Philippine National Bank v. Court of Appeals
REITERATIONFacts
The Antecedents: Private respondent Loreto Tan owned a parcel of land subject to expropriation proceedings. The government deposited the expropriation price of P32,480.00 with petitioner Philippine National Bank (PNB). Tan filed a motion for the release of the funds to him. Procedural History: The trial court ordered PNB to release the P32,480.00 to Tan. PNB, through its Assistant Branch Manager Juan Tagamolila, issued a manager's check for the amount and delivered it to Sonia Gonzaga without Tan's knowledge or authority. Sonia Gonzaga deposited the check in her account and withdrew the funds. Tan demanded payment from PNB, which was refused on the ground that payment was made to Sonia Gonzaga based on an alleged Special Power of Attorney (SPA). Tan denied executing any SPA in favor of Sonia Gonzaga. Tan filed a complaint against PNB and Tagamolila to recover the amount. PNB filed a third-party complaint against the Gonzagas, which was dismissed. The trial court ruled in favor of Tan, ordering PNB and Tagamolila to pay jointly and severally. The Court of Appeals affirmed the trial court's decision against PNB, modifying it by deleting the awards for exemplary damages and attorney's fees. PNB filed a petition for review. The Petition: Petitioner PNB questioned the Court of Appeals' decision, arguing that the existence of the SPA need not be proven by it under the best evidence rule, as it was allegedly proven by testimonies and a certification from Far East Bank and Trust Company.
Issue(s)
Whether petitioner Philippine National Bank (PNB) sufficiently proved payment of the expropriation price to private respondent Loreto Tan, and whether the Best Evidence Rule applies to the alleged Special Power of Attorney (SPA). Whether private respondent Loreto Tan is entitled to attorney's fees. Whether private respondent Loreto Tan is entitled to exemplary damages.
Ruling
The petition is unmeritorious. The decision of the Court of Appeals is affirmed with the modification that the award of P5,000.00 as attorney's fees by the Regional Trial Court is reinstated.
Ratio Decidendi
On the issue of payment and the Best Evidence Rule: The Court held that there was no question that no payment had ever been made to private respondent Tan, as the check was never delivered to him. Article 1233 of the Civil Code states that a debt shall not be understood to have been paid unless the thing or service in which the obligation consists has been completely delivered or rendered. The burden of proof of such payment lies with the debtor. In the instant case, neither the alleged SPA nor the check issued by petitioner was presented in court. The testimonies of petitioner's own witnesses regarding the check were conflicting. Furthermore, the contents of the SPA were in issue, thus the Best Evidence Rule applies, requiring the original document to be presented. Since the original SPA was not presented, petitioner's arguments regarding due payment must fail. The Court cited Section 2, Rule 130 of the Rules of Court regarding the original writing and Section 4, Rule 130 concerning secondary evidence when the original is lost or destroyed, neither of which were sufficiently invoked or proven by the petitioner. On the entitlement to attorney's fees: The Court held that private respondent Tan is entitled to attorney's fees. Article 2208 of the Civil Code allows attorney's fees to be awarded if the claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act or omission of the party from whom it is sought. The Court reiterated its ruling in Rasonable v. NLRC, et al. that when a party is forced to litigate to protect his rights, he is entitled to an award of attorney's fees. Tan was compelled to file a separate civil action to recover the amount due to PNB's unjustified omission. On the entitlement to exemplary damages: The Court agreed with the appellate court that the award of exemplary damages should be deleted. Under Article 2232 of the Civil Code, exemplary damages may be awarded if a party acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner, but they cannot be recovered as a matter of right. The Court cited jurisprudence requiring that the act must be accompanied by bad faith or done in a wanton, fraudulent, oppressive or malevolent manner, and that exemplary damages cannot be awarded without compensatory damages. In this case, while there was a clear breach of PNB's obligation, there was no evidence that it acted in a fraudulent, wanton, reckless or oppressive manner. Moreover, there was no award of compensatory damages which is a prerequisite for exemplary damages.
Main Doctrine
A debt is not understood to have been paid unless the thing or service in which the obligation consists has been completely delivered or rendered. The burden of proof of such payment lies with the debtor. In cases where the contents of a document are in issue, the Best Evidence Rule applies, requiring the original document to be presented unless exceptions are met.