Bank of the Philippine Islands vs.
Spouses Reynaldo and Victoria Royeca
G.R. No. 176664, July 21, 2008
559 SCRA 207
FACTS:
On August 23, 1993, spouses Reynaldo and Victoria Royeca (respondents)
executed and delivered to Toyota Shaw, Inc. a Promissory Note for P577,008.00 payable
in 48 equal monthly installments. To secure the payment of said Promissory Note,
respondents executed a Chattel Mortgage in favor of Toyota over a Toyota Corolla motor
vehicle. Toyota, with notice to respondents, transferred all its rights, title, and interest
in the Chattel Mortgage to Far East Bank and Trust Company (FEBTC) through a deed
of assignment.
On May 20, 1997, the respondents delivered to the Auto Financing Department of
FEBTC eight (8) postdated checks in different amounts totaling P97,281.78.
However, on March 14, 2000 FEBTC sent a formal demand to respondents asking
for the payment of four (4) monthly amortizations covering the period from May 18,
1997 to August 18, 1997 but the respondents refused to pay on the ground that they
had already paid their obligation to FEBTC. The respondents further claimed that they
did not receive any notice from the drawee banks or from FEBTC that these checks were
dishonored.
FEBTC was later on merged with and absorbed by BPI.
ISSUE:
Who has the burden of proving payment?
RULING:
In civil cases, the party, whether plaintiff or defendant, who asserts the affirmative
of an issue has the onus to prove his assertion in order to obtain a favorable judgment.
For the plaintiff, the burden to prove its positive assertions never parts. For the
defendant, an affirmative defense is one which is not a denial of an essential ingredient
in the plaintiff’s cause of action, but one which, if established, will be a good defense –
i.e. an “avoidance” of the claim. The party having the burden of proof must establish his
case by a preponderance of evidence, or evidence which is more convincing to the court
as worthy of belief than that which is offered in opposition thereto.
As a general rule, one who pleads payment has the burden of proving it. Even
where the plaintiff must allege non-payment, the general rule is that the burden rests
on the defendant to prove payment, rather than on the plaintiff to prove non-payment.
The debtor has the burden of showing with legal certainty that the obligation has been
discharged by payment.
When the existence of a debt is fully established by the evidence contained in the
record, the burden of proving that it has been extinguished by payment devolves upon
the debtor who offers such a defense to the claim of the creditor. Where the debtor
introduces some evidence of payment, the burden of going forward with the evidence –
as distinct from the general burden of proof – shifts to the creditor, who is then under
a duty of producing some evidence to show non-payment.
Payment must be made in legal tender
Settled is the rule that payment must be made in legal tender. A check is not legal
tender and, therefore, cannot constitute a valid tender of payment. Since a negotiable
instrument is only a substitute for money and not money, the delivery of such an
instrument does not, by itself, operate as payment. Mere delivery of checks does not
discharge the obligation under a judgment. The obligation is not extinguished and
remains suspended until the payment by commercial document is actually realized.
In this case, respondents failed to present sufficient proof of payment. Hence, it
was no longer necessary for the petitioner to prove non-payment, particularly proof that
the checks were dishonored. The burden of evidence is shifted only if the party upon
whom it is lodged was able to adduce preponderant evidence to prove its claim.
Further, it should be noted that the petitioner, as payee, did not have a legal
obligation to inform the respondents of the dishonor of the checks. A notice of dishonor
is required only to preserve the right of the payee to recover on the check. It preserves
the liability of the drawer and the indorsers on the check. Otherwise, if the payee fails
to give notice to them, they are discharged from their liability thereon, and the payee is
precluded from enforcing payment on the check. The respondents, therefore, cannot
fault the petitioner for not notifying them of the non-payment of the checks because
whatever rights were transgressed by such omission belonged only to the petitioner.
Promissory notes
The Court finds that the evidence at hand preponderates in favor of the petitioner. The
petitioner’s possession of the documents pertaining to the obligation strongly buttresses
its claim that the obligation has not been extinguished. The creditor’s possession of the
evidence of debt is proof that the debt has not been discharged by payment. A
promissory note in the hands of the creditor is a proof of indebtedness rather than proof
of payment. In an action for replevin by a mortgagee, it is prima facie evidence that the
promissory note has not been paid. Likewise, an uncanceled mortgage in the possession
of the mortgagee gives rise to the presumption that the mortgage debt is unpaid.
Laches
The Court does not agree with the respondents position that the petitioner’s claim is
barred by laches since it has been three years since the checks were issued. Laches is a
recourse in equity. Equity, however, is applied only in the absence, never in
contravention, of statutory law. Thus, laches cannot, as a rule, abate a collection suit
filed within the prescriptive period mandated by the New Civil Code. The petitioner’s
action was filed within the ten-year prescriptive period provided under Article 1144 of
the New Civil Code. Hence, there is no room for the application of laches.
Banking
Respondents have consistently raised — that they were not notified of the non-payment
of the checks. Reasonable banking practice and prudence dictates that, when a check
given to a creditor bank in payment of an obligation is dishonored, the bank should
immediately return it to the debtor and demand its replacement or payment lest it causes
any prejudice to the drawer.
