International Banking Corporation v. Yared
REITERATIONFacts
The Antecedents: On October 5, 1920, Oriental American Traders, Inc. sold goods on credit to George A. Yared for P12,294.25. Between October 5, 1920, and April 4, 1921, Yared made payments totaling P2,500 and returned goods valued at P1,140.80, leaving an unpaid balance of P8,653.55. The credit was subsequently assigned to International Banking Corporation (plaintiff). On June 4, 1921, Yared paid P500, and on July 8, 1921, another P500, leaving a remaining balance of P7,653.55, which remained unpaid. Procedural History: The Court of First Instance of Cebu rendered a judgment ordering the defendant, George A. Yared, to pay the plaintiff, International Banking Corporation, the amount of P7,653.55 with interest and costs. The Petition: Yared appealed the decision, assigning errors related to the court's alleged failure to give full credit to his testimony regarding a compromise and full payment, the plaintiff's alleged silence and abandonment for eight to nine years supporting the defense of extinguishment of obligation, and the plaintiff being estopped by laches.
Issue(s)
Whether the plaintiff is bound by the testimony of the defendant, whom it called as its witness, stating that the amount claimed had been fully paid by means of a compromise. Whether the plaintiff is estopped by laches from claiming payment due to its alleged silence and inaction for eight to nine years. Whether the judgment against the appellant was erroneous.
Ruling
The Supreme Court affirmed the judgment of the Court of First Instance in toto, holding that the plaintiff is not bound by the testimony of the defendant whom it called as its witness and may impugn its veracity, and that estoppel by laches is not applicable as the prescriptive period for the action has not yet elapsed.
Ratio Decidendi
On the issue of whether the plaintiff is bound by the testimony of the defendant called as its witness: The Court held that a litigant who calls an adversary as a witness is not bound by the latter's testimony and may impugn its veracity. Citing Jones on Evidence and the case of Tan Chico vs. Concepcion and Asia Banking Corporation, the Court reasoned that under prevailing practices and statutes, a party calling an adverse witness is not bound by their testimony and may rebut it. This is to prevent a litigant from being helpless to enforce their rights if their adversary, compelled to testify, fails to tell the truth. The purpose of calling an adverse party is to elicit material facts through cross-examination, akin to a bill of discovery, and justice requires that the calling party be allowed to challenge the truthfulness of such testimony when prejudicial to their cause. On the issue of estoppel by laches: The Court ruled that estoppel by laches is not applicable in this case. While equity may bar claims due to long delay, abandonment, and negligence, this case is governed by positive law. The claim is based on an instrument in writing, and Section 43 of the Code of Civil Procedure provides a ten-year period within which an action for its enforcement may be brought. Since the statutory period had not yet elapsed at the time the action was filed, the claim had not prescribed. Therefore, the plaintiff's alleged inaction for eight to nine years did not bar its right to collect the debt within the legally prescribed period. On the issue of whether the judgment against the appellant was erroneous: Based on the foregoing rulings, the Court found no error in the judgment rendered by the court a quo. The defendant's arguments regarding compromise and estoppel by laches were found to be without merit. The evidence established an unpaid balance, and the legal periods for filing the action had not expired. Consequently, the judgment ordering the defendant to pay the outstanding amount was affirmed.
Main Doctrine
A litigant who presents an adversary as a witness is not bound by the adversary's testimony and may impugn its veracity. Estoppel by laches is not applicable when the prescriptive period for the action has not yet elapsed.