Unified Financing Corp. v. Tolentino

G.R. No. 271304 · 2025-02-24 · J. LOPEZ, J.: · Remedial Law

REITERATION

Facts

The Antecedents: Spouses James and Liwayway G. Tolentino, brothers/sisters-in-law to spouses Juan and Estelita G. Tolentino, obtained two loans from Juan: first, PHP 970,184.00 on August 25, 2003, maturing February 20, 2004, at 25% interest per annum; second, PHP 1,082,340.00 on October 27, 2003, maturing April 24, 2004, same interest. Evidenced by notarized promissory notes using UFC pro forma. Juan executed notarized Assignment Contracts with Warranty of Soundness, transferring rights to Unified Financing Corp. (UFC). Partial payment of PHP 200,000 on first loan; full default on second. UFC sent separate demand letters to both pairs of spouses on October 18, 2013, ignored, leading to complaint for sum of money. UFC prayed for principal PHP 1,852,524 (post-partial), 25% interest (willing to reduce to 12%), attorney's fees. Tolentinos related by affinity, argued no loans needed documents; scheme implausible; no consideration received; 'loans only in paper.' Procedural History: UFC filed complaint October 18, 2013, RTC Angeles City Br. 57 (Civil Case No. 15376). Spouses James/Liwayway answered w/ counterclaim: general denial paras 3-5 (loans/assignments) for lack of knowledge, contrary to practice; prescription. Spouses Juan/Estelita defaulted initially (no answer post-summons), but motion lifted default admitting answer identical to co-defendants; in motion, admitted meeting UFC rep, 'settled obligation,' expected dismissal (linked to separate Civil Case 15375 vs. them, dismissed post-settlement). Pre-trial/trial: UFC offered photocopies (prom notes, assignments, demands); rested. RTC Dec. 19, 2019 dismissed: no preponderance, photocopies no probative value sans originals (best evidence). MR w/ originals attached denied Dec. 10, 2020. CA Fifth Div. March 15, 2023 affirmed (originals fatal since cause from docs); MR denied Sept. 14, 2023. The Petition: UFC Petition for Certiorari (Rule 65) SC: RTC/CA erred dismissing for no originals in formal offer; Tolentinos no specific oath-denial (Rule 8 Sec. 8), docs deemed genuine/executed; marked/identified/offered; originals in MR cured. Alt: substantial compliance, no best evidence issue. SC noted Rule 65 improper (should Rule 45), but relaxed for merit/substantial justice (grave abuse exception).

Issue(s)

Whether failure to attach/submit original actionable documents (promissory notes, assignments) in formal offer warrants dismissal despite marking/identification; and whether Tolentinos' denials constituted specific under-oath challenge to genuineness/due execution under Rule 8, Sec. 8. Whether the action prescribed (10 yrs from 2003 execution vs. 2004 maturity) and whether sufficient proof of payment was presented. Whether liability exists post-assignment sans debtor consent. Whether the stipulated interest rate is appropriate and whether the procedural remedy invoked by UFC was proper.

Ruling

Petition GRANTED. CA Decision/Resolution REVERSED/SET ASIDE. Spouses James/Liwayway ORDERED pay UFC PHP 6,231,755.35 (principal + 6% interest from maturities to 2024), plus 6% from finality till full payment. No liability for spouses Juan/Estelita (settled separately).

Ratio Decidendi

On Actionable Documents/Specific Denial (Main Issue): Prom notes/assignments actionable (Rule 8 Sec. 7, attached to complaint enforcing loans). Deemed admitted absent Rule 8 Sec. 8 compliance: (1) specific direct denial of genuineness/execution; (2) under oath; (3) sets forth facts. Tolentinos' answers: general 'deny paras 3-5 lack knowledge/contrary practice'; no forgery/duress claim; attacked plausibility ('in-laws no docs,' 'no reason assign,' 'paper only')—presupposes existence, substantive defenses (no consideration). Inconsistent: deny loan, then assume for lack consider. Thus admitted. Reinforced: Juan/Estelita MR judicial admission ('settled obligation,' met UFC rep); James testimony (prior UFC loans/transactions 10-15 yrs). Per Consolidated Bank (503 Phil. 103 [2005]): admission obviates originals/best evidence (Rule 130 Sec. 4); photocopies = originals if no authenticity question. RTC/CA misapplied, grave abuse (Buencamino v. People, 889 Phil. 871 [2020]—rule admissibility timely, not defer). On Payment/Prescription/Burden: Loans established, burden shifts to Tolentinos (Decena v. Asset Pool, 887 Phil. 906 [2020]). No payment evidence (testimonies/judicial affidavits silent beyond PHP 200k admit); mere denial insufficient. Prescription: not execution (2003), but maturity (Feb/Apr 2004, Art. 1144[1] CC; Univ. Mindanao v. BSP, 116 Phil. 401 [2016]); complaint 2013 timely (10 yrs). On Assignment: Valid sans debtor consent (Aquintey v. Tibong, 540 Phil. 422 [2006]; Art. 1285 CC—perfection binds on notice for payment). On Interest/Procedural Remedy: Interest: 25% unconscionable/excessive (Lara's Gifts v. Midtown, 929 Phil. 754 [2022]); reduced to 6% from maturity (Art. 1169/1229 CC), computed table to PHP 6,231,755.35 (Loan1: 2,606,015.03; Loan2: 3,625,740.32). Rule 65 improper (lapsed appeal period), but exceptions apply for grave abuse/oppressive (Martillano v. CA, 477 Phil. 226 [2004]); relaxed for substantial justice (Anglo-American v. CA, 633 Phil. 266 [2010]). Notwithstanding defect, merit imbues Petition.

Main Doctrine

When an action is based on a written instrument attached to the complaint as an actionable document under Rule 8, Sec. 7, Rules of Court, its genuineness and due execution are deemed admitted unless the adverse party specifically denies them under oath and sets forth the facts claimed, per Rule 8, Sec. 8. A specific denial must be direct, unambiguous, under oath, and include alternative facts; general denials, plausibility attacks, or claims of lack of consideration do not suffice as they presuppose the document's existence. Once admitted, the best evidence rule (Rule 130, Sec. 4) does not apply, allowing photocopies full evidentiary weight equivalent to originals, as held in Consolidated Bank v. Del Monte (503 Phil. 103 [2005]). Judicial admissions in pleadings or motions (e.g., acknowledging loan existence while claiming payment) further solidify this, shifting burden to defendant on payment or prescription. Prescription for written contracts runs from maturity date or demand, not execution (Art. 1144[1], Civil Code), and courts may reduce unconscionable stipulated interest to 6% per annum from maturity under Arts. 1169 and 1229, Civil Code. Assignee of credit perfects transfer without debtor consent (Art. 1285, Civil Code), binding debtor upon notice for payment direction.