Banking Cases Ass. 3

[G.R. No. 138954.
November 25, 2004]

ASUNCION GALANG ROQUE, petitioner, vs. PEOPLE OF THE PHILIPPINES, respondent.
DECISION
AZCUNA, J.:
This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure,
assailing the decision of the Court of Appeals in CAG.R. CR No. 20411, entitled People of the
Philippines vs. Asuncion Galang Roque, which affirmed in toto the decision of the Regional Trial Court
(RTC) of Guagua, Pampanga, Branch 49, where petitioner was found guilty of the crime of qualified
theft.
In an information dated December 3, 1990, the petitioner was charged with qualified theft in the
Regional Trial Court of Guagua Pampanga, Branch 49. The Information reads as follows:
That on or about the 16th day of November, 1989, in the municipality of Floridablanca, province of
Pampanga, Philippines and within the jurisdiction of his Honorable Court, the above-named accused
ASUNCION GALANG ROQUE, being then employed as teller of the Basa Air Base Savings and Loan
Association Inc. (BABSLA) with office address at Basa Air Base, Floridablanca, Pampanga, and as such
was authorized and reposed with the responsibility to receive and collect capital contributions from its
member/contributors of said corporation, and having collected and received in her capacity as teller of
the BABSLA the sum of TEN THOUSAND PESOS (P10,000.00), said accused, with intent of gain, with
grave abuse of confidence and without the knowledge and consent of said corporation, did then and
there willfully, unlawfully and feloniously take, steal and carry away the amount of P10,000.00,
Philippine currency, by making it appear that a certain depositor by the name of Antonio Salazar
withdrew from his Savings Account No. 1359, when in truth and in fact said Antonio Salazar did not
withdr[a]w the said amount of P10,000.00 to the damage and prejudice of BABSLA in the total amount
of P10,000.00, Philippine currency.
All contrary to law.[1]
The evidence of the prosecution consisted of the testimonies of three witnesses, namely: Antonio
Salazar, Rosalina de Lazo and Reynaldo Manlulu and Exhibits A to G with submarkings.
The first prosecution witness, Antonio Salazar (Salazar) is a member/depositor of the Basa Air
Base Savings and Loan Association Inc. (BABSLA) as evidenced by his passbook No. 1359. He was
made to sign two ledgers when he opened his savings account. On November 16, 1989, Salazar made
a deposit of P2,000 at the BABSLA; however, he did not make any withdrawal, nor did he authorize
anyone to do the same on that date or on November 17, 1989 or for the whole month of November of
that year. Salazar disclosed that around July 1990 he heard that the funds of other depositors were
missing inside the BABSLA and were supposedly clandestinely circulating around the base. Prodded by
this news, and considering that the balance in his passbook was P46,000, he went to the BABSLA to
withdraw P40,000, but was informed that his balance at the BABSLA was insufficient to cover the
withdrawal. He was not allowed to withdraw. Rosalina de Lazo, the general manager, informed him that
several withdrawals were made on his account amounting to P30,500, as evidenced by three (3)
BANKING LAWS - Assignment No. 3
withdrawal slips. Included among these withdrawal slips is one with the amount of P10,000, dated
November 16, 1989. Salazar claimed that the signature appearing on said withdrawal slip was not his
signature. He does not personally know who made the withdrawal of P10,000. Salazar assumed that
the one in control of the funds made the withdrawal.[2]
The second prosecution witness was the general manager of the BABSLA in the person of
Rosalina de Lazo (de Lazo). She has held her position as general manager since 1983. De Lazo
averred that the BABSLA had only one teller, and that the petitioner, Asuncion Galang Roque, held that
job from 1989 up to the last working day of June 1990. She added that the petitioner had not been
absent from work, particularly in 1989. Sometime in July 1990, she met MSgt. Antonio Salazar, who was
complaining that the amount of P30,500 was missing from his account. A comparison of the banks
ledger and his passbook manifested that there were three (3) withdrawals appearing on the ledger that
do not appear in his passbook, inclusive of the withdrawal made on November 16, 1989. She saw the
three (3) withdrawal slips and in the withdrawal slip dated November 16, 1989 the initial after the figure
11-17-89 is the customary initial of the petitioner. She claimed that she was familiar with the customary
initial of the petitioner. The withdrawal slip dated November 16, 1989 was made after 3:00 oclock in the
afternoon of the same day but was stamped 11-17-89, as it is bank regulation that all transactions made
after 3:00 p.m. will be entered in the book the next day.
De Lazo further testified that at the commencement of the business hour, petitioner gets cash
from the treasurer and her beginning cash on November 17, 1989 per Tellers Daily Report
was P355,984.53 which she used to serve all kinds of transactions pertaining to withdrawals. The initial
over the typewritten name agroque is the customary initial of the petitioner, Asuncion Galang Roque. De
Lazo claimed to be familiar with it. At the end of the work day petitioner prepared the Abstract of
Payment, which is a summary of the withdrawals the teller paid that day as evidenced by several
withdrawal slips.
De Lazo testified that before the petitioner went on forced leave petitioner sought her assistance
because she feared she would be removed from work. She claimed that petitioner admitted to taking
some money from the depositors, including the account of Sgt. Salazar. Unable to help petitioner, she
referred her to Col. Dunilayan, the president and chairman of the BABSLA, who told her to return the
money immediately. Petitioner told Col. Dunilayan that she would return the money. She failed to do so.
