NEGO: Sec.

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National Bank v. Manila Oil Refining & By-
[Warrants of Attorney to Confess
11 Products Company, Inc. Judgment]
No. 18103 8 June 1922 Malcolm, J. Yedda
Petitioners: Respondents:
National Bank Manila Oil Refining & By-Products Company, Inc.
Recit Ready Summary

1. Manila Oil made a promissory note in favor of National Bank (NB) with a provision saying that in case
of default, any attorney may appear and confess judgment on their behalf for the principal amount, with
interest, costs and attorneys fees, and waive all errors, rights to inquisition and appeal and all property
exemptions.
2. Manila Oil was unable to pay so NB brought a suit and Atty. Recto (with NB) entered appearance on
behalf of Manila Oil pursuant to the promissory note provision.
3. Manila Oil strongly objected to this an filed a demurrer which was overruled.
4. Presently, there is no law which sanctions judgment notes in our jurisdiction so the Court sought advice
from prominent lawyers with banking institutions who unanimously protested against the recognition of
judgment notes. The Court also cited jurisprudence from other jurisdictions about the issue:
a. First National Bank of Kansas City v. White (Against judgment notes)- it is against public policy
and encourages fraud, oppression and tyranny. It puts the debtor on the mercy of the creditor
and renders the courts as mere clerks to enter the judgment
b. Farquhar & Co. vs. Dehaven (Against)- if it should be adopted, the same should be by the act
of the Legislature with all proper safeguards to prevent fraud and imposition. No man shall
suffer judgment at the hands of the courts without proper process and a day to be heard
c. First National Bank of Las Cruces v. Baker (For judgment notes)- it’s not against public policy;
used by common law since time immemorial then passed down to us; if an undesirable
circumstance has since arise, the Legislature should’ve prohibited it.
5. SC ruled that doctrines of common law are binding only in so far as they are founded on sound
principles applicable to local conditions. It held that warrants of atty to confess judgment are not
authorized nor contemplated by our law and it should not be recognized by implication. It will
only be valid when given express legislative action.
Facts

1. The manager and treasurer of Manila Oil (respondent) executed and delivered to NB (petitioner) a
promissory note stating that incase such note 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
fees, and waives all errors, rights to inquisition, and appeal, and all property exemptions.
2. Respondent failed to pay on demand so petitioner filed a suit to recover Php 61,000 with costs and
interests. Atty. Recto, a lawyer associated with petitioner entered his appearance in representation of
respondent and filed a motion confessing judgment.
3. Respondent objected. Atty. Gonzales appeared on its behalf and filed a demurrer.
4. Advice of prominent lawyers with banking institutions were sought. Although the sanction of judgment
notes in the Philippines might prove of immediate value to clients, the attorneys-at-law had unanimous
protest against the recognition of judgment notes.
Point/s of Contention

NB
1. NIL expressly recognizes judgment notes and they are enforceable under the regular procedure.
Section 5 provides:
“The negotiable character of an instrument otherwise negotiable is not affected by
a provision which x x x

(b) Authorizes a confession of judgment if the instrument be not paid at maturity."

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Issues Ruling
1. Whether a promissory note written by a maker authorizing any attorney to appear 1. No
and confess judgment is valid.
Rationale
1. Whether a promissory note written by a maker authorizing any attorney to appear and confess
judgment is valid — NO
● The quoted provision merely provides that, in jurisdiction where judgment notes are
recognized, such clauses shall not affect the negotiable character of the instrument. The same
section also provides, "But nothing in this section shall validate any provision or stipulation
otherwise illegal."
● The court now has to determine the validity of a provision in a note authorizing an attorney to
appear and confess judgment against the maker, absent a statute.
o Advantage of this situation: it permits us to reach the solution best grounded in the
solid principles of law and which will best advance the public interest.
● Neither the Code of Civil Procedure nor any other remedial statute expressly or tacitly
recognizes a confession of judgment called a judgment note. The provisions of Civ Pro
contemplate that all defendants should have an opportunity to be heard. Provisions on
counterclaims in the said Code argue against judgment notes especially that it provides that,
in case the defendant or his assignee omits to set up a counterclaim, he cannot afterwards
maintain an action against the plaintiff therefor.
● It is a familiar common security of ancient origin. There were two kinds of judgments by
confession: judgment by cognovit actionem and confession relicta verification. A number of
US Jurisdictions have accepted this common law view while others refused. The weight of
opinion is that unless authorized by statute, warrants of attorney to confess judgment are void,
against public policy.
● Leading case is probably the First National Bank of Kansas City v. White:
o Defendant executed a judgment note which authorized any attyy to appear for him in
an action on the note at any time the note became due in any court of record in
Missouri, to waive the issuing service of process and to confess judgment in favor of
First National Bank, with interest, costs of suit, attorney's fee of 10% and also to waive
and release all errors in said proceedings and judgment, and all proceedings appeals,
or writs of error thereof.
o Denham, an atty, appeared pursuant to the note, entered appearance and consented
that judgment be rendered in favor of plaintiff.
o TAKEAWAY: We do not think that the policy of our law is to thus place a debtor in the
absolute power of his creditor. Fraud would be enlarged and oppression and tyranny
will follow. This kind of instrument reduces the court to mere clerks to enter and record
the judgment called for. Agreements whose object is to oust the jurisdiction of the
courts are contrary to public policy and will not be enforced. The contract is void as
against the public policy of the State. Such agreements are iniquitous and should be
condemned by the courts, until such time it may receive express statutory recognition.
● Farquhar & Co. vs. Dehaven (another well-considered authority):
o The notes contained a waiver of presentment and protest, homestead and exemption
rights real and personal, and other rights
o Also contained a provision empowering and authorizing Farquhar or agent or any
prothonotary or atty to appear and confess judgment on their behalf
o TAKEAWAY: If the practice is adopted in the State, it should be by the act of the
Legislature with all proper safeguards to prevent fraud and imposition. No man shall
suffer judgment at the hands of the courts without proper process and a day to be
heard. To give currency to such paper by judicial pronouncement would be to open
the door to fraud and imposition, and to subject the people to wrongs and injuries not
heretofore contemplated.
● First National Bank of Las Cruces v. Baker lends support to judgment notes:
o A warrant of atty given as a security to a creditor accompanying a promissory note
confers a valid power and authorizes a confession of judgment in any court of
competent jurisdiction in an action to be brought upon said note

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 o It is not against public policy-- it was a practice from time immemorial at common law,
and the common law comes down to us sanctioned as justified by the reason and
experience. If conditions have which make its application undesirable, it is for the
Legislature to so announce, and to prohibit the taking of judgments of this kind.
o It enables a debtor to obtain money which he could by no possibility otherwise obtain.
● Judgments by confession in common law were considered an amicable, easy and cheap way
to secure debts. They are a quick remedy; they save the time and money of the courts, litigants
and the government.
● Disadvantages:
o Enlarges the field for fraud
o Promisor bargains away his right to a day in court
o Strikes down the right of appeal afforded by statutes
● We are of the opinion that warrants of attorney to confess judgment are not authorized nor
contemplated by our law. Furthermore, 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.
Disposition

Judgment appealed from is set aside. Judgment notes are void. Case is remanded to lower court for
further proceedings.