Answer 1 to 4 Cases

7/25/2019 Answer 1 to 4 Cases

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A. Affirmative and Negative Defenses

1. Villanueva vs. Court of Appeals

[G.R. No. 117108. November 5, 1997]

DANIEL C. VILLANUEVA, pet i t ioner, vs.COURT OF APPEALS, LANDREGISTRATION AUTHORITY and OO KIAN TIOK, respondents.

D E C I S I O N

PANGANIBAN, J.:

May the Register of Deeds refuse to register an application for a notice of lispendenson the ground that the applicant does not have any title or right of possessionover the subject properties?

The Case

Petitioner seeks reversal of the Decision [1]of Respondent Court ofAppeals[2]promulgated on August 31, 1994 in CA-G.R. SP No. 34449, which answeredthe foregoing question in the affirmative:

In view of the foregoing, theLis Pendens in question is not registrable since itseeks to affect property not belonging to the defendant [petitioner herein], and theaction of the Register of Deeds in denying the registration of the same is herebysustained."[3]

The lis pendenssought to be registered is Civil Case No. 92-2358 pending beforeBranch 74 of the Regional Trial Court of Antipolo, Rizal.[4]

The Facts

The assailed Decision fairly narrates the facts as follows:[5]

Records show that TCT Nos. 262631; 273873 and 2777938 [sic] were issued in thename of Valiant Realty and Development Corporation and Filipinas Textile Mills,Inc. and the same were mortgaged in favor of Equitable Banking Corp. Uponfailure of the mortgagors to comply with the terms and conditions of the mortgage,the bank foreclosed the mortgaged properties [and] sold the same to the EquitableBanking Corp. as the highest bidder at public auction sale. After the expiration of

the redemption period, mortgagors did not exercise the right of redemption and as
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a consequence thereof, the mortgagee sold all its rights, interests and participationof said properties to the herein oppositor, Oo Kian Tiok.

Immediately after acquiring the rights, titles and interests of the bank in saidproperties, Oo Kian Tiok took possession up to the present time, except for a briefperiod of time when his possession was interrupted by the herein petitioner [who]together with armed goons, [and] without [any] court order swooped down on the

properties and disarmed the security guards assigned therein and forcibly removedthe 30 workers therefrom, which prompted Oo Kian Tiok to file Civil Case No. 92-2358 against Filipinas Textile Mills, Inc., [and] Daniel Villanueva, et als. forRecovery of Possession and Damages with Prayers for Writ of PreliminaryMandatory Injunction and/or Temporary Order.

As a consequence, the herein petitioner, being one of the defendants of the above-

mentioned case, filed a formal request with the Office of the Register of Deeds toannotate a corresponding Notice of Lis Pendens of Civil Case No. 92-2358 in therespective Memorandum of Encumbrances of TCT Nos. 262631; 273873 and277938 but the same was denied registration based on the following grounds, towit:

....that Mr. Villanueva is merely asserting possession of the property not on the titleor right over the property. While it appears that Mr. Villanueva is an officer of theowner-corporation, Filipinas Textile Mills, Inc., the latter is no longer the ownerthereof but plaintiff Oo Tian [sic] Tiok. Moreover, no Board Resolution has been

submitted indicating that said Villanueva has been duly authorized by the formerowner to file the notice of lis pendens.

Hence, the petitioner elevated the matter on consulta [to Respondent LandRegistration Authority] pursuant to Section 117 of P.D. 1529 on the grounds thatthe herein petitioner, together with his sister Terry Villanueva-Yap, EdenVillanueva, Susan Villanueva and his brother Frank Villanueva are the lawfulowners of the 63% of the beneficial shares of Filipinas Textile Mills, Inc. and arenot merely asserting possession but also ownership over the subject propertiescontrary to the conclusion submitted by the Register of Deeds. (Resolution, pp. 1-2)

The consulta was decided against petitioner by Respondent Land RegistrationAuthority and later, on appeal, by Respondent Court. Hence, this petition for reviewunder Rule 45 of the Rules of Court.[6]

The Issues

Petitioner assigns the following errors to Respondent Court:[7]
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"A. Not appreciating petitioners compliance with all the requirements set forthunder the Land Registration Act and the Rules of Court;

B. Not finding that the petitioner duly raised the affirmative defense of ownershipover the properties subject of Civil Case No. 92-2358;

C. Not finding that the Respondent Land Registration Authority erred in assumingjurisdiction to determine the issue of ownership over the properties subject of civilcase no. 92-2358;

D. In affirming the resolution of the Respondent Land Registration Authority inConsulta No. 2131.

The Solicitor General, as counsel for Respondent Land Registration Authority,summarizes the issue:[8]

Whether or not the notice of lis pendens requested by petitioner to be annotated inthe respective memorandum of encumbrances at the back of TCT Nos. 262631,273873 and 277938 is registrable.

Stated simply, the issue is whether petitioners application for registration of thenotice of lis pendens should be rejected on the ground that it affects a property whichdoes not belong to him personally, but is merely claimed by a corporation, the majority(63%) of which is owned by him and his brothers and sisters.

Respondent Courts Ruling

In dismissing petitioners appeal, Respondent Court ruled:[9]

Even if the petitioner were able to comply with all the requirements (referring tothe formalities) for the annotation of a notice of lis pendens, it does not necessarilyfollow that he would ipso facto be entitled to such annotation. There is need forhim to show that he owns the subject property or that he has right or interest vis--vis its possession. The mere possession of a property does not give rise to the rightto annotate. Without such title or interest, whence would his right to annotate comefrom?

The petitioner contends that the determination of registrability of a notice of lispendens is ministerial as far as the Register of Deeds is concerned. On the basis ofthe evidence on record, this is exactly what the Register of Deeds of Rizal did - herefused to annotate because it clearly appears from the documents submitted(specifically, T.C.T. Nos. 262631, 273873 and 277938) that the subject parcels ofland are registered not in the name of Villanueva but in the name of Valiant Realty

and Development Corporation and co-defendant Filipinas Textile Mills, Inc. TheRegister of Deeds did not attempt to go beyond what clearly appears in the


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aforementioned Transfer Certificates of Title. He did not attempt, as the petitionerwould imply, to inquire into and try to resolve conflicting allegations of theclaimants of the aforesaid property.

The Land Registration Authority in its assailed resolution had aptly pointed outthat petitioner Villanueva had not produced a board resolution of Filipinas TextileMills, Inc. authorizing him to take possession of the litigated property. Hence,although it may be conceded that Villanueva is in possession thereof, it wouldappear that his possession is illegal which would not result in vesting in him anyright or interest over the above-cited property. As far as the said property isconcerned, Villanueva is a third person, a stranger. There could be no dispute as tothe fact that Filipinas Textile Mills, Inc. (in the name of which the contested

parcels of land are registered) and Villanueva are, before the law, two separate anddistinct persons. Indubitably Villanueva is not Filipinas Textiles Mills, Inc.

The Courts Ruling

The petition is meritorious.

Sole Issue: Registrat ion of L is Pendens

Who May Register Notice of Lis Pendens?

