The Supreme Court ruled that vouchers, unlike official receipts, are not conclusive proof of payment for contractual obligations. This decision emphasizes the importance of possessing official receipts or other concrete evidence like cashed checks to substantiate claims of payment, safeguarding contractors and service providers against potential disputes arising from insufficient documentation.

Unpaid Dues and Disputed Vouchers: A Construction Firm’s Legal Battle

Towne & City Development Corporation and Guillermo Voluntad, both in the construction business, entered into a contract for construction and repair work at Virginia Valley Subdivision. After Guillermo completed the work, a dispute arose over the full payment of services rendered. Towne & City claimed they had fully paid Guillermo, even alleging an overpayment, while Guillermo asserted a substantial unpaid balance. The core issue revolved around whether the vouchers presented by Towne & City sufficiently proved that they had indeed settled their financial obligations. The legal question then becomes, in Philippine law, do vouchers suffice as concrete evidence of payment?

The case reached the Supreme Court, where the petitioner, Towne & City, argued that the Court of Appeals erred by not considering vouchers and other documentary exhibits as proofs of payment. The Supreme Court emphasized that it isn’t a trier of facts, thus under Rule 45, it only decides questions of law. Factual findings of lower courts are typically affirmed, a principle further solidified when the Court of Appeals supports the trial court’s findings. Petitioner tried to circumvent this rule, asserting that whether a voucher serves as evidence of payment is a question of law, specifically contradicting the principle from Philippine National Bank vs. Court of Appeals, which states that “the best evidence for proving payment is by evidence of receipts showing the same.”

Building on this principle, the Court clarified that determining if the signatures on the vouchers presented by the petitioner constitute valid proof requires a fact-based examination of the documents themselves and circumstances surrounding their issuance. Such functions belong to trial courts and appellate courts reviewing factual findings. In PNB v. Court of Appeals, the court underscored that receipts serve as the best, yet merely presumptive, evidence of payment, open to challenge via parole evidence. The Supreme Court further stated that a voucher is not a receipt because a voucher is just a method of recording the disbursal of funds while a receipt is a signed acknowledgment that goods or money was exchanged between parties. As the court stated:

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.

Furthermore, regarding payments made via checks, the Court referred to Article 1249 of the Civil Code. The Court reiterated, however, that even with mercantile documents such as checks, payment becomes effective only upon encashment, or creditor-caused impairment. Because the petitioner couldn’t produce originals of the encashed checks or related bank statements from the relevant period, it was deemed that neither condition was met. Likewise, arguments hinging on the testimony of the Corporate Secretary, Rhodora Aguila, were deemed factual in nature and given the credibility assessments assigned to them by the Court of Appeals, they couldn’t constitute reasons to overturn established findings of facts by the court.

In sum, the Supreme Court emphasized that reliance on vouchers alone isn’t sufficient to prove payment. Contractors and businesses must secure official receipts or ensure payments are traceable via banking instruments. Absent such, a contractor’s claim can remain valid despite voucher records, underscoring the necessity of compliant transactional recording.

FAQs

What was the key issue in this case?	The main issue was whether the vouchers presented by Towne & City Development Corporation were sufficient proof of payment to Guillermo Voluntad for construction services rendered. The court had to determine if vouchers alone could serve as evidence of payment in fulfilling contractual obligations.
What is the difference between a voucher and a receipt?	A receipt is a written and signed acknowledgment that money or goods have been exchanged. In contrast, a voucher is simply an internal record of a business transaction, like the disbursement of funds, but does not, by itself, prove payment unless supported by additional evidence such as a cashed check or a signed receipt.
Why were the vouchers in this case not considered sufficient evidence of payment?	The vouchers lacked supporting evidence such as official receipts or proof that the checks mentioned in the vouchers were actually cashed. According to the court, a voucher is merely a method of recording payments, not conclusive proof of payment itself.
What does the Civil Code say about payment by check?	Article 1249 of the Civil Code states that the delivery of mercantile documents, including checks, only produces the effect of payment when they have been cashed, or when through the fault of the creditor they have been impaired. This means a check must be cleared and the funds received for payment to be considered complete.
What is the best evidence for proving payment, according to the Supreme Court?	According to the Supreme Court, while receipts are the best evidence of payment, they are not conclusive and can be rebutted. The fact of payment may be established by other means, like parole evidence.
Did the Supreme Court disregard the ruling in Philippine National Bank vs. Court of Appeals?	No, the Supreme Court clarified that it considered the ruling in Philippine National Bank vs. Court of Appeals, which states that the best evidence for proving payment is evidence of receipts. However, this ruling does not preclude the possibility of payment being proven through other means.
What was the final ruling of the Supreme Court in this case?	The Supreme Court affirmed the Court of Appeals’ decision, which upheld the trial court’s ruling. Towne & City Development Corporation was ordered to pay Guillermo Voluntad the unpaid balance.
What is the practical implication of this ruling for businesses and contractors?	Businesses and contractors should always obtain and keep official receipts for all payments made. Maintaining proper documentation is crucial to avoid disputes and ensure that payments are legally recognized and proven.

In conclusion, the Supreme Court’s decision in this case serves as a reminder of the importance of diligent record-keeping and the need for concrete evidence to support claims of payment. The ruling highlights the value of official receipts and banking records, emphasizing that vouchers alone may not suffice to fulfill contractual obligations.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Towne & City Development Corporation vs. Court of Appeals, G.R. No. 135043, July 14, 2004