#33: CITIBANK VS.

SABENIANO
TOPIC: RULE 130, SECTION 3

THIRD DIVISION
G.R. No. 156132
February 6, 2007
CITIBANK, N.A. (Formerly First National City Bank) and INVESTORS FINANCE
CORPORATION, doing business under the name and style of FNCB
Finance, Petitioners,
vs.
MODESTA R. SABENIANO, Respondent.
FACTS:
Respondent Modesta R. Sabeniano was a client of both petitioners Citibank and FNCB
Finance. She filed a Complaint against petitioners claiming to have substantial deposits and
money market placements with the petitioners, as well as money market placements with
the Ayala Investment and Development Corporation (AIDC), the proceeds of which were
supposedly deposited automatically and directly to respondent's accounts with petitioner
Citibank. Respondent alleged that Citibank refused to return her deposits and the proceeds
of her money market placements despite her repeated demands, thus, compelling
respondent to file Civil Case. RTC: Ten years after the filing of the Complaint a Decision was
finally rendered in Civil Case No. 11336 on 24 August 1995 by the fourth Judge who handled
the said case, Judge Manuel D. Victorio, holding that the set-off made by Citibank was illegal,
null and void and declaring Sabeniano indebted to Citibank in the amount of P1,069,847.40.
CA: The Court of Appeals also declared the setoff as illegal, null and void but it held that
Citibank failed to establish by competent evidence the alleged indebtedness, thus the setoff
of P1,069,847.40 in the account of Sabeniano is without legal and factual basis.
ISSUE:
Was there proper appreciation of evidence by the court in the case at bar?
HELD:
No. After going through the testimonial and documentary evidence presented by both sides
to this case, it is this Court's assessment that respondent did indeed have outstanding loans
with petitioner Citibank at the time it effected the off-set. The totality of Citibank's evidence
as to the existence of the said loans preponderates over respondent's. Preponderant
evidence means that, as a whole, the evidence adduced by one side outweighs that of the
adverse party. This Court disagrees in the pronouncement made by the Court of Appeals
summarily dismissing the documentary evidence submitted by petitioners based on its
broad and indiscriminate application of the best evidence rule. In general, the best evidence
rule requires that the highest available degree of proof must be produced. Accordingly, for
documentary evidence, the contents of a document are best proved by the production of the
document itself, to the exclusion of any secondary or substitutionary evidence. The best
evidence rule applies only when the subject of the inquiry is the contents of the document.
Where the issue is only as to whether such document was actually executed, or exists, or on
the circumstances relevant to or surrounding its execution, the best evidence rule does not
apply and testimonial evidence is admissible. Any other substitutionary evidence is likewise
admissible without need for accounting for the original. This Court did not violate the best
evidence rule when it considered and weighed in evidence the photocopies and microfilm

copies of the Promissory Notes(PNs), Managers Checks (MCs), and letters submitted by the
petitioners to establish the existence of respondent's loans. The terms or contents of these
documents were never the point of contention in the Petition at bar. To recapitualate, the
PNs are declared subsisting and outstanding and Citibank is ordered to return to respondent
the principal amounts of the said PNs. Sabeniano, on the other hand, is ordered to pay
Citibank he balance of her outstanding loans in the sum of P1,069,847.40

#43: MICHAEL AND CO. VS. ENRIQUEZ

TOPIC: SECONDARY EVIDENCE

EN BANC
G.R. No. L-10824 December 24, 1915
E. MICHAEL & CO., INC., plaintiff-appellant,
vs.
ADRIANO ENRIQUEZ, defendant-appellee.
FACTS:
The action is based on a sale with a right to repurchase made by Adriano Enriquez in
favor of E. Michael and E. Michael & Co., of which appellant claims to be the successor, by
reason of an instrument, duly executed and delivered by said companies to appellant,
transferring property, business and assets of every kind, including the land which is the
subject of this litigation.
It is alleged in the complaint that the time to repurchase having expired, the title to
the property became absolute in appellant and that it is accordingly the owner of the land
described in said instruments. On the trial appellant sought to prove the execution and
delivery of the conveyance transferring to it the land described in the sale with right to
repurchase. The trial court prevented appellant from the proving the fact. Appellant also
attempted to prove the fact that the instrument so executed and delivered was lost, it being
his purpose to lay the basis for the introduction of secondary evidence as to its contents.
The trial court also prevented appellant from proving that fact.
ISSUE:

WON the trial court erred in not allowing the appellants to submit secondary
evidence?
HELD:

The SC held that the trial court committed a reversible error.

