUSAND NINE HUNDRED

FORTY EIGHT Pesos (P138,948.00) without need of notice or demand, in
installments as follows:

P11,579.00 payable for 12 consecutive months starting on ________ 19 __ until the

amount of P11,579.00 is fully paid. Each installment shall be due every___day of
each month. A late payment penalty charge of two and a half (2.5%) percent per
month shall be added to each unpaid installment from due date thereof until fully
paid.

x x x      x x x      x x x
It is hereby agreed that if default be made in the payment of any of the
installments or late payment charges thereon as and when the same becomes
due and payable as specified above, the total principal sum then remaining
unpaid, together with the agreed late payment charges thereon, shall at once
become due and payable without need of notice or demand.
x x x      x x x      x x x
If any amount due on this Note is not paid at its maturity and this Note is
placed in the hands of an attorney or collection agency for collection, I/We
jointly and severally agree to pay, in addition to the aggregate of the
principal amount and interest due, a sum equivalent to ten (10%) per cent
thereof as attorney’s and/or collection fees, in case no legal action is filed,
otherwise, the sum will be equivalent to twenty-five (25%) percent of the
amount due which shall not in any case be less than FIVE HUNDRED
PESOS (P500.00) plus the cost of suit and other litigation expenses and, in
addition, a further sum of ten per cent (10%) of said amount which in no
case shall be less than FIVE HUNDRED PESOS (P500.00), as and for
6
liquidated damages.”

_______________

5 Annex “C”; rollo, p. 31.

6 Annex “C”; rollo, p. 31.

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Radiowealth Finance Company vs. Del Rosario

Thereafter, respondents defaulted on the monthly installments.

Despite repeated demands, they failed to pay their obligations under
their Promissory Note. 7
On June 7, 1993, petitioner filed a Complaint for the collection
of a sum of money before the Regional Trial Court of Manila,
8
Branch 14. During the trial, Jasmer Famatico, the credit and
collection officer of petitioner, presented in evidence the
respondents’ check payments, the demand letter dated July 12, 1991,
the customer’s ledger card for the respondents, another demand
letter and Metropolitan Bank dishonor slips. Famatico admitted that
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he did not have personal knowledge of the transaction or the

execution of any of these pieces of documentary evidence, which
had merely been endorsed to him.
On July 4, 1994, the trial court issued 9 an Order terminating the
presentation of evidence for the petitioner. Thus, the latter formally
offered its evidence and exhibits and rested its case on July 5, 1994.
10
Respondents filed on July 29, 1994 a Demurrer to Evidence for
alleged lack
11
of cause of action. On November 4, 1994, the trial court
dismissed the complaint for failure of petitioner to substantiate its
claims, the evidence it had presented being merely hearsay.
On appeal, the Court of Appeals (CA) reversed the trial court and
remanded the case for further proceedings.
12
Hence, this recourse.

_______________

7 Rollo, pp. 32-34.

8 Presided by Judge Inocencio D. Maliaman.
9 Appellant’s Brief before the CA, p. 4; rollo, p. 48.
10 Rollo, pp. 37-38.
11 Rollo, pp. 40-41.
12 This case was deemed submitted for decision upon receipt by this Court on
April 28, 2000 of the petitioner’s Memorandum signed by Atty. Allan B. Gepty of
Singson Valdez & Associates. Respondents’ Memorandum, signed by Atty. Eduardo
V. Bringas of Romeo R. Bringas & Associates, was received earlier, on April 3, 2000.

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Ruling of the Court of Appeals

According to the appellate court, the judicial admissions of

respondents established their indebtedness to the petitioner, on the
grounds that they admitted the due execution of the Promissory
Note, and that their only defense was the absence of an agreement
on when the installment payments were to begin. Indeed, during the
pretrial, they admitted the genuineness not only of the Promissory
Note, but also of the demand letter dated July 12, 1991. Even if the
petitioner’s witness had no personal knowledge of these documents,
they would still be 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
13
tenor is of independent relevance.”
Besides, Articles 19 and 22 of the Civil Code require that every
person must—in the exercise of rights and in the performance of
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duties—act with justice, give all else their due, and observe honesty
and good faith. Further, the rules on evidence are to be liberally
construed in order to promote their objective and to assist the parties
in obtaining just, speedy and inexpensive determination of an action.