During the same meeting, petitioner, in the presence of Col. Dunilayan and de Lazo, prepared a list
containing the names of members from whose accounts she took money. Petitioner gave the list to Col.
Dunilayan. When petitioner failed to return the money they decided to file a case against her. In the
morning of November 17, de Lazo was already aware of the taking of the P10,000 that occurred the day
prior. Since she had full trust and confidence in petitioner, and did not fear that this anomaly would
persist, she did not ask for the presentation of the passbook so that the corresponding entries could be
made in order to avoid a discrepancy between the ledger and the passbook, nor did she send notice to
Antonio Salazar. It is the practice of the bank that all withdrawals require the presentation of the
passbook. This was the first instance that a transaction was not recorded in the passbook. There are
only a few cases wherein she (de Lazo) allows deposits to be made without the presentation of the
passbook on the same day. In these instances she just requires the depositor to come some other time
for the recording of the transaction in the passbook. As of the date of this testimony, the BABSLA had
already paid deposits on accounts from which the petitioner had taken money, including that of Antonio
Salazar as indicated in the bank records.[3]
The third and last prosecution witness is Reynaldo Manlulu, who is both the treasurer and a
member of the board of directors of the BABSLA. He testified that petitioner was the teller of the
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BABSLA in November 1989 and that she reported for work on the 17 th of that month. He intimated that
on that date petitioner got a beginning cash from him amounting to P355,984.53, including all the the
transactions that occurred after 3:00 p.m. of the preceding day. This beginning cash can be seen in the
Tellers Daily Report. The signature above the typewritten name agroque is petitioners because she
signed it in his presence. Apart from the beginning cash, he also turned over to petitioner the
transactions that took place after 3:00 p.m. of the preceding day, particularly the withdrawal slip of MSgt.
Salazar. At the end of the business day of November 17, 1989, she prepared an abstract of payment
and in this abstract the initial over the typewritten name agroque is the initial of the petitioner because
she signed it in his presence. Petitioner paid the withdrawal of P16,300 evidenced by the withdrawal
slips attached to the abstract of payment. After she prepared the abstract of payment, petitioner turned
over to him the cash and all the transactions that were taken after 3:00 p.m. A Cash Count shows the
total cash that petitioner turned over to him. The initial over the typewritten name agroque is petitioners
because it was signed in his presence.[4]
The evidence for the petitioner consists of the testimony of the petitioner herself and that of Atty.
Norbin Dimalanta and Exhibits 1 to 5 with sub-markings.
Petitioner, Asuncion Galang Roque, testified that she was employed as teller at the BABSLA from
1979 until her termination in 1990. In the morning she gets the money from the treasurer and they do a
cash count which is reflected in the Tellers Daily Report and at 3:00 p.m. she prepares and submits an
abstract of payment. However, before making the abstract, she and the treasurer conduct a cash count
and the remaining cash is turned over to the treasurer. As a teller, she received deposits and payments,
deposits of checks and payments of loans. She does not discharge any memorandum or withdrawals
unless both the manager and the treasurer previously approve it. Depositors cannot withdraw after 3:00
p.m., unless they talk to the manager or treasurer. Withdrawals done after 3:00 p.m. are reflected as
transactions of the following day. She insisted that the charge against her of stealing and carrying
away P10,000 is false since she did not prepare the withdrawal slip dated November 16, 1989 which
involves the account of Antonio Salazar. She also denied forging the signature of Salazar and affixing
her initial. Petitioner also disowned the initial in the abstract of payment dated November 17, 1989 and
the initials on several withdrawal slips. She claimed to be innocent and contended that Rosalina de
Lazo is the one who is guilty because she was only used by the president. The latter is still connected
with the BABSLA while the petitioner was terminated in June 1990.
Throughout the eleven years that petitioner worked as a teller at the BABSLA, she had never
been absent from work or required by the treasurer to explain any discrepancy or anomaly related to the
cash that she handled as a teller. Before her dismissal, petitioner was not suspended by the board of
directors of the BABSLA during the investigation of her case. She was put on forced leave which
eventually led to her termination. The manager was also supposed to be on forced leave. However,
when the manager reported for work and some members protested and filed a petition, the president
asked them to retract their statements by means of executing an affidavit of desistance. Even though
petitioner received notice regarding the investigation, she did not attend because she knew the
personalities of the members of the committee. Only the accused and the complainants whose accounts
were withdrawn were investigated. She filed a complaint with the Department of Labor in connection
with her dismissal but it was dismissed because she did not pursue it. Apart from the president, there
were seven (7) members of the board of directors of the BABSLA in 1990: Col. Dunilayan, Col.