Trial courts do well in refusing at all times to permit the introduction of incompetent
evidence and particularly secondary evidence of the contents of written instruments unless
the facts required by the Code of Civil Procedure as the conditions precedent for such
evidence are clearly shown to exist. Section 321 of the Code provides: "An original writing
must be produced and proved, except as otherwise provided in this Act. If it has been lost,
proof of the loss must first be made before evidence can be given of its contents. Upon such
proof being made, together with proof of the due execution of the writing, its contents may
be proved by a copy or by a recital of its contests in some authentic document, or by the
recollection of a witness."
As will be seen from this section, the writing itself must be produced unless it has
been lost or destroyed in which case, before its contents may be proved by other evidence,
it must be shown by the person offering the secondary evidence (1) that the document was
duly executed and delivered, where delivery is necessary, and (2) that it has been lost or
destroyed. The execution and delivery of the document may be established by the person or
persons who executed it, by the person before whom its execution was acknowledged, pr by
any person who was present and saw it executed and delivered or who, after its execution

and delivery, saw it and recognized the signatures; or by a person to whom the parties to
the instruments had previously confessed the execution thereof.
The destruction of the instrument may be proved by any person knowing the fact.
The loss may be shown by any person who knew the fact of its loss, or by anyone who has
made, in the judgment of the court, a sufficient examination in the place where the
document or papers of similar character are usually kept by the person in whose custody the
document lost was, and has been unable to find it; or who has made any other investigation
which is sufficient to satisfy the court that the instrument is indeed lost. If it appears, on an
attempt to prove the loss, that the document is in fact in existence, then the proof of the
loss or destruction fails and secondary evidence is inadmissible unless section 322 of the
Code of Civil Procedure should be applicable. After proper proof of the due execution and
delivery of the instrument and its loss or destruction, oral evidence may be give of its
contents by any person who signed the document, or who read it, or who heard it read
knowing, or it being proved from other sources, that the document so read was the one in
question. Such evidence may also be given by any person who was present when the
contents of the document were talked over between the parties thereto to such an extent as
to give him reasonably full information as to its contents; or the contents may be proved by
any person to whom the parties to the instrument have confessed or stated the contents
thereof; or by a copy thereof; or by a recital of its contents in some authentic document.
Trial courts should not be so strict with reference to matters of the character under
discussion as to cause a miscarriage of justice; but on the other hand, they should see to it
that they are not impose on by the introduction of fabricated testimony and that injustice
shall not result from an evasion of the rules of evidence by designing persons.
#63: PEOPLE VS. PEDROSA
TOPIC: DISQUALIFICATION BY REASON OF MENTAL INCAPACITY AND IMMATURITY
SECOND DIVISION
G.R. No. L-56457 January 27, 1989
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
DIOSCORO PEDROSA, accused-appellant.
FACTS:
This is a case of the complex crime of Rape with Homicide of the victim Maria Belen
Almaden where the accused Dioscoro Pedrosa was found guilty.
On June 9, 1977, Sps. Amalden, the parents of the victim, left their house in Barangay
Tacuranga, Palo, Leyte, to harvest palay in neighboring Barangay Capiwaran. 1 They left
behind their daughter Maria with her siblings.
At about 11:30 p.m., Delia was awakened when someone tugged at her head. As she
sat up on the edge of the bed, she heard Maria cry out in pain. She also heard the rattling
sound of empty water gallon containers in the house. She was seized with fear because she
sensed that the hand that touched her head was not Maria's. She groped for Maria but could
not find her. Unable to find a match, she went out of the house to seek help from the
neighbors. The first house she went to was that of Santiago Villas. When Villas refused to
accompany her because his wife would not let him, she proceeded to the neighboring house
of 70-year old Francisco Mas. 4
In the meantime, Roberto, who slept only three (3) meters away from the bed of
Delia and Maria, 5 had also been awakened when Maria cried out in pain. When he heard the
sound of water containers striking one another, he stood up and went to the other bed but
he found it empty. He sat down. Then he felt something hit his foot; it was the foot of a man
wearing pants but without shoes. The man's pants had irregular and unravelled edges.
Roberto went to the porch and sat down. A man emerged from the room and joined him.
Roberto, from apparent fright, shouted, calling for Delia. The man became angry, telling
Roberto that he would awaken the neighbors. 6