Issue

The petitioner raises this lone issue:

“The Honorable Court of Appeals patently erred in ordering the remand of

this case to the trial court instead of rendering judgment on the basis of
petitioner’s evidence.”

For an orderly discussion, we shall divide the issue into two parts:
(a) legal effect of the Demurrer to Evidence, and (b) the date when
the obligation became due and demandable.

_______________

13 Memorandum for the Petitioner, p. 4; rollo, p. 96. Original written in capital

letters.

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The Court’s Ruling

The Petition has merit. While the CA correctly reversed the trial
court, it erred in remanding the case “for further proceedings.”

Consequences of a Reversal, on
Appeal, of a Demurrer to Evidence

Petitioner contends that if a demurrer to evidence is reversed on

appeal, the defendant should be deemed to have waived the right to
present evidence, and the appellate court should render judgment on
the basis of the evidence submitted by the plaintiff. A remand to the
trial court “for further proceedings” would be an outright defiance of
Rule 33, Section 1 of the 1997 Rules of Court.
On the other hand, respondents argue that the petitioner was not
necessarily entitled to its claim, simply on the ground that they lost
their right to present evidence in support of their defense when the
Demurrer to Evidence was reversed on appeal. They stress that the

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CA merely found them indebted to petitioner, but was silent on

when their obligation became due and demandable.
The old Rule 35 of the Rules of Court was reworded under Rule
33 of the 1997 Rules, but the consequence on appeal of a demurrer
to evidence was not changed. As amended, the pertinent provision of
Rule 33 reads as follows:

“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 have the right to present evidence. If
the motion is granted but on appeal the order of dismissal is reversed he
14
shall be deemed to have waived the right to present evidence.”

_______________

14 In the old Rules, the same provision is worded in Section 1 of Rule 35 as

follows:

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Explaining the consequence of a demurrer to evidence, the Court in

15
Villanueva Transit v. Javellana pronounced:

“The rationale behind the rule and doctrine is simple and logical. The
defendant is permitted, without waiving his right to offer evidence in the
event that his motion is not granted, to move for a dismissal (i.e., demur to
the plaintiff’s evidence) on the ground that upon the facts as thus established
and the applicable law, the plaintiff has shown no right to relief. If the trial
court denies the dismissal motion, i.e., finds that plaintiff’s evidence is
sufficient for an award of judgment in the absence of contrary evidence, the
case still remains before the trial court which should then proceed to hear
and receive the defendant’s evidence so that all the facts and evidence of the
contending parties may be properly placed before it for adjudication as well
as before the appellate courts, in case of appeal. Nothing is lost. The
doctrine is but in line with the established procedural precepts in the
conduct of trials that the trial court liberally receive all proffered evidence at
the trial to enable it to render its decision with all possibly relevant proofs in
the record, thus assuring that the appellate courts upon appeal have all the
material before them necessary to make a correct judgment, and avoiding
the need of remanding the case for retrial or reception of improperly
excluded evidence, with the possibility thereafter of still another appeal,
with all the concomitant delays. The rule, however, imposes the condition by
the same token that if his demurrer is granted by the trial court, and the
order of dismissal is reversed on appeal, the movant losses his right to

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present evidence in his behalf and he shall have been deemed to have
elected to stand on the insufficiency of plaintiff’s case and evidence. In such
event, the appellate court which reverses the order of dismissal shall
proceed to render judgment on the merits on the basis of plaintiff’s
evidence.” (Italics supplied)

_______________

“SECTION 1. Effect of judgment on demurrer to evidence.—After the plaintiff has completed

the presentation of his evidence, the defendant without waiving his right to offer evidence in
the event the motion is not granted, may move for a dismissal on the ground that upon the facts
and the law the plaintiff has shown no right to relief. However, if the motion is granted and the
order of dismissal is reversed on appeal, the movant loses his right to present evidence in his
behalf.”

15 33 SCRA 755, 761-762, June 30, 1970, per Zaldivar, J.

