[G.R. NO.
140608 : September 23, 2004] of herein defendant, the same does not bind him and
PERMANENT SAVINGS AND LOAN BANK,
Petitioner, v. MARIANO VELARDE, Respondent.
DECISION AUSTRIA-MARTINEZ, J.:
In a complaint for sum of money filed before the
Regional Trial Court of Manila (Branch 37), docketed
as Civil Case No. 94-71639, petitioner Permanent
Savings and Loan Bank sought to recover from
respondent Mariano Velarde, the sum of P1,000,000.00
plus accrued interests and penalties, based on a loan
obtained by respondent from petitioner bank, evidenced
by the following: (1) promissory note dated September
28, 1983;1 (2) loan release sheet dated September 28,
1983;2 and (3) loan disclosure statement dated
September 28, 1983.3 Petitioner bank, represented by its
Deputy Liquidator after it was placed under liquidation,
sent a letter of demand to respondent on July 27, 1988,
demanding full payment of the loan.4 Despite receipt of
said demand letter,5 respondent failed to settle his
account. Another letter of demand was sent on February
22, 1994,6 and this time, respondent's counsel replied,
stating that the obligation "is not actually existing but
covered by contemporaneous or subsequent agreement
between the parties '"7
In his Answer, respondent disclaims any liability on the
instrument, thus:
2. The allegations in par. 2, Complaint, on the existence
of the alleged loan of P1-Million, and the purported
documents evidencing the same, only the signature
appearing at the back of the promissory note, Annex
"A" seems to be that of herein defendant. However, as
to any liability arising therefrom, the receipt of the said
amount of P1-Million shows that the amount was
received by another person, not the herein defendant.
Hence, no liability attaches and as further stated in the
special and affirmative defenses that, assuming the
promissory note exists, it does not bind much less is
there the intention by the parties to bind the herein
defendant. In other words, the documents relative to the
loan do not express the true intention of the parties.8
Respondent's Answer also contained a denial under
oath, which reads:
I, MARIANO Z. VELARDE, of age, am the defendant
in this case, that I caused the preparation of the
complaint and that all the allegations thereat are true
and correct; that the promissory note sued upon,
assuming that it exists and bears the genuine signature
Page 1 of 5
that it did not truly express the real intention of the
parties as stated in the defenses; '9
During pre-trial, the issues were defined as follows:
1. Whether or not the defendant has an outstanding loan
obligation granted by the plaintiff;
2. Whether or not the defendant is obligated to pay the
loan including interests and attorney's fees;
3. Whether or not the defendant has really executed the
Promissory Note considering the doubt as to the
genuineness of the signature and as well as the non-
receipt of the said amount;
4. Whether or not the obligation has prescribed on
account of the lapse of time from date of execution and
demand for enforcement; and
cralawlibrary
5. Whether or not the defendant is entitled to his
counterclaim and other damages.10
On September 6, 1995, petitioner bank presented its
sole witness, Antonio Marquez, the Assistant
Department Manager of the Philippine Deposit
Insurance Corporation (PDIC) and the designated
Deputy Liquidator for petitioner bank, who identified
the Promissory Note11 dated September 28, 1983, the
Loan Release Sheet12 dated September 28, 1983, and
the Disclosure Statement of Loan Credit Transaction.13
After petitioner bank rested its case, respondent, instead
of presenting evidence, filed with leave of court his
demurrer to evidence, alleging the grounds that:
(a) PLAINTIFF FAILED TO PROVE ITS CASE BY
PREPONDERANCE OF EVIDENCE.
(b) THE CAUSE OF ACTION, CONCLUDING
ARGUENTI THAT IT EXISTS, IS BARRED BY
PRESCRIPTION AND/OR LACHES.14
The trial court, in its Decision dated January 26, 1996,
found merit in respondent's demurrer to evidence and
dismissed the complaint including respondent's
counterclaims, without pronouncement as to costs.15
On appeal, the Court of Appeals agreed with the trial
court and affirmed the dismissal of the complaint in its
Decision16 dated October 27, 1999.17 The appellate
court found that petitioner failed to present any
evidence to prove the existence of respondent's alleged
loan obligations, considering that respondent denied
petitioner's allegations in its complaint. It also found
that petitioner bank's cause of action is already barred
by prescription.18
Hence, the present Petition for Review on
Certiorariunder Rule 45 of the Rules Court, with the
following assignment of errors:
4.1
THE COURT OF APPEALS ERRED IN HOLDING
THAT PETITIONER FAILED TO ESTABLISH THE
GENUINENESS, DUE EXECUTION AND
AUTHENTICITY OF THE SUBJECT LOAN
DOCUMENTS.