Petitioner contends that a notice of lis pendens may be filed in relation to actionsaffecting the title to or possession of real property. In the instant petition, defendantsin Civil Case No. 92-2358, among whom is petitioner, repeatedly and emphaticallyallege that it is Filipinas Textile Mills, Inc. (FTMI), of which petitioner is a stockholder,which owns the properties in question. Thus, an affirmative relief of ownership isprayed for in the answer which sanctions registration of the notice of lis pendens.[10]

Private Respondent Oo Kian Tiok counters10that the errors and arguments raisedin the petition at bar are mere repetitions of those already discussed in [the] petitionfor review submitted before Respondent Court, which the latter had already

considered, weighed and resolved adversely to the herein petitioner.[11]

The Solicitor General, on the other hand, asserts:[12]

Based on the incontrovertible facts, the notice of lis pendens requested bypetitioner to be annotated on the back of the aforesaid certificates of title is notregistrable, because the registration will affect the property obviously not

belonging to petitioner, who is one of the defendants in Civil Case No. 92-2358filed before the Regional Trial Court of Antipolo, Branch 74. It has beenconsistently held by public respondent LRA, as in Consulta No. 430, Pedro delRosario, petitioner versus the Register of Deeds of Quezon City, respondent, and in

Consulta No. 146, the Register of Deeds of Sorsogon, petitioner, that a notice of lis
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pendens is not registrable if it seeks to affect property not belonging to thedefendant.

The notice of lis pendens is an announcement to the whole world that a particularreal property is in litigation, and serves as a warning that one who acquires an interest

over said property does so at his own risk, or that he gambles on the result of thelitigation over said property.[13]The registration of a notice of lis pendens is governedby Section 24, Rule 14 of the Rules of Court:[14]

Sec. 24. Notice of lis pendens. In an action affecting the title or the right ofpossession of real property, the plaintiff, at the time of filing the complaint, and thedefendant, at the time of filing his answer, when affirmative relief is claimedin such answer, or at any time afterwards, may record in the office of the registrarof deeds of province in which the property is situated a notice of the pendency ofthe action, containing the names of the parties and the object of the action or

defense, and a description of the property in that province affected thereby. Fromthe time only of filing such notice for record shall a purchaser, or incumbrancer ofthe property affected thereby, be deemed to have constructive notice of the

pendency of the action, and only of its pendency against parties designated by theirreal names.

The notice of lis pendens hereinabove mentioned may be cancelled only uponorder of the court, after proper showing that the notice is for the purpose ofmolesting the adverse party, or that it is not necessary to protect the rights of the

party who caused it to be recorded.

In Magdalena Homeowners Association, Inc. vs. Court of Appeals,[15]this Courtenumerated the cases where a notice of lis pendens is proper:

According to Section 24, Rule 14 of the Rules of Court and Section 76 ofPresidential Decree No. 1529, a notice of lis pendensis proper in the followingcases, viz.:

a) An action to recover possession of real estate;

b) An action to quiet title thereto;

c) An action to remove clouds thereon;

d) An action for partition; and

e) Any other proceedings of any kind in Court directly affecting the title to the landor the use or occupation thereof or the buildings thereon.

The notice of lis pendens--i.e., that real property is involved in an action--isordinarily recorded without the intervention of the court where the action is
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pending. The notice is but an incident in an action, an extrajudicial one, to besure. It does not affect the merits thereof. It is intended merely to constructivelyadvise, or warn, all people who deal with the property that they so deal with it attheir own risk, and whatever rights they may acquire in the property in any

voluntary action transaction are subject to the results of the action, and may well beinferior and subordinate to those which may finally be determined and laid downtherein. The cancellation of such a precautionary notice is therefore also a mereincident in the action, and may be ordered by the Court having jurisdiction of it atany given time. And its continuance or removal--like the continuance or removalof a preliminary attachment or injunction--is not contingent on the existence of afinal judgment in the action, and ordinarily has no effect on the merits thereof.

To annotate a notice of lis pendens, the following elements must be present: (a)the property must be of such character as to be subject to the rule; (b) the court must

have jurisdiction both over the person and the res; and (c) the property or resinvolvedmust be sufficiently described in the pleadings.[16]

Only the first requisite is at issue in this case; the second and the third requisitesare not. In explaining the first requirement, former Senator Vicente J. Franciscowrote:[17]

x x x to all suits or actions which directly affect real property and not only thosewhich involve the question of title, but also those which are brought to establish anequitable estate, interest, or right, in specific real property or to enforce any lien,charge, or encumbrance against it, there being in some cases a lis pendens,

although at the commencement of the suit there is no present vested interest, claim,or lien in or on the property which it seeks to charge. It has also been held to applyin the case of a proceeding to declare an absolute deed a mortgage, or to redeemfrom a foreclosure sale, or to establish a trust, or to suits for the settlement andadjustment of partnership interests. [fn: 54 C.J.S., 577-578]

It is not sufficient that the title or right of possession may be incidentallyaffected. Thus a proceeding to forfeit the charter of a corporation does not depriveit of the power to dispose of its property, nor does it place such property within therule of lis pendens, so that purchasers thereof may lose the property or right to the

possession through the appointment of a receiver. [fn: Havemeyer vs. SuperiorCourt, 84 Cal. 327, 18 Am. St. Rep. 192, 24 Pac. 121, 10 L.R.A. 627 x x x]

In order that the doctrine of lis pendens may apply, so that purchaser of propertymay be bound by the judgment or decree rendered, it is essential that there be inexistence a pending action, suit or proceeding, and there can be no lis pendens

because of the fact that an action or suit is contemplated. [fn: 54 C.J.S., 583]

Civil Case No. 92-2358, which petitioner sought to annotate, is an action forrecovery of possession and damages with prayer for writ of preliminary mandatory

injunction and/or temporary restraining order. That civil case is an accion publiciana ora plenary action in an ordinary civil proceeding to determine the better and legal right


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to possess (independently of title).19What private respondent sought to recover wasnot just possession de facto but possession de jure.20On the other hand, thedefendants in Civil Case No. 92-2358 alleged in their answer that there was fraudcommitted among Bernardino Villanueva, Equitable Banking Corporation andRespondent Oo Kian Tiok, such that the real estate mortgage was invalid. Hence, the

subsequent auction of the mortgaged property transferred no right, title and interestwhatsoever to Equitable Bank as the highest bidder and thence to private respondentas buyer. In effect, the defendants in the civil case directly opposed the recovery ofpossession prayed for by the plaintiff and in fact challenged the very validity of the titleof private respondent. Both contentions of the parties thus directly put the propertiesunder the coverage of the rule, thereby sufficiently satisfying the first requisite andplacing the case squarely within the parameters set by Magdalena.21

In our jurisdiction, the following may file a notice of lis pendens:22

(a) The plaintiff -- at the time of filing the complaint.

