NATIONAL MARKETING CORPORATION, PLAINTIFF AND APPELLEE, VS. JOSE, G. DE CASTRO, DEFENDANT AND APPELLANT.

National Marketing Corporation versus De Castro

The Case

This is a collection case. The National Marketing Corporation, the plaintiff and appellee, sued Jose G. de Castro, the defendant and appellant, to recover the unpaid balance of the price of two tractors he bought on credit from the plaintiff's predecessor-in-interest, together with stipulated interest and attorney's fees. The case matters to a reviewee for two reasons. First, it is a clean illustration of the rule that a denial in an answer must be specific, and that material averments not specifically denied are deemed admitted, so that judgment may be rendered on the pleadings. Second, it shows when a motion for new trial may properly be denied for want of an affidavit of merit, and why a defendant who has been given every chance to be heard cannot later claim that he was deprived of his day in court.

Procedural History

The action was filed in the Court of First Instance of Manila. After the plaintiff rested its case, the trial court reset the continuation of the trial to give the defendant his turn to present evidence. The defendant failed to appear on the reset date, and the court considered the case submitted for decision on the plaintiff's evidence. On the defendant's own motion, however, the court set aside that order and gave him time to report on his supposed amicable settlement with the plaintiff. Several manifestations and motions for extension followed, the plaintiff rejected the settlement offers, and the trial court eventually denied the last motion for extension and rendered judgment for the plaintiff. The defendant moved for a new trial, which was denied. He then appealed directly to the Supreme Court, stating in his notice of appeal that the issues involved are purely questions of law.

Facts

On June 7, 1949, Jose G. de Castro bought from the Philippine Relief and Trade Rehabilitation Administration, known as PRATRA and the plaintiff's predecessor-in-interest, two International Model TD-18 tractors with dozer, for a total price of 38,000 pesos. He made a down payment of 15,200 pesos, leaving a balance of 22,800 pesos. To secure that balance, he executed a promissory note dated June 7, 1949. Under the note, in case of default in the payment of principal and interest, he bound himself to pay an additional ten percent of the total amount due as attorney's fees and costs of collection.

He failed to comply with the terms of the note. The plaintiff's predecessor sent demand letters dated May 2, 1953, June 14, 1954, and February 12, 1955. His wife, Miguela B. de Castro, answered these letters on May 15, 1953, June 25, 1954, and July 18, 1955, admitting the indebtedness and asking for extensions of time on the ground of alleged financial reverses. As of July 11, 1956, the principal was 22,800 pesos and the stipulated interest was 11,227 pesos and 71 centavos, for a total of 34,027 pesos and 71 centavos. He had paid only 3,480 pesos, which was applied to interest, leaving an outstanding balance of 30,547 pesos and 71 centavos.

In the meantime, PRATRA was dissolved on October 3, 1950, and its assets, rights, choses in action, obligations, and contracts were transferred to and assumed by the Price Stabilization Corporation, known as PRISCO. PRISCO was in turn dissolved on June 17, 1955, and its rights and contracts were transferred to the National Marketing Corporation, known as NAMARCO, which became the plaintiff. In his answer, the defendant did not specifically deny the material averments of the complaint; he merely alleged that he had no knowledge or information sufficient to form a belief as to their truth, and so denied them.

Issues

• Whether or not the defendant was deprived of his day in court, so that the judgment against him should be set aside.
• Whether or not the trial court correctly denied the motion for new trial, which was not supported by an affidavit of merit.
• Whether or not the trial court properly rendered judgment on the basis of the plaintiff's evidence, given the defendant's answer.

Applicable Provisions

The decision applies the rule on specific denial under the old Rules of Court, which the Court states as follows:

Material averments in a complaint, other than those as to the amount of damage, are deemed admitted when not specifically denied.

This rule bears directly on the case because the defendant's qualified denial did not put the material averments of the complaint in issue.

The decision also relies on the rule allowing judgment on the pleadings, stated thus:

The court may render judgment upon the pleadings if material averments in the complaint are admitted.

This is the basis for sustaining the judgment rendered on the plaintiff's evidence, since the defendant's admissions left nothing to try.

Ruling

On the first issue, the Court held that the defendant was not deprived of his day in court. The records show that the trial court repeatedly bent over backwards for him. It set aside its verbal order of August 10, 1956, upon his own motion and over the plaintiff's objection, and gave him twenty days to report on the status of his negotiations. It gave him further periods on October 22 and November 10, 1956. Only when his last motion for extension did not bear the conformity of the plaintiff's counsel, and the case had dragged on for an unreasonable period, did the court deny it and consider the case submitted. It is not, therefore, correct to say that the appellee had been deprived of his day in court.

On the second issue, the Court held that the motion for new trial was correctly denied. The motion was grounded on mistake, claiming the defendant was deprived of the opportunity to present evidence because he and his counsel failed to arrive on time on the morning of August 10, 1956, owing to heavy traffic on the way from Quezon City. But no affidavit of merit was attached to the motion, as required by the rules on new trial, and so the denial was proper.

On the third issue, the Court held that the judgment could stand on the pleadings themselves. The defendant's answer merely alleged that he had no knowledge or information sufficient to form a belief as to the truth of the material paragraphs of the complaint, and so denied them. The Court ruled that a denial is not specific simply because it is so qualified. Since material averments not specifically denied are deemed admitted, and judgment may be rendered on the pleadings when material averments are admitted, the trial court acted correctly.

Doctrine

First, a denial in an answer must be specific. A denial that a party has no knowledge or information sufficient to form a belief is not a specific denial, and it does not raise an issue. Second, material averments in a complaint, other than the amount of damage, are deemed admitted when not specifically denied, and the court may render judgment upon the pleadings when those averments are admitted. Third, a motion for new trial based on mistake or excusable neglect must be supported by an affidavit of merit; without it, the motion is properly denied. Fourth, a party who has been given repeated opportunities to present evidence and to settle cannot later claim that he was deprived of his day in court.

Disposition

The Supreme Court affirmed the judgment of the trial court, with costs against the appellant, Jose G. de Castro.

Remember This

Memorize the line: a denial is not specific simply because it is so qualified, and what is not specifically denied is deemed admitted. Examiners use this case in civil procedure to test specific denial, judgment on the pleadings, and the affidavit of merit required for a motion for new trial.