Manzano vs. Despabiladeras

A party upon whom a request for admission is served under Rule 26 must respond with a sworn statement specifically denying the matters or detailing the reasons for inability to admit or deny them; failure to do so within the prescribed period renders each matter impliedly admitted, and that admission is conclusive and may not be contradicted by evidence presented at trial unless shown to have been made through palpable mistake. An existing pre-trial agreement to submit an offer to stipulate does not nullify or replace this independent remedy.

In August and September 1989, respondent Luz Despabiladeras purchased various construction materials on credit from petitioner Roger Manzano for her project at the Camarines Sur Polytechnic Colleges (CSPC). The parties disputed the total value of the materials delivered, the existence of a stipulated 8% monthly interest, and the amount already paid. Petitioner claimed only ₱130,000 had been paid out of over ₱300,000 worth of deliveries, while respondent asserted she had made additional payments that fully or substantially satisfied the obligation.

• Nature of the Action: Petitioner Roger Manzano filed a complaint for sum of money with damages seeking recovery of balances for construction materials delivered on credit to respondent Luz Despabiladeras, which she used in a project at the Camarines Sur Polytechnic Colleges (CSPC). The complaint alleged a total delivery of ₱307,140.50 worth of materials, payable upon respondent’s initial collection from CSPC, with a stipulated 8% monthly interest until full payment.

• Partial Payment and Demand: Respondent had paid ₱130,000 but allegedly failed to pay the balance despite having collected from CSPC. Petitioner alleged that after applying partial payments, respondent still owed ₱201,711.74 plus interest.

• Respondent’s Defense: In her Answer with Counterclaim, respondent claimed petitioner had substantially altered the prices of the delivered materials. She asserted that, in addition to the ₱130,000, she had made further payments via two checks—one for ₱43,069.00 and another for ₱14,000.00. Petitioner replied that those checks covered past obligations unrelated to the present case.

• Pre-trial Agreement: At the pre-trial conference on October 2, 1990, the parties agreed on the record that “the plaintiff shall submit an offer to stipulate showing an itemized list of construction materials delivered to the defendant together with the cost claimed by the plaintiff within fifteen (15) days furnishing copy thereof to the defendant who will state her objections if any, or comment therein within the same period of time.”

• Request for Admission: Instead of an offer to stipulate, petitioner filed a “Request for Admission” on October 24, 1990, asking respondent to admit, among other things, that on specific dates he delivered the items described in annexed invoices with a total value of ₱314,610.50, and that of that amount, respondent had paid only ₱130,000.

• Respondent’s Response: Respondent did not file a sworn statement denying or explaining the matters requested. She later submitted a list of items indicating which deliveries were admitted and which were not, but noted that “Deliveries admitted do not bear the actual price agreed [upon] or the specifications requested.” The trial court, in its order of February 21, 1994, confirmed that because respondent had not answered the request for admission under oath, the facts stated therein were deemed admitted.

• Admissions During Trial: During the trial, petitioner’s wife testified and petitioner’s counsel admitted that, in addition to the ₱130,000 partial payment, petitioner had received a total of ₱122,000 in further payments—₱97,000 from the CSPC retention lien released pursuant to a court order, and ₱25,000 upon the expiration of respondent’s counterbond posted to dissolve petitioner’s bond.

• Trial Court’s Decision: The trial court found petitioner entitled to recover ₱87,610.50 as the unpaid balance (total obligation of ₱314,610.50 minus ₱130,000 initial payment and ₱97,000 additional payment). It denied the claim for 8% monthly interest for lack of a written stipulation, but awarded legal interest at 12% per annum from the filing of the complaint and ₱10,000 attorney’s fees.

• Appellate Reversal: The Court of Appeals set aside the trial court’s decision, holding that the pre-trial agreement effectively replaced the request for admission and that respondent had not impliedly admitted the facts. It further held that if the two checks of ₱43,069.50 and ₱14,200.00 were credited together with the ₱25,000 payment admitted by petitioner, the total payments reached ₱309,269.50, effectively extinguishing the obligation.

• Implied Admission: Petitioner maintained that respondent’s failure to file a sworn statement denying the matters in the Request for Admission under Rule 26 resulted in the implied admission of those facts—specifically, that the total value of materials delivered was ₱314,610.50 and only ₱130,000 had been paid. He argued that the trial court correctly confirmed this admission and disregarded contrary evidence.
• Effect of Pre-trial Agreement: Petitioner contended that the Court of Appeals erred in treating the pre-trial agreement for an offer to stipulate as a bar to the request for admission. The request for admission is an independent procedural remedy available after issues have been joined, and the trial court neither amended nor repealed Rule 26 by allowing it.
• Nature of Comment Filed: Petitioner argued that the list of items respondent submitted was not a sworn statement as required by Rule 26 and could not be considered compliance. The trial court’s directive for respondent to file a “comment” on the request was understood to mean a comment under oath, consistent with Rule 26.
• Appreciation of Evidence: Petitioner asserted that the trial court was not precluded from disregarding respondent’s evidence that contradicted her implied admission, even though such evidence had been admitted during trial, because admissions made through the operation of Rule 26 are conclusive unless shown to be grounded on palpable mistake.

• Primacy of Pre-trial Agreement: Respondent countered that the mutual agreement during pre-trial for an offer to stipulate supplanted any subsequent request for admission. Her filing of a comment or list of items substantially complied with that agreement, and she could not be deemed to have impliedly admitted the facts in the request.
• Need for Trial on the Merits: She argued that the trial court itself had required petitioner to present evidence on the matters in the request and had allowed her to present contrary evidence, indicating that no conclusive admission had been recognized.
• Full Payment: Respondent maintained that the evidence on record—including the two checks (₱43,069.50 and ₱14,200.00) and the ₱25,000 admitted by petitioner—established that payments totaled at least ₱309,269.50, fully satisfying the obligation.