(b) The defendant --

1) at the time of filing his answer (when affirmative relief is claimed insuch answer)

2) or at any time afterwards (See Sec. 24, Rule 14)

Petitioner is one of the defendants in Civil Case No. 92-2358.23Now, is it necessaryfor him to prove to the Register of Deeds that the properties to which he seeks

annotation of the notice of lis pendens belong to him as required by RespondentCourt? We do not believe so. The law does not require such proof from thedefendant. We cannot find any valid reason why we should add to the requirementsset in the Rules. The settled doctrine in statutory construction is that legal intent isdetermined principally from the language of the statute. Where the language of astatute is clear and unambiguous, the law is applied according to its express terms,and interpretation would be resorted to only where a literal interpretation would beeither impossible or absurd or would lead to an injustice.24

We stress that although it is not necessary for the applicant to provehisownership or interest over the property sought to be affected by lis pendens,theapplicant must, in the complaint or answer filed in the subject litigation, assert a claimof possession or title over the subject property in order to give due course to hisapplication.As settled, lis pendens may be annotated only where there is an action orproceeding in court, which affects the title to, or possession of, real property.25

Be it remembered that a notation of lis pendens does not create a nonexistentright or lien. It serves merely as a warning to a person who purchases or contracts onthe subject property that he does so at his peril and subject to the result of the pendinglitigation.26The registration of the notice of lis pendens is done without leave ofcourt. The Rule merely requires an affirmative relief to be claimed in the answer toenable a defendant to apply for the annotation of the notice.27There is no requirementthat the applying defendant must prove his right or interest over the property sought

to be annotated. In deciding the issue of whether the application by petitioner isregisterable, Respondent Court concluded: it would appear that his possession is
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illegal which would not result in vesting in him any right or interest over the above-citedproperties.28This conclusion of Respondent Court was premature, as it preempted thetrial on the merits of the main case sought to be registered.

On the other hand, an affirmative relief or defense is an allegation of a new matterwhich, while admitting, expressly or impliedly, the material allegations of the complaintwould nevertheless prevent or bar recovery by the plaintiff. Affirmative defensesinclude fraud, statute of limitations, release, payment, illegality, statute of frauds,estoppel, former recovery, discharge in bankruptcy, and other matters alleged by wayof confession and avoidance.29An affirmative defense may be an allegation of newmatters -- that is, facts different from those averred by the plaintiff which, if true,destroys or negates the plaintiffs right of action. An affirmative defense admits thefacts alleged by the plaintiff, or at least those not necessarily denied by theinterposition of the affirmative defense itself. Even though an affirmative defensecontains allegations inconsistent with those of the complaint, the latter must, in theabsence of denials, nevertheless be taken as admitted in the defense.30In the case at

bar, the defendants in Civil Case No. 92-2358 insist that fraud attended the agreementamong Bernardino Villanueva, Equitable Banking Corporation and Respondent OoKian Tiok. Such fraud, if proven true, will defeat or bar the claim of said respondentand benefit the defendants.

Petitioner in this case was impleaded by private respondent as one of thedefendants in the trial court; thus, he falls under the definition of the Rules as a partyclaiming affirmative relief. His status as a mere stockholder can no longer bequestioned in this case, much less his capacity to sue on the mere pretext that he wasnot authorized by the corporation to litigate on its behalf. We emphasize that the issueat bar is the right to annotate the pendency of Civil Case No. 92-2358, not the legalstanding of petitioner to represent the corporation in the said case.

Wary that the properties which were mortgaged and auctioned would bedissipated and/or passed to innocent purchasers for value, petitioner initiated themove to annotate the lis pendens to protect the corporations right. He correctly acted,considering that there was, as alleged by private respondent, an intra-corporatecontroversy which effectively barred a common action by the management of thecorporation.31

In any event, a reading of the allegations in the answer will readily show thatdefendants (herein petitioner included) were not merely asserting a right of possessionover the disputed properties. Rather, they were insisting on their ownership over the

said real estate, claiming that plaintiff (herein private respondent) was not entitled atall to their possession, because he did not have any right, title or interest whatsoeverover them.32The following allegations in the answer illustrate the claim of petitioner foraffirmative relief:33

Answering Defendants, for the reasons and facts stated herein and in theirAffirmative Allegations and Affirmative Defenses, specifically deny the followingallegations in the original Complaint dated 08 May 1992:

x x x x x x x x x
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3.3.1. The compound located on Amang E. Rodriguez Avenue, Barangay SanRoque, Cainta, Rizal is owned by

plaintiff, the truth being that such compound is owned by defendant FTMI beingcovered by the titles of the Subject Properties which are registered in the name of

defendant FTMI;

x x x x x x x x x

3.3.4. The compound located on Amang E. Rodriguez Avenue, Barangay SanRoque, Cainta, Rizal was being unlawfully occupied by defendants DanielVillanueva, Terry Villanueva-Yu, Susan Villanueva, Eden Villanueva, FrankieVillanueva, Artemio Tuquero, Mel P. Dimat and Bienvenido Bulaong, the truth

being that the occupation of the compound by said defendants was lawful becausethey are duly elected and authorized directors, officers and/or representatives of

defendant FTMI which is the registered owner thereof;

3.4 Paragraph 5, insofar as it is alleged that:

3.4.1. Plaintiff is the lawful owner of three (3) parcels of land together with theproperties and improvements that may be found therein, situated in Barangay SanRoque, Cainta, Rizal, the truth being that plaintiff has no right, title and interestwhatsoever in the said properties; and

3.4.2. The Certification dated 06 April 1992 of Mr. Vicente A. Garcia, Register of

Deeds of Pasig, attached as Annex B to the Complaint proves that plaintiff OoKian Tiok purchased the rights and interests over the titles of defendant FTMIfrom EBC, the truth being that such a Certification merely shows that defendantBernardino Villanueva connived and colluded with EBC and plaintiff whereby theSubject Properties were illegally mortgaged, and then sold at public auctionauction [sic] in favor of EBC, and thereafter allegedly purchased by Oo Kian Tiokthrough a Redemption Contract;

3.5 Paragraph 6, in so far as it is made to appear that defendant FTMI is theformer-owner of the three (3) lots covered by T.C.T. Nos. 262631, 273873, and

277938 of the Registry of Deeds for the Province of Rizal, the truth being thatdefendant FTMI remains as the registered owner of the aforementioned three (3)lots;

3.6 Paragraph 7, insofar as it is alleged, that:

3.6.1 Defendant FTMI obtained a loan of Twenty Five Million Pesos(P25,000,000.00) from EBC, the truth being that the loan purportedly obtained bydefendant Bernardino Villanueva ostensibly on behalf of defendant FTMI was notduly authorized by defendant FTMIs board of directors, and thus not binding upondefendant FTMI;


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3.6.2 Defendant FTMI mortgaged the Subject Properties, with all the buildings,improvements, machineries and equipment thereon, to EBC on 14 July 1982, thetruth being that the alleged mortgage was never authorized by defendant FTMIs

board of directors and therefore, not binding upon defendant FTMI;

x x x x x x x x x

3.8 Paragraph 10, insofar as it is stated that defendant FTMI had one (1) year from01 August 1988, or until 01 August 1989, to redeem the Subject Properties, thetruth being that since the Subject Properties were never validly mortgaged norforeclosed, there was, in reality, no period within which to redeem the SubjectProperties.

x x x x x x x x x

3.12. Paragraph 15, insofar as it is made to appear that:

3.12.1. The action taken on 04 April 1992 is merely an offshoot of an intra-corporate controversy between the owners and stockholders of defendant FTMI,the truth being that the action taken on 04 April 1992 was a valid exercise bydefendant FTMI and/or its authorized representatives of its power ofadministration over its own properties;

3.12.2. Plaintiff is an innocent bystander and is allegedly being helplessly dragged

into the controversy, the truth being that plaintiff is conniving and colluding withdefendant Bernardino Villanueva in order to wrest ownership and possession of theSubject Properties from its registered owner, defendant FTMI, in order to favordefendant Bernardino Villanueva;

To require that an applicant must prove his ownership or his interest over theproperty sought to be affected with the notice of lis pendenswill unduly restrict thescope of the rule. In such case, a party questioning the ownership of the registeredowner will litigate his or her case without an assurance that the property will beprotected from unwanted alienation during the pendency of the action, therebydefeating the very purpose and rationale of the registration.