Just then Francisco Mas and Delia arrived at the house of the Almadens with a lamp.
They found the appellant sitting at the porch . 7 With the light provided by the lamp, Roberto
saw that the man sitting on the porch was wearing the unevenly edged trousers of the man
who hit his foot; he identified the man as the appellant. 8 Francisco tried to go up the house
but he had to beat a hasty retreat when the appellant shouted at him not to enter. 9
After Francisco left, Delia, Roberto, and the appellant went inside and found Maria
lying in bed. Dioscoro, the appellant, shook the girl, but she did not move. She was dead.
The following morning, at about 9:00 o'clock, the appellant, who appeared restless
and disturbed ("nalilisang'), went to the house of Nonilon Chiquillo, a 39-year old tuba
gatherer of the same barrio, and asked him for Endrin, a poisonous insecticide, but Nonilon
said he had none. The appellant left thereafter. 12
Later that morning, the appellant accompanied Roberto to Bo. Capiwaran to inform
Linda of her daughter's death. They found Linda doing laundry work near a well in the yard.
Maria's father, Leovigildo, who was working in the ricefield, heard the news and joined them.
He heard the appellant tell his (Leovigildo's) wife: "Mama Linda, Maria Belen is already dead.
She suffered from stomach ache and pains." The bereft Almadens went home.
Upon reaching home, Leovigildo saw his dead child, Maria, lying on a bloodied
blanket. When he examined her and found that the blood came from her vagina, he
suspected foul play. He looked for a doctor, but finding none at the Maternity House, he
reported the matter to the police. Patrolman Rogelio Montejo, who was assigned to
investigate the case, accompanied Leovigildo back to his house. The two looked for the
appellant but he was nowhere to be found. According to Linda, the appellant ran when
Leovigildo went out to look for a doctor to examine their child. They found the appellant
later in his house. When Pat. Montejo asked him if he was Dioscoro, the appellant's reply
was, "I did not know what I was doing.' The appellant was then brought to Leovigildo's
house, to the room where the dead girl still lay. There, he was told by Pat. Montejo, "Look at
what you have done." The appellant did not say anything. He did not deny the imputation of
the police officer.
ISSUES:
(1) WON such admission is hearsay, being made out of court?
(2) WON the siblings of the victim who are children are credible witnesses?
HELD:
(1) The reply of the accused, when he was asked by Patrolman Rogelio Montejo whether he
was Dioscoro Pedrosa, which reply was made not very long after he had failed to secure
poison, such a reply being. I did not know what I was doing. This utterance is an unusual
utterance. It was not the proper answer to a simple question. It was made spontaneously
and instinctively, with the knowledge that his fear and apprehension had been transformed
into reality he was already being made to answer and to account for the death of Maria
Belen. This utterance is an admission of guilt. It is part of the res gestae.
(2) The star witnesses for the prosecution in this case are children of tender years. And from
the mouths of the children we get the truth. Truly, children of sound mind are likely to be
more observant of incidents which take place within their view than older persons, so their
testimony is likely to be more correct and truthful than that of older persons, and where
once established that they have fully understood the nature and character of an oath, as in
this case before us, their testimony should be given full faith and credence. 23
Moreover, Erlinda Velasco Almaden and Roberto Almaden are very close relatives of the
appellant. We find no reason for them to falsely testify against a close relative (the
appellant) regarding such a heinous crime.
#73: BANCO FILIPINO VS. MONETARY BOARD
TOPIC: PRIVILEGED COMMUNICATION
EN BANC
G.R. No. 70054 July 8, 1986

