Hibberd v. Rohde

HIBBERD V.
ROHDE
DOCTRINE:
Rhiano: Meaning of admission, waived defenses & not waived
o By the admission of the genuineness and due execution of an instrument, 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 pleadings of the party relying upon it; that the documents 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.
o When a party is deemed to have admitted the genuineness and due execution of an actionable
document, defenses that are implied from said admission are necessarily waived like the
defenses of forgery of the document, lack of authority to execute the document, that the party
charged signed the document in some other capacity than that alleged in the pleading, or that the
was no delivery. (NOT waived: defense of want/illegality of consideration, exact time of delivery,
payment/nonpayment, usury, and fraud)
Basically, the genuineness and execution of a written instrument or document set in a pleading
with the original attached is deemed admitted UNLESS the adverse party under oath denies them.
Failure to deny would be a WAIVER on the part of the adverse party on certain defenses, those
that concern the genuineness or the execution.
HOWEVER, it is not a waiver to introduce any other DEFENSE ON THE MERITS which does not
contradict the execution/genuineness of the instrument introduced in evidence.
In case: though there was no verified denial of the written instrument, the defense of illegality of
consideration was still allowed to be raised. However, plaintiff (Hibberd) still won because there was no
illegality of consideration.
EMERGENCY RECIT:
McMillian secured merchandise from Brand and Hibberd and sold it. Brand and Hibberd claimed it was
only a deposit and therefore filed an estafa case. Rohde is the defense counsel of Mcmillian. Rhode was
able to strike an agreement for Brand and Hibberd to withdraw the case, in turn he will execute a
promissory note together with Mcmillian to pay the sum owed to them for the value of the merchandise.
Rhode only gave a partial payment of 200 of the 1200, which prompted Hibberd to file suit on the
Promissory Note. Only Rhode appeared and answered BUT did NOT enter a denial on the genuineness
and the execution of the note and Raises only the Special Defense of Illegality of Consideration. Hibberd,
on his part claims that Rohdes special defense of illegality of consideration is cut off by section 103 of the
Code of Civil Procedure (Sec 8 Rule 8 now). The SC ruled that Rohde may still interpose the defense
despite the failure to enter a verified denial of the genuineness and due execution of the note set out in
the complaint because Rule 103 cannot preclude a defendant from introducing any defense on the merits
which does not contradict the execution of the instrument introduced in evidence. However Hibberd still
wins because there was no illegality of consideration.
FACTS:
McMillian was in the retail liquor business and secured a stock of merchandise valued at P1,200 from
Brand & Hibberd and sold it.
Brand and Hibberd argue it was only given as a DEPOSIT and filed a case of Estafa agains Mcmillian.
Mcmillian got an attorney, named Rhode for his defense in the estafa case.
According to the SC, it appears that Rhode strongly insisted that McMillian was not guilty of the crime
charged, and no doubt his ability as a lawyer tended to convince the complainants that the criminal
charge was unjustified.
The parties made an agreement: 1) IF Brand & Hibberd would withdraw the estaf complaint. 2) Rohde
agreed to be a jointly and severally liable with Mcmillian to pay tothe firm of Brand and Hibberd, of the city
of Baguio, 1,200 pesos in monthly installments of 100.
Rhode paid 200.
Not stated in case but it appears there were no further payments, hence this case, a suit on the
Promissory Note.
Only Rhode appeared and answered BUT did NOT enter a denial on the genuineness and the execution
of the note.
o Raises only the Special Defense of Illegality of Consideration.
Hibberd argues that his special defense of illegality of consideration is cut off by section 103 of
the Code of Civil Procedure, which reads as follows: "Actions and defenses based upon a written
instruments. When an action is brought upon a written instrument and the complaint contains or has
annexed a copy of such instrument, the genuineness and due execution of the instrument shall be
deemed admitted, unless specifically denied under oath in the answer; and when the defense to an
action, or a counterclaim stated in an answer, is founded upon a written instrument and the copy thereof
is contained in or annexed to the answer, the genuineness and due execution of such instrument shall be
deemed admitted, unless specifically denied under oath by the plaintiff in his pleadings. (Identical to
Rule 8 Section 8 of 1997 Rules/Current Rules)
Trial Court
o In-favor of Rohde, since the consideration of the promissory note was the compromise of a
public offense.
Submitted for review with the SC
ISSUE
1. WON the defense of illegality of consideration may still be raised despite the failure to enter a
denial on the genuineness of the note.
2. (Not related but substantive part ) WON there was an illegal consideration
HELD/RATIO:
1. YES, it may still be raised.
the special defense interposed by the defendant of illegality of consideration is not barred by his failure
to enter a verified denial of the genuineness and due execution of the note set out in the complaint.
Rule 103 cannot preclude a defendant from introducing any defense on the merits which does not
contradict the execution of the instrument introduced in evidence.
o SECTION 103 (of the old rules) DOES NOT PROHIBIT SUCH A DEFENSE AS ILLEGALITY
OF CONTRACT. To interpret section 103 as to prohibit such a defense as illegality of
consideration, which is clearly a defense of new matter, would pro tanto repeal the second
paragraph of section 94, which permits a defendant to answer by "A statement of any new matter
constituting a defense or counterclaim." Likewise, section 285 provides that the terms of a writing
may be impeached by reason of its illegality or fraud.
The Court has held before that Sec. 103 is not applicable to an indorser in a promissory note in a suit
against the maker. It has been held that the admission of the genuineness and due execution of the
instrument does not bar the defense of want of consideration. The only object of the rule was to enable a
plaintiff to make out a prima facie, not a conclusive case.
2. No, there was no illegal consideration.
There is no charge that Brand & Hibberd file the criminal complaint with a view of extorting a settlement
of their claim against McMillian. There can be no doubt that the agreement which resulted in the
execution of the note and withdrawal of the case was entered into by Brand & Hibberd with an eye to the
satisfaction of their pecuniary claim against McMillian.
It is not shown that Brand & Hibberd agreed not to testify in any further criminal proceedings against
McMillian, or that they would suppress any evidence in their possession, or that they would solicit the
State's prosecutor or any other Government official whose authority extend to the criminal case, to not
hold the defendant for trial. What they actually did was to move in open court for a dismissal of the
complaint. This is all they did so far as the record shows, and that it was satisfactory to the defendant
Rohde is apparent from the fact that he subsequently made partial payments on the note.
There having been no agreement to interfere with the due administration of the criminal law, we are
constrained to hold that no part of the consideration of the note declared upon his illegal or against public
policy. The plaintiff is therefore entitled to judgment. The judgment appealed from is reversed and
judgment is decreed against the defendant Rohde for the sum of one thousand pesos, the amount
remaining unpaid on the note, together with legal interest from the date of the institution of this action.
Without costs. So ordered.

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