WHEREFORE,the petition is hereby GRANTED.The assailed Decisionis REVERSEDand SETASIDE. The Land Registration Authority ishereby ORDEREDto annotate the application for a notice of lis pendens in TCT Nos.262631, 273873 and 277938. No costs.

SO ORDERED.

Romero, Melo, and Francisco, JJ., concur.Narvasa, C.J., (Chairman), on official leave.


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2. Equitable Card Network vs. Capistrano

EQUITABLE CARDNETWORK, INC., G.R. No. 180157

Petitioner,

Present:VELASCO, JR.,J., Chairperson,

- versus - PERALTA,ABAD,MENDOZA, andPERLAS-BERNABE,JJ.

JOSEFA BORROMEO CAPISTRANO,

Respondent.Promulgated:

February 8, 2012

x --------------------------------------------------------------------------------------- x

DECISION

ABAD, J.:

This case is about the sufficiency of the defendants allegations in the answer

denying the due execution and genuineness of the plaintiffs actionable documents

and the kind of evidence needed to prove forgery of signature.

The Facts and the Case

Petitioner Equitable Cardnetwork, Inc. (ECI) alleged in its complaint that in

September 1997 respondent Josefa B. Capistrano (Mrs. Capistrano) applied for

membership at the Manila Yacht Club (MYC) under the latters widow-

membership program. Since the MYC and ECI had a credit card sponsorship

agreement in which the Club would solicit for ECI credit card enrollment among

its members and dependents, Mrs. Capistrano allegedly applied for and was

granted a Visa Credit Card by ECI.

ECI further alleged that Mrs. Capistrano authorized her daughter, Valentina C.

Redulla (Mrs. Redulla), to claim from ECI her credit card and ATM application

form.[1]Mrs. Redulla signed the acknowledgment receipt[2]on behalf of her
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mother, Mrs. Capistrano. After Mrs. Capistrano got hold of the card, she

supposedly started using it. On November 24, 1997 Mrs. Redulla personally

issued a P45,000.00 check as partial payment of Mrs. Capistranos account with

ECI. But Mrs. Redullas check bounced upon deposit.

Because Mrs. Capistrano was unable to settle her P217,235.36 bill, ECI

demanded payment from her. But she refused to pay, prompting ECI to file on

February 30, 1998 a collection suit against her before the Regional Trial Court

(RTC) of Cebu City.

Answering the complaint, Mrs. Capistrano denied ever applying for MYCmembership and ECI credit card; that Mrs. Redulla was not her daughter; and that

she never authorized her or anyone to claim a credit card for her. Assuming she

applied for such a card, she never used it. Mrs. Redulla posed as Mrs. Capistrano

and fooled ECI into issuing the card to her. Consequently, the action should have

been brought against Mrs. Redulla. Mrs. Capistrano asked the court to hold ECI

liable to her for moral and exemplary damages, attorneys fees, and litigation

expenses.

After trial, the RTC[3]ruled that, having failed to deny under oath the genuineness

and due execution of ECIs actionable documents that were attached to the

complaint, Mrs. Capistrano impliedly admitted the genuineness and due

execution of those documents. In effect she admitted: 1) applying for

membership at the MYC;[4]2)accomplishing the MYC membership information

sheet[5]

which contained a request for an ECI Visa card; 3)holding herself liablefor all obligations incurred in the use of such card; 4)authorizing Mrs. Redulla to

receive the Visa card issued in her name;[6]5)applying for an ATM Card with

ECI;[7]and 6)using the credit card in buying merchandise worthP217,235.36 as

indicated in the sales slips.

The RTC said that when an action is founded upon written documents, their

genuineness and due execution shall be deemed admitted unless the defendantspecifically denies them under oath and states what he claims to be the facts.[8]A
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mere statement that the documents were procured by fraudulent representation

does not raise any issue as to their genuineness and due execution.[9]The RTC

rejected Mrs. Capistranos argument that, having verified her answer, she should

be deemed to have denied those documents under oath. The RTC reasoned thatshe did not, in her verification, deny signing those documents or state that they

were false or fabricated.

The RTC added that respondent Mrs. Capistrano could no longer raise the defense

of forgery since this had been cut-off by her failure to make a specific

denial. Besides, said the RTC, Mrs. Capistrano failed to present strong and

convincing evidence that her signatures on the document had been forged. She

did not present a handwriting expert who could attest to the forgery. The trialcourt ordered Mrs. Capistrano to pay ECIs claim of P217,235.36 plus interests,

attorneys fees and litigation expenses. Mrs. Capistrano appealed the decision to

the Court of Appeals (CA).

On May 10, 2007 the CA reversed the trial courts decision and dismissed ECIs

complaint.[10]The CA ruled that, although Mrs. Capistranos answer was

somewhat infirm, still she raised the issue of the genuineness and due executionof ECIs documents during trial by presenting evidence that she never signed any

of them. Since ECI failed to make a timely objection to its admission, such

evidence cured the vagueness in her answer. Further, the CA ruled that Mrs.

Capistrano sufficiently proved by evidence that her signatures had been forged.

The Issues Presented

The issues presented are:

1. Whether or not the CA correctly ruled that, although Mrs. Capistrano failed to

make an effective specific denial of the actionable documents attached to the

complaint, she overcame this omission by presenting parol evidence to which ECI

failed to object; and
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2. Whether or not the CA correctly ruled that Mrs. Capistrano presented clear and

convincing evidence that her signatures on the actionable documents had been

forged.

Ruling of the Court

One. An answer to the complaint may raise a negative defense which consists in

defendantsspecific denialof the material fact that plaintiff alleges in his

complaint, which fact is essential to the latters cause of action.[11]Specific denial

has three modes. Thus:

1) The defendant must specify each material allegation of fact thetruth of which he does not admit and whenever practicable set forththe substance of the matters on which he will rely to support hisdenial;

2) When the defendant wants to deny only a part or a qualificationof an averment in the complaint, he must specify so much of theaverment as is true and material and deny the remainder; and

3) When the defendant is without knowledge and informationsufficient to form a belief as to the truth of a material averment madein the complaint, he shall so state and this shall have the effect of adenial.

But the rule that applies when the defendant wants to contest the documents

attached to the claimants complaint which are essential to his cause of action is

found in Section 8, Rule 8 of the Rules of Court, which provides:

SECTION 8.How to contest such documents. When an action or defense isfounded upon a written instrument, copied in or attached to the corresponding

pleading as provided in the preceding Section, thegenuineness and dueexecutionof 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 doesnot appear to be a party to the instrument or when compliance with an order foran inspection of the original instrument is refused.
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To determine whether or not respondent Mrs. Capistrano effectively denied the

genuineness and due execution of ECIs actionable documents as provided above,

the pertinent averments of the complaint and defendant Capistranos answer are

here reproduced.

