Myline Cordial

PNB vs. Manila Oil Refining and By Products Company
G.R. No. L-18103, June 8, 1922

FACTS:
The manager and the treasurer of the defendant executed and delivered to the complainant Philippine National Bank a written instrument with a judgment note on demand, PNB brought an action and filed a motion confessing judgment.

ISSUE:
Whether or not a judgment note or a provision in a promissory note whereby in case the same is not paid at maturity, the maker authorizes any attorney to 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 exemptions. Will it affect the negotiable character of the instrument?

RULING:
No, a judgment note will not affect the negotiable character of the instrument. However, judgment note is not valid and effective. Warrants of attorney to confess judgment are void as against public policy because they enlarge the field for fraud, under these instruments the promissor bargains away his right a day in court, and the effect of instrument is to strike down the right of appeal accorded by statute.