Trans-Pacific Industrial Supplies, Inc. v. Court of Appeals

G.R. No. 109172, 19 August 1994

FACTS:

Petitioner applied for and grated financial accommodations by respondent bank. The loans were evidenced and secured by four (4) promissory notes, a real estate mortgage covering three parcels of land and a chattel mortgage over petitioner’s stock and inventories.Unable to settle its obligation in full, petitioner requested for, and was granted by respondent bank, a restructuring of the remaining indebtedness. To secure the re-structured loan, three new promissory notes were executed by Trans-Pacific.

The released parcels of land were then sold according to petitioner, were turned over to the bank and applied to Trans-Pacific’s restructured loan. Subsequently, respondent bank returned the duplicate original copies of the three promissory notes to Trans-Pacific with the word “PAID” stamped thereon.

Despite the return of the notes Associated Bank demanded from Trans-Pacific payment of the accrued interest. According to the bank, the promissory notes were erroneously released. Initially, Trans-Pacific expressed its willingness to pay the amount demanded by respondent bank. Later, it had a change of heart and instead initiated an action for specific performance and damages.

ISSUE:

Whether or not the accrued interest was paid.

RULING:

A duplicate copy of the original may be admitted in evidence when the original is in the possession of the party against whom the evidence is offered, and the latter fails to produce it after reasonable notice (Sec. 2[b], Rule 130), as in the case of respondent bank.

Art. 1271. The delivery of a private document evidencing a credit, made voluntarily by the creditor to the debtor, implies the renunciation of the action which the former had against the latter.

It may not be amiss to add that Article 1271 of the Civil Code raises a presumption, not of payment, but of the renunciation of the credit where more convincing evidence would be required than what normally would be called for to prove payment. The rationale for allowing the presumption of renunciation in the delivery of a private instrument is that, unlike that of a public instrument, there could be just one copy of the evidence of credit. Where several originals are made out of a private document, the intendment of the law would thus be to refer to the delivery only of the original original rather than to the original duplicate of which the debtor would normally retain a copy. It would thus be absurd if Article 1271 were to be applied differently.

* Case digest by Lea Caipang, LLB-1, Andres Bonifacio Law School, SY 2017-2018

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