G.R. No. 160855; April 16, 2008
Concepcion Chua Gaw, petitioner, vs. Suy Ben Chua and Felisa Chua, respondents.

FACTS

Petitioner Concepcion Chua Gaw and respondent Suy Ben Chua are siblings. Their father, Chua Chin, died in 1986, leaving behind the family business Hagonoy Lumber. In December 1986, the heirs, including Concepcion and Suy Ben, executed a Deed of Extra-Judicial Partition and Renunciation, wherein all heirs except one sister, Chua Sioc Huan, waived their shares in Hagonoy Lumber in her favor. In May 1988, Concepcion and her husband borrowed P200,000 from Suy Ben for house construction, payable in six months without interest. Suy Ben issued a check for the amount, which was encashed. The spouses failed to repay. Suy Ben later purchased Hagonoy Lumber from Chua Sioc Huan in 1990.
When Suy Ben filed a complaint for sum of money to recover the loan, the spouses Gaw contended the P200,000 was not a loan but an advance on Concepcion’s share in the profits of Hagonoy Lumber. They argued she was entitled to a share as an heir and demanded an accounting. The Regional Trial Court ruled in favor of Suy Ben, ordering payment of the loan. The Court of Appeals affirmed the decision.

ISSUE

The core issue is whether the P200,000 given by respondent to petitioner was a loan obligation or an advance payment of petitioner’s alleged share in the profits of Hagonoy Lumber.

RULING

The Supreme Court denied the petition and affirmed the lower courts’ rulings, holding that the P200,000 was a loan, not a share in profits. The Court emphasized that the burden of proof lies with the party alleging a fact. Petitioner failed to substantiate her claim that the money represented her share. The Deed of Partition clearly established that she had renounced her hereditary rights to Hagonoy Lumber in favor of her sister, Chua Sioc Huan. Consequently, she had no remaining ownership interest from which to claim profits at the time of the transaction in 1988.
The Court found the evidence for the loan more credible and supported by a demand letter. Petitioner’s claim was a mere allegation unsupported by convincing proof. The legal logic rests on the principle that one who pleads payment as a defense to an obligation has the burden of proving it. Here, petitioner asserted the payment was for her share, but she could not overcome the evidence of the valid Deed of Partition extinguishing her claim and the promissory note evidence of the loan. Thus, the contract of loan was duly proven, and the obligation to pay remained.