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In other words, defendants who present a demurrer to the plaintiff’s

evidence retain the right to present their own evidence, if the trial
court disagrees with them; if the trial court agrees with them, but on
appeal, the appellate court disagrees with both of them and reverses
the dismissal order, the defendants lose the right to present their own
16
evidence. The appellate court shall, in addition, resolve the case
and render judgment on the merits, 17
inasmuch as a demurrer aims to
discourage prolonged litigations.
In the case at bar, the trial court, acting on respondents’ demurrer
to evidence, dismissed the Complaint on the ground that the plaintiff
had adduced mere hearsay evidence. However, on appeal, the
appellate court reversed the trial court because the genuineness and
the due execution of the disputed pieces of evidence had in fact been
admitted by defendants.
Applying Rule 33, Section 1 of the 1997 Rules of Court, the CA
should have rendered judgment on the basis of the evidence
submitted by the petitioner. While the appellate court correctly ruled
that “the documentary evidence submitted by the [petitioner] should
have been allowed and appreciated x x x,” and that “the petitioner
presented quite a number of documentary exhibits x x x enumerated
18
in the appealed order,” we agree with petitioner that the CA had
sufficient evidence on record to decide the collection suit. A remand
is not only frowned upon by the Rules, it is also logically
unnecessary on the basis of the facts on record.

Due and Demandable Obligation

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Petitioner claims that respondents are liable for the whole amount of
their debt and the interest thereon, after they defaulted on the
monthly installments.

_______________

16 Siayngco v. Costibolo, 27 SCRA 272, 284, February 28, 1969; Tison v. Court of
Appeals, 276 SCRA 582, 599-600, July 31, 1997.
17 Atun v. Nuñez, 97 Phil. 762, 765, October 26, 1955; Arroyo v. Azur, 76 Phil.
493.
18 CA Decision, pp. 4-5; rollo, pp. 26-27.

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Respondents, on the other hand, counter that the installments were

not yet due and demandable. Petitioner had allegedly allowed them
to apply their promotion services for its financing business as
payment of the Promissory Note. This was supposedly evidenced by
the blank space left for the date on which the installments should
19
have commenced. In other words, respondents theorize that the
action for immediate enforcement of their obligation is premature
because its fulfillment is dependent on the sole will of the debtor.
Hence, they consider that the proper court should first fix a period
for payment, pursuant to Articles 1180 and 1197 of the Civil Code.
This contention is untenable. The act of leaving blank the due
date of the first installment did not necessarily mean that the debtors
were allowed to pay as and when they could. If this was the
intention of the parties, they should have so indicated in the
Promissory Note. However, it did not reflect any such intention.
On the contrary, the Note expressly stipulated that the debt
should be amortized monthly in installments of P11,579 for twelve
consecutive months. While the specific date on which each
installment would be due was left blank, the Note clearly provided
that each installment should be payable each month.
Furthermore, it also provided for an acceleration clause and a late
payment penalty, both of which showed the intention of the parties
that the installments should be paid at a definite date. Had they
intended that the debtors could pay as and when they could, there
would have been no need for these two clauses.
Verily, the contemporaneous and subsequent acts of the parties
manifest their intention and knowledge that the monthly installments
would be due and demandable each

_______________

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19 Respondents’ Answer, p. 1; rollo, p. 35.

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month. In this case, the conclusion that the installments had already
become due and demandable is bolstered by the fact that
respondents started paying installments on the Promissory Note,
even if the checks were dishonored by their drawee bank. We are
convinced neither by their avowals that the obligation had not yet
matured nor by their claim that a period for payment should be fixed
by a court.
Convincingly, petitioner has established not only a cause of
action against the respondents, but also a due and demandable
obligation. The obligation of the respondents had matured and they
clearly defaulted when their checks bounced. Per the acceleration
clause, the whole debt became due one month (April 2, 1991) after
the date of the Note because the check representing their first
installment bounced. As for the disputed documents submitted by
the petitioner, the CA ruling in favor of their admissibility, which
was not challenged by the respondents, stands. A party who did not
appeal cannot obtain affirmative relief other than that granted in the
21
appealed decision.
It should be stressed that respondents do not contest the amount
of the principal obligation. Their liability as expressly stated in the
22
Promissory Note and found by the CA is “P13[8],948.00 which is
payable in twelve (12) installments at P11,579.00 a month for twelve
(12) consecutive months.” As

