G.R. No. 68635 - IN RE: Laureta

Petitioners Danilo Decena and Cristina Castillo (formerly Decena) applied for and were granted loans from Prudential Bank totaling P20,000,000.00. The loans were evidenced by two promissory notes: one dated October 6, 1997 for P2,500,000.00 and another dated January 21, 1998 for P10,000,000.00.
Prudential Bank merged with the Bank of the Philippine Islands (BPI), with BPI as the surviving corporation.
Petitioners allegedly defaulted on their obligations, leaving an unpaid balance of P12,500,000.00.

On May 12, 2006, BPI assigned the petitioners’ indebtedness to respondent Asset Pool A (SPV-AMC), Inc. through a deed of assignment.
Respondent sent a formal demand letter dated September 19, 2006, and a follow-up demand letter on May 17, 2007, to petitioners to settle the outstanding debt.
Petitioners failed to pay the alleged outstanding obligation, prompting respondent to file a Complaint for Sum of Money and Damages before the Regional Trial Court (RTC) of Makati City on January 14, 2008.

Petitioners admitted the receipt of the loans from Prudential Bank but contended that the loans had been substantially paid.
They challenged the sufficiency of evidence presented by respondent and claimed that the complaint should be dismissed on the ground of laches because the complaint was filed almost ten years after the loans matured.
Danilo testified that the loans were supposedly settled in 2004 when Prudential Bank foreclosed properties mortgaged as collateral, but he had no clear recollection or documentary proof of payment.

Isabelita Martinez Ciabal, respondent’s Director and Remedial Account Officer, testified regarding her role in collecting non-performing loans, the assignment of the loans to respondent, and the demand letters sent to petitioners.
Ciabal stated that the principal obligation was P12,500,000.00 with an interest rate of 15% based on the promissory notes.
Petitioners admitted the genuineness of signatures on the promissory notes but denied the current liability by asserting payments had been made or that the debts were settled through foreclosure of collaterals.

The RTC ruled in favor of respondent, holding petitioners jointly and severally liable for P12,500,000.00 plus 12% interest and 6% penalty interest per annum from September 19, 2006 until finality, then 6% interest thereafter, and awarded attorney’s fees and costs of suit.
Petitioners appealed to the Court of Appeals (CA).

The CA partially affirmed the RTC Decision, confirming petitioners’ liability but reduced the principal amount to P10,000,000.00, which was the amount prayed for in the complaint.
The CA held that petitioners had the burden of proving payment, which they failed to discharge. It further affirmed the presumption of non-payment due to respondent’s possession of promissory notes.
Petitioners’ Motion for Reconsideration was denied by the CA.

Whether petitioners are liable for the unpaid amount evidenced by the promissory notes assigned to respondent.
Whether petitioners discharged their burden of proving payment or settlement of the loan obligations.
Whether the Court of Appeals correctly reduced the principal amount to P10,000,000.00 based on the amount prayed for in the complaint.
Proper computation of interest to be applied on the unpaid loan obligation.