In the Philippines, an ‘Acknowledgment’ receipt can be a powerful piece of evidence for debt. This case clarifies that if you don’t formally deny the authenticity of a signed acknowledgment of debt under oath, the court will likely consider it an admission of your obligation. However, the Supreme Court emphasizes that such acknowledgment binds only the person who signed it unless proven otherwise.

One Signature, Two Spouses: Who Pays the Price of an Acknowledged Debt?

Spouses Fernando and Ma. Elena Santos were sued by Lolita Alcazar, represented by her attorney-in-fact Delfin Chua, to collect payment for paint and construction materials. The case hinged on a document titled ‘Acknowledgment’ signed by Fernando, admitting a debt of P1,456,000.00 to Legazpi Color Center (LCC). Lolita Alcazar argued that this document, coupled with the couple’s failure to specifically deny the debt under oath in their initial response, proved their obligation. The spouses countered that the document did not reflect the true agreement and sought to reduce the acknowledged amount. The heart of the legal matter was whether Fernando’s singular acknowledgment bound both spouses to the full debt amount.

The legal framework rests on Section 8, Rule 8 of the Rules of Civil Procedure, which dictates that when a claim is based on a document, its genuineness and due execution are deemed admitted unless specifically denied under oath by the adverse party. This rule stems from the principle that parties should deal honestly and fairly in their pleadings. If a party intends to challenge the authenticity of a document presented against them, they must do so explicitly and under oath. Failure to comply with this requirement essentially concedes the document’s validity, thereby simplifying the process of evidence presentation and reducing the scope of potential disputes.

The Supreme Court, in its analysis, focused on the effect of the ‘Acknowledgment’ signed solely by Fernando Santos. The Court underscored that Fernando’s failure to deny the document’s genuineness and due execution under oath constituted an admission that he indeed signed the document, understanding its contents and intending to be bound by it. In effect, Fernando waived any defenses related to the document’s authenticity or unauthorized execution. The impact of this admission is profound, as the Court elucidated:

“By the admission of the genuineness and due execution [of such document] is meant that the party whose signature it bears admits that he signed it or that it was signed by another for him 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 formal requisites required by law, such as a seal, an acknowledgment, or revenue stamp, which it lacks, are waived by him.”

Building on this principle, the Court emphasized that this admission made the Acknowledgment a primary piece of evidence, negating the necessity for additional proof, such as receipts or detailed statements of account, to substantiate the debt. This does not mean, however, that there were no limits. The High Court made it clear that the acknowledgment receipt is valid and binding between the parties who executed it, as a document evidencing the loan agreement they had entered into. As such, the Court recognized that the Acknowledgment’s binding effect was limited to Fernando, the signatory. Ma. Elena, not having signed the document, could not be held liable for the full amount based solely on that acknowledgment. It means that Ma. Elena could only be held liable to the extent of P600,000.00, as admitted by her and Fernando in paragraph 5 of their Answer; no case against her may be proved over and beyond such amount, in the absence of her signature and an acknowledgment of liability in the Acknowledgment.

The Court addressed the argument that the Court of Appeals had previously required receipts and statements of account to prove the debt. It was resolved by emphasizing that, by failing to refute the authenticity of the Acknowledgment, along with their implicit admission of a debt in their Answer, the necessity of presenting further documentary evidence was essentially waived. The Acknowledgment, in conjunction with the admissions made in their pleadings, sufficed to establish the debt.

The Court dismissed the claim that the spouses were deprived of their day in court. It found that they were given ample opportunities to present their evidence, but their repeated requests for postponement and eventual failure to attend scheduled hearings led to the trial court’s decision to consider their right to present evidence waived. The High Court cited the rule on grant or denial of a motion for postponement:

[A] party moving for postponement should be in court on the day set for trial if the motion is not acted upon favorably before that day. He has no right to rely either on the liberality of the court or on the generosity of the adverse party. x x x

The spouses also contended that the pre-trial conference was a sham due to the absence of records and that they were not duly notified of the hearing where the respondent presented her evidence ex parte. The Supreme Court debunked this claim. The Court noted that a pre-trial conference did occur, that a representative for the petitioners attended, and that a pre-trial order was issued, serving as a record of the proceedings and clearly specifying the date of the hearing. The Court reasoned that because petitioners were aware of the schedule from the outset, their failure to attend could not be attributed to the trial court.

FAQs

What was the key issue in this case?	The main issue was whether an acknowledgment of debt signed by one spouse could bind both spouses to the entire debt amount, especially when the genuineness of the document was not specifically denied under oath.
What is the significance of failing to deny a document under oath?	Under the Rules of Civil Procedure, failure to specifically deny the genuineness and due execution of a document under oath is considered an admission of its validity and authenticity. This admission prevents the denying party from later contesting the document’s legitimacy.
Does an acknowledgment receipt always require additional proof of debt?	Generally, an acknowledgment receipt can serve as sufficient evidence of a debt, especially when its genuineness is admitted. Additional proof may not be necessary unless the debtor presents a strong defense or new matter.
Who is bound by an acknowledgment of debt?	Typically, only the person who signed the acknowledgment of debt is bound by it. However, there may be exceptions if agency or other legal relationships can be proven.
Can a court deny a motion for postponement?	Yes, a court has the discretion to deny a motion for postponement, especially if it appears that the motion is intended to delay the proceedings. The court’s primary duty is to ensure the efficient and timely administration of justice.
What is the purpose of a pre-trial conference?	A pre-trial conference aims to streamline the trial process, clarify the issues in dispute, and explore the possibility of settlement. It also helps the court manage its caseload more efficiently.
What happens if a party fails to attend a scheduled hearing?	If a party fails to attend a scheduled hearing without a valid excuse, the court may proceed with the hearing in their absence and render a judgment based on the evidence presented. The court may also deem the absent party to have waived their right to present evidence.
How did the court modify the Court of Appeals’ decision?	The Supreme Court affirmed the Court of Appeals’ decision but modified it to hold Ma. Elena Santos liable only to the extent of P600,000.00, reflecting the amount she had admitted in her Answer, rather than the full amount acknowledged by her husband.

This case underscores the importance of carefully reviewing and responding to legal claims, especially those based on written documents. Failing to specifically deny the authenticity of a document under oath can have significant consequences, including being held liable for debts you may not have intended to acknowledge. The Santos vs. Alcazar case shows us how crucial it is to respond appropriately and promptly when facing legal action.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Spouses Fernando and Ma. Elena Santos vs. Lolita Alcazar, G.R. No. 183034, March 12, 2014