_______________

20 Article 1371 of the Civil Code provides that “[i]n order to judge the intention of
the contracting parties, their contemporaneous and subsequent acts shall be
principally considered.”
21 Lagandaon v. Court of Appeals, 290 SCRA 330, May 21, 1998; Dio v.
Concepcion, 296 SCRA 579, September 25, 1998. Filflex Industrial & Manufacturing
Corporation v. National Labor Relations Commission, 286 SCRA 245, February 12,
1998; Philippine Tobacco Flue-Curing & Redrying Corporation v. National Labor
Relations Commission, 300 SCRA 37, December 10, 1998; Quezon Development
Bank v. Court of Appeals, 300 SCRA 206, December 16, 1998.
22 There was a typographical error in the CA Decision. As reflected in the
Promissory Note, the amount should be P138,948, not, P130,948.

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correctly found by the CA, the “ambiguity” in the Promissory Note

23
is clearly attributable to human error.
Petitioner, in its Complaint, prayed for “14% interest per annum
from May 6, 1993 until fully paid.” We disagree. The Note already
stipulated a late payment penalty of 2.5 percent monthly to be added
to each unpaid installment until fully paid. Payment of interest was
not expressly stipulated in the Note. Thus, it should be deemed
included in such penalty. In addition, the Note also provided that the
debtors would be liable for attorney’s fees equivalent to 25 percent
of the amount due in case a legal action was instituted and 10
percent of the same amount as liquidated damages. Liquidated
damages, however, should no longer be imposed for being
24
unconscionable. Such damages should also be deemed included in
the 2.5 percent monthly penalty. Furthermore, we hold that
petitioner is entitled to attorney’s fees, but only in a sum equal to 10
percent of the amount due which we deem reasonable under the
25
proven facts.
The Court deems it improper to discuss respondents’ claim for
moral and other damages. Not having appealed the CA Decision,
they are not entitled to affirmative relief, as already explained
26
earlier.
WHEREFORE, the Petition is GRANTED. The appealed
Decision is MODIFIED in that the remand is SET ASIDE and
respondents are ordered TO PAY P138,948, plus 2.5 percent penalty
charge per month beginning April 2, 1991 until fully paid, and 10
percent of the amount due as attorney’s fees. No costs.
SO ORDERED.

_______________

23 CA Decision, p. 5; rollo, p. 27.

24 Article 2226 of the Civil Code provides that “[l]iquidated damages, whether
intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous
or unconscionable.”
25 Law Firm of Raymundo A. Armovit v. CA, 202 SCRA 16, September 27, 1991;
Pascual v. CA, 300 SCRA 214, December 16, 1998.
26 See note 21.

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     Melo (Chairman), Vitug, Purisima and Gonzaga-Reyes, JJ.,

concur.

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Petition granted, judgment modified and set aside.

Notes.—Whoever avails of a demurrer to evidence gambles his

right to adduce evidence. (Quebral vs. Court of Appeals, 252 SCRA
353 [1996])
The rule embodied in Section 1, Rule 35 of the Rules of Court
that if a demurrer to evidence is granted and the order of dismissal is
reversed on appeal, the movant loses his right to present evidence in
his behalf contemplates a ground pertaining to the merits of the case
and not where the dismissal is principally focused on the court’s lack
of jurisdiction. (Philippine Amusement and Gaming Corporation vs.
Court of Appeals, 275 SCRA 433 [1997])
In an election protest proceeding, which is a summary one, and in
which the periods are short and fatal, and trials rapid and preferential
as the peremptory nature of the litigation so requires, the motion for
dismissal at that stage of the proceeding must be considered as a
demurrer to the evidence presented by the protestant, with implied
waiver by the protestee to present his evidence, whatever may be the
ruling, whether adverse or favorable, either in the first instance or on
appeal, the court of origin or appellate court having the power to
definitely decide the protest. (Enojas, Jr. vs. Commission on
Elections, 283 SCRA 229 [1997])
Where a court denies a demurrer to evidence, it should set the
date for the reception of the defendant’s evidence in chief and not
proceed to grant the plaintiff’s claims. (Northwest Airlines, Inc. vs.
Court of Appeals, 284 SCRA 408 [1998])

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