BANCO FILIPINO, petitioner,

vs.
MONETARY BOARD, ET AL., respondents.
FACTS:
Subject of this "Petition to Set Aside Order to Produce Documents dated 17 February
1986" is the Order of Branch 136, Regional Trial Court, Makati, granting the motion of Banco
Filipino, based on Section 1, Rule 27, of the Rules of Court, for the production, inspection,
and copying of certain papers and records which are claimed as needed by the Petitioner
Bank for the preparation of its comments, objections, and exceptions to the Conservator's
report dated January 8, 1985, and Receiver's Report dated March 19, 1985.
In issuing the challenged order, the court below took the view that the Supreme
Court's resolution referring to it the matters relative to the bank's closure does not preclude
the petitioner from availing of this mode of discovery as an additional means of preparing for
the hearing. It considered the documents sought to be produced as not privileged because
these constitute or contain evidence material to the issues into by the Court.
These materials are said to comprise of records of the administrative proceedings
conducted by respondent's officials and representatives from the inception of and
preparation of the challenged reports and the resolution placing petitioner under
receivership and thereafter under liquidation as it is the regularity and impartiality of these
administrative proceedings which are being assailed by the petitioner, the trial court saw no
reason why said documents should be thus concealed from it.
Respondents Monetary Board and Central bank prayed that the assailed Order be
reversed and set aside, for being a privileged communication.
ISSUE:
WON the documents subject of the assailed Order are within the purview of privileged
communication?
HELD:

The SC holds that no grave abuse of discretion was committed by the court below in
granting petitioner's motion for the production of the documents enumerated herein. The SC
adopted the view of the RTC that the documents are not privileged and that these constitute
or contain evidence material to the issues being inquired into by the Court.
Herein respondents cite Section 21, Rule 130, Rules of Court which states:
Section 21. Privileged Communications. The following persons cannot testify as to matters
learned in confidence in the following cases:
xxx xxx xxx
(e) A public officer cannot be examined during his term of office or afterwards, as to
communications made to him in official confidence, when the court finds that the public
interest would suffer by disclosure.
However, the SC noted that the said priviledge is intended not for the protection of
public officers but for the protection of public interest (Vogel vs. Gruaz 110 U.S. 311 cited in
Moran, Comments on the Rules of Court, 1980 Ed. Vol. 5, p. 211). Where there is no public
interest that would be prejudiced, this invoked rule will not be applicable. The rule that a
public officer cannot be examined as to communications made to him in official confidence
does not apply when there is nothing to show that the public interest would suffer by the
disclosure question
In the case at bar, the respondents have not established that public interest would
suffer by the disclosure of the papers and documents sought by petitioner. Considering that
petitioner bank was already closed as of January 25, 1985, any disclosure of the
aforementioned letters, reports, and transcripts at this time pose no danger or peril to our
economy. Neither will it trigger any bank run nor compromise state secrets. Respondent's

reason for their resistance to the order of production are tenuous and specious. If the
respondents public officials acted rightfully and prudently in the performance of their duties,
there should be nothing at all that would provoke fear of disclosure
#83: PEOPLE VS. OCAMPO
TOPIC: ADMISSION BY CONDUCT

THIRD DIVISION

G.R. No. 80262 September 1, 1993

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
FERNANDO OCAMPO y CABRERA, accused-appellant.
FACTS:

