Consideration in a contract is presumed; how to overcome the presumption

SPOUSES NORA SAGUID and ROLANDO P. SAGUID vs. SECURITY FINANCE, INC., G.R. No. 159467, December 9, 2005

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Under Article 1354 of the Civil Code, it is presumed that consideration^[28] exists and is lawful unless the debtor proves the contrary.^[29] Moreover, under Section 3(r) of Rule 131 of the Rules of Court, it is presumed that there is a sufficient consideration for a contract. The presumption that a contract has sufficient consideration cannot be overthrown by a mere assertion that it has no consideration.^[30] To overcome the presumption of consideration, the alleged lack of consideration must be shown by preponderance of evidence.^[31]

In proving that there is no consideration for the aforementioned documents, petitioners proffered in evidence the following documents that showed that they bought the subject vehicle in cash and not in installment basis: (a) Vehicle Sales Invoice No. 7104;^[32] (b) Vehicle Delivery Note;^[33] (c) Official Receipts No. 208646^[34] and No. 208648;^[35] (d) Certificate of Registration No. 32862328;^[36] and (e) Official Receipt No. 40459605.^[37] In addition, Ms. Zenaida Maralit of Toyota Balintawak, Inc. confirmed that the subject car was indeed paid in cash and not through financing for the reasons that the originals of the Certificate of Registration and the Official Receipt of the subject vehicle have not been marked as encumbered by the Land Transportation Office and are in the possession of the buyer. She added that respondent is not accredited in Toyota Balintawak, Inc. She testified:

Q: Madam Witness, do you know if this vehicle was purchased in cash or through financing?

A: It was purchased in cash.

Q: What proof do you have to show that it was purchased in cash?

A: There was an invoice cash return.

Q: By the way, being the head of the Credit and Collection, what are your duties and functions?

A: We are in-charge of collection, we are in-charge of the documentation with LTO, insurance and financing documents.

Q: As far as the purchase of vehicle through financing, what is your specific duty?

A: We are the one who asked the client to sign the documents.

Q: Will you tell the Honorable Court what is the procedure in case the vehicle is purchased from your office through financing?

A: After the client signed the documents, we get all the requirements based on the credit advice issued by the financing company. So together with the documents and all the requirements, valid ID, post dated checks, we are the one transmitting them to the financing company and after processing, the financing company gave us the proceed two to four days after the release of the vehicle.

Q: As far as the Certificate of Registration and Official Receipt are concerned, what did you do with them if the vehicle was purchased through financing?

A: If it was through financing, the original Official Receipt and Certificate of Registration goes to the financing company. We are the one transmitting them. Only the xerox copies of the Official Receipt and Certificate of Registration go to the client through financing transaction.

Q: As far as the security of the financing company, when it comes to purchase of vehicle through financing, what do you do with the Official Receipt and Certificate of Registration?

A: The LTO marked there encumbered. It means it was mortgaged to that particular financing company.

Q: Where it was marked?

A: At the Certificate of Registration, it was marked encumbered.

Q: On the face?

A: On the face.

Q: Do you have any policy as far as your company is concerned with regards to the purchase of vehicle through financing?

A: We have only the accredited financing companies.

Q: Is the plaintiff herein, Security Finance, accredited in your company?

A: No, not even in one transaction.

Q: What would be the significance if the original copy of the Certificate of Registration and the corresponding Official Receipt is in the possession of the buyer?

A: That means it was on cash transaction.^[38]

On the other hand, respondent, through Rosauro G. Maghirang, Jr., Vice-President for Marketing, said that it paid the dealer in checks and that they have proof of payment. He testified:

Q: Mr. witness, you said you paid the dealer. In what form did you pay the dealer?

A: In checks, sir.

Q: Do you have any proof of your payment?

A: Yes, sir. ^[39]

It is thus clear that the subject car was bought in cash and not through financing via respondent. We find the evidence presented by respondent to be unreliable and erratic. The testimony of Rosauro Maghirang, Jr. that respondent paid Toyota Balintawak, Inc. is simply unsubstantiated by competent evidence. If respondent truly paid the dealer how come it never presented the checks it used to pay Toyota Balintawak, Inc.? Even assuming arguendo that respondent released the loan proceeds to petitioners, the same would be inconsistent with its allegation that it was the one that paid the dealer. Furthermore, another telltale sign that strengthens the claim of petitioners that they did not transact with respondent for a loan was the fact that the alleged loan/credit application^[40] was not signed by any or both of them.

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