otRAS PREStACIoNES

December 31, 1997 For value received, I promise to pay “B” P1 million not later than one year from date with 2 percent per annum.

Signed: “A”

Q: Using the above promissory note, how should the pleading be worded? A: Two ways of pleading of actionable document:

1.) The substance shall be set forth in the pleading and the original or a copy thereof shall be attached to the pleading as an exhibit, which shall be deemed as part of the pleading. Party simply cites only important parts of the document, then attached the document.

EXAMPLE:

COMPLAINT

1. Plaintiff B is xxx of legal age xxx; Defendant A is xxxgayxxxx; 2. Sometime in December 31, 1997, defendant A secured a loan from

plaintiff B for a sum of P1 million payable not later than December 31, 1998 with 2% interest per annum. Copy of said Promissory Note hereto attached as EXHIBIT A;

3. The account is now overdue and despite demands of defendant A still failed to pay B xxx.

So, the main features of the promissory note are recited in your pleading – the date when the loan was secured, the amount, the interest, etc. But still you have to attach a copy of the promissory note, either xerox copy or the original.

2.) Said copy may with like effect be set forth in the pleading. Document is quoted verbatim. EXAMPLE:

COMPLAINT

3.) Plaintiff B is xxx of legal age xxx; Defendant A is xxxgayxxxx;

4.) On Dec. 31, 1997 def. A secured a loan from plaintiff B which is covered by a

promissory note worded as follows:

December 31, 1997 For value received, I promise to pay “B” P1 million not later than one year from date with 2 percent per annum.

Signed: “A”

5.) The account is now overdue and despite demands of defendant A still failed to pay B xxx.

So, you copy the entire promissory note verbatim. There is no need to attach a copy of the promissory note. That is the second way.

Now, if the document is not classified as actionable, then there is no need to follow Section 7. Just imagine if you will apply Section 7 to all documents in your possession. If you intend to present in evidence 50 documents and only one is actionable, ang 49 hindi, so you will have 49 annexes. So, ang pleading mo, kakapal. (parang mukha mo!)

Q: Suppose in the first way, the promissory note was not attached. What will happen?

A: The party violates Rule 8, Section 7. The adverse party may move to dismiss the complaint for violation of the rules, if such document could not be secured.

If an actionable document is properly pleaded in your pleading in the manner mentioned in Section 7, the adverse party is now obliged to follow Section 8 if he wants to contest such document.

Sec. 8. How to contest such documents. When an action or defense is founded upon a written instrument, copied in or attached to the corresponding pleading as provided in the preceding section, the genuineness and due execution of the instrument shall be deemed admitted unless the adverse party, under oath, specifically denies them, and sets forth what he claims to be the facts; but the requirement of an oath does not apply when the adverse party does not appear to be a party to the instrument or when compliance with an order for an inspection of the original instrument is refused. (8a)

Q: Does every pleading have to be under oath? A: GENERAL RULE: NO.

EXCEPTION: Except when the law requires it. Example: Section 8, Rule 8.

EXAMPLE: If the plaintiff sues you based on a promissory note which is properly pleaded under Section 7 and you would like to contest the genuineness and due execution of the note like when the figure was altered to P20,000 instead of P1,000 only, so there is falsification, then you must deny the genuiness and due execution in your answer specifically and most importantly your answer must VERIFIED AND UNDER OATH.

If the denial is not verified and under oath, the genuineness and due execution of the promissory note is deemed admitted.

Q: When you say “you have admitted the genuiness and due execution of the document,” what are the specific facts that you have deemed admitted?

A: The answer is found in the landmark case of HIBBERD vs. RHODE (32 Phil. 476): IX. The party whose signature it bears signed it;

X. If signed by another, it was signed for him and with his authority;

Q: Pretty Maya told Papa Paul that her housemate Sexy Regina wanted to borrow money from him. Paul agreed. Maya signed the promissory note: “Regina as principal, signed by Maya.” But actually, Regina never ordered Maya to use her (Regina’s) name. When the note fell due without payment, Paul sued Regina. Regina denied agency but failed to verify her answer. What is the effect?

A: Pretty Maya becomes agent of Sexy Regina. So, the defense of unauthorized signature is automatically out.

XI. At the time it was signed, it was in words and figures exactly as set out in the pleading of the party relying upon it;

Q: Mr. Quiachon sued Mr. Tiamzon to collect a loan of P50,000 on a promissory note. Mr. Tiamzon admitted liability but only to the amount of P5,000. Mr. Tiamzon used falsification as a defense but his answer was not verified. What is the effect?

A: Mr. Tiamzon admits the genuiness of the promissory note – that it was really P50,000.

XII. The document was delivered; and

XIII. The formal requisites of law, such as seal, acknowledgement (notarization) or revenue stamp which it lacks, are waived by it.