Accused Fernando Ocampo was charged with the commission of the crime of rape
with homicide before the Regional Trial Court of Macabebe, Pampanga. Upon arraignment,
accused-appellant pleaded not guilty. After trial, the court a quo rendered a decision, on
September 18, 1987, finding the accused guilty beyod reasonable doubt of the crime he was
accused of committing.
The victim, Evelyn Bildan y Danganan, was 10 yrs old when the crime happened. At
around 11 o'clock on the morning of February 8, 1987, Mary Jane Bildan, an elder sister of
the victim, was proceeding from the house of Amalia Lorenzo, her aunt, just across the road
from their house, Capalangan, Apalit, Pampanga. As she was entering the gate of their
residence, she saw accused-appellant Fernando Ocampo ascending the stairs. Curios at
what accused-appellant was up to, Mary stayed under the house. After about four minutes,
she heard a loud thud coming from inside the house. She immediately went upstairs to
verify. But since the door was locked, she peeped through a hole near the door and she
thereupon saw accused-appellant naked making coital movements over the naked body of
her sister Evelyn who appeared to be unconscious.
Frightened, Mary Jane shouted for help, causing accused-appellant to jump out of the
window, still naked, bringing with him his clothes. Hearing Mary Jane's outcry, Jerry Lorenzo,
Mary Jane's cousin, who was strolling nearby, arrived at the scene, followed by another
neighbor. Ten minutes later, accused-appellant arrived. He opened the door by climbing
through a window by means of a ladder.
As soon as the door was opened, Mary Jane and Jerry Lorenzo went inside the house
and saw the lifeless body of Evelyn, lying prostrate and naked on the floor. Mary Jane noticed
discolorations on Evelyn's stomach and nose.
Accused-appellant assails the testimony of Mary Jane Bildan, the sister of the victim,
as incredible. Accused-appellant contends that Mary Jane was prodded by her relatives, for
lack of any other suspect, to point to accused-appellant as the culprit
ISSUE:
WON the RTC erred in finding the accused guilty beyond reasonable ground?
HELD:
Accused-appellant also argues next that if he was indeed responsible for what
happened to Evelyn, he should not have immediately returned to the situs of the crime,
much less opened the door to the house after passing through the window from where he
escaped, for such actuations are incongruous with human nature. There can be no dispute to
the legal proposition that flight from the scene of the felony is one of the indicia of a guilty
conscience. However, it is equally true that in exceptional cases, culprits have become
bolder by returning to their prey to ensure that the victim was successfully eliminated under
the pretext of feigning innocence. The fact that this form of reverse psychology does not
happen as often as flight does not mean that it can never take place

Moreover, Mary Jane's timidity to relay what she saw is thus understandable for a
fifteen-year old teenager who could not be expected to act like a matured woman. Withal,
her inability to speak out her mind then was sufficiently clarified and her delay in informing
others of what she knew about a criminal offense will not impair her credibility (People vs.
Martinada, 194 SCRA 36 [1991]). Verily, Mary Jane's procrastination was brought about by
the natural reticence and abhorrence of most individuals to get involved in a criminal case
(People vs. Punzalan, 153 SCRA 1 [1987]).
#93: ESTRADA VS. DESIERTO
TOPIC: TESTIMONIAL KNOWLEDGE
ISSUES:
(1) WON the evidence presented as against Estrada should be impeached for being hearsay?
(2) WON there is adoptive admission on the part of Former Pres. Estrada as regards the
Angara Diary?
HELD:
(1)
Evidence is called hearsay when its probative force depends, in whole or in part, on
the competency and credibility of some persons other than the witness by whom it is
brought to produce.
(2)
There is adoptive admission made by President Estrada when his options dwindled
when, according to the Angara Diary, the armed forces withdrew its support from him as a
president and Commander-in-Chief. Thus, then Executive Secretary Angara had to allegedly
ask Senate President Pimentel to advise petitioner to consider the dignified exit or
resignation. President Estrada did not object to the suggestion but simply said he could
never leave the country. According to the Court, his silence on this and othe related
suggestions can be taken as an adoptive admission.
Besides, he had several opportunities, according to the Court, to object to the
admissibility of the diary, but did not do so seasonably. It is too late in the day to raise his
objections in an Omnibus Motion.
The Angara Diary also contains direct statements of the President which could be
categorized as admissions of the party like:
(a) his proposal for snap election in which he would not participate;
(b) his statement that he would leave by Monday if the second envelope would be opened
by Monday; and
(c ) statements like, Pagod na pagod na ako. Ayoko na, masyado nang masakit. Pagod na
ako sa red tape, bureaucracy, intriga. I just want to clear my name, then I will go. These
words were taken by the Court as admissions indicative of his resignation.

