Decena v. Asset Pool A (SPV-AMC), Inc.
REITERATIONFacts
The Antecedents: Respondent Asset Pool A (SPV-AMC), Inc. (respondent) filed a Complaint for Sum of Money and Damages against petitioners Danilo Decena and Cristina Castillo (petitioners) for unpaid loan obligations amounting to P10,000,000.00, plus interest, evidenced by a Promissory Note dated January 21, 1998, and P2,500,000.00 evidenced by a Promissory Note dated October 6, 1997. These loans were originally granted by Prudential Bank, which later merged with Bank of the Philippine Islands (BPI). BPI assigned petitioners' indebtedness to respondent through a deed of assignment. Respondent sent demand letters to petitioners, but they failed to settle the obligation. Procedural History: The Regional Trial Court (RTC) ruled in favor of the respondent, ordering petitioners to pay the principal amount of P12,500,000.00 plus interest and attorney's fees. The Court of Appeals (CA) partially affirmed the RTC decision, modifying the principal amount to P10,000,000.00 plus interest, citing that the complaint only prayed for P10,000,000.00. The CA denied petitioners' motion for reconsideration. The Petition: Petitioners assail the CA's decision, arguing that their loan obligation had already been paid, and that the complaint should have been dismissed on the ground of laches. They also claimed that the loans were settled when Prudential Bank foreclosed their properties.
Issue(s)
Whether petitioners are liable for the amount due. Whether the CA erred in reducing the principal amount to P10,000,000.00. Whether the computation of interest is correct.
Ruling
The Court denied the petition and affirmed with modification the decision of the Court of Appeals. Petitioners are jointly and severally liable to pay respondent the principal amount of P12,500,000.00 plus monetary interest of 12% per annum from September 19, 2006, until finality of the ruling; compensatory interest on the monetary interest at the rate of 12% per annum from January 14, 2008, until June 30, 2013, and 6% per annum from July 1, 2013, until finality of the ruling; P25,000.00 as attorney's fees; costs of suit; and legal interest at the rate of 6% per annum on the total sums due from finality of the ruling until full payment.
Ratio Decidendi
On the liability for the amount due: The Court held that petitioners are liable for the loan obligation. The burden of proving payment rests on the petitioners once proof of indebtedness is established. Petitioners failed to present documentary evidence of payment or proof that their mortgaged properties were used to secure the subject promissory notes. Danilo Decena admitted the genuineness of his signatures on the promissory notes, establishing their indebtedness. The creditor's possession of the evidence of debt is proof that the debt has not been discharged by payment. On the reduction of the principal amount: The Court disagreed with the CA's reduction of the principal amount to P10,000,000.00. While courts generally cannot award more than what is prayed for, this rule is subject to due process considerations. In this case, respondent's complaint averred that the cause of action was based on two promissory notes totaling P12,500,000.00, and petitioners actively participated in the proceedings, thus not being deprived of their opportunity to be heard on the full amount. Therefore, the principal amount should be P12,500,000.00. On the computation of interest: The Court applied the guidelines from Nacar v. Gallery Frames regarding the computation of legal interest. The principal amount of P12,500,000.00 should earn a straight monetary interest of 12% per annum from September 19, 2006, until finality of the ruling. Compensatory interest at 12% per annum should also be applied on the monetary interest from judicial demand (January 14, 2008) until June 30, 2013, and at 6% per annum from July 1, 2013, until finality. All monetary awards will earn legal interest at 6% per annum from finality until full payment.
Main Doctrine
In civil cases, the party who pleads payment has the burden of proving payment. When the creditor is in possession of the document of credit, proof of non-payment is not needed for it is presumed. The creditor's possession of an evidence of indebtedness is proof that the debt has not been discharged by payment.