Sanchez, MSgt. Romero, Sgt. Manlulu, Sgt. Torato, Mrs. Bagasbas and Capt. Baluyut. Capt. Baluyut
was subsequently dimissed as a member of the board of directors.[5]
The second witness for the petitioner was Atty. Norbin Dimalanta. He averred that he only gave
advice regarding the legality of the possible dismissal of the petitioner based on the evidence the
committee gathered. He was present when the evidence and witnesses were presented. Proper notices
were sent to the accused. The chairman of the committee, Leonardo Tolentino, concluded that the
initials on the withdrawal slips were similar to the petitioners initials. He did not suggest the consultation
of a handwriting expert on forgery since there were other pieces of evidence showing that the petitioner
figured in the anomaly because several witnesses identified the figures appearing in the original copy of
the questioned receipt as written by the petitioner. His conclusion that no one else could have done it
except for Mrs. Roque was arrived at only after the investigation of the records and documents
presented to the committee.[6]
The RTC found the petitioner guilty beyond reasonable doubt of the crime charged, on the
following grounds:
After a careful evaluation of the evidence presented by both sides, the Court finds that the prosecution
has proved the guilt of the accused beyond reasonable doubt. This finding is supported by the
categorical testimony of prosecution witness Reynaldo Manlulu who testified that on November 17,
1989 accused received from him a beginning cash in the amount of P355,984.53 which is shown in a
Tellers Daily Report (Exh. D) prepared by the accused and signed by the accused in his presence
( TSN, March 25, 1993, page 3). At the close of business day of November 17, 1989 the accused also
prepared an Abstract of Payment (Exh. E) and she signed it in his presence (Id., page 6). Aside from the
beginning cash he also turned over to the accused the transactions that took place after 3:00 oclock of
the preceding day particularly the withdrawal slip of M/Sgt. Salazar (Id., page 4) so that it can be
entered on the records on that very date as bank regulation requires that transactions occurring after
3:00 oclock of a particular day are recorded the following day. This explains why although the
questionable withdrawal slip was dated November 16, 1989 it was stamped paid on November 17,
1989, for record purposes. Since it was the accused who gave Reynaldo Manlulu the withdrawal slip
dated November 16, 1989 the presumption is that, being in possession of said withdrawal slip before its
delivery to Reynaldo Manlulu, the accused is the one who prepared the said withdrawal slip. This
particular transaction was turned over to him by the accused the previous day (Id., page 5).
The Tellers Daily Report dated November 17, 1989 reflects, among others, a total withdrawal on that
date in the amount of P16,300.00. This amount is the totality of withdrawal after adding the seven (7)
legitimate withdrawals amounting to P6,300.00 (Exhs. E-2 to E-8) and the questionable withdrawal of
P10,000.00 (Exh. C). On the other hand, the Abstract of Payment (Exh. E) reflects, among others, a
savings withdrawal of P16,300.00 which tallies with the Tellers Daily Report of that date and with the
seven (7) withdrawal slips.
The defense interposed by the accused is one of denial. She claimed that all the initials in the
withdrawal slip of P10,000.00 (Exh. C), on the Tellers Daily Report (Exh. D), in the Abstract of Payment
(Exh. E) as well as on the list of names of depositors (Exh. G) are not hers, implying, therefore, that
these documents were prepared by somebody else. To emphasize that the initials on Exhibits C, D, E,
and G are not hers, accused during the hearing on March 18, 1993 wrote six (6) of her initials in a piece
of paper (Exh. 1). However, the Court is not in a position to state whether the initial in Exhibit 1 is the
same or different from the initials in Exhibits C, D, E, and G not being an expert along that line. Accused
could have very well availed of court processes to request the NBI or PNP Crime Laboratory to
determine whether or not the initials in Exhibits C, D, E, and G are hers by comparing the same with
similar documents on file with the BABSLA which are abundant as said documents are prepared daily
and accused was, prior to her dismissal, the only teller of BABSLA for over a year and has therefore
accomplished a lot of these documents. Unfortunately, accused did not make any attempt to do so. At
any rate, denial cannot prevail over the affirmative and categorical testimony of Reynaldo Manlulu who
stated that accused turned over to him the questionable withdrawal slip on November 16, 1989 and it
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was in turn returned to the accused by said witness the following day November 17, 1989 in order that
said transaction may be reflected on the records on that date. Said witness also positively testified that
the accused initialed in his presence the Tellers Daily Report and the Abstract of Payment which said
accused prepared on November 17, 1989. Denial is a self-serving negative evidence that cannot be
given greater weight than the declaration of credible witnesses who testified on affirmative matters
(People vs. Carizo, 233 SCRA 687). Like alibi, denial is inherently a weak defense and cannot prevail
over the positive and credible testimony of the prosecution witnesses (People vs. Macagaleng, 237
SCRA 299).
Accused after denying that the initials over the typewritten name A. G. Roque found in several exhibits
introduced by the prosecution are not hers concentrated [on] her defense that Rosalina de Lazo,
another prosecution witness, and the General manager of BABSLA was the author of the anomaly being
imputed against her because said witness has committed certain anomalous transactions at the
BABSLA in the past. Accused, however, never mentioned a word about the testimony of Reynaldo
Manlulu which actually proved her undoing. She failed to controvert nor even comment on the damaging
testimony of Reynaldo Manlulu that she turned over to him the questionable withdrawal slip and signed
and/or placed her initial on the Tellers Daily Report and Abstract of Payment in his presence. Accused
did not present any evidence that Reynaldo Manlulu had ulterior motives to testify falsely against her.
