Ridao v. Handmade Credit and Loans, Inc.
REITERATIONFacts
The Antecedents: Petitioner Gemma A. Ridao obtained loans from respondent Handmade Credit and Loans, Inc., represented by Teofilo V. Manipon. Initially, Ridao borrowed $4,000.00, evidenced by a promissory note. Subsequently, she obtained an additional loan that increased her obligation to $6,167.00, also evidenced by the same promissory note, and a separate P40,000.00 loan. Both loans carried a 4% monthly interest and were payable within a year. Handmade Credit alleged that Ridao failed to make any payments, prompting them to send a demand letter for the outstanding amounts, including interest and attorney's fees. Procedural History: Handmade Credit filed a complaint for collection of sum of money with damages against Ridao before the Regional Trial Court (RTC) of Urdaneta City, Pangasinan. Ridao, in her answer, admitted obtaining a $4,000.00 loan but claimed it was a personal loan from Teofilo, not Handmade Credit, and asserted full payment of her $4,300.00 obligation. She also denied the additional loans and alleged material alterations and forged signatures on the documents presented by Handmade Credit. The RTC ruled in favor of Ridao, dismissing the complaint and finding the 4% monthly interest to be unconscionable. The RTC also declared the P40,000.00 loan void. Handmade Credit appealed to the Court of Appeals (CA), which modified the RTC's decision, ordering Ridao to pay $3,200.00 plus interest, finding the promissory notes void due to material alterations but holding Ridao liable for the unpaid balance. The Petition: Petitioner Ridao filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the CA's decision and resolution. Ridao argues that the CA erred in ordering her to pay the remaining loan balance. She contends that Handmade Credit impliedly admitted the genuineness of her payment ledger by failing to file a reply and specifically deny it under oath. Furthermore, Ridao asserts that the CA's finding of material alterations on the promissory notes, which rendered them void, should have led to the dismissal of Handmade Credit's complaint entirely, as the altered notes could not form the basis of any obligation. She also points to Teofilo's admission of receiving payments and the company's policy of not issuing receipts when payments were made by a relative, as further evidence of payment.
Issue(s)
Whether the Court of Appeals committed reversible error in ordering Ridao to pay the sum of $3,200.00 or its peso equivalent, with interest, and whether Ridao sufficiently proved payment of her loan obligation. Whether the ledger submitted by Ridao, which was not specifically denied under oath by Handmade Credit, constituted an implied admission of payment, considering its admissibility and weight as proof of payment. Whether the promissory notes, found to be void due to material alterations, could be the basis for Ridao's obligation, and the implications for Handmade Credit's credibility. On the overall claim for collection, considering the evidence presented by both parties and the burden of proof.
Ruling
The petition is granted. The Decision of the Court of Appeals is modified, and the Complaint of Handmade Credit & Loans, Inc. is dismissed.
Ratio Decidendi
On the issue of the amount owed and proof of payment: Weighing the admissible evidence, including the ledger showing payments, the admitted alterations to the promissory notes, and Handmade Credit's failure to discharge its burden to prove non-payment, the Court concluded that Ridao had sufficiently proven her payments. Consequently, Handmade Credit's complaint for collection of sum of money was dismissed. On the issue of the ledger as an actionable document and implied admission, and its admissibility and weight as proof of payment: The Court disagreed with Ridao's contention that Handmade Credit's failure to file a reply specifically denying the ledger under oath constituted an implied admission. The Court clarified that a ledger is not an actionable document. However, the Court noted that the ledger was admissible and sufficient to prove that Ridao made payments and that Handmade Credit received them. The Court emphasized that in civil cases, only a preponderance of evidence is required. The Court found that Teofilo, Handmade Credit's representative, admitted receiving four payments totaling $1,100.00 as indicated in the ledger. The burden shifted to Handmade Credit to prove non-payment, which they failed to do. On the issue of the void promissory notes and Handmade Credit's credibility: The Court affirmed the CA's finding that the promissory notes were void due to material alterations, tampering, and superimpositions, made without Ridao's consent. The CA correctly concluded that Handmade Credit, as the party causing these alterations, could not enforce the terms of the altered notes. This finding significantly undermined Handmade Credit's credibility. Given the void nature of the primary documents presented by Handmade Credit to prove the obligation and the failure to present other competent evidence of non-payment, the Court found no basis to sustain Handmade Credit's claim. On the overall claim for collection and the burden of proof: The Court reiterated the settled rule that the debtor bears the burden of proving payment once the existence of the debt is established. However, once the debtor presents some evidence of payment, the burden of going forward with the evidence shifts to the creditor to prove non-payment. In this case, Ridao presented the ledger as evidence of payment. Therefore, the burden shifted to Handmade Credit to prove non-payment. The Court found that Handmade Credit failed to present sufficient evidence to support its claim of non-payment beyond Teofilo's denial.
Main Doctrine
A ledger, which merely indicates receipt of payment but does not provide the terms and conditions of a loan transaction, is not an actionable document. However, it is admissible as evidence and can be sufficient to prove payments made, shifting the burden to the creditor to prove non-payment.