• Implied Admission: Whether respondent’s failure to answer under oath the request for admission pursuant to Rule 26 resulted in an implied and conclusive admission of the material facts stated therein, notwithstanding the pre-trial agreement for an offer to stipulate.
• Crediting of Payments: Whether the remaining unpaid balance was correctly computed after considering the additional payments petitioner admitted receiving during trial.
• Attorney’s Fees: Whether the award of attorney’s fees was warranted under Article 2208 of the Civil Code.

• Implied Admission: Respondent’s failure to serve a sworn statement specifically denying or detailing the reasons for inability to admit or deny the matters in the Request for Admission resulted in the implied admission of those matters under Section 2, Rule 26 of the 1964 Rules of Court. The pre-trial agreement to submit an offer to stipulate did not supersede this independent remedy, which any party may invoke after issues have been joined. The trial court’s order confirming the admission was thus proper, and evidence contradicting the deemed admission was correctly disregarded pursuant to the rule that admissions in pleadings or proceedings cannot be controverted unless shown to have been made through palpable mistake.
• Crediting of Payments: The total obligation was established at ₱314,610.50, with an admitted partial payment of ₱130,000. During trial, petitioner admitted the receipt of an additional ₱97,000 from the CSPC retention lien and ₱25,000 upon expiration of respondent’s counterbond, for a total of ₱122,000 in further payments. Subtracting the total payments of ₱252,000 from the admitted obligation leaves an unpaid balance of ₱62,610.50. The two checks respondent sought to credit had been previously claimed by petitioner as payment for past accounts and were not shown to apply to the present obligation; thus, they were not credited.
• Attorney’s Fees: Attorney’s fees are recoverable only in the instances enumerated in Article 2208 of the Civil Code. None of those grounds was present, as respondent’s resistance to the claim for unwritten interest was not in bad faith and did not compel petitioner to litigate under any of the statutory exceptions. The award of attorney’s fees was therefore deleted.

• Implied Admission under Rule 26 — Where a party upon whom a request for admission is served fails to file and serve a sworn statement either specifically denying the matters of which admission is requested or setting forth in detail the reasons why the party cannot truthfully either admit or deny those matters, each of the matters shall be deemed admitted. The admission so implied is conclusive as to the admitting party and may not be contradicted by evidence at trial, unless it is previously shown to have been made through palpable mistake. The rule applies even if a pre-trial agreement contemplated a different mode of stipulation; the request for admission remains an available, independent remedy after joinder of issues.
• Admissions in Pleadings and Proceedings — Admissions made by parties in pleadings, during trial, or in the course of other proceedings do not require proof and are binding; they cannot be controverted by the party making them unless shown to have been made through palpable mistake (citing Yu v. Magpayo, 44 SCRA 163; Elayda v. Court of Appeals, 199 SCRA 349).

• “Each of the matters of which an admission is requested shall be deemed admitted unless, within a period designated in the request, which shall not be less than ten (10) days after service thereof, or within such further time as the court may allow on motion and notice, the party to whom the request is directed serves upon the party requesting the admission a sworn statement either denying specifically the matters of which an admission is requested or setting forth in detail the reasons why he cannot truthfully either admit or deny those matters.”
• “Admission made by the parties in the pleadings, or in the course of the trial or other proceedings do not require proof and cannot be contradicted unless previously shown to have been made through palpable mistake.”
• “The above-quoted Sections 1 and 2 of Rule 26 should not be disregarded, as in fact the trial court did not, when it ordered respondent to file comment thereon, just because the parties mutually agreed that petitioner submit ‘an offer to stipulate.’ For, as stated earlier, the request for admission is a remedy afforded any party after the issues had been joined.”

• Yu v. Magpayo, 44 SCRA 163 — Relied upon by the trial court and cited with approval for the rule that admissions made in pleadings or proceedings are conclusive and may not be contradicted unless made through palpable mistake.
• Elayda v. Court of Appeals, 199 SCRA 349 — Cited to reinforce that an admission in pleadings cannot be controverted and that contradictory proofs should be ignored.
• A.C. Enterprises, Inc. v. Construction Industry Arbitration Commission, 224 SCRA 55 — Applied by the trial court as authority for the imposition of 12% per annum legal interest from the filing of the complaint.
• American Home Assurance Co. v. Antonio Chua, 309 SCRA 250 — Cited to support the deletion of attorney’s fees, reiterating that attorney’s fees may be awarded only under the grounds enumerated in Article 2208 of the Civil Code.

• Rule 26, Sections 1 and 2, 1964 Rules of Court (substantially reproduced in the 1997 Rules) — The request for admission procedure and the consequence of implied admission for failure to respond with a sworn statement were the procedural anchors of the decision. The trial court and the Supreme Court strictly applied the rule, holding that respondent’s silence under oath triggered a conclusive implied admission.
• Article 1956, Civil Code of the Philippines — The provision that no interest shall be due unless expressly stipulated in writing was applied to deny the claim for 8% monthly interest. Legal interest at 12% per annum from judicial demand was awarded instead.
• Article 2208, Civil Code of the Philippines — Enumerates the instances when attorney’s fees may be awarded. None being present, the award was deleted.

Panganiban (Chairman), Sandoval-Gutierrez, and Garcia, JJ., concur. Corona, J., on leave.