When there is no evidence indicating that the principal witness for the prosecution was moved by
improper motive, the presumption is that he was not so moved, and his testimony is entitled to full faith
and credit. (People vs. Perciano, 233 SCRA 393). Accused also failed to controvert the testimony of
Rosalina de Lazo that accused confessed before Col. Dunilayan, the president of BABSLA that she took
money from some depositors which she promised to return and in fact wrote down the names of said
depositors before Col. Dunilayan in a piece of paper which she handed to him. This fact and [it being]
taken in the light that she failed to appear for investigation after the anomaly was discovered despite
due notice, and her lack of interest to pursue a case she filed before the Department of Labor which
caused its dismissal, do not speak well of her claim of innocence.
Art. 309, paragraph 2 of the Revised Penal Code provides that the penalty for theft is prision
correccional in its medium and maximum periods if the value property stolen is more than P6,000.00 but
does not exceed P12,000.00 and since the accused is charged for qualified theft, and the property or
money stolen is P10,000.00, under Art. 310 the penalty prescribed for this crime is increased two (2)
degrees higher, the basis of which is Art. 309, paragraph 2. Therefore the corresponding penalty is
prision mayor maximum to reclusion temporal minimum. However, as the accused is qualified [under]
the indeterminate sentence law, the prescribed penalty for her in this case is prision mayor as minimum
to reclusion temporal as maximum.
WHEREFORE, judgment is rendered finding the accused guilty beyond reasonable doubt of the crime
of qualified theft as charged and she is hereby sentenced to suffer the penalty of 6 years and 1 day of
prision mayor as minimum to 12 years, 2 months and 1 day of reclusion temporal as maximum, and to
indemnify the offended party Basa Air Base Savings & Loan Association Inc. in the amount
of P10,000.00, and to pay the costs.
reasonable doubt. As aptly pointed out by the lower court:

This finding is supported by the categorical testimony of prosecution witness Reynaldo Manlulu who
testified that on November 17, 1989 accused received from him a beginning cash in the amount
of P355,984.53 which is shown in a Tellers Daily Report (Exh. D) prepared by the accused and signed
by the accused in his presence (TSN, March 25, 1993, page 30). At the close of business day of
November 17, 1989 the accused also prepared an Abstract of Payment (Exh. E) and signed it in his
presence (Id., page 6). Aside from the beginning cash he also turned over to the accused the
transaction that took place after 3:00 oclock of the preceding day particularly the withdrawal slip of
M/Sgt. Salazar (Id., page 4) so that it can be entered on the records on that very date as bank
regulation required that transaction occurring after 3:00 oclock of a particular day are recorded the
following day. This explains why although the questionable withdrawal slip was dated November 16,
1989 it was stamped paid on November 17, 1989 for record purposes. Since it was the accused who
gave Reynaldo Manlulu the withdrawal slip dated November 16, 1989 the presumption is that being in
possession of said withdrawal slip before its delivery to Reynaldo Manlulu the accused is the one who
prepared the said withdrawal slip. This particular transaction was tuned over to him by the accused the
previous day (Id., page 5).
The Tellers Daily Report dated November 17, 1989 reflects among others a total withdrawal on that date
in the amount of P16,300.00. This amount is the totality of withdrawal after adding the seven (7)
legitimate withdrawals amounting to P6,300.00 (Exhs. E-2 to E-8) and the questionable withdrawal
of P10,000.00 (Exh. C). On the other hand the Abstract of Payment (Exh. E) reflects among others a
savings withdrawal of P16,300.00 which tallies with the Tellers Daily Report of that date and with the
seven (7) withdrawal slips.
Appellants defense is one of denial. She claims that the initials in the withdrawal slip of P10,000.00
(Exh. C) the Tellers Daily Report (Exh. D) the Abstract of Payment (Exh. E) and list of names of
depositors (Exh. G) are not hers thus implying that these documents were prepared by somebody else.
To bolster her claim she wrote her initials six (6) times on a piece of paper during the hearing on March
18, 1993 (Exh. 2) probably for comparison purposes. Admittedly there are noticeable differences
between her initials in Exhibit 2 and those appearing on Exhibits C to G. This is of course
understandable. It was not difficult for appellant to feign her initials in Exhibit 2 in order to mislead the
Court.
At any rate no less than Rosalina de Lazo who as general manager of BABSLA is familiar with the
initials has positively identified the initials on Exhibits C to G as hers. Likewise, Reynaldo Manlulu
categorically stated not only that the questionable withdrawal slip (Exh. C) was turned over to him by
appellant on November 16, 1989 and returned to her on November 17, 1989 but also that the Tellers
Daily Report (Exh. D) and the Abstract of Payment (Exh. E) were initialed by her in his presence.
Needless to say the initials in Exhibits C, D, and E bear such similarities as would lead to the conclusion
that they were prepared by one and the same person. Hence, a more worthy and reliable evidence than
the mere samples of her initials written during the trial is required to controvert the positive testimonies
of Rosalina de Lazo and Reynaldo Manlulu.