ECI s complain t:

3. That sometime in 1997, defendant applied for membership, as widow of a

deceased member of the Manila Yacht Club;

4. That in connection with her application for membership in the Manila Yacht

Club, defendant applied for and was granted a Manila Yacht Club Visa Card in

accordance with Credit Card Sponsorship Agreement entered into between the

plaintiff and the Manila Yacht Club wherein Manila Yacht Club shall solicit

applications for the Manila Yacht Club Visa Cards from Manila Yacht Clubmembers and dependents. Copy of the Manila Yacht Club Information Sheet is

hereto attached as Annex A;

Mrs. Capistranos answer:

3. She specifically denies paragraph[s] 3 and 4 of the complaint for want ofsufficient knowledge to form a belief as to the veracity of the allegationscontained therein and for the reasons stated in her special and affirmativedefenses.

x x x x

ECI s complain t:

5. That defendant authorized her daughter, Mrs. Valentina Redulla to get the

said credit card including her ATM application form from the plaintiff which

enabled the defendant to avail of the cash advance facility with the use of said

card; Copy of the authorization letter, application form and acknowledgment

receipt showing that Valentina C. Redulla received the said credit card are

hereto attached as Annexes B, C, and D, respectively;


4. She specifically denies paragraph 5 of the complaint for want of sufficientknowledge to form a belief as to the allegations contained therein. She neverauthorized any person to get her card.Valentina Redulla is not her daughter.

x x x x

ECI s complain t:

6. That with the use of the said Manila Yacht Club Visa Card, defendant could

purchase goods and services from local and accredited stores and

establishments on credit and could make cash advances from ATM machines

since it is the plaintiff who pays first the said obligations and later at a stated

period every month, the plaintiff will send a statement of account to defendant


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showing how much she owes the plaintiff for the payments it previously made

on her behalf. Copy of the monthly statement of accounts for the months of

November and December 1997 are hereto attached as Annexes E and F,

respectively;

Mrs. Capistranos answer:5. She specifically denies paragraph 6 of the complaint for want of sufficient

knowledge to form a belief as to the veracity of the allegations contained thereinand for the reasons as stated in her special and affirmative defenses.

x x x x

ECI s complain t:

7. That it is the agreement of the parties that in the event that an account is

overdue, interest at 1.75% per month and service charge at 1.25% will be

charged to the defendant;

Mrs. Capistranos answer:6. She specifically denies paragraph 7 of the complaint for want of sufficientknowledge to form a belief as to the veracity of the allegations containedtherein.

x x x x

ECI s complain t:

8. That on November 24, 1997, defendants daughter, Mrs. Valentina C. Redulla

issued Solidbank Check No. 0127617 dated November 24, 1997 in the amount

of P45,000.00 in partial payment of defendants account with the plaintiff;

9. That when the said check was deposited in the bank, the same was dishonored

for the reason Account Closed. Copy of said said check is hereto attached as

Annex G;

Mrs. Capistranos answer:7. She denies paragraph[s] 8 and 9 for want of sufficient knowledge to form a

belief as to the veracity of the allegations contained therein and for the reasonsaforestated. It is quite peculiar that herein defendants alleged account would be

paid with a personal check of somebody not related to her.

x x x x

ECI s complain t:

10. That defendant has an unpaid principal obligation to the plaintiff in the

amount of P217,235.326;


8. She denies paragraph 10 for want of sufficient knowledge as to the veracityof the allegations contained therein and for the reasons stated in her special and

affirmative defenses. Granting ex gratia argumenti that defendant did indeed


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apply for a card, still, she vehemently denies using the same to purchase goodsfrom any establishment on credit.

x x x x

ECIs complaint11. That plaintiff made demands on the defendant to pay her obligation but

despite said demands, defendant has failed and refused to pay her obligation

and still fails and refuses to pay her obligation to the plaintiff and settle her

obligation, thus, compelling the plaintiff to file the present action and hire the

services of counsel for the amount of P53,998.84 and incur litigation expenses

in the amount of P30,000.00;

12. That it is further provided as one of the terms and conditions in the issuance

of the Manila Yacht Club Card that in the event that collection is enforced

through court action, 25% of the amount due of P53,998.84 will be charged as

attorneys fees and P53,998.84 will be charged as liquidated damages;

Mrs. Capistranos answer9. She denies paragraph[s] 11 and 12 for want of sufficient knowledge to forma belief as to the veracity of the allegations therein. If ever there was anydemand sent to herein defendant the same would have been rejected on validand lawful grounds. Therefore, any damage or expense, real or imaginary,incurred or sustained by the plaintiff should be for its sole and exclusiveaccount.

x x x x

Further, Mrs. Capistranos special and affirmative defensesread as follows:

10. Defendant repleads by reference all the foregoing allegations which arerelevant and material hereto.

11. Defendant denies having applied for membership with the EquitableCardnetwork, Inc. as a widow of a deceased member of the Manila Yacht Club.

12. She has never authorized anyone to get her alleged card for the precedingreason. Therefore, being not a member, she has no obligation, monetary orotherwise to herein plaintiff.

13. Plaintiff has no cause of action against herein answering defendant.

14. This Valentina C. Redulla is not her daughter. In all modesty, defendantbeing a member of one of the prominent families of Cebu and being a boardmember of the Borromeo Brothers Estate whose holdings include Honda CarsCebu as well as other prestigious establishments, it would be totally uncalledfor if she would not honor a valid obligation towards any person or entity.


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15. She surmises that this Valentina Redulla has been posing as JosefaCapistrano. Therefore, plaintiffs cause of action should have been directedtowards this Redulla.

16. Even granting for the sake of argument that herein answering defendant did

indeed authorized somebody to pick up her card, still, she never made anypurchases with the use thereof. She, therefore, vehemently denies having usedthe card to purchase any merchandise on credit.

In substance, ECIs allegations, supported by the attached documents, are that

Mrs. Capistrano applied through Mrs. Redulla for a credit card and that the former

used it to purchase goods on credit yet Mrs. Capistrano refused to pay ECI for

them. On the other hand, Mrs. Capistrano denied these allegations for lack of

knowledge as to their truth.[12]This mode of denial is by itself obviously

ineffectual since a person must surely know if he applied for a credit card or not,

like a person must know if he is married or not. He must also know if he used the

card and if he did not pay the card company for his purchases. A persons denial

for lack of knowledge of things that by their nature he ought to know is not an

acceptable denial.

In any event, the CA ruled that, since ECI did not object on time to Mrs.

Capistranos evidence that her signatures on the subject documents were forged,

such omission cured her defective denial of their genuineness and due

execution. The CAs ruling on this point is quite incorrect.

True, issues not raised by the pleadings may be tried with the implied consent of

the parties as when one of them fails to object to the evidence adduced by the

other concerning such unimpleaded issues.[13]But the CA fails to reckon with therule that a partys admissions in the course of the proceedings, like an admission

in the answer of the genuineness and true execution of the plaintiffs actionable

documents, can only be contradicted by showing that defendant made such

admission through palpable mistake.[14]Here, Mrs. Capistrano never claimed

palpable mistake in the answer she filed.
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It is of no moment that plaintiff ECI failed to object to Mrs. Capistranos evidence

at the trial that the subject documents were forgeries. As the Court ruled inElayda

v. Court of Appeals,[15]the trial court may reject evidence that a party adduces to

contradict a judicial admission he made in his pleading since such admission isconclusive as to him. It does not matter that the other party failed to object to the

contradictory evidence so adduced.