#113: PEOPLE VS LEONES

TOPIC: RULE 130 SEC 44, OFFICIAL RECORDS
SECOND DIVISION
G.R. No. L-48727 September 30, 1982
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
JOSEPH LEONES y DUCUSIN alias JESSIE, defendant-appellant.
FACTS:

This is an appeal from the decision of the Court of First Instance of La Union, Branch I,
convicting the accused-appellant, Joseph Leones y Ducusin, of the crime of rape and
sentencing him to suffer the penalty of reclusion perpetua and to pay the cost.
Complainant Irene Dulay was a salesgirl employed in the store of Mr. & Mrs. Pepito
Leones at San Fernando, La Union where she resided. On April 22, 1973, the complainant
who had headache stayed in her room. Earlier that day, the members of the Leones family,
including the accused-appellant Joseph Leones and his sister Elizabeth, had gone to nearby
beach resort for a picnic.
At about past noon the appellant and Elizabeth returned to their house. While there,
the appellant and Elizabeth entered the room where complainant was lying down and forced
her to take three tablets dissolved in a spoon which according to them were aspirin. The
complainant refused to take the tablets but was forced to do so when the appellant held her
mouth while his sister pushed the medicine. Then the appellant and Elizabeth left the room
and after a while the complainant felt dizzy.
Later, the appellant returned to the complainant's room and took of her panty. Then
the appellant went on top of her. The complainant tried to push him but as she was weak
and dizzy, the appellant succeeded in abusing her. At about 4:30 P.M. of the same date,
Natividad Leones, the stepmother of the appellant, found the complainant unconscious near
her room without any panty on. She was then taken to the La Union Provincial Hospital by
the driver of the Leones family.
The accused-appellant denied the charge imputed to him, claiming that at the time of
the alleged rape between 2:00 o'clock and 3:00 o'clock p.m. on April 22, 1973, he was at the
beach resort with the other members of the family, namely his sister Elizabeth, his
stepmother Natividad Leones, his younger brothers and sisters named Marivic, Theresa,
Carol, Pinky and Bongbong together with other companions, for a picnic and had lunch
thereat, swimming and picture-taking.
ISSUE:
WON the conviction of the accused is proper?
HELD:
The clinical case record of Irene Dulay's admission and confinement at the Provincial
Hospital of La Union, marked Exhibit "2", contain entries which totally and completely belie
the claim of the complainant that she was raped by the accused in the afternoon of April 22,
1973.
The entry written in the above clinical record when Irene Dulay was admitted under
the item "Complaints" reads: Vaginal Bleeding, and below this entry appears the DiagnosisHealing lacerated wide at 2 o'clock and 10 o'clock hymen. Assuming that the victim was
raped between 2 and 3 o'clock p.m., April 22, 1973 (the same day she was admitted in the
hospital), then the lacerations of the hymen at 2 o'clock and 10 o'clock would not have been
described and indicated to be Healing in the clinical case record. It would be described as
"laceration fresh" or by similar words like "bloody or new lacerations." There is no instant
formula, technique or process known to medical science or by human experience to hasten
the healing of a lacerated hymen within three (3) hours or so after defloration.
The written entries in the clinical case record, Exh. "2", showing the date of her
admission in the hospital on April 22, 1973, her complaint of vaginal bleeding and the
diagnosis of "Healing lacerated wide at 2 o'clock and 10 o'clock hymen" are prima facie
evidence of the facts therein stated, the said entries having been made in official records by
a public officer of the Philippines in the performance of his duty especially enjoined by law,
which is that of a physician in a government hospital. (Rule 130, See. 38, Rules of Court).
From the same clinical case record, Exhibit "2", it appears clearly that the alleged
victim, Irene Dulay, was having her menstrual period when she was supposedly raped for
the Complaint indicated that she had vaginal bleeding. She herself admitted in her
testimony that on April 22, 1973, she was having her menstruation.