SO ORDERED.[7]
On appeal, the appellate court found the conviction in accord with law and the evidence and
affirmed the decision of the RTC in toto. The Court of Appeals, quoting at length the lower court,
reasoned, thus:
The Court fully agrees with the court a quo in finding that appellants guilt has been proven beyond
No cogent reason has been shown for this court not to give credence to the prosecution witnesses. As
aptly observed by the court a quo:
Accused after denying that the initials over the typewritten name A.G. Roque found in several exhibits
introduced by the prosecution are not hers concentrated [on] her defense that Rosalina de Lazo another
prosecution witness and the General Manager of BABSLA was the author of the anomaly being imputed
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against her because said witness has committed certain anomalous transactions at the BABSLA in the
past. Accused however, never mentioned a word about the testimony of Reynaldo Manlulu which
actually proved her undoing. She failed to controvert nor even comment on the damaging testimony of
Reynaldo Manlulu that she turned over to him the questionable withdrawal slip and signed and/or
placed her initial on the Tellers Daily Report and Abstract of Payment in his presence. Accused did not
present any evidence that Reynaldo Manlulu had ulterior motives to testify falsely against her. When
there is no evidence indicating that the principal witness for the prosecution was moved by improper
motive the presumption is that he was not so moved and his testimony is entitled to full faith and credit.
(People vs. Perciano 233 SCRA 393). Accused also failed to controvert the testimony of Rosalina de
Lazo that the accused confessed before Col. Dunilayan the president of BABSLA that she took money
from some depositors which she promised to return and in fact wrote down the names of said
depositors before Col. Dunilayan in a piece of paper which she handed to him. This fact and [it being]
taken in the light that she failed to appear for investigation after the anomaly was discovered despite
due notice, and her lack of interest to pursue a case she filed before the Department of Labor which
caused its dismissal, do not speak well of her claim of innocence.
V
WHETHER OR NOT THE COURT OF APPEALS CORRECTLY AFFIRMED THE DECISION OF THE
LOWER COURT CONVICTING PETITIONER OF THE CRIME OF QUALIFIED THEFT WHEN THE
PROSECUTION FAILED TO PROVE BEYOND REASONABLE DOUBT THE FACT OF LOSS OF THE
AMOUNT OF P10,000.00 IN THE ABSENCE OF ANY AUDIT BY AN INDEPENDENT AUDITOR? [9]
Said issues may be summed up into two:
1. Whether or not qualified theft may be committed when the personal property is in the lawful
possession of the accused prior to the commission of the alleged felony?
2. Whether or not the elements of qualified theft were proven?
First Issue
In sum, the Court finds appellants conviction of the offense charged in accord with law and evidence.[8]
Petitioner contends:
Petitioner now raises the following issues:

I
LOWER COURT CONVICTING PETITIONER OF THE CRIME OF QUALIFIED THEFT THROUGH
FALSIFICATION OF BANK DOCUMENTS?
II
LOWER COURT CONVICTING PETITIONER OF THE CRIME OF QUALIFIED THEFT BECAUSE OF
THE WEAKNESS OF THE DEFENSE OFFERED BY PETITIONER AND NOT ON THE STRENGTH OF
THE EVIDENCE OF THE PROSECUTION?
III
LOWER COURT CONVICTING PETITIONER OF THE CRIME OF QUALIFIED THEFT IN THE
ABSENCE OF ANY EVIDENCE WHETHER TESTIMONIAL OR DOCUMENTARY TO THE EFFECT
THAT PETITIONER WAS SEEN OR CAUGHT IN THE ACT OF TAKING OR CARRYING AWAY THE
SUM OF P10,000.00?
Theft as defined in Article 308 of the Revised Penal Code requires physical taking of anothers property
without violence or intimidation against persons or force upon things.
The crime of theft is akin to the crime of robbery. The only difference is in robbery there is force upon
things or violence or intimidation against persons in taking of personal properties. In the crime of theft
the taking of the personal property with intent to gain is without violence against or intimidation of
persons nor force upon things and the taking shall be without the consent of the owner. In robbery, the
taking is against the will of the owner.
Under Article 308 of the Revised Penal Code, the following are the elements of the crime of theft:
1. Intent to gain;
2. Unlawful taking;
3. Personal property belonging to another;
4. Absence of violence or intimidation against persons or force upon things.
IV
The foregoing requirements presume that the personal property is in the possession of another, unlike
estafa, [where] the possession of the thing is already in the hands of the offender. In People vs. Lacson,
57 Phil. 325, it was held:
LOWER COURT CONVICTING PETITIONER OF THE CRIME OF QUALIFIED THEFT WHEN THE
AMOUNT OF P10,000.00 WHICH CONSTITUTES THE CORPUS DELICTI OR BODY OF THE CRIME
WAS NEVER OFFERED IN EVIDENCE BY THE PROSECUTION?
Commentators on the Spanish Penal Code lay great stress on the taking away, that is, getting
possession in theft, laying hold of the thing, so that if the thing is not taken away, but received and then
appropriated or converted, without consent of the owner, it may be any other crime, that of estafa for
instance.