4.2
THE COURT OF APPEALS ERRED IN HOLDING
THAT PETITIONER'S CAUSE OF ACTION IS
ALREADY BARRED BY PRESCRIPTION AND OR
LACHES.19
Before going into the merits of the petition, the Court
finds it necessary to reiterate the well-settled rule that
only questions of law may be raised in a Petition for
Review on Certiorari under Rule 45 of the Rules of
Court, as "the Supreme Court is not a trier of facts."20 It
is not our function to review, examine and evaluate or
weigh the probative value of the evidence presented.21
There are, however, exceptions to the rule, e.g., when
the factual inferences of the appellate court are
manifestly mistaken; the judgment is based on a
misapprehension of facts; or the CA manifestly
overlooked certain relevant and undisputed facts that, if
properly considered, would justify a different legal
conclusion.22 This case falls under said exceptions.
The pertinent rule on actionable documents is found in
Rule 8, Section 7 of the Rules of Court which provides
that when the cause of action is anchored on a
document, the genuineness or due execution of the
instrument shall be deemed impliedly admitted unless
the defendant, under oath, specifically denies them, and
sets forth what he claims to be the facts.
It was the trial court's opinion that:
The mere presentation of supposed documents
regarding the loan, but absent the testimony of a
competent witness to the transaction and the
documentary evidence, coupled with the denial of
liability by the defendant does not suffice to meet the
requisite preponderance of evidence in civil cases. The
documents, standing alone, unsupported by independent
Page 2 of 5
evidence of their existence, have no legal basis to stand
on. They are not competent evidence. Such failure
leaves this Court without ample basis to sustain the
plaintiff's cause of action and other reliefs prayed for.
The loan document being challenged. (sic) Plaintiff did
not exert additional effort to strengthen its case by the
required preponderance of evidence. On this score, the
suit must be dismissed.23
The Court of Appeals concurred with the trial court's
finding and affirmed the dismissal of the complaint,
viz.:
'The bank should have presented at least a single
witness qualified to testify on the existence and
execution of the documents it relied upon to prove the
disputed loan obligations of Velarde. - This falls short
of the requirement that (B)efore any private writing
may be received in evidence, its due execution and
authenticity must be proved either: (a) By anyone who
saw the writing executed; (b) By evidence of the
genuineness of the handwriting of the maker; or (c) By
a subscribing witness. (Rule 132, Sec. 21, Rules of
Court)'
It is not true, as the Bank claims, that there is no need to
prove the loan and its supporting papers as Velarde has
already admitted these. Velarde had in fact denied these
in his responsive pleading. And consistent with his
denial, he objected to the presentation of Marquez as a
witness to identify the Exhibits of the Bank, and
objected to their admission when these were offered as
evidence. Though these were grudgingly admitted
anyway, still admissibility of evidence should not be
equated with weight of evidence. - 24
A reading of respondent's Answer, however, shows that
respondent did not specifically deny that he signed the
loan documents. What he merely stated in his Answer
was that the signature appearing at the back of the
promissory note seems to be his. Respondent also
denied any liability on the promissory note as he
allegedly did not receive the amount stated therein, and
the loan documents do not express the true intention of
the parties.25 Respondent reiterated these allegations in
his "denial under oath," stating that "the promissory
note sued upon, assuming that it exists and bears the
genuine signature of herein defendant, the same does
not bind him and that it did not truly express the real
intention of the parties as stated in the defenses '"26
Respondent's denials do not constitute an effective
specific denial as contemplated by law. In the early case
of Songco v. Sellner,27 the Court expounded on how to
deny the genuineness and due execution of an
actionable document, viz.:
'This means that the defendant must declare under oath
that he did not sign the document or that it is otherwise
false or fabricated. Neither does the statement of the
answer to the effect that the instrument was procured by
fraudulent representation raise any issue as to its
genuineness or due execution. On the contrary such a
plea is an admission both of the genuineness and due
execution thereof, since it seeks to avoid the instrument
upon a ground not affecting either.
In fact, respondent's allegations amount to an implied
admission of the due execution and genuineness of the
promissory note. The admission of the genuineness and
due execution of a document means that the party
whose signature it bears admits that he voluntarily
signed the document or it was signed by another for
him and with his authority; that 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; that the
document was delivered; and that any formalities
required by law, such as a seal, an acknowledgment, or
revenue stamp, which it lacks, are waived by him.28
Also, it effectively eliminated any defense relating to
the authenticity and due execution of the document,
e.g., that the document was spurious, counterfeit, or of
different import on its face as the one executed by the
parties; or that the signatures appearing thereon were
forgeries; or that the signatures were unauthorized.29
Clearly, both the trial court and the Court of Appeals
erred in concluding that respondent specifically denied
petitioner's allegations regarding the loan documents, as
respondent's Answer shows that he failed to specifically
deny under oath the genuineness and due execution of
the promissory note and its concomitant documents.
