NOEMI M. CORONEL, petitioner, vs. ENCARNACION C. CAPATI, respondent.

Topic: Existence of a debt and burden of proof for payment

The debtor has the burden of showing with legal certainty that the obligation has been
discharged by payment
Facts: Noemi Coronel contracted two loans from Encarnacion Capati on embodied in 2
handwritten instruments:
1) September 4, 1992 amounting to P121,000.00 payabele on or before February 4,
1993. and October 25, 1992.
2) Ocotber 25, 1992 amounting to P 363,000.00 payable on or before March 25, 1993
Noemi issued 2 Metrobank checks dated September 24, 1992 and October 25, 1992
respectively.
Noemi failed to pay her loans upon maturity date despite Encarnacion’s repeated demands.
Moreover, both checks were dishnored when presented for payment.
Encarnacion then filed a complaint for the sum of money and damages before the RTC of
Guagua, Pampanga
The TRIAL COURT ordered Noemi to pay Encarnacion Capati P484,000 (principal
obligation) + 12% interest per annum from the time of the filing of this case upon the time
fully paid; pay cost of suit, pay 10% of P484,000 as attorneys fees.
Noemi appealed to the Court of Appeals but it was denied.
Noemi’s defense:
That the Metrobank checks representing P 121,000 and P363,000 amounts to several
checks issued in favor of Encarnacion for a loan amounting to P1.101M which she has fully
paid.
Encarnacion only depostied such checks because of a dispute arising from Enacarnacion’s
demand for exorbitant and interst on P1.101M.
Noemi alleged that she was asked by Encarnacion to affix her signature on blank sheets of
papers (implying the written loan agreement).
On May 20, 1992, She was informed by Encarnacion that her loan obligation added to
P980,000 + P121,000 as interest which Noemi agreed.
Encarnacion asked Noemi to sign a Pacto de Retro Sale serving as a security.
June 18, 1992, Noemi paid Encarnacion P66,000 in cash before the end of the redemption
period of the Pacto de Retro Sale.
Noemi issued 2 Metrobank checks amounting to (CN # 114668) P 980,000 and (CN #
114669) P 121,000 on August 20, 1992 and September 4, 1992 respectively but replaced
the checks CN # 114675 and 114678 with the same details.
September 7, 1992, Noemi paid Encarnacion P40,000 thru Metrobank CN # 114700.
November 13, 1992, Noemi paid P1M thru BPI Check no. 019877 while the remaing
balance will be paid on or before Devcember 15, 1992, evidenced by a handwritted receipt.
Encarnacion returned CN # 114675 P 980,000 upon payment of Noemi of Cashier’s check
worth P 1M.
Noemi issued another postdated check Metrobank CN 114679 P 363,000 dated October 25,
1992 for her obligation.
Noemi claims that her remaining balance is only P50,000 hence she issued a Metrobank CN
14763 with the said amount on December 1, 1992.
January 4, 1993, Noemi ordered the bank to stop payment of the checks amounting to
P121,000 and P 363,000 thru a letter.
The checks were not yet returned by Encarnacion because Encarnacion claimed that
interest had not yet been completely paid.
Summary of total obligation by Noemi: which she claimed to have paid, as
follows:
P 980,000.00 ..principal obligation
176,000.00 3% monthly interest P 66,000.00 June 18, 1992
from 40,000.00September 7, 1992
1,000,000.00November 13, 1992
P1,156,000.00 May to Nov 1992
50,000.00December 1, 1992
P1,156,000.00
Issue: Whether or not the witten instrument the loan agreement is the true agreement
between the parties.
Held: YES. The existence of petitioners obligation is supported by documentary evidence.
The signature of petitioner as debtor appears in both instruments. Noemi Coronel does not
deny she owns these signatures. These exhibits are the best evidence of the subject
obligation.
Petitioners contrary evidence has no leg to stand on. At first, she claims that her total
loan obligation amounted to P1.101 million, the amount of consideration stated in the
document entitled Pacto de Retro Sale. At the end, however, she came up with a different
computation of her obligation as totaling P1.156 million, without any document to support
her allegation. The discrepancy between the two computations is not explained. The age
old rule of evidence is that oral testimony as to a certain fact, depending as it does on
human memory that is most often than not, momentary and fleeting, is not as
reliable as written or documentary evidence.
The Court is more convinced that Exhibits A-1 and B-1 express the true agreement of
the parties, contrary to the oral testimony of petitioner that those amounts are part of a
loan amounting to P1.101 million which she has fully paid. Incidentally, the pacto de
retro sale referred to by petitioner, is the subject matter of another litigation between the
same parties pending with the same court.
Noemi tried to escape responsibility by testifying that it has been Encarnacion’s
practice to ask her to sign blank sheets of paper. She wants the court to believe that she did
not know of the contents of Exhibits A-1 and B-1, and that these documentary evidence
could have been one of those blank sheets of paper that respondent has asked her to sign.
The Court finds this tale unacceptable, absent any form of duress or intimidation
from respondent, which petitioner does not even allege.
Time and again, we have held that one who is of age and a businesswise is presumed to
have acted with due care and to have signed the documents in question with full
knowledge of its contents and consequences. Petitioner is not one ignorant, illiterate
person who could be easily duped into signing blank sheets of papers. She has
borrowed large sums of money from respondent. In fact, petitioners total loan
obligation to respondent has reached over millions of pesos.
Thus, on October 21, 1992 and February 22, 1993, she caused the execution of two
documents entitled Discharge of Real Estate Mortgage and Discharge of Chattel Mortgage
respectively, when she paid respondent the full consideration of the promissory notes
of P2M and P1M, wherein the mortgages served as security for the payment of said
notes. Similarly, petitioner, upon payment of P1M to respondent on November 13, 1992,
retrieved the Metrobank Check No. 114675 dated August 20, 1992 which she issued as
security to respondent. Interestingly, in the case of the two checks subject matter of this
litigation, petitioner did not even demand their return from respondent, notwithstanding
her claim that she has paid in full her loan obligation. All she presented was a
letter ordering Metrobank Guagua to stop payment of the checks without proof that it has
been received by, nor actually sent to Metrobank Guagua.
Again, we reiterate the rule that 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 defense to the
claim of the creditor. Even where respondent-creditor who was plaintiff in the lower
court, alleges non-payment, the general rule is that the onus rests on the petitioner-debtor
who was defendant in the lower court, to prove payment, rather than on the plaintiff-
creditor to prove non-payment. The debtor has the burden of showing with legal certainty
that the obligation has been discharged by payment