Notwithstanding the above, the Court holds that the CA correctly ordered the

dismissal of ECIs action since, contrary to the RTCs finding, Mrs. Capistrano

effectively denied the genuineness and due execution of ECIs actionable

documents. True, Mrs. Capistrano denied ECIs actionable documents merely for

lack of knowledge which denial, as pointed out above, is inadequate since by theirnature she ought to know the truth of the allegations regarding those

documents. But this inadequacy was cured by her quick assertion that she was

also denying the allegations regarding those actionable documents for the reasons

as stated in her special and affirmative defenses.

In the Special and Affirmative Defenses section of her answer, Mrs. Capistrano

in fact denied ECIs documented allegations that she applied for a credit card, wasgiven one, and used it. She said:

11. Defendant denies having applied for membership with the EquitableCardnetwork, Inc. as a widow of a deceased member of the Manila Yacht Club.

12. She has never authorized anyone to get her alleged card for the precedingreason. Therefore, being not a member, she has no obligation, monetary orotherwise to herein plaintiff.

Neither the RTC nor the CA can ignore Mrs. Capistranos above additional

reasons denying ECIs allegations regarding its actionable documents. Such

reasons form part of her answer. Parenthetically, it seems that, when Mrs.

Capistrano denied the transactions with ECI for lack of knowledge, it was her

way of saying that such transactions took place without her knowing. And, since

Mrs. Capistrano in fact verified her claim that she had no part in those

transactions, she in effect denied under oath the genuineness and due execution
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of the documents supporting them. For this reason, she is not barred from

introducing evidence that those documents were forged.

Two.Here, apart from presenting an officer who identified its documents, ECIpresented no other evidence to support its claim that Mrs. Capistrano did business

with it. On the other hand, the evidence for the defense shows that it was not

likely for Mrs. Capistrano to have applied for a credit card since she was already

81 years old, weak, bedridden, and suffering from senility at the time in

question.[16]What is more, she had been staying in Cagayan de Oro under the care

of his son Mario; whereas she made the alleged cash advances and purchases

using the credit card in different malls in Cebu City, Bohol,and Muntinlupa City.[17]

Further, as the CA found, Mrs. Capistranos specimen signatures on a Deed of

Sale,[18]an Extra-judicial Settlement of Estate of Deceased Person,[19]a Waiver

of Rights,[20]and a handwritten note,[21]executed at about the time in question,

clearly varied from the signatures found on ECIs documents.[22]The testimony of

a handwriting expert, while useful, is not indispensable in examining orcomparing handwritings or signatures.[23]The matter here is not too technical as

to preclude the CA from examining the signatures and ruling on whether or not

they are forgeries. The Court finds no reason to take exception from the CAs

finding.

WHEREFORE, the Court DISMISSESthe petition and AFFIRMSthe order

of the Court of Appeals in CA-G.R. CV 79424 dated May 10, 2007 that directed

the dismissal of the complaint against respondent Josefa B. Capistrano.

SO ORDERED.
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B. Specific Denials

3. Warner Barnes vs. Reyes

G.R. No. L-9531 May 14, 1958

WARNER BARNES and CO., LTD.,plaintiff-appellee,vs.GUILLERMO C. REYES, ET AL.,defendants-appellants.

Ozaeta, Lichauco and Picazo for appellee.Mariano M. de Joya for appellants.

PARAS, C.J.:

The plaintiff-appellee filed against the defendants-appellants an action for foreclosure ofmortgage on August 20, 1954. The deed of mortgage sued upon was attached to the complaintas Annex "A". After having been granted an extension, the appellants filed an answer onSeptember 30, 1954, alleging:

1. That they admit paragraph 1 of the complaint;

2. That the defendants are without knowledge or information sufficient to form a belief asto the truth of the material averments of the remainder of the complaint; and

3. That they hereby reserve the right to present an amended answer with specialdefenses and counterclaim.

As the appellants did not file any amended answer, the appellee moved on November 15, 1954for judgment on the pleadings on the ground that the answer failed to tender an issue. The lowercourt granted appellee's motion in the order dated December 28, 1954 and thereafter (onDecember 29, 1954) rendered judgment in favor of the appellee. In granting the motion forjudgment on the pleadings, the lower court held "that the denial by the defendants of the materialallegations of the complaint under the guise of lack of knowledge is a general denial so as toentitle the plaintiff to judgment on the pleadings."

In the present appeal taken by the defendants, the question raised is whether the allegation ofwant of knowledge or information as to the truth of the material averments of the complaintamounts to a mere general denial warranting judgment on the pleadings or is sufficient to tender

a triable issue.

Section 7 of Rule 9 of the Rules of court, in allowing the defendant to controvert materialaverments not within his knowledge or information, provides that "where the defendant is withoutknowledge or information sufficient to form a belief as to the truth of material averment, he shallso state and this shall have the effect of a denial. This form of denial was explained in one caseas follows:

Just as the explicit denials of an answer should be either general or specific, so alldenials of knowledge or information sufficient to form a belief should refer either generallyto all the averments of the complain" thus intended to be denied, or specifically to suchas are to be denied by that particular form of plea. The would be so definite and certain in

its allegation that the pleaders' adversary should not be left in doubt as to what isadmitted, what is denied, and what is covered by denials of knowledge or information


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sufficient to form a belief. Under this form of denial employed by the defendant, it wouldbe difficult, if not impossible to convict him of perjury if it should transpire that some of hisdenials of knowledge, etc., were false, for he could meet the charge by saying that hisdenials referred only to matters of which he had in fact no knowledge or information.(Kirachbaum Eschmann, 98 NE 328, 329-330.).

This is a foreclosure suit. It is alleged that the severally indebted in the sum of P9,906.88,secured by a mortgage. A copy of the mortgaged deed was attached and made a part of thecomplaint. There are also allegations of partial payments, defaults in the payment of outstandingbalance, and a covenant to pay interest and attorney's fees. It is hard to believe that theappellants could not have had knowledge or information as to the truth or falsity of any of saidallegations. As a copy of the deed of mortgage formed part of the complaint, it was easy for andwithin the power of the appellants, for instance, to determine and so specifically allege in theiranswer whether or not they had executed the alleged mortgage. The appellants could be aided inthe matter by an inquiry or verification as to its registration in the Registry of Deeds. "Anunexplained denial of information and belief of a matter of records, the means of informationconcerning which are within the control of the pleader, on are readily accessible to him, isevasive and is insufficient to constitute an effective denial. (41 Am. Juris., 399, citing

Dahlstrom vs. Gemunder, 92, NE 106.)

It is noteworthy that the answer was filed after an extension granted by the lower court, and thatwhile a reservation was made to file an amended answer, no such pleading was presented. Ifthese show anything, it is that the appellants obviously did not have any defense or wanted todelay the proceedings.

The form of denial adopted by the appellants, although allowed by the Rules of Court, must beavailed of with sincerity and in good faith,certainly neither for the purpose of confusing theadverse party as to what allegations of the complaint are really put in issue nor for, the purposeof delay.