Therefore, respondent is deemed to have admitted the
loan documents and acknowledged his obligation with
petitioner; and with respondent's implied admission, it
was not necessary for petitioner to present further
evidence to establish the due execution and authenticity
of the loan documents sued upon.
While Section 22, Rule 132 of the Rules of Court
requires that private documents be proved of their due
execution and authenticity before they can be received
in evidence, i.e., presentation and examination of
witnesses to testify on this fact; in the present case,
there is no need for proof of execution and authenticity
with respect to the loan documents because of
respondent's implied admission thereof.30
Page 3 of 5
Respondent claims that he did not receive the net
proceeds in the amount of P988,333.00 as stated in the
Loan Release Sheet dated September 23, 1983.31 The
document, however, bears respondent's signature as
borrower.32Res ipsa loquitur.33 The document speaks for
itself. Respondent has already impliedly admitted the
genuineness and due execution of the loan documents.
No further proof is necessary to show that he undertook
the obligation with petitioner. "A person cannot accept
and reject the same instrument."34
The Court also finds that petitioner's claim is not barred
by prescription.
Petitioner's action for collection of a sum of money was
based on a written contract and prescribes after ten
years from the time its right of action arose.35 The
prescriptive period is interrupted when there is a
written extrajudicial demand by the creditors.36 The
interruption of the prescriptive period by written
extrajudicial demand means that the said period would
commence anew from the receipt of the demand.37
Thus, in the case of The Overseas Bank of Manila v.
Geraldez,38 the Court categorically stated that the
correct meaning of interruption as distinguished from
mere suspension or tolling of the prescriptive period is
that said period would commence anew from the receipt
of the demand. In said case, the respondents Valenton
and Juan, on February 16, 1966, obtained a credit
accommodation from the Overseas Bank of Manila in
the amount of P150,000.00. Written extrajudicial
demands dated February 9, March 1 and 27, 1968,
November 13 and December 8, 1975 and February 7
and August 27, 1976 were made upon the respondents
but they refused to pay. When the bank filed a case for
the recovery of said amount, the trial court dismissed
the same on the ground of prescription as the bank's
cause of action accrued on February 16, 1966 (the date
of the manager's check for P150,000.00 issued by the
plaintiff bank to the Republic Bank) and the complaint
was filed only on October 22, 1976. Reversing the
ruling of the trial court, the Court ruled:
An action upon a written contract must be brought
within ten years from the time the right of action
accrues (Art. 1144[1], Civil Code). "The prescription of
actions is interrupted when they are filed before the
court, when there is a written extrajudicial demand by
the creditors, and when there is any written
acknowledgment of the debt by the debtor" (Art. 1155,
Ibid, applied in Gonzalo Puyat & Sons, Inc. v. City of
Manila, 117 Phil. 985, 993; Philippine National Bank v.
Fernandez, L-20086, July 10, 1967, 20 SCRA 645, 648;
Harden v. Harden, L-22174, July 21, 1967, 20 SCRA
706, 711).
A written extrajudicial demand wipes out the period
that has already elapsed and starts anew the prescriptive
period. Giorgi says: "La interrupcion difiere de la
suspension porque borra el tiempo transcurrido
anteriormente y obliga a la prescripcion a comenzar de
nuevo" (9 Teoria de las Obligaciones, 2nd Ed., p. 222).
"La interrupcion . . . quita toda eficacia al tiempo
pasado y abre camino a un computo totalmente nuevo,
que parte del ultimo momento del acto interruptivo,
precisamente, como si en aquel momento y no antes
hubiese nacido el credito" (8 Giorgi, ibid pp. 390-2).
That same view as to the meaning of interruption was
adopted in Florendo v. Organo, 90 Phil. 483, 488,
where it ruled that the interruption of the ten-year
prescriptive period through a judicial demand means
that "the full period of prescription commenced to run
anew upon the cessation of the suspension". "When
prescription is interrupted by a judicial demand, the full
time for the prescription must be reckoned from the
cessation of the interruption" (Spring v. Barr, 120 So.
256 cited in 54 C.J.S. 293, note 27). That rule was
followed in Nator and Talon v. CIR, 114 Phil. 661,
Sagucio v. Bulos, 115 Phil. 786 and Fulton Insurance
Co. v. Manila Railroad Company, L-24263, November
18, 1967, 21 SCRA 974, 981.
