hence this case, a suit on the
L. O. HIBBERD v. WM. J. ROHDE
32 PHIL 476 / GR No. 8418
Dec 09, 1915
FACTS:
• McMillian was in the retail liquor
business and secured a stock of
merchandise valued at P1,200 from
Brand & Hibberd and sold it.
• Brand and Hibberd argue it was
only given as a DEPOSIT and filed a
case of Estafa agains Mcmillian.
• Mcmillian got an attorney, named
Rhode for his defense in the estafa
case.
• According to the SC, it appears that
Rhode strongly insisted that McMillian
was not guilty of the crime charged, and
no doubt his ability as a lawyer tended to
convince the complainants that the
criminal charge was unjustified.
• The parties made an agreement:
1) IF Brand & Hibberd would
withdraw the estaf complaint.
2) Rohde agreed to be a jointly
and severally liable with Mcmillian
to pay tothe firm of Brand and
Hibberd, of the city of Baguio,
1,200 pesos in monthly
installments of 100.
• Rhode paid 200 out of the 1200,
which prompted Hibberd to file suit
on the Promissory Note.
*Not stated in case but it appears
there were no further payments,
Promissory Note.
• Only Rhode appeared and answered
BUT did NOT enter a denial on the
genuineness and the execution of the
note.
*Raised only the Special Defense
of Illegality of Consideration
Trial Court Decision: Ruled in favour
of Rohde, since the consideration of the
PN was the compromise of a public
offense.
ISSUE:
WoN the defense of illegality of
consideration may still be raised despite
the failure to enter a denial on the
genuineness of the note?
HELD: YES, it may still be raised.
The special defense interposed by
the defendant of illegality of
consideration is not barred by his failure
to enter a verified denial of the
genuineness and due execution of the
note set out in the complaint.
Rule 103 cannot preclude a defendant from
introducing any defense on the merits which does not
contradict the execution of the instrument introduced in
evidence.
SECTION 103 (of the old rules) DOES NOT
PROHIBIT SUCH A DEFENSE AS ILLEGALITY
OF CONTRACT. To interpret section 103 as to
prohibit such a defense as illegality of
consideration, which is clearly a defense of new
matter, would pro tanto repeal the second
paragraph of section 94, which permits a
defendant to answer by "A statement of any new
matter constituting a defense or counterclaim."
Likewise, section 285 provides that the terms of
a writing may be impeached by reason of its
illegality or fraud.
 The Court has held before that Sec. 103 is not
applicable to an indorser in a promissory note in a suit
against the maker. It has been held that the admission of
the genuineness and due execution of the instrument
does not bar the defense of want of consideration. The
only object of the rule was to enable a plaintiff to make
out a prima facie, not a conclusive case.