Can a person tasked to receive and collect capital contributions and having collected and received in
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her capacity as teller as alleged in the information, be guilty of theft? The question should be answered
in the negative. xxx[10]
Petitioners argument contradicts jurisprudence. In U.S. v. De Vera,[11] the accused, Nieves de
Vera, received from Pepe, an Igorot, a bar of gold weighing 559.7 grams for the purpose of having a
silversmith examine the same, and bank notes amounting to P200 to have them exchanged for silver
coins. Accused appropriated the bar of gold and bank notes. This Court, citing Spanish and U.S.
jurisprudence, ruled that the crime committed was theft and not estafa since the delivery of the personal
property did not have the effect of transferring the juridical possession, thus such possession remained
in the owner; and the act of disposal with gainful intent and lack of owners consent constituted the crime
of theft.
teller, the Court articulated:

Although the question is not specifically raised in the assignments of error, the court has carefully
considered the classification of the crime committed by the defendant and found it to be correctly
classified by the trial court as qualified theft. The money was in the possession of the defendant as
receiving teller of the bank, and the possession of the defendant was the possession of the bank. When
the defendant, with a grave abuse of confidence, removed the money and appropriated it to his own use
without the consent of the bank, there was the taking or apoderamiento contemplated in the definition of
the crime of theft.
In the case of the United States vs. De Vera (43 Phil., 1000, 1003), Justice Villamor speaking for the
court said:
The principle enunciated in U.S. v. De Vera was reiterated in People v. Trinidad,[12] thus:
The defendant received a finger ring from the offended party for the purpose of pledging it as security
for a loan of P5 for the benefit of said offended party. Instead of pledging the ring, the defendant
immediately carried it to one of her neighbors to whom she sold it for P30 and appropriated the money
to her own use.
xxx
The defendant is undoubtedly guilty of having sold the ring without authority and the only question which
presents some difficulty is to determine whether the crime committed was theft or whether it should be
classified as estafa. The question is discussed at length in the case of United States vs. De Vera (43
Phil., 1000) in which the court, citing various authorities, held that "When the delivery of a chattel or
cattle has not the effect of transferring the juridical possession thereof, or title thereto, it is presumed
that the possession of, and title to, the thing so delivered remains in the owner; and the act of disposing
thereof with intent of gain and without the consent of the owner constitutes the crime of theft." This view
seems to be supported both by Spanish and American authorities.
"The argument advanced in support of the contention of the defense is that the goods misappropriated
were not taken by the accused without the consent of the owner who had delivered them to her
voluntarily, and this element being lacking, it cannot be the crime of theft.
"It is well to remember the essential elements of the crime of theft, as expounded in the textbooks,
which are as follows: First, the taking of personal property; second, that the property belongs to another;
third, that the taking away be done with intent of gain; fourth, that the taking away be done without the
consent of the owner; and fifth, that the taking away be accomplished without violence or intimidation
against persons or force upon things.
"The commentators on the Spanish Penal Code, from which ours was adopted, lay great stress on the
first element, which is the taking away, that is, getting possession, laying hold of the thing, so that, as
Viada says, if the thing is not taken away, but received and then appropriated or converted without the
consent of the owner, it may be any other crime, that of estafa for instance, but in no way that of theft,
which consists in the taking away of the thing, that is, in removing it from the place where it is kept by
the legal owner, without the latter's consent, that is, without obtaining for the purpose the consent of the
legitimate owner."
xxx
The doctrine of the case as stated in the syllabus is as follows:
Though the facts in the present case differs somewhat from those in the De Vera case, the underlying
principle is the same in both cases: the juridical possession of the thing appropriated did not pass to the
perpetrators of the crime, but remained in the owners; they were agents or servants of the owners and
not bailees of the property. (See 17 R. C. L., 43, par. 49.) But it has been suggested that one of the
essential elements of the crime of theft is that the intent to misappropriate the property taken must exist
at the time of the asportation and that while this element clearly existed in the De Vera case, it is not as
apparent in the case at bar.
We may agree that in cases such as the present the crime committed should not be regarded as theft
unless the circumstances are such that it must be presumed that the intent to convert or misappropriate
the property existed at the time it was received by the perpetrator of the crime. But the existence of such
intent is, in our opinion, fully as apparent in this case as it was in the De Vera case; the defendant,
according to her own statement, offered the ring for sale immediately after its delivery to her, and we are
forced to conclude that she did not receive it with honest intentions, but had the disposal of it in mind at
the time.
In the case of People v. Locson[13] which also deals with money of a bank in the possession of its
"When the delivery of a chattel or cattle has not the effect of transferring the juridical possession thereof,
or title thereto, it is presumed that the possession of, and title to, the thing so delivered remains in the
owner; and the act of disposing thereof with intent of gain and without the consent of the owner
constitutes the crime of theft."
The Supreme Court of Spain in a decision of June 23, 1886 held that a shepherd, who takes away and
converts to his own use several head of the sheep under his care, is guilty of qualified theft. (Viada: Vol.
3, p. 433, 4th ed.)
In the case of People v. Isaac,[14] which involved a temporary driver of a public service vehicle, this
Court pronounced:
In the case of U. S. vs. De Vera (43 Phil., 1000), this Court said that when the delivery of a chattel has
not the effect of transferring the juridical possession thereof, or title thereto, it is presumed that the
possession of, and title to, the thing so delivered remains in the owner; and the act of disposing thereof
MJRTB
with intent of gain and without the consent of the owner constitutes the crime of theft. This, we think, is
actually the case here. For as we see it, appellant had only substituted for the regular driver of a vehicle
devoted to the transportation of passengers for a fare or compensation and therefore operated as a
public utility; and while his arrangement with the owner was to turn in, not all the fare collected, but only
a fixed sum known in the trade as "boundary", still he cannot be legally considered a hirer or lessee,
since it is ordained in section 26 of the Rules of Regulations of the Public Service Commission that "no
motor vehicle operator shall enter into any kind of contract with any person if by the terms thereof it
allows the use and operation of all or any of his equipment under a fixed rental basis." In the eye of the
law then, appellant was not a lessee but only an employee or agent of the owner, so that his possession
of the vehicle was only an extension of that of the latter. In other words, while he had physical or
material possession of the jeepney, the juridical possession thereof remained in the owner. Under those
circumstances his disposing of the jeepney with intent of gain and without the consent of its owner
makes him guilty of theft.
