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PNB v. CA and Loreto Tan (1996) Romero, J. Tan owns a land abutting the national highway in Bacolod. Expropriation proceedings were instituted by the government against him and other property owners. Tan filed a motion requesting for the release to him of the expropriation price of P32k. This 32k was deposited by the govt with PNB-Bacolod. TC required PNB-Bacolod to release to Tan the P32k deposited by the government. Asst Branch Mngr Tagamolila issued a manager's check for P32k. This was delivered to one Sonia Gonzaga without Tan's knowledge, consent or authority. This Gonzaga then deposited it in her account with Far East Bank and Trust Co. Tan demanded the P32k from PNB but PNB refused because it had already delivered the check to Gonzaga on the strength of a Special Power of Atty allegedly executed by Tan, in Gonzagas favour. Tan executed an affidavit saying that: o He never executed any special power of atty in Gonzagas favour o Did not authorize Gonzaga to receive the P32k PNB opposed Tans recovery of the P32k and said Gonzaga presented a copy of the special power of atty by virtue of which, PNB delivered the check to her. However, PNB was unable to present this when directed by the court to produc e it. The court decided that there was need for the matter to be ventilated in a separate civil action. Tan filed a complaint with the RTC-Bacolod. rd rd PNB filed a 3 party complaint against sps Gonzaga. PNB failed to have the summons served on Gonzaga, so 3 party complaint was dismissed. Branch mngr Tagamolila said that Gonzaga presented a Special Power of Attorney to him but borrowed it back claiming that she needed it to encash the check. RTC ordered PNB & Tagamolila to pay Tan solidarily the P32k + damages + atty fees CA affirmed but atty fee and exemplary damages were deleted.

Issue: Is award of exemplary damages proper? Held: No. CA correct in deleting exemplary damages. Ratio: EXEMPLARY DAMAGES: WHEN IMPOSED (IN GENERAL) Under NCC 2232, exemplary damages may be awarded if a party acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. They cannot be recovered as a matter of right; the court has yet to decide whether or not they should be adjudicated. Jurisprudence set down the requirements for award of exemplary damages: 1. They may be imposed by way of example in addition to compensatory damages, and only after the claimant's right to them has been established; 2. They cannot be recovered as a matter of right, their determination depending upon the amount of compensatory damages that may be awarded to the claimant; 3. The act must be accompanied by bad faith or done in a wanton, fraudulent, oppressive or malevolent manner. Award of compensatory damages is a prerequisite before exemplary damages may be awarded In the present case: o There is a clear breach of obligation to pay Tan BUT there is no evidence that it acted in a fraudulent, wanton, reckless or oppressive manner. o There is no award of compensatory damages which is a prerequisite before exemplary damages may be awarded.

Re: Atty fees Tan is entitled to atty fees. NCC 2208 allows atty 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. Re: Evidence No payment was ever made to Tan (check was never delivered to him). When the LC ordered PNB to pay Tan, it had the obligation to deliver. Under NCC 1233, 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 Burden of proof of such payment lies with the debtor. BUT in this case PNB did not present neither the SPA nor the check issued by it Testimonies of PNBs witnesses were conflicting o Tagamolila (Branch mngr): said the check was issued to Gonzaga as atty-in-fact of Tan o Tibon (the cashier): said that check was issued to Loreto Tan Considering that the contents of the Special Power of Atty are also in issue, the best evidence rule (from the Rules of Court) applies.

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o o CA affirmed.

Hence, only the original document (which has not been presented at all) is the best evidence of the fact as to whether or not Tan authorized Gonzaga to receive the check. In the absence of such document, PNGs arguments regarding due payment must fail.