Spouses Arsenio R. Reyes v. Court of Appeals

Summary

This case involved a family dispute between cousins over whether P500,000 was a loan or partnership contribution. Pablo V. Reyes sued spouses Arsenio and Nieves Reyes for collection, claiming they borrowed P500,000 at 5% monthly interest evidenced by an acknowledgment receipt. Petitioners defended that the money was originally Pablo's partnership contribution later converted to a non-interest bearing loan, and that the receipt was simulated. The Supreme Court affirmed the Court of Appeals' finding that a valid loan obligation existed, rejecting the novation defense. The Court held that petitioners owed P500,000 with 5% monthly interest from July 15, 1990, less P484,000 in payments already made (P400,000 truck value plus P84,000 interest payments). The decision emphasized that novation is never presumed and must be clearly established, and that testimonial evidence cannot overcome documentary evidence like the acknowledgment receipt.