Quoting from Ruling Case Law, this Court has also said in the same case:
"A felonious taking is necessary in the crime of larceny, and generally speaking, a taking which is done
with the consent or acquiescence of the owner of the property is not felonious. But if the owner parts
with the possession thereof for a particular purpose, and the person who receives the possession
avowedly for that purpose has the fraudulent intention to make use of it as the means of converting it to
his own use and does so convert it, this is larceny, for in such case, the fraud supplies the place of the
trespass in the taking, or, as otherwise stated, the subsequent felonious conversion of the property by
the alleged thief will relate back and make the taking and conversion larceny.
Under this theory, appellant, who, according to his own confession, took the vehicle from its owner
already with the intention of appropriating it, should also be deemed guilty of theft. (People vs. Trinidad,
50 Phil., 65.)
In the present case, what is involved is the possession of money in the capacity of a bank teller.
In People v. Locson,[15] cited above, this Court considered deposits received by a teller in behalf of a
bank as being only in the material possession of the teller. This interpretation applies with equal force to
money received by a bank teller at the beginning of a business day for the purpose of servicing
withdrawals. Such is only material possession. Juridical possession remains with the bank. In line with
the reasoning of the Court in the above-cited cases, beginning with People v. De Vera, if the teller
appropriates the money for personal gain then the felony committed is theft and not estafa. Further,
since the teller occupies a position of confidence, and the bank places money in the tellers possession
due to the confidence reposed on the teller, the felony of qualified theft would be committed.
Second Issue
The elements of qualified theft include the elements of theft and any of the circumstances
enumerated in Article 310 of the Revised Penal Code[16] (RPC). The elements of theft, which is defined
in Artilce 308 of the RPC,[17] are the following:
xxx there are five essential elements which constitute the crime of theft, namely: (1) Taking of personal
property; (2) that said property belongs to another; (3) that said taking be done with intent to gain; (4)
that, further, it be done without the owners consent; and (5) finally, that it be accomplished without the
use of violence or intimidation against persons, nor of force upon things. [18]
The specific qualifying circumstance in Article 310 of the RPC which the information indicated was
that the felony was committed with grave abuse of confidence. Hence, to warrant a conviction, the
prosecution should have proven the following elements:
1. Taking of personal property.
2. That the said property belongs to another.
3. That the said taking be done with intent to gain.
4. That it be done without the owners consent.
5. That it be accomplished without the use of violence or intimidation against persons, nor of
force upon things.
6. That it be done with grave abuse of confidence.
Regarding the first element, the taking of personal property, the prosecution was not able to
present direct evidence that petitioner took the P10,000 on November 16, 1989. The prosecution
attempted to prove the taking through circumstantial evidence. One of the pieces of evidence that the
prosecution adduced and the trial court and Court of Appeals relied on heavily for the conviction was the
withdrawal slip for P10,000, dated November 16, 1989. Antonio Salazar disowned the signature on the
withdrawal slip. However, he also indicated that he did not know who made the withdrawal. Rosalina de
Lazo testified that the initial on the withdrawal slip, written after the figure 11-17-89, was the customary
signature of petitioner. She, however, did not intimate the significance of petitioners initial on the
withdrawal slip. A careful inspection of all the withdrawal slips, [19] including the withdrawal slip stated
above, shows that the date and the initial of petitioner were written across the stamped word paid. This
indicates that petitioners initial was placed in her capacity as a teller which, therefore, only proves that
this transaction passed through her hands in such capacity. It does not in any manner show that
petitioner prepared the withdrawal slip or that the proceeds of the withdrawal increased her patrimony.
The trial court articulated and the Court of Appeals quoted in toto the following:
Since it was the accused who gave Reynaldo Manlulu the withdrawal slip dated November 16, 1989 the
presumption is that, being in possession of said withdrawal slip before its delivery to Reynaldo Manlulu,
the accused is the one who prepared the said withdrawal slip. This particular transaction was turned
over to him by the accused the previous day[20]
This presumption is without basis in law. Under the rules of evidence, there is a fixed number of
presumptions. These are contained in Sections 2 and 3 of Rule 131, of the Revised Rules of Court.