So kung may konting diperensiya like there is notarial seal, no acknowledgment, no revenue stamp, all these defects are deemed cured.

The SC said in HIBBERD that if you admit the genuineness and due execution of the actionable document, defenses which are inconsistent with genuineness and due execution are deemed automatically waived. Meaning, any defense which denies the genuineness or due execution of the document is deemed automatically waived.

Q: What are the defenses which are no longer allowed once you admit the genuineness and due execution of the actionable document?

A: The following:

VI. The signature appearing in the document is a forgery;

VII. In case it was signed by an agent in behalf of the corporation or partnership, or a principal, the signature was unauthorized;

IX. The party charged signed it in some other capacity than that alleged in the pleading; and X. It was never delivered. (Hibberd vs. Rhode, supra)

Q: Does it mean to say that when you admit impliedly the genuineness and due execution of the actionable document, you have no more defense?

A: NO. What are no longer available are defenses which are inconsistent with your own admission of the genuineness and due execution of the actionable document like forgery, because you cannot admit that the document is genuine and at the same time allege that it is forged. According to the SC in HIBBERD, you may still invoke defenses provided the defenses are NOT inconsistent with your admission of the authenticity of the document.

Q: What defenses may be interposed notwithstanding admission of genuiness and due execution of an actionable document as aforesaid?

A: In the case of HIBBERD, the following: 1.) payment;

2.) want or illegality of consideration; 3.) fraud; 4.) mistake; 5.) compromise; 6.) statute of limitation; 7.) estoppel; 8.) duress; 9.) minority; and 10.) imbecility

Now, if you do not verify you denial, there is already an advantage in my favor. So you cannot anymore interpose the defense of for example, forgery because that is inconsistent with your own admission of the genuineness and due execution of the actionable document. But what if the you presented evidence to prove forgery? Can I waive the benefit of implied admission?

Q: May the benefit of the admission of genuineness and due execution of an actionable document? If so, in what instances?

A: YES. In the following cases, the implied admission is deemed waived:

1.) Where the pleader presented witnesses to prove genuiness and due execution and the adversary proved, without objection, the contrary. (Yu Chuck vs. Kong Li Po, 46 Phil. 608); 2.) Where the pleader fails to object to evidence controverting the due execution. (Legarda Koh

vs. Ongsiaco, 36 Phil. 185)

In other words, the lawyer of the defendant does not remember Section 8 and therefore the denial is improper. But the lawyer of the plaintiff did not also remember Section 8 that when there was evidence of forgery, he failed to object. So, the incompetence of the both lawyers cancel each other. That is what happens if the lawyer does not know. Bobo! Maayo pa ang bulalo, naay utok!

WHEN DENIAL NOT UNDER OATH STILL VALID

Q: When may a simple denial suffice? Meaning, what are the instances where the denial of the genuineness of the document, which is not under oath, is valid?

1.) When the adverse party does not appear to be a party to the instrument;

EXAMPLE: Ms. Guadalope filed a case against Ms. Castillo based on a contract entered by them. But before Ms. Guadalope filed the case, Ms. Castillo died (simba ko!… tok-tok!). So Ms. Guadalope filed against the heirs. The heirs realized that the signature of Ms. Castillo in contract as forged. Even if the answer of the heirs is not under oath, they can still prove forgery because they are not party to the instrument.

2.) When compliance with an order for an inspection of the original instrument is refused; 3.) When the document to be denied is not classified as an actionable document but merely an

evidentiary matter. This is because when the document if not actionable, there is no need to follow Section 7.

REPLY; GENERAL RULE: OPTIONAL; EXCEPTION: SECTION 8 Normally, the person who is presenting the actionable document is the plaintiff.

PROBLEM: But suppose it is the defendant who is invoking an actionable document for his defense. He claims to have paid the loan and have attached a copy of the RECEIPT to his answer. The plaintiff looks at the document and realizes that his signature in the receipt is forged.

Q: What should the plaintiff do?

A: Based on Section 8, the plaintiff must deny the genuineness of the receipt specifically under oath Q: In what pleading should the plaintiff file where he will deny under oath the genuiness and due execution of the receipt?

A: Plaintiff should file a REPLY and it must be under oath. If he will not file a reply, the receipt is impliedly admitted to be genuine.

Q: But the plaintiff may argue that under Rule 6, Section 10 the filing of a reply is optional. How do we reconcile it with Section 8?

A: Rule 6 is the general rule. Section 8 should prevail over Rule 6 because the former is a specific provision that applies only to actionable document. It has been asked in the Bar:

Q: When is the filing of the reply compulsory?

A: When the defendant anchors his defense on an actionable document and plaintiff will deny the genuineness and due execution of such document.