. . . no court will permit its process to be trifled with and its intelligence affronted by theoffer of pleadings which any reasoning person knows can not possibly be true. . . ."Thegeneral rule that the Court is not bound to accept statements in pleadings which are, tothe common knowledge of all intelligent persons, untrue, applies just as well to theprovisions of Rule 8(b), 28 U.S.C.A. following section 723c, as to pleadings under the,State statute." (Nieman vs. Long, 51 F. Supp. 30, 31.)

This rule, specifically authorizing an answer that defendant has no knowledge orinformation sufficient to form a belief his to the truth of an averment and giving suchanswer is not the effect of a denial, does not apply where the fact as to which want ofknowledge is asserted is to the knowledge of the court as plainly and necessarily withinthe defendants knowledge that his averment of ignorance must be palpably untrue. (Icle

Plant Equipment Co. vs. Martocello, D.C. Pa. 1941, 43 F. Supp. 281.)

Wherefore, the decision appealed from is hereby affirmed with costs against the appellants. Soordered.

Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L.,Endencia, and Felix, JJ.,concur.

4. PNB vs. Court of Appeals


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PHILIPPINE NATIONAL BANK pet i t ioner, vs. HONORABLE COURTOF APPEALS, and ATTY. MORDENO CUA, respondents.

D E C I S I O N

CALLEJO, SR., J.:

This is a petition for review on certiorari under Rule 45 of the Rules ofCourt, as amended, filed by petitioner Philippine National Bank (PNB), of theDecision[1]dated July 22, 1996 of the Court of Appeals which reversed andset aside the Decision[2]of the Regional Trial Court, Cagayan de Oro City,Branch 24 in Civil Case No. 90-423, an action for a sum of money filedagainst the private respondent Atty. Mordeno Cua.

On September 6, 1990, the petitioner filed a complaint against the private

respondent with the Regional Trial Court, Cagayan de Oro City, Branch 24,wherein it alleged, inter alia, that:

. . .

2. Sometime on December 18, 1985, the PNB thru its Cable Division received atested message from Manufacturers Hanover Trust Co., New York (Mantrust) toremit proceeds in the amount $14,056.25 to Philippine National Bank, Cagayan deOro Branch under Account No. 16087. This message was implementedon December 20, 1985 in the Peso Conversion rate of P262,793.04.

3. On December 26, 1985, after a thorough but futile search for Cagayan de OroBranch for Account No. 16087, PNB Manila was notified that the account was notcarried or maintained by Cagayan de Oro.With this Notice, it was later discoveredthat said Account No. 16087 was carried with PCI Bank Cagayan de Oro in thename of CENTER FOR ECONOMIC AND SOCIAL STUDIESwith theDefendant Mordeno Cua as the sole signatory.

4. With the discovery mentioned in the preceding paragraph, the PNB Cagayan deOro Branch transferred and delivered the amount of $14,056.25 to Account No.

16087 with the PCI Bank, Cagayan de Oro Branch and funds were withdrawn bythe defendant Mordeno Cua.

5. About the same time when the PNB Cagayan de Oro Branch transferred anddelivered the amount of $14,056.25 to the PCI Bank Cagayan de Oro Branch,Mantrust rectified their tested message and recalled the fund stating that the moneywas not intended for PNB. This recall Order was complied by PNB on January 21,1986 thru telex message sent to Mantrust, New York.

6. Upon request for PCI Bank Cagayan de Oro to return the amount thus

transferred and delivered, the PNB was informed that the whole amount was
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already withdrawn by Mordeno Cua, the sole signatory for the Center forEconomic and Social Studies.

7. Thereafter, requests both verbal and written were made upon the defendantMordeno Cua to restitute the amount of $14,056.25 but all efforts failed asMordeno Cua refused and continue to refuse to restitute or make necessaryarrangement for the restitution.[3]

The petitioner, as plaintiff, prayed that after due proceedings, judgmentbe rendered in its favor, thus:

WHEREFORE, premises considered, it is respectfully prayed that after duehearing, the defendant be adjudged liable with PNB for:

1. The amount of P262,793.04 with interest until full payment;

2. Moral damages and legal fees in the amount as may be proven duringthe trial;

3. Such other remedies as may be available under the premises.[4]

In his Answer to the complaint, the private respondent, as defendant,admitted to being the sole signatory to the account of the Center forEconomic and Social Studies (CESS) with Philippine Commercial Industrial

Bank (PCIB), Cagayan de Oro Branch. He, however, alleged that thepetitioner had no causes of action against him, and that he had no knowledgesufficient to form a belief as to the truth of the allegations alleged inparagraphs 2, 3, 5, 7, 8, and 9 of the complaint, the truth being that withreference to paragraph 4 thereof, he never withdrew money from PCIB fromthe fund transfer of the petitioner nor was he notified of the said fund transferto the account of CESS with the PCIB. The private respondent interposedcounterclaims for damages against the petitioner.[5]

The petitioner adduced evidence that on December 18, 1985, the Head

Office of the Philippine National Bank (PNB) in Manila received a secretcoded message thru its Cable Division from Manufacturers Hanover TrustCo., New York (Mantrust) directing the petitioner bank to remit the proceedsin the amount of US$14,056.25 to PNB Cagayan de Oro Branch underAccount No. 16085 of CESS.[6]The petitioner implemented the messageon December 20, 1985 at the prevailing peso conversion rate in the amountof P262,793.04.

However, after thorough verification, it turned out that Account No. 16087was not maintained with the PNB, Cagayan de Oro Branch. The latterforthwith informed the petitioner of the said fact.[7]Upon further verification, itwas found that the said account was maintained by the PCIB, Cagayan de
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Oro Branch under the name of CESS, with private respondent Mordeno Cuaas sole signatory. At about the same time, Mantrust rectified its secret codedmessage and recalled the fund, stating that the money was not intended forPNB. This recall message was complied with by the petitioner on January

21, 1986 thru a telex message sent to Mantrust, New York.[8]

Writtendemands were then sent to respondent Cua to return or restitute the amount,but the latter failed to do so.[9]After the petitioner rested its case, the privaterespondent opted not to adduce evidence in his behalf. After due hearing,the RTC rendered judgment in favor of the petitioner, the dispositive portionof which reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor ofplaintiff and against the defendant ordering the latter to pay the former thefollowing sums:

(a) P262,793.04 pesos equivalent of $14,056.25; and(b) P662.00 for docketing fees.[10]

The trial court ruled that the petitioner adduced the requisite quantum ofevidence to prove its claim against the private respondent.

On appeal, the Court of Appeals reversed the decision of the trial court,holding that the petitioner failed to prove that the private respondent withdrewthe money remitted to the account of CESS with the PCIB, Cagayan de OroBranch by the PNB, Cagayan de Oro City Branch.[11]

The petitioner avers in this case that the Court of Appeals erred inreversing the decision of the trial court, and insists that:

THE CA CONCLUSION THAT THE TESTIMONIES AND EVIDENCE ONRECORD ARE INSUFFICIENT TO PROVE THAT THE AMOUNT OFREMITTANCE EQUIVALENT TO US$14,056.25 (P260,793.04) WAS INDEEDRECEIVED BY THE APPELLANT IS ERRONEOUS CONSIDERING THATTHE PRIVATE RESPONDENTS FAILURE TO SPECIFICALLY DENY THEALLEGATION OF PETITIONER UNDER PARAGRAPH 6 OF THE

COMPLAINT CONSTITUTES A JUDICIAL ADMISSION BY PRIVATERESPONDENT THAT HE WITHDREW THE WHOLE AMOUNT OFREMITTANCE TRANSFERRED BY PETITIONER TO PCIB FOR CREDIT TOCESS ACCOUNT.

