G.R. No. 255264. October 10, 2022
MANUEL ONG, PETITIONER, VS. SPOUSES ROWELITO AND AMELITA VILLORENTE, RESPONDENTS.

FACTS

Petitioner Manuel Ong, a textile seller, filed a complaint for sum of money against respondent spouses, who were garment contractors. He alleged that between 1991 and 1993, respondents purchased clothing materials worth P1,500,000.00. As partial payment, they issued several checks totaling P420,000.00, which were subsequently dishonored for the reason “Account Closed.” Respondents later executed two promissory notes, one in 1997 and another in 2001, acknowledging the debt and proposing payment terms, but they still failed to settle. After a formal demand in 2004 went unheeded, petitioner filed the complaint seeking payment of the P420,000.00.
The Regional Trial Court (RTC) ruled in favor of Ong, finding his claim substantiated by the dishonored checks and promissory notes. It ordered respondents to pay the principal sum with interest and attorney’s fees. On appeal, the Court of Appeals (CA) reversed the RTC, dismissing the complaint. The CA held that the checks and promissory notes were insufficient to establish a perfected contract of sale, as they did not specifically refer to the textile purchases from 1991-1993, thereby failing to prove respondents’ liability.

ISSUE

Whether the Court of Appeals erred in reversing the RTC and ruling that petitioner failed to establish respondents’ liability for the sum of money.

RULING

The Supreme Court granted the petition, reversing the CA and reinstating the RTC decision with modification on the interest rate. The Court held that the CA committed reversible error in requiring petitioner to specifically prove a perfected contract of sale. In an action for sum of money, the cause of action is the existence of an obligation and the debtor’s failure to pay. Petitioner successfully established this through preponderance of evidence.
The legal logic is anchored on the principle that a combination of documentary evidence can collectively prove an obligation. The dishonored checks, while not direct proof of the sale, constitute written acknowledgments of a debt. Crucially, the subsequent promissory notes, particularly the 1997 note which explicitly referred to the “P1,500,000.00 debt,” constituted a clear written recognition and confirmation of the pre-existing obligation. This confirmation effectively removed the claim from the scope of the Statute of Frauds. Respondents’ failure to present credible evidence of payment, coupled with their execution of these notes, affirmed the obligation’s existence. The Court found the RTC’s factual findings, which credited this evidence, to be more aligned with the evidentiary record. Consequently, respondents’ liability was duly established. The awarded interest was modified to 12% per annum from judicial demand until June 30, 2013, and 6% thereafter until full payment.