SECOND DIVISION
G.R. No. 228435, June 21, 2017
KT CONSTRUCTION SUPPLY, INC., REPRESENTED BY WILLIAM GO, Petitioner, v. PHILIPPINE SAVINGS BANK, Respondent.
D E C I S I O N
MENDOZA, J.:
This petition for review on certiorari seeks to reverse and set aside the April 22, 2016 Decision1 and November 23, 2016 Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No. 103037, which affirmed with modification the June 11, 2014 Decision3 of the Regional Trial Court, Branch 133, Makati City (RTC).
On October 12, 2006, petitioner KT Construction Supply, Inc. (KT Construction) obtained a loan from respondent Philippine Savings Bank (PSBank) in the amount of P2.5 million. The said loan was evidenced by a Promissory Note4 executed on the same date. The said note was signed by William K. Go (Go) and Nancy Go-Tan (Go-Tan) as Vice-President/General Manager and Secretary/Treasurer of KT Construction, respectively. In addition, both Go and Go-Tan signed the note in their personal capacities.
The promissory note stipulated that the loan was payable within a period of sixty (60) months from November 12, 2006 to October 12, 2011. In addition, the said note provided for the payment of attorney's fees in case of litigation.
On January 3, 2011, PSBank sent a demand letter to KT Construction asking the latter to pay its outstanding obligation in the amount of P725,438.81, excluding interest, penalties, legal fees, and other charges. For its failure to pay despite demand, PSBank filed a complaint for sum of money against KT Construction.
The RTC Ruling
In its June 11, 2014 Decision, the RTC ruled in favor of PSBank. It opined that the promissory note expressly declared that the entire obligation shall immediately become due and payable upon default in payment of any installment. The trial court, nevertheless, reduced the interest rate and stipulated interest fees for being unconscionable. Thus, it declared KT Construction, Go and Go-Tan solidary liable and it ordered them to pay PSBank the loan in the amount of P725,438.81 subject to twelve percent (12%) interest per annum and P50,000.00 as attorney's fees. The fallo reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff Philippine Savings Bank and against the defendant KT Construction Supply, Inc., represented by William Go and Nancy Go Tan, ordering the defendant to pay the plaintiff, jointly and severally, the following:Aggrieved, KT Construction appealed before the CA.
1) The amount of Seven Hundred Twenty Five Thousand Four Hundred Thirty Eight Pesos and 81/100 (Php725,438.81) plus twelve percent (12%) interest per annum from January 13, 2011 until fully paid. 2) Php50,000.00 as and for attorney's fees.
SO ORDERED.5
WHEREFORE, in view of the foregoing premises, the instant appeal is DENIED. The Decision of Branch 133 of the Regional Trial Court, Makati City, National Capital Judicial Region dated June 11, 2014 in Civil Case No. 11-060, is hereby AFFIRMED with the MODIFICATION that KT Construction, represented by William K. Go and Nancy Go-Tan, is ordered to pay PS Bank the amount equivalent to 6% per annum of the total of the monetary awards from the finality of this Decision until full payment thereof, as legal interest. In addition, the Clerk of Court of Branch 133 of the Regional Trial Court in Makati City, or his duly authorized deputy is DIRECTED to assess and collect the additional docket fees from Philippine Savings Bank as fees in lien in accordance with Section 2, Rule 141 of the Rules of Court.KT Construction moved for reconsideration, but its motion was denied by the CA in its November 23, 2016 resolution.
SO ORDERED.6
KT Construction insists that Go and Go-Tan could not be held solidarity liable for the judgment award because they were neither impleaded nor served with summons. Moreover, they did not voluntarily appear before the court. Thus, the courts never acquired jurisdiction over their persons.ISSUES I
THE COURT OF APPEALS GRAVELY AND PALPABLY ERRED, AS DID THE LOWER COURT, IN HOLDING WILLIAM GO AND NANCY GO TAN JOINTLY AND SEVERALLY LIABLE WITH THE PETITIONER TO THE RESPONDENT BANK;II
THE COURT OF APPEALS ERRED, AS DID THE LOWER COURT, IN NOT FINDING THAT THE COMPLAINT IN THIS CASE WAS PREMATURELY FILED;III
THE COURT OF APPEALS ERRED, AS DID THE LOWER COURT, IN FAILING TO DECLARE THE PROMISSORY NOTE IN QUESTION AS NULL AND VOID FOR BEING A CONTRACT OF ADHESION; ANDIV
THE COURT OF APPEALS ERRED, AS DID THE LOWER COURT, IN AWARDING ATTORNEY'S FEES IN FAVOR OF THE RESPONDENT BANK.7
Jurisprudence tells us that one who pleads payment has the burden of proving it; the burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-payment. Indeed, once the existence of an indebtedness is duly established by evidence, the burden of showing with legal certainty that the obligation has been discharged by payment rests on the debtor.13In the case at bench, KT Construction admitted that it obtained a loan with PSBank. It, nevertheless, averred that it had been regularly paying the loan. Thus, KT Construction could have easily provided deposit slips and other documentary evidence to prove the fact of payment. It, however, merely alleged that it religiously paid its obligation without presenting any evidence to substantiate the said obligation.
In relation to the rules of civil procedure, it is elementary that a judgment of a court is conclusive and binding only upon the parties and their successors-in-interest after the commencement of the action in court. A decision rendered on a complaint in a civil action or proceeding does not bind or prejudice a person not impleaded therein, for no person shall be adversely affected by the outcome of a civil action or proceeding in which he is not a party. The principle that a person cannot be prejudiced by a ruling rendered in an action or proceeding in which he has not been made a party conforms to the constitutional guarantee of due process of law.In short, jurisdiction over the person of the parties must be acquired so that the decision of the court would be binding upon them. It is a fundamental rule that jurisdiction over a defendant is acquired in a civil case either through service of summons or voluntary appearance in court and submission to its authority.18
Endnotes:
** Per Special Order No. 2445 dated June 16, 2017.
1 Penned by Associate Justice Henri Jean Paul B. Inting with Associate Justice Mario V. Lopez and Associate Justice Ramon A. Cruz, concurring; rollo, pp. 30-43.
2 Id. at 45-46.
3 Penned by Presiding Judge Elpidio R. Calis; id. at 98-102.
4 Id. at 72.
5 Id. at 102.
6 Id. at 42-43.
7 Id. at 10.
8 Id. at 151-158.
9Premiere Development Bank v. Central Surety & Insurance Company, Inc., 598 Phil. 827, 849 (2009).
10Rollo, p. 74.
11Spouses Agner v. BPI Family Savings Bank, Inc., 710 Phil. 82, 85-86 (2013).
12 736 Phil. 357 (2014).
13 Id. at 367.
14Norton Resources and Development Corporation v. All Asia Bank Corporation, 620 Phil. 381, 392 (2009).
15 Id. at 392.
16Baron Marketing Corp. v. CA, 349 Phil. 769, 779-780 (1998).
17 G.R. No. 206147, January 13, 2016.
18Prudential Bank v. Magdamit, Jr., G.R. No. 183795, November 12, 2014, 740 SCRA 1, 13.