EVEN ASSUMING ARGUENDO THAT PARAGRAPH 6 OF THECOMPLAINT CANNOT BE CONSIDERED JUDICIALLY ADMITTED BYPRIVATE RESPONDENT, THE CA CONCLUSION THAT THETESTIMONIES AND EVIDENCE ON RECORD ARE INSUFFICIENT TOPROVE THAT THE AMOUNT OF REMITTANCE WAS IN FACT CREDITED

INTO THE ACCOUNT OF CESS WITH PCIB IS ERRONEOUS
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CONSIDERING THAT THE TESTIMONIES AND EVIDENCES ON RECORDPARTICULARLY THE LETTER OF PETITIONER DATED AUGUST 10, 1988ADDRESSED TO PRIVATE RESPONDENT, WHICH LETTER WASADMITTED BY THE LOWER COURT AS EXHIBIT D, CLEARLY

ESTABLISHED THAT PCIB MANILA CREDITED TO FCDU ACCOUNT NO.16087 OF CESS WITH THEIR CAGAYAN DE ORO BRANCH THE AMOUNTOF US$14,114.33 (US$14,056.25).[12]

Since the issues raised by the petitioner are interrelated, we shall delveinto and resolve them simultaneously.

The petitioner avers that the ruling of the CA, that it failed to adducesufficient evidence to prove the material allegations in its complaint, iserroneous. According to the petitioner, the private respondent failed tospecifically deny the material allegations in paragraph 6 of the complaint,and that the private respondents denial in paragraph E of his Answer to theComplaint was an ineffective denial. Thus, the private respondent is deemedto have admitted that he withdrew the amount for the account of CESS withthe PCIB. The reason for this, the petitioner contends, is that:

... [T]he information on whether Mordeno Cua actually withdrew the wholeamount of remittance from CESS account with PCIBank Cagayan de Oro is withinthe knowledge or control of Mordeno Cua being the sole signatory to the saidCESS Account.[13]

The private respondent, for his part, avers that he specifically deniedhaving withdrawn or received remittances by the petitioner to the account ofCESS with the PCIB, Cagayan de Oro Branch. The petitioner was burdenedto prove that (a) it remitted the amount of US$14,056.25 to the PCIB,Cagayan de Oro Branch for the account of CESS; and that (b) the privaterespondent withdrew the said amount. He asserts that while the petitionerproved that the said amount was remitted to the account of CESS with thePCIB, it failed to prove that he withdrew the said amount from the bank.

The petitioners contention has no merit.

Rule 8, Section 10 of the Rules of Court, as amended,[14]require adefendant to specify each material allegations of fact, the truth of which hedoes not admit, and whenever practicable, to set forth the substance of thematters upon which he relies to support his denial. Where a defendantdesires to deny part of an averment for a qualification thereof, he ismandated to specify so much of the averment as true and material and shalldeny the remainder. If a defendant is without knowledge or informationsufficient to form a belief as to the truth of a material averment in thecomplaint, he is bound to so state and this shall have the effect of a denial. Insuch a case, it is indispensable that the matter regarding where lack of
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knowledge is alleged be clearly set forth so that the adverse party is informedof what is denied. The purpose of requiring the defendant to make a specificdenial is to make him disclose the matters alleged in the complaint which hesuccinctly intends to disprove at the trial, together with the matter which he

relied upon to support the denial.[15]

The parties are compelled to lay theircards on the table.

A denial is not specific simply because it is so qualified by the defendant.A general denial does not become specific by the use of the word specifically.When the matters of whether the defendant alleges having no knowledge orinformation sufficient to form a belief, are plainly and necessarily within thedefendants knowledge, his alleged ignorance or lack of information will notbe considered as a specific denial.[16]Section 11, Rule 8 of the saidRule,[17]provides that material averments in the complaint other than those asto the amount of unliquidated damages shall be deemed admitted when notspecifically denied.

In his Answer to the complaint, the respondent alleged inter alia that:

A. Paragraph 1 of the complaint is ADMITTED.

B. Paragraphs 2 and 3 is (sic) DENIED, defendant has no knowledge sufficient toform a belief as to the truth thereof except the averment that defendant is asignatory for CENTER FOR ECONOMIC AND SOCIAL STUDIES for the bankaccount of the latter at PCIBank.

C. Paragraph 4 is DENIED, the truth being that defendant never withdrew moneyfrom PCIBank, from the funds transfer of plaintiff-bank nor notified of the fundtransfer thereof by plaintiff-bank.

D. For reason stated above, paragraph 5 is DENIED, defendant never knew of thetransaction between PCIBank and the plaintiff and the consequent rectification ofthe so-called tested message from Mantrust Bank that the money was not intendedfor the plaintiff.

E. Paragraph 6 is again DENIED, defendant has no business interfering bank-to-bank transactions, that whether the Center for Economic and Social Studieswithdrew an amount at PCIBank is purely an exercise of a bank-to-clientrelationship.

F. Paragraphs 7, 8 and 9 are DENIED, defendant has no knowledge sufficient toform a belief as to the truth thereof; and as AFFIRMATIVE/SPECIALDEFENSES, defendant repleads the above statements and further aver;

G. That plaintiff has no cause of action against therein defendant.
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H. Granting that there is a cause of action, the same is barred by prescriptionand/or laches and/or estoppel; as COUNTERCLAIM, paragraph A to H arerepleaded and furthermore aver;

I. That this suit could have been avoided by the plaintiff had it exercise (sic) soundbanking practices and without being arrogant, reckless, grossly negligent, baselessand irresolute which gravely caused irreparable injury to the rights of the defendantas the latter is suffering untold misery, wounded feelings, moral shock, besmirchedreputation, sleepless nights, fright, serious anxiety and social humiliation, byreason of this suit, which plaintiff be condemned to pay ONE MILLION PESOS asmoral damage and to caution other banking institution not to repeat this totallyerroneous case, the plaintiff be imposed and made to pay defendant exemplarydamage of the same amount, reasonable attorneys fees and costs of the suit. [18]

Thus, in paragraph B, the private respondent denied the averments inparagraph 3 of the complaint, including the averment that Account No. 16087was carried with the PCIB, Cagayan de Oro Branch in the name ofCESS. Nevertheless, this denial was ineffective because such fact waswithin the knowledge of the private respondent, being the signatorythereto. The defendants denial is, thus, equivalent to anadmission. Likewise, the private respondents failure to specifically deny, inparagraph C of his Answer, the allegation in paragraph 4 of the complaintthat the PNB, Cagayan de Oro Branch transferred and delivered the amountof US$14,056.25 to Account No. 16087 carried by the PCIB, Cagayan de

Oro Branch was equiv

Documents

Answer 1 to 4 Cases