Demurrer to Evidence Reversed on Appeal: When the Court Must Decide on the Plaintiff's Evidence

When a defendant files a demurrer to evidence and the trial court grants it, the defendant is taking a calculated risk. If an appellate court later reverses that dismissal, the defendant loses the right to present his own evidence — and the appellate court must decide the case based solely on the plaintiff's evidence. This principle, rooted in the Rules of Court, was clarified by the Supreme Court in Radiowealth Finance Company v. Spouses Del Rosario (G.R. No. 138739, July 6, 2000).

The case also illustrates how judicial admissions can prove a debtor's liability even when the plaintiff's witness lacks personal knowledge of the documents involved.

The Facts of the Case

In March 1991, Spouses Vicente and Maria Sumilang Del Rosario executed a Promissory Note in favor of Radiowealth Finance Company for P138,948. The note required monthly installments of P11,579 for twelve consecutive months, with a 2.5% monthly late payment penalty and an acceleration clause making the entire balance due upon default.

The spouses defaulted, and their checks were dishonored. Radiowealth filed a collection suit. During trial, the company's credit and collection officer presented documentary evidence — including the promissory note, demand letters, ledger cards, and dishonor slips — but admitted he had no personal knowledge of the transaction. The documents had merely been endorsed to him.

The trial court dismissed the complaint, ruling the evidence was hearsay. The Court of Appeals reversed, finding the spouses had admitted the genuineness and due execution of the promissory note and demand letter during pretrial. However, the appellate court remanded the case for further proceedings. Radiowealth appealed to the Supreme Court.

The Legal Issue

The sole issue was whether the Court of Appeals erred in remanding the case instead of rendering judgment based on the petitioner's evidence.

The Supreme Court's Ruling

The Court granted the petition, holding that the Court of Appeals correctly reversed the trial court but erred in remanding the case.

The Effect of Reversing a Demurrer to Evidence

Under the Rules of Court, when a demurrer to evidence is granted but the dismissal is reversed on appeal, the defendant is deemed to have waived the right to present evidence. The appellate court must then render judgment on the merits based on the plaintiff's evidence. The exact statutory text of this provision is not available in the ASG law library, but the principle is clearly established in the decision itself.

The Court explained the rationale, citing Villanueva Transit v. Javellana: the defendant who demurs elects to stand on the insufficiency of the plaintiff's case. If the trial court denies the demurrer, the defendant may still present evidence. But if the trial court grants it and the appellate court reverses, the defendant loses that right. A remand would defy the Rules and unnecessarily prolong litigation.

The Obligation Was Due and Demandable

The respondents argued that no due date was fixed for the first installment, making the obligation one whose fulfillment depended on the debtor's will. They asked the court to fix a period under the Civil Code provisions on obligations with a period.

The Court rejected this. The promissory note clearly required monthly installments of P11,579 for twelve consecutive months. The acceleration clause and late payment penalty showed the parties intended payment at definite dates. The spouses' own partial payments, though dishonored, confirmed their understanding that installments were due monthly.

Judicial Admissions and Admissibility of Evidence

Even though the plaintiff's witness had no personal knowledge of the documents, they were admissible because the respondents had admitted their genuineness and due execution during pretrial. These admissions established their indebtedness.

Adjusting the Award

The Court modified the amounts. Since the note did not stipulate interest but did impose a 2.5% monthly penalty, that penalty covered the interest claim. The 10% liquidated damages were deemed unconscionable and included in the penalty. Attorney's fees were reduced to 10% of the amount due, which the Court found reasonable.

Practical Takeaways

• A demurrer to evidence is a high-stakes move. If granted by the trial court but reversed on appeal, the defendant waives the right to present evidence. The appellate court decides based on the plaintiff's evidence alone.
• Judicial admissions are powerful. Admissions made in pleadings or during pretrial — such as the genuineness and due execution of a document — can establish liability even without a witness with personal knowledge.
• Appellate courts should not remand after reversing a demurrer. The Rules require the appellate court to render judgment on the merits based on the evidence already on record.
• Blank spaces in contracts do not automatically favor debtors. If a promissory note clearly provides for monthly installments, an acceleration clause, and penalties, the obligation is due and demandable even if specific dates were left blank.
• Courts will reduce unconscionable penalties. Liquidated damages that are iniquitous or excessive may be equitably reduced under the Civil Code.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.