PNB VS.
MANILA OIL REFINING AND BY PRODUCTS COMPANY
GR NO L-18103 JUNE 8, 1922
FACTS:
The manager, Vicente Sotelo, and the treasurer, Rafael Lopez, of the Manila Oil Refining & By-
Products Company, Inc., executed and delivered to the Philippine National Bank a promissory note for
the purpose of renewal in the amount of P61, 000 payable on demand after May 8, 1920 with
stipulation “to hereby authorize any attorney in the Philippine Islands, in case this note be not paid at
maturity, to appear in my name and confess judgment for the above sum with interest, cost of suit and
attorney's fees of ten (10) per cent for collection, a release of all errors and waiver of all rights to
inquisition and appeal, and to the benefit of all laws exempting property, real or personal, from levy or
sale.” Manila Oil failed to pay the note on demand so PNB brought action in the CFI Manila to recover
the value. Mr. Elias N. Rector, an attorney associated with PNB entered his appearance in representation
of defendant and filed a motion confessing judgment. The defendant, however, in a sworn declaration,
objected strongly to the unsolicited representation of Atty. Recto. Later, Atty. Antonio Gonzalez
appeared for the defendant and filed a demurrer, and when this was overruled, presented an answer.
The trial judge decided on the motion of Atty. Recto.
ISSUE:
Whether or not a provision in a promissory note whereby in case the same is not paid at
maturity, the maker authorizes any attorney to appear and confess judgment thereon for the principal
amount, with interest, costs, and attorney's fees, and waives all errors, rights to inquisition, and appeal,
and all property exception is valid.
RULING:
Neither the Code of Civil Procedure nor any other remedial statute expressly or tacitly
recognizes a confession of judgment commonly called a judgment note. On the contrary, the provisions
of the Code of Civil Procedure, in relation to constitutional safeguards relating to the right to take a
man's property only after a day in court and after due process of law, contemplate that all defendants
shall have an opportunity to be heard. At common law, there were two kinds of judgments by
confession; the one a judgment by cognovit actionem, and the other by confession relicta verificatione.
In the absence of statute, there is a conflict of authority as to the validity of a warrant of attorney for the
confession of judgement. The weight of opinion is that, unless authorized by statute, warrants of
attorney to confess judgment are void, as against public policy.
Judgments by confession as appeared at common law were considered an amicable, easy, and
cheap way to settle and secure debts. They are a quick remedy and serve to save the court's time. They
also save the time and money of the litigants and the government the expenses that a long litigation
entails. In one sense, instruments of this character may be considered as special agreements, with
power to enter up judgments on them, binding the parties to the result as they themselves viewed it.
On the other hand, are disadvantages to the commercial world which outweigh the considerations just
mentioned. Such warrants of attorney are void as against public policy, because they enlarge the field
for fraud, because under these instruments the promissor bargains away his right to a day in court, and
because the effect of the instrument is to strike down the right of appeal accorded by statute. The
recognition of such a form of obligation would bring about a complete reorganization of commercial
customs and practices, with reference to short-term obligations. It can readily be seen that judgement
notes, instead of resulting to the advantage of commercial life in the Philippines might be the source of
abuse and oppression, and make the courts involuntary parties thereto. If the bank has a meritorious
case, the judgement is ultimately certain in the courts.
The SC is of the opinion that warrants of attorney to confess judgment are not authorized nor
contemplated by our law. Furthermore, provisions in notes authorizing attorneys to appear and confess
judgments against makers should not be recognized in this jurisdiction by implication and should only be
considered as valid when given express legislative sanction.
Thus, the judgment appealed from is set aside and the case is remanded to the lower court.
