BPI V. ROYECA (CIVIL, REMEDIAL)

The petition is partly meritorious.

In civil cases, the party having the burden of proof must establish his case by a preponderance of evidence. Thus, 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.

In Jimenez v. NLRC, the Court elucidated on who, between the plaintiff and defendant, has the burden to prove the affirmative defense of payment:

"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. "

Petitioner insists that the respondents did not sufficiently prove the alleged payment. It avers that under the law and existing jurisprudence, DELIVERY OF CHECKS DOES NOT CONSTITUTE PAYMENT.

Respondents on the other hand, postulate that they have established payment of the amount being claimed by the petitioner and unless the petitioner proves that the checks have been dishonored, they should not be made liable to pay the obligation again.

The divergence in this conflict of opinions can be narrowed down to the issue of whether the ACKNOWLEDGMENT RECEIPT was sufficient proof of payment. As correctly observed by the RTC, this is only proof that respondents delivered 8 checks in payment of the amount due. Apparently, this will not suffice to establish actual payment.

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.

Because of the failure of respondents to present sufficient proof of payment, 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 lodges 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. 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.

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.

Finally, the respondents posit that the petitioner's claim is barred by laches since it has been 3 years since the checks were issued. We do not agree. 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 files within the prescriptive period mandated by the New Civil Code. The petitioner's action was files within the 10-year prescriptive period provided under Article 1144 of the New Civil Code. Hence, there is no room for the application of laches.