Trans Industrial Utilities v. Metropolitan Bank & Trust
REITERATIONFacts
The Antecedents: Trans Industrial Utilities, Inc. (Trans Industrial), through its President Rodolfo T. Tiu, obtained several loans from Metropolitan Bank & Trust Company (Metrobank), later substituted by Meridian Corporation. To secure these loans, Trans Industrial assigned a parcel of land and, along with Spouses Rodolfo and Victoria Tiu and Juanita T. Tiu (collectively, petitioners), executed Continuing Surety Agreements. Petitioners defaulted on their obligations, leading to a Debt Settlement Agreement. Subsequently, Trans Industrial executed a Deed of Dacion En Pago for another property, and petitioners executed a new surety agreement for the restructured loan. Despite this, petitioners again failed to make payments, prompting Metrobank to file an action for collection of sum of money. Procedural History: In their defense, petitioners argued that the loans exceeded the authority granted by Trans Industrial's board resolutions, that the loans were improperly converted from US Dollars to Philippine Pesos, that the dacion en pago was more than sufficient to cover the debt, and that they had overpaid. They filed a Demurrer to Evidence, which was denied by the Regional Trial Court (RTC). The RTC, in its Decision dated November 27, 2009, ruled in favor of the respondent, ordering petitioners to pay the outstanding amount. The Court of Appeals (CA), in its Decision dated October 30, 2015, affirmed the RTC's ruling, finding that petitioners had admitted the genuineness and due execution of key documents due to their failure to deny them under oath and that their claims of fraud and overpayment were unsubstantiated. The CA denied petitioners' motion for reconsideration in a Resolution dated August 17, 2016. The Petition: Petitioners filed a Petition for Review under Rule 45 of the Rules of Court, assailing the CA's Decision and Resolution. They contend that the CA erred in holding that their admission of the genuineness and due execution of the Secretary's Certificate and Debt Settlement Agreement made them valid, that the CA erred in not holding that Trans Industrial exceeded its authority by borrowing in US Dollars, and that the CA erred in not holding that petitioners had overpaid their loans. Petitioners argue that the board resolution authorizing the loans was void due to a lack of quorum and that the admission of the documents' genuineness and due execution only pertains to their admissibility as evidence, not their validity. They also claim that the value of the property subject to the dacion en pago was sufficient to cover the entire obligation, leading to an overpayment.
Issue(s)
Whether the Court of Appeals erred in holding that the admission of the genuineness and due execution of the Secretary's Certificate and Debt Settlement Agreement does not make them valid. Whether the Court of Appeals erred in not holding that petitioner Trans Industrial Utilities, Inc. exceeded its authority by borrowing in US Dollars instead of Philippine Pesos, and that Metrobank is estopped from converting the dollar loans into pesos at a higher rate. Whether the Court of Appeals erred in not holding that petitioner Trans Industrial Utilities, Inc. has overpaid its loans, specifically regarding the Deed of Dacion en Pago. Whether the Court of Appeals erred in holding that petitioner Trans Industrial Utilities, Inc.'s claim of overpayment is not substantiated, encompassing all aspects of the overpayment claim.
Ruling
The petition is denied. The Decision of the Court of Appeals dated October 30, 2015, and its Resolution dated August 17, 2016, in CA-G.R. CV No. 03923, are affirmed in toto.
Ratio Decidendi
On the Admission of Genuineness and Due Execution: The Court reiterated that under Section 8, Rule 8 of the Rules of Court, the genuineness and due execution of an actionable document are deemed admitted unless specifically denied under oath. Petitioners failed to specifically deny under oath the Secretary's Certificate and the Debt Settlement Agreement attached to the amended complaint. Their Amended Answer was not verified, which is tantamount to a failure to deny under oath. Therefore, petitioners admitted the genuineness, due execution, and authenticity of these documents. The Court emphasized that such admission precludes defenses like forgery, lack of authority, or non-delivery. The statement in the Secretary's Certificate that the resolution was "unanimously approved, a legal quorum being present and voting" directly contradicts petitioners' claim of lack of quorum, and this contradiction cannot be raised due to the admission of the document's genuineness and due execution. On Exceeding Borrowing Authority and Conversion of Dollar Loans: The Court found that the Debt Settlement Agreement was freely and voluntarily entered into by the parties, with no proof of fraud on Metrobank's part. This agreement acknowledged the credit accommodations, the due and demandable nature of the obligations, and established a new principal amount after adjustments, including the conversion of US Dollar denominated loans to Philippine Pesos. Petitioners initiated the restructuring and were aware of the contents of the documents. A claim of payment and overpayment, as insisted by petitioners, is an admission of the existence and enforceability of the loan obligations, estopping them from belatedly claiming the contract is null and void or that its stipulations differ from what appears in the agreement. Furthermore, the Secretary's Certificates dated July 24, 1996, and August 16, 1995, validly authorized separate loan amounts, and there was no indication that the P15,000,000.00 authorization was merely an increase or a ceiling. The Debt Settlement Agreement superseded all previous agreements. On Overpayment regarding the Deed of Dacion en Pago: Petitioners failed to substantiate their claim of overpayment specifically related to the Deed of Dacion en Pago. The Deed of Dacion En Pago and the Debt Settlement Agreement clearly stated that the property was transferred to partially settle the obligation to the extent of P22,000,000.00, not P27,500,000.00 as claimed by petitioners. The documents presented negated the claim of overpayment through dacion en pago. On Overpayment and Substantiation (encompassing all aspects): The Court found no error in the lower courts' appreciation of the evidence regarding the overpayment claim, considering all aspects presented.
Main Doctrine
Failure to specifically deny under oath the genuineness and due execution of an actionable document attached to a pleading results in the admission of such document, precluding the party from later assailing its validity or raising defenses that should have been raised at the outset.