As such, the SC held that the guilt of the accused was not proved beyond reasonable
doubt.
#123: CHARLES LEE ET AL VS. COURT OF APPEALS
TOPIC: BURDEN OF EVIDENCE/BUIRDEN OF PROOF
SECOND DIVISION
[G.R. NO. 117913. February 1, 2002]
CHARLES LEE, CHUA SIOK SUY, MARIANO SIO, ALFONSO YAP, RICHARD VELASCO
and ALFONSO CO, petitioners, vs. COURT OF APPEALS and PHILIPPINE BANK OF
COMMUNICATIONS, respondents.
[G.R. NO. 117914. February 1, 2002]
MICO METALS CORPORATION, petitioner, vs. COURT OF APPEALS and PHILIPPINE
BANK OF COMMUNICATIONS, respondents.
FACTS:
On March 2, 1979, Charles Lee, President of MICO, wrote private respondent
Philippine Bank of Communications (PBCom) requesting for a grant of a discounting
loan/credit line in the sum of Three Million Pesos (P3,000,000.00) for the purpose of carrying
out MICOs line of business as well as to maintain its volume of business. On the same day,
Charles Lee requested for another discounting loan/credit line of Three Million Pesos
(P3,000,000.00) from PBCom for the purpose of opening letters of credit and trust receipts.
As such, the same was approved by PBCom in a Resolution which was adopted unanimously
by the MICOs Board of Directors.
A series of loans were obtained using the said credit line.
Consequently, petitioners Lee et al had numerous other transactions with PBCOm by
which they requested and opened credit lines, both in the country and abroad. Respondents
PBCom, after the execution of the proper documents and the issuance of necessary
resolutions, obliged the MICO through Lee.
Upon maturity of all credit availments obtained by MICO from PBCom, the latter made
a demand for payment. [30] For failure of petitioner MICO to pay the obligations incurred
despite repeated demands, private respondent PBCom extrajudicially foreclosed MICOs real
estate mortgage and sold the said mortgaged properties in a public auction sale held
on November 23, 1982.
Petitioners (MICO and herein petitioners-sureties) denied all the allegations of the
complaint filed by respondent PBCom, and alleged that:
a) MICO was not granted the alleged loans and neither did it receive the proceeds of the
aforesaid loans;
b) Chua Siok Suy was never granted any valid Board Resolution to sign for and in behalf of
MICO;
c) PBCom acted in bad faith in granting the alleged loans and in releasing the proceeds
thereof;
d) petitioners were never advised of the alleged grant of loans and the subsequent
releases therefor, if any;
e) since no loan was ever released to or received by MICO, the corresponding real estate
mortgage and the surety agreements signed concededly by the petitioners-sureties are null
and void.
The trial court gave credence to the testimonies of herein petitioners and dismissed
the complaint filed by PBCom. The trial court likewise declared the real estate mortgage and
its foreclosure null and void. In ruling for herein petitioners, the trial court said
that PBCom failed to adequately prove that the proceeds of the loans were ever delivered to
MICO. The trial court said that the lack of proof as regards the existence of the merchandise

covered by the letters of credit bolstered the claim of herein petitioners that no purchases of
the goods were really made and that the letters of credit transactions were simply resorted
to by the PBCom and Chua SiokSuy to accommodate the latter in his financial requirements.
The Court of Appeals reversed the ruling of the trial court, saying that the latter
committed an erroneous application and appreciation of the rules governing the burden of
proof. Citing Section 24 of the Negotiable Instruments Law which provides that Every
negotiable instrument is deemed prima facie to have been issued for valuable
consideration and every person whose signature appears thereon to have become
a party thereto for value, the Court of Appeals said that while the subject promissory
notes and letters of credit issued by the PBCom made no mention of delivery of cash, it is
presumed that said negotiable instruments were issued for valuable consideration.
Petitioners filed a motion for reconsideration of the challenged decision of the Court
of Appeals but this was denied.
ISSUE:
WON the CAS decision is proper?
HELD:

In civil cases, the party having the burden of proof must establish his case by
preponderance of evidence.[33] Preponderance of evidence means evidence which is more
convincing to the court as worthy of belief than that which is offered in opposition thereto.
Petitioners contend that the alleged promissory notes, trust receipts and surety
agreements attached to the complaint filed by PBCom did not ripen into valid and binding
contracts inasmuch as there is no evidence of the delivery of money or loan proceeds to
MICO or to any of the petitioners-sureties. Petitioners claim that under normal banking
practice, borrowers are required to accomplish promissory notes in blank even before the
grant of the loans applied for and such documents become valid written contracts only when
the loans are actually released to the borrower. The contentions of petitioners failed to
persuade.
During the trial of an action, the party who has the burden of proof upon an issue
may be aided in establishing his claim or defense by the operation of a presumption, or,
expressed differently, by the probative value which the law attaches to a specific state of
facts. A presumption may operate against his adversary who has not introduced proof to
rebut the presumption. The effect of a legal presumption upon a burden of proof is to create
the necessity of presenting evidence to meet the legal presumption or the prima facie case
created thereby, and which if no proof to the contrary is presented and offered, will
prevail. The burden of proof remains where it is, but by the presumption the one who has
that burden is relieved for the time being from introducing evidence in support of his
averment, because the presumption stands in the place of evidence unless rebutted.
Under Section 3, Rule 131 of the Rules of Court the following presumptions, among
others, are satisfactory if uncontradicted: a) That there was a sufficient consideration for a
contract and b) That a negotiable instrument was given or indorsed for sufficient
consideration. As observed by the Court of Appeals, a similar presumption is found in
Section 24 of the Negotiable Instruments Law which provides that every negotiable
instrument is deemed prima facie to have been issued for valuable consideration and every
person whose signature appears thereon to have become a party for value. Negotiable
instruments which are meant to be substitutes for money, must conform to the following
requisites to be considered as such a) it must be in writing; b) it must be signed by the
maker or drawer; c) it must contain an unconditional promise or order to pay a sum certain
in money; d) it must be payable on demand or at a fixed or determinable future time; e) it
must be payable to order or bearer; and f) where it is a bill of exchange, the drawee must be
named or otherwise indicated with reasonable certainty. Negotiable instruments include
promissory notes, bills of exchange and checks. Letters of credit and trust receipts are,
however, not negotiable instruments. But drafts issued in connection with letters of credit
are negotiable instruments.

Private respondent PBCom presented documentary evidence to prove petitioners

credit availments and liabilities.
The above-cited documents presented have not merely created a prima facie case
but have actually proved the solidary obligation of MICO and the petitioners, as sureties of
MICO, in favor of respondent PBCom. While the presumption found under the Negotiable
Instruments Law may not necessarily be applicable to trust receipts and letters of credit, the
presumption that the drafts drawn in connection with the letters of credit have sufficient
consideration. Under Section 3(r), Rule 131 of the Rules of Court there is also a presumption
that sufficient consideration was given in a contract. Hence, petitioners should have
presented credible evidence to rebut that presumption as well as the evidence presented by
private
respondent PBCom.
The
letters
of
credit
show
that
the
pertinent
materials/merchandise have been received by MICO. The drafts signed by the
beneficiary/suppliers in connection with the corresponding letters of credit proved that said
suppliers were paid by PBCom for the account of MICO. On the other hand, aside from their
bare denials petitioners did not present sufficient and competent evidence to rebut the
evidence of private respondent PBCom. Petitioner MICO did not proffer a single piece of
evidence, apart from its bare denials, to support its allegation that the loan transactions, real
estate mortgage, letters of credit and trust receipts were issued allegedly without any
consideration.