Towne & City Development Corp. vs. Court of Appeals

A voucher is not necessarily evidence of payment but merely a documentary record of a business transaction, and payment by check extinguishes the obligation only when the check has been cashed or impaired through the creditor's fault.

Guillermo Voluntad and petitioner Towne & City Development Corporation entered into a construction and repair contract from 1984 to 1985 for housing units and facilities at the Virginia Valley Subdivision, with a total contract cost of P1,041,359.00. Pending completion, Voluntad was allowed to occupy a subdivision house free of charge. Upon completion, Voluntad demanded payment, claiming a substantial balance remained unpaid.

• The Contract: From 1984 to 1985, Guillermo Voluntad and petitioner entered into a contract for the construction and repair of housing units and facilities at the Virginia Valley Subdivision, owned by petitioner, for a total contract cost of P1,041,359.00. The parties agreed that full payment would be made upon completion of the project.
• The Dispute: After completing the works, Voluntad demanded payment. Voluntad claimed petitioner paid only P69,400.00, leaving a balance of P971,959.00. Petitioner countered that it had paid P1,022,793.46, resulting in an overpayment of P58,189.46, and further claimed Voluntad owed P66,000.00 in unpaid rentals for the house he occupied since 1985.
• The Evidence: During trial, Voluntad did not present evidence-in-chief due to petitioner's admissions in its Answer with Counter-claims regarding the contract and obligation to pay. Petitioner presented its Corporate Secretary, Rhodora Aguila, who testified that she personally handed cash or check payments to Voluntad, supported by vouchers bearing Voluntad's signatures.
• Lower Court Findings: The trial court found petitioner liable for the unpaid balance of P715,228.50, a finding affirmed entirely by the Court of Appeals. The appellate court ruled that the vouchers presented by petitioner were not receipts and did not constitute adequate proof of payment.

• Question of Law: Petitioner argued that the issue of whether a voucher suffices as evidence of payment is a question of law, making it reviewable under Rule 45.
• Evidentiary Weight of Vouchers: Petitioner maintained that the appellate court erred in not considering the vouchers and other documentary exhibits as proofs of payment.
• Application of Precedent: Petitioner insisted that the appellate court's failure to consider the vouchers as proof of payment runs counter to the ruling in Philippine National Bank v. Court of Appeals, which states that the best evidence for proving payment is evidence of receipts showing the same.

• Question of Law vs. Fact: Whether the issue of whether vouchers constitute proof of payment is a question of law reviewable under Rule 45.
• Evidentiary Weight of Vouchers: Whether vouchers bearing the payee's signature constitute adequate proof of payment of an obligation.
• Payment by Check: Whether references to check payments in vouchers extinguish the obligation without proof of encashment.

• Question of Law vs. Fact: The issue is factual, not legal. Determining whether vouchers constitute adequate proof of payment requires an examination of the vouchers and an inquiry into the circumstances surrounding their issuance, which is a function reserved for trial courts and the Court of Appeals. Under Rule 45, the Supreme Court is not a trier of facts, and none of the recognized exceptions to review factual findings apply.
• Evidentiary Weight of Vouchers: Vouchers are not receipts and do not necessarily evidence payment. A voucher is merely a method of recording or keeping track of payments made for orderly accounting. Unless supported by actual payment—such as an encashed check or duly receipted cash—a voucher remains a piece of paper with no evidentiary weight. The appellate court did not disregard PNB v. Court of Appeals; rather, it correctly applied the distinction that while a receipt is a written and signed acknowledgment of money or goods delivered, a voucher is merely a documentary record of a business transaction.
• Payment by Check: References to check payments in vouchers do not vest them with the character of receipts. Under Article 1249 of the Civil Code, delivery of a check produces the effect of payment only when it has been cashed or when, through the fault of the creditor, it has been impaired. Petitioner failed to produce the originals of the supposedly encashed checks or bank statements, and the exception regarding impairment through the creditor's fault does not apply to instruments executed by the debtor himself and delivered to the creditor.

• Distinction between Question of Law and Question of Fact — A question of law arises when the doubt or difference refers to what the law is on a certain state of facts, while a question of fact arises when the doubt or difference refers to the truth or falsehood of alleged facts. Whether a piece of evidence suffices as proof of payment necessitates an examination of the evidence, which constitutes a question of fact.
• Evidentiary Value of Vouchers vs. Receipts — A receipt is a written and signed acknowledgment that money has been or goods have been delivered, whereas a voucher is merely a documentary record of a business transaction. A voucher is not necessarily evidence of payment; it is only a method of recording disbursements. Without proof of actual payment, such as an encashed check or receipted cash, a voucher has no evidentiary weight.
• Payment by Check — Under Article 1249 of the Civil Code, payment of debts in money must be made in legal tender. The delivery of mercantile documents, including checks, produces the effect of payment only when they have been cashed or when through the fault of the creditor they have been impaired. The exception of impairment through the creditor's fault does not apply to instruments executed by the debtor and delivered to the creditor.

• "It should be noted that a voucher is not necessarily an evidence of payment. It is merely a way or method of recording or keeping track of payments made. A procedure adopted by companies for the orderly and proper accounting of funds disbursed. Unless it is supported by an actual payment like the issuance of a check which is subsequently encashed or negotiated, or an actual payment of cash duly receipted for as is customary among businessmen, a voucher remains a piece of paper having no evidentiary weight."
• "The references to alleged check payments in the vouchers presented by the petitioner do not vest them with the character of receipts. Under Article 1249 of the Civil Code, payment of debts in money has to be made in legal tender and the delivery of mercantile documents, including checks, 'shall produce the effect of payment only when they have been cashed, or when through the fault of the creditor they have been impaired.'"

• Philippine National Bank v. Court of Appeals, G.R. No. 116181 (1996) — Followed. The Court clarified that while a receipt is the best evidence of payment, it is not conclusive but merely presumptive, and payment may be established by parole evidence. The appellate court did not disregard this ruling but correctly distinguished it, as vouchers do not possess the character of receipts.
• Naguiat v. Court of Appeals, G.R. No. 118375 (2003) — Followed. Cited for the definition distinguishing a question of law from a question of fact, reinforcing that the issue of whether vouchers prove payment is factual.

• Article 1249, Civil Code — Applied to establish that payment of debts in money must be made in legal tender and that the delivery of checks produces the effect of payment only when they have been cashed or impaired through the creditor's fault. Petitioner's failure to produce encashed checks or bank statements meant the obligation was not extinguished.
• Section 1, Rule 45, 1997 Rules of Civil Procedure — Applied to dismiss the petition, as a petition for review under Rule 45 should raise only questions of law, and the issue of whether vouchers constitute proof of payment was deemed a question of fact.

Puno (Chairman), Quisumbing, Austria-Martinez, and Callejo, Sr.