Interruption of the prescriptive period as meaning
renewal of the original term seems to be the basis of the
ruling in Ramos v. Condez, L-22072, August 30, 1967,
20 SCRA 1146, 1151. In that case the cause of action
accrued on June 25, 1952. There was a written
acknowledgment by the vendors on November 10, 1956
of the validity of the deed of sale.
In National Marketing Corporation v. Marquez, L-
25553, January 31, 1969, 26 SCRA 722, it appears that
Gabino Marquez executed on June 24, 1950 a
promissory note wherein he bound himself to pay to the
Namarco P12,000 in installments within the one-year
period starting on June 24, 1951 and ending on June 25,
1952. After making partial payments on July 7, 1951
and February 23, 1952, Marquez defaulted.
His total obligation, including interest, as of October
31, 1964, amounted to P19,990.91. Written demands for
the payment of the obligation were made upon Marquez
and his surety on March 22, 1956, February 16, 1963,
June 10, September 18 and October 13, 1964. Marquez
did not make any further payment.
Page 4 of 5
The Namarco sued Marquez and his surety on
December 16, 1964. They contended that the action had
prescribed because the ten-year period for suing on the
note expired on June 25, 1962. That contention was not
sustained. It was held that the prescriptive period was
interrupted by the written demands, copies of which
were furnished the surety.
Respondent's obligation under the promissory note
became due and demandable on October 13, 1983. On
July 27, 1988, petitioner's counsel made a written
demand for petitioner to settle his obligation. From the
time respondent's obligation became due and
demandable on October 13, 1983, up to the time the
demand was made, only 4 years, 9 months and 14 days
had elapsed. The prescriptive period then commenced
anew when respondent received the demand letter on
August 5, 1988.39 Thus, when petitioner sent another
demand letter on February 22, 1994,40 the action still
had not yet prescribed as only 5 years, 6 months and 17
days had lapsed. While the records do not show when
respondent received the second demand letter,
nevertheless, it is still apparent that petitioner had the
right to institute the complaint on September 14, 1994,
as it was filed before the lapse of the ten-year
prescriptive period.
Lastly, if a demurrer to evidence is granted but on
appeal the order of dismissal is reversed, the movant
shall be deemed to have waived the right to present
evidence.41 The movant who presents a demurrer to the
plaintiff's evidence retains 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.42 Thus, respondent may no longer
offer proof to establish that he has no liability under the
loan documents sued upon by petitioner.
The promissory note signed and admitted by respondent
provides for the loan amount of P1,000,000.00, to
mature on October 13, 1983, with interest at the rate of
25% per annum. The note also provides for a penalty
charge of 24% per annum of the amount due and
unpaid, and 25% attorney's fees. Hence, respondent
should be held liable for these sums.
WHEREFORE, the petition is GRANTED. The
Decisions of the Regional Trial Court of Manila
 30
(Branch 37) dated January 26, 1996, and the Court of Chua v. Court of Appeals, G.R. No. 88383, February
Appeals dated October 27, 1999 are SET ASIDE. 19, 1992, 206 SCRA 339, 346.
Respondent is ordered to pay One Million Pesos 32
(P1,000,000.00) plus 25% interest and 24% penalty Id., p. 5, Exhibit "B-1."
charge per annum beginning October 13, 1983 until 33
Associated Bank v. Court of Appeals, G.R. No.
fully paid, and 25% of the amount due as attorney's
123793, June 29, 1998, 291 SCRA 511, 527.
fees. Costs against respondent.
35
Article 1144, Civil Code.
SO ORDERED.
36
Article 1155, Civil Code.
Endnotes:
37
20 Ledesma v. Court of Appeals, G.R. No. 106646, June
New Sampaguita Builders Construction, Inc. v.
30, 1993, 224 SCRA 175, 177-178.
Philippine National Bank, G.R. No. 148753, July 30,
2004. 38
G.R. No. L-46541, December 28, 1979 (94 SCRA
21 937).
Philippine Lawin Bus Co. v. Court of Appeals, G.R.
No. 130972, January 23, 2002, 374 SCRA 332, 337. 39
Records, p. 8, Exhibit "D-1."
22
Supra., New Sampaguita Builders Construction, Inc. 40
Id., p. 9, Exhibit "E."
case, note 20.
41
FGU Insurance Corporation v. G.P. Sarmiento
28
Filipinas Textile Mills v. Court of Appeals, G.R. No. Trucking Corporation, G.R. No. 141910, August 6,
119800, November 12, 2003. 2002, 386 SCRA 312, 322-323.
29
Velasquez v. Court of Appeals, G.R. No. 124049, June 42
Radiowealth Finance Company v. Del Rosario, G.R.
30, 1999, 309 SCRA 539, 547. No. 138739, July 6, 2000, 335 SCRA 288, 297.

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