Royal Cargo Corporation v. DFS Sports Unlimited, Inc.
REITERATIONFacts
The Antecedents: Petitioner Royal Cargo Corporation (RCC), an international freight forwarder, was engaged by respondent DFS Sports Unlimited, Inc. (DFS), a concessionaire of the Subic Bay Metropolitan Authority (SBMA) engaged in importing and selling duty-free sporting goods, for brokerage and trucking services. Between April and July 1994, RCC rendered services for which it incurred P248,449.63 in expenses, which DFS allegedly failed to pay. Procedural History: RCC filed a collection suit against DFS. DFS denied most of the transactions, claiming it only engaged RCC's services once in May 1994 and that it had given RCC P44,710.00 for customs duties and taxes, which were allegedly not paid, leading to the seizure and loss of value of the imported goods. DFS counterclaimed for damages and reimbursement. The Regional Trial Court (RTC) dismissed both the complaint and counterclaim. The Court of Appeals (CA) affirmed the RTC decision. RCC appealed to the Supreme Court. The Petition: RCC assailed the CA's ruling, arguing that the burden of proof of payment lies with the debtor (DFS) and that mere presentation of original invoices is insufficient to prove payment.
Issue(s)
Whether the burden of evidence lies with the debtor to prove that payment has been made. Whether the mere presentation by the debtor of original invoices alone is sufficient to prove payment of its debt. Whether an invoice is deemed a credit instrument which, upon presentation by the debtor, raises the disputable presumption of payment as per Rule 131, Section 3(h) of the Rules of Court.
Ruling
The Supreme Court granted the petition, reversed the decisions of the CA and RTC, and ordered respondent DFS Sports Unlimited, Inc. to pay petitioner Royal Cargo Corporation the principal amount of P248,449.63 plus legal interest and attorney's fees.
Ratio Decidendi
On the issue of burden of proof for payment: The Court reiterated the settled rule that one who pleads payment has the burden of proving it. Even when the creditor alleges non-payment, the onus rests on the debtor to prove discharge of the obligation with legal certainty. While the burden of going forward with evidence may shift to the creditor upon presentation of some evidence of payment by the debtor, the general burden of proof remains with the debtor. In this case, DFS, as the debtor, was obligated to prove its payment to RCC. On whether mere presentation of original invoices is sufficient proof of payment: The Court ruled in the negative. An invoice is a commercial document indicating goods sold or services rendered and the terms of payment, essentially a bill. It is not a receipt, which is a written acknowledgment of payment. The invoices presented by DFS were stamped "PAID" and "AUDITED" by its own personnel, not by RCC. This self-serving stamping, without more, does not constitute proof of actual payment received by the creditor. The Court found that RCC's invoices were merely evidence of the transaction and the debt, not proof of its extinguishment. On whether an invoice raises a disputable presumption of payment: The Court clarified that the disputable presumption of payment under Rule 131, Section 3(h) of the Rules of Court applies to credit instruments delivered to the debtor, signifying the creditor's relinquishment of the obligation. An invoice, as defined and understood in commercial practice, is not a credit instrument. Therefore, its possession by the debtor does not automatically raise a presumption of payment. The Court emphasized that DFS failed to present any official receipts, bank records, or testimony from the person who allegedly made the payment to substantiate its claim.
Main Doctrine
The burden of proving payment rests on the debtor. Mere presentation of invoices stamped "PAID" and "AUDITED" by the debtor's own personnel is insufficient to prove payment, especially in the absence of official receipts or testimony from the person who made the payment. Invoices are not receipts and do not, by themselves, serve as proof of payment.