UBAS, SR. v. CHAN

Manuel C. Ubas, Sr. Vs. Wilson Chan

G.R. No. 215910

February 6, 2017

Facts

This case stemmed from a Complaint for Sum of Money with Application for Writ of Attachment3(Complaint) filed by petitioner against respondent Wilson Chan (respondent) before the Regional Trial Court of Catarman, Northern Samar, Branch 19 (RTC), docketed as Civil Case No. C-1071. In his Complaint, petitioner alleged that respondent, "doing business under the name and style of UNIMASTER," was indebted to him in the amount of P1,500,000.00, representing the price of boulders, sand, gravel, and other construction materials allegedly purchased by respondent from him for the construction of the Macagtas Dam in Barangay Macagtas, Catarman, Northern Samar (Macagtas Dam project). He claimed that the said obligation has long become due and demandable and yet, respondent unjustly refused to pay the same despite repeated demands. Further, he averred that respondent had issued three (3) bank checks, payable to "CASH" in the amount of P500,000.00 each, on January 31, 1998, March 13, 1998, and April 3, 1998, respectively (subject checks),5 but when petitioner presented the subject checks for encashment on June 29, 1998, the same were dishonored due to a stop payment order. As such, respondent was guilty of fraud in incurring the obligation.

Respondent filed an Answer with Motion to Dismiss, seeking the dismissal of the case on the following grounds: (a) the complaint states no cause of action, considering that the checks do not belong to him but to Unimasters Conglomeration, Inc. (Unimasters); (b) there is no contract that ever existed between him and petitioner; and (c) if petitioner even had a right of action at all, the complaint should not have been filed against him but against Unimasters, a duly registered construction company which has a separate juridical personality from him.

During trial, petitioner testified that on January 1, 1998, he entered into a verbal agreement with respondent for the supply of gravel, sand, and boulders for the Macagtas Dam project. He presented as the only proof of their business transaction the subject checks issued to him by respondent and delivered to his office by respondent's worker on different occasions. He alleged that, at the behest of respondent, he only deposited the checks to his bank account on June 29, 1998. When the checks were dishonored, petitioner demanded from respondent the value of the dishonored checks, but to no avail.Apart from his own testimony, petitioner presented Jose Chie Ubas, the company operations manager of Ubas Construction, Inc., who testified that in 1998, he accompanied several deliveries of gravel, sand, and boulders to a certain project engineer named Paking dela Cruz at the Macagtas Dam project site, and that respondent issued checks for their payment; thus, he came to know that there was a transaction between them.13 Petitioner also presented Francisco Barrelo, the former employee of Far East Bank, who testified that the subject checks were dishonored upon presentment because of a stop payment order by the bank.

On the other hand, respondent presented Unimasters' comptroller, Belma Murillo (Murillo), who testified that Unimasters was contracted by the Department of Public Works and Highways for the Macagtas Dam project; that Engineer Ereberto Merelos (Engr. Merelos) was hired as project engineer tasked to supervise the work, the hiring of laborers, the delivery and payment of aggregates, and the payroll, and was likewise in charge of negotiating the supply of aggregates and the revolving fund for its payments; that the subject checks were issued for the replenishment of the revolving fund, but Engr. Merelos lost the same sometime in January 1998; and that upon being informed about the loss of the checks, respondent, as President of Unimasters, instructed Murillo to issue a Stop Payment Order on April 10, 1998. Murillo belied petitioner's claim that the subject checks were given to the latter in payment of the aggregates and materials that he allegedly delivered for the Macagtas Dam project, considering that their office did not process any delivery receipt or proof of delivery of such aggregates by petitioner.

For his part, respondent admitted to having issued the subject checks. However, he claimed that they were not issued to petitioner, but to Engr. Merelos for purposes of replenishing the project's revolving fund. Respondent also described the procedure in the delivery of aggregates to their project sites, asserting that petitioner was not among their suppliers of aggregates for the Macagtas Dam project as, in fact, the latter never submitted any bill attaching purchase orders and delivery receipts for payments as other suppliers did.

Issue

The sole issue in this case is whether or not the CA erred m dismissing petitioner's complaint for lack of cause of action.

Held

The petition is meritorious.

Cause of action is defined as the act or omission by which a party violates a right of another. It is well-settled that the existence of a cause of action is determined by the allegations in the complaint.

In this case, petitioner's cause of action is anchored on his claim that respondent personally entered into a contract with him for the delivery of construction materials amounting to P1,500,000.00, which was, however, left unpaid. He also avers that respondent is guilty of fraud in the performance of said obligation because the subject checks issued to him by respondent were dishonored on the ground of stop payment. As proof, petitioner offered in evidence, among others, the demand letter he sent to respondent detailing the serial numbers of the checks that were issued by the latter, including the dates and amounts thereof. He also offered the dishonored checks which were in his possession.

Respondent neither disputes the fact that he had indeed signed the subject checks nor denies the demand letter sent to him by petitioner. Nevertheless, he claims that the checks were not issued to petitioner but to the project engineer of Unimasters who, however, lost the same. He also disclaims any personal transaction with petitioner, stating that the subject checks were in fact, issued by Unimasters and not him. Besides, petitioner failed to present any documentary proof that he or his firm delivered construction materials for the Macagtas Dam project.

The Court finds for petitioner.

Jurisprudence holds that "in a suit for a recovery of sum of money, as here, the plaintiff-creditor [(petitioner in this case)] has the burden of proof to show that defendant [(respondent in this case)] had not paid [him] the amount of the contracted loan. However, it has also been long established that where the plaintiff-creditor possesses and submits in evidence an instrument showing the indebtedness, a presumption that the credit has not been satisfied arises in [his] favor. Thus, the defendant is, in appropriate instances, required to overcome the said presumption and present evidence to prove the fact of payment so that no judgment will be entered against him." This presumption stems from Section 24 of the NIL, which provides that:

Section 24. Presumption of Consideration. - Every negotiable instrument is deemed prima facie to have been issued for a valuable consideration; and every person whose signature appears thereon to have become a party thereto for value.

Although the checks were under the account name of Unimasters, it should be emphasized that the manner or mode of payment does not alter the nature of the obligation. The source of obligation, as claimed by petitioner in this case, stems from his contract with respondent. When they agreed upon the purchase of the construction materials on credit for the amount of P1,500,000,00, the contract between them was perfected.41 Therefore, even if corporate checks were issued for the payment of the obligation, the fact remains that the juridical tie between the two (2) parties was already established during the contract's perfection stage and, thus, does not preclude the creditor from proceeding against the debtor during the contract's consummation stage.

Court’s Ruling

WHEREFORE, the petition is GRANTED. The Decision dated October 28, 2014 of the Court of Appeals in CA-G.R. CV No. 04024 is hereby SET ASIDE. The Decision dated January 30, 2008 of the Regional Trial Court of Catarman, Northern Samar, Branch 19 in Civil Case No. C-1071 is REINSTATED.