The case originated from a complaint for a sum of money filed before the Regional Trial Court (RTC) by EBC against WTC. The complaint alleged that on December 9, 1994 WTC obtained a loan from it in the amount of $75,000.00 with interest at 8.75 percent per annum. The loan is evidenced by a Promissory Note payable on demand signed by Robert and Charlie, the principal stockholders of WTC who also executed a Surety Agreement binding themselves as its sureties. Both the PN and the Surety Agreement were attached to the Complaint. EBC further alleged that it made a final demand on April 19, 1996 for WTC to pay its obligation but both WTC and its sureties, Robert and Charlie failed to pay.
In their answer, WTC, Robert and Charlie admitted that WTC obtained a loan of $75,000 with interest of 8.75 percent per annum and that Robert and Charlie bound themselves as sureties as evidence by the PN and the Surety Agreement. They also stated that only one demand letter was sent and that the PN does not provide the due date of payment so the loan had not yet matured as the maturity date was left blank to be agreed upon by the parties at a later date. Since no maturity date has been fixed, the filing of the complaint was premature, their answer further alleged. WTC, Charlie and Robert also raised the defenses that the contract is one of adhesion and they were forced to sign the same and that interest of 8.75 percent per annum, penalties and fees are unconscionable.
Based on this answer, EBC filed a Motion for Judgment on the Pleadings. The RTC granted the motion and rendered judgment ordering WTC, Robert and Charlie to jointly and severally pay to EBC the $75,000.00 loan and the stipulated interest. Later on the Court of Appeals (CA), on appeal by WTC, Charlie and Robert, affirmed the decision. The CA noted that the defendants admitted the material allegations of the Complaint and that there was no need to present evidence to prove the maturity date of the PN since it was payable on demand. WTC, Robert and Charlie questioned this ruling. They said that their answer did not totally and unqualifiedly admit the material allegations of the complaint and it tendered genuine issues as contained in their special and affirmative defenses. If they were given the chance, they could have presented witnesses to prove said defenses. Were the RTC and the CA correct in rendering judgment on the pleadings?
The judgment rendered by the RTC is valid, not as a judgment on the pleadings but as a summary judgment and its affirmance by the CA is in order. In a proper case for judgment on the pleadings, there is no ostensible issue at all because of the failure of the defending party’s answer to raise an issue. On the other hand, in the case of summary judgment, issues apparently exist – i.e. specific denials or affirmative defenses are in truth set out in the answer – but the issues thus arising from the pleadings are sham, fictitious or not genuine as shown by affidavits, depositions or admissions. Summary judgment is a procedure aimed a weeding out sham claims or defenses at an early stage of the litigation. The proper inquiry in this regard is whether the affirmative defenses offered constitute genuine issues of fact requiring full blown trial. A genuine issue means an issue of fact calls for the presentation of evidence.
In this case, the Answer apparently tendered issues. While it admitted that WTC obtained the loan, that Charlie and Robert signed the PN and bound themselves as sureties, it also alleged special and affirmative defenses that the obligation had not matured and that the PN and surety agreement were contract of adhesion. But, as found by both the RTC and CA, the issues are not factual ones requiring trial, nor were they genuine issues. The matter proffered as a defense could be resolved judiciously by plain resort to the stipulations in the PN which was already before the court. A full blown trial to determine the date of maturity of the loan is not necessary. Also the act of leaving blank the maturity date of the loan did not necessarily mean that the parties agreed to fix it later. There is also no need for trial to resolve the particular line of defense that the loan documents constituted a contract of adhesion. The stipulations in the documents are clear and leave no doubt as to the intention of the parties. They contain no ambiguities. So there is no need to apply the rule that should there be ambiguities in the contract of adhesion, such ambiguities are to be construed against the party that prepared it (Wood Technology Corp. et. al. vs. Equitable Banking Corp. G.R. 153867, February 17, 2005, 451 SCRA 724).