The Supreme Court has affirmed that appeals raising only questions of law should be dismissed outright if filed under Rule 41 of the Rules of Court. This means that if an appeal challenges a lower court’s decision based purely on legal interpretations—without disputing the underlying facts—the appellate court should dismiss it. This ruling clarifies the proper procedure for appealing summary judgments and reinforces the distinction between questions of law and questions of fact in the Philippine legal system, ensuring that cases are resolved efficiently and through the correct channels.

When Does a Car Loan End? Examining Dacion en Pago and Summary Judgments

This case revolves around Spouses Augusto and Nora Navarro, who took out a loan from Rural Bank of Tarlac, Inc., to purchase a vehicle. Unable to keep up with payments, they surrendered the vehicle to the bank with the understanding that its sale would settle their remaining debt. However, a dispute arose over whether this surrender constituted a dacion en pago—a form of payment where property is transferred to satisfy a debt—or simply a partial settlement. The bank then sought a summary judgment to recover the remaining balance, leading the spouses to appeal the RTC’s decision through an ordinary appeal, which the Court of Appeals dismissed. The Supreme Court then took up the case to determine whether the CA was correct in dismissing the appeal.

The central legal question before the Supreme Court was whether the appeal filed by Spouses Navarro involved pure questions of law or a mix of law and fact. According to Section 2, Rule 50 of the Rules of Court, appeals under Rule 41 that raise only questions of law must be dismissed. The Supreme Court clarified the distinction between questions of law and questions of fact, noting that a question of law arises when the issue does not require examining the probative value of evidence or assessing the truthfulness of admitted facts. Instead, it involves doubts about the correct application of law and jurisprudence to a specific set of circumstances. The test is whether the appellate court can resolve the issues without reviewing or evaluating evidence.

SECTION 2. Dismissal of improper appeal to the Court of Appeals. — An appeal under Rule 41 taken from the Regional Trial Court to the Court of Appeals raising only questions of law shall be dismissed, issues purely of law not being reviewable by said court. Similarly, an appeal by notice of appeal instead of by petition for review from the appellate judgment of a Regional Trial Court shall be dismissed.

An appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate court but shall be dismissed outright.

In contrast, a question of fact arises when there is doubt or controversy regarding the truth or falsity of alleged information, the credibility of witnesses, or the relevance of surrounding circumstances. Applying these definitions, the Supreme Court found that the Navarros’ appeal raised pure questions of law. The undisputed facts included the loan amount, the terms of the promissory note, the bank’s acknowledgement of partial payments, the vehicle’s surrender, and its subsequent sale. The core issue was whether the RTC correctly concluded that these facts did not constitute a complete dacion en pago. This determination required interpreting legal principles rather than re-evaluating factual evidence.

The spouses argued that a factual issue remained regarding the total amount of installment payments they made, claiming they paid more than the bank acknowledged. However, the Supreme Court emphasized that the burden of proving this claim rested on the spouses. As an affirmative defense under Section 5(b), Rule 6 of the Rules of Court, they needed to provide documentary evidence, such as receipts, to substantiate their payments. Despite multiple opportunities, they failed to present any such evidence, weakening their argument and reinforcing the appellate court’s decision to uphold the summary judgment. Therefore, the Court reiterated that when a defense relies on a written instrument, the substance of the document must be included in the pleading, along with the original or a copy.

According to this provision, “An affirmative defense is an allegation of a new matter which, while hypothetically admitting the material allegations in the pleading of the claimant, would nevertheless prevent or bar recovery by him. The affirmative defenses include fraud, statute of limitations, release, payment, illegality, statute of frauds, estoppel, former recovery, discharge in bankruptcy, and any other matter by way of confession and avoidance.”

The Court also addressed the issue of attorney’s fees and costs of suit, explaining that this matter depended on the propriety of the summary judgment. Given that the loan agreement stipulated attorney’s fees in case of a collection suit, and Rule 142 of the Rules of Court allows costs to the prevailing party, the CA only needed to determine if the lower court correctly applied these provisions. Again, this involved legal interpretation rather than factual dispute. The Court referenced established precedent, stating that the determination of whether an appeal involves questions of law or fact is best left to the CA, with doubts resolved in its favor.

The Supreme Court acknowledged that the determination of whether an appeal involves only questions of law or also questions of fact is best left to the Court of Appeals. The Supreme Court found no reason to overturn the Court of Appeals’ conclusion that Spouses Navarro’s appeal raised pure questions of law. Consequently, the dismissal of their appeal was deemed proper. The case highlights the importance of distinguishing between questions of law and questions of fact in appellate procedure, and it serves as a reminder that unsupported factual claims will not suffice to overturn a summary judgment.

FAQs

What was the key issue in this case?	The key issue was whether the appeal filed by Spouses Navarro raised pure questions of law or a mix of law and fact, which determines the proper appellate procedure. The Court determined it was purely a question of law.
What is a ‘dacion en pago’?	Dacion en pago is a special form of payment where a debtor transfers ownership of property to a creditor to satisfy a debt. The core of the issue was whether the surrendering of the vehicle was a full settlement or partial payment.
What is a summary judgment?	A summary judgment is a procedural device used during civil proceedings to promptly and expeditiously resolve a case without a trial. It is granted when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law.
What is the difference between a question of law and a question of fact?	A question of law involves the application of legal principles to a given set of facts, while a question of fact concerns the truth or falsity of alleged facts. A question of law is for the judge to decide, while a question of fact is for the jury (if there is one) or the judge (if there is not) to decide.
Why was the Spouses Navarro’s appeal dismissed?	The appeal was dismissed because it raised only questions of law and was filed under Rule 41, which is inappropriate for such appeals. Rule 45, a petition for certiorari, is more appropriate for questions of law.
What evidence did Spouses Navarro fail to provide?	Spouses Navarro failed to provide receipts or other documentary evidence to support their claim that they had paid a higher amount in loan installments than what the bank acknowledged. The Court emphasized that it is their burden to substantiate payments.
What is the significance of Rule 50, Section 2 of the Rules of Court?	Rule 50, Section 2 mandates the dismissal of appeals made under Rule 41 if they raise only pure questions of law, as these issues are not reviewable by the Court of Appeals under that rule. It underscores the importance of selecting the correct mode of appeal.
Can attorney’s fees be awarded in a summary judgment?	Yes, attorney’s fees can be awarded in a summary judgment if the loan agreement between the parties provides for it and if the prevailing party is entitled to costs of suit under Rule 142 of the Rules of Court.

This case underscores the importance of understanding procedural rules in appellate practice and the necessity of providing adequate evidence to support factual claims. The Supreme Court’s decision reinforces the principle that appeals raising pure questions of law must follow the correct procedural route, ensuring efficient and appropriate judicial review.

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 Augusto and Nora Navarro vs. Rural Bank of Tarlac, Inc., G.R. No. 180060, July 13, 2016