Courts of law should not be too ready to generate other presumptions. After a thorough review of all the
presumptions enumerated in Sections 2 and 3 of Rule 131, the presumption that comes closest to the
one the RTC and Court of Appeals relied on is paragraph (j), Section 3 of Rule 131, which reads:
That a person found in possession of a thing taken in the doing of a recent wrongful act is the taker and
the doer of the whole act; otherwise, that things which a person possesses, or exercises acts of
ownership over, are owned by him;
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In a long line of cases, [21] this Court has always applied this presumption to a situation where
property has been stolen and the stolen property is found in the possession of the accused. In these
cases the possession of the accused gives rise to the presumption that the accused is the taker of the
stolen property. In the presumption availed of by the lower courts the property found in the possession
of the accused, which is the withdrawal slip, is not stolen property. Furthermore, the presumption the
lower court made was not that the petitioner stole anything, but rather that the petitioner was the maker
of the withdrawal slip. It is plain that the presumption used by the lower court and the one found in
paragraph (j), Section 3 of Rule 131 are different. Consequently, there is no basis for the finding that the
withdrawal slip was prepared by the petitioner.
Another piece of evidence offered to prove petitioners taking is her extrajudicial confession to de
Lazo and Col. Dunilayan wherein she allegedly admitted taking money from the accounts of several
members of the BABSLA and the list of people from whose accounts she took money, which list
petitioner supposedly prepared in the presence of de Lazo and Col. Dunilayan. In the testimony of
Rosalina de Lazo, all she mentioned was that petitioner confessed to having taken sums of money from
the accounts of several depositors, including the account of Sgt. Salazar. Nowhere in her testimony did
she mention that petitioner confessed the exact date on which she took the money, nor the amount she
took from the account of Sgt. Salazar. It cannot be deduced from the alleged verbal confession of
petitioner that she was confessing a specific taking of P10,000 from the account of Sgt. Salazar on
November 16, 1989. She also saw petitioner prepare the list of depositors from whose accounts she
had taken some money. Again, a perusal of the handwritten list allegedly prepared by petitioner does
not disclose any relation to the specific taking alleged in the information. All that was written on the list,
among other names and figures, was the name Salazar, Antonio and the number fifteen (15) to the right
of the name. It must be kept in mind that the information was for a theft of P10,000 that occurred on the
16th of November 1989. The list does not mention the date on which the money was taken. Neither does
it disclose the precise amount that was taken.
The other pieces of evidence such as the Tellers Daily Report and Abstract of Payment, to which
witnesses de Lazo and Salazar both testified as containing the customary initials of petitioner, only
corroborate the withdrawal slip. They merely reveal that on the 16 th of November 1989, a withdrawal
was made on the account of Sgt. Antonio Salazar and that this withdrawal passed through the hands of
petitioner in her capacity as a teller of the BABSLA. Again, they prove neither that petitioner prepared
the subject withdrawal slip nor that she took the P10,000 on that date.
From the foregoing discussion it is plain that the prosecution failed to prove by direct or sufficient
circumstantial evidence that there was a taking of personal property by petitioner.
A discussion of the other elements of qualified theft mentioned above is not necessary. Even if the
other elements were satisfactorily proven, the first and most basic element of qualified theft was not
established. The prosecution was, therefore, unsuccessful in proving beyond reasonable doubt that the
petitioner committed the crime of qualified theft.
WHEREFORE, the petition is GRANTED and the decision and resolution of the Court of Appeals
dated December 28, 1998 and May 26, 1999, respectively, are REVERSED and SET ASIDE. Petitioner,
Asuncion Galang Roque, is ACQUITTED of the crime of qualified theft charged in the information. No
costs.
SO ORDERED.
MJRTB
G.R. No. L-45656 May 5, 1989

PACIFIC BANKING CORPORATION and CHESTER G. BABST, petitioners,
vs.
THE COURT OF APPEALS, JOSEPH C. HART and ELEANOR HART, respondents.
Flores, Ocampo, Dizon & Domingo for petitioners.
executed on July 18, 1956, of John Clarkin, who owned seven and half percent of the capital stock of
the bank, and his wife Helen.
Unfortunately, the business floundered and while attempts were made to take in other partners, these
proved unsuccessful. Nevertheless, petitioner Pacific Banking Corporation and its then Executive Vice
President, petitioner Chester Babst, did not demand payment for the initial July 1957 installment nor of
the entire obligation, but instead opted for more collateral in addition to the guaranty of Clarkin.
Quasha, Asperilla, Ancheta, Pena, Marcos & Nolasco for private respondents.
As the business further deteriorated and the situation became desperate, Hart agreed to Clarkin's
proposal that all Insular Farms shares of stocks be pledged to petitioner bank in lieu of additional
collateral and to insure an extension of the period to pay the July 1957 installment. Said pledge was
executed on February 19, 1958.
GUTIERREZ, JR., J.:
Less than a month later, on March 3,1958, Pacific Farms Inc, was organized to engage in the same
business as Insular Farms Inc. The next day, or on March 4, 1958, Pacific Banking Corporation, through
petitioner Chester Babst wrote Insular Farms Inc. giving the latter 48 hours to pay its entire obligation.
This is a petition for review of the decision of the Court of Appeals in CA-G.R. Nos. 52573 and 52574
directing petitioners to pay to respondent Hart ONE HUNDRED THOUSAND (P 100,000.00) PESOS
with legal interest from February 19, 1958 until fully paid, plus FIFTEEN THOUSAND (P 15,000.00)
PESOS attorneys fees, but subject to the right of reimbursement of petitioner Pacific Banking
Corporation (PBC) from petitioner Babst, whatever amounts PBC should pay on account of the
judgment.
On March 7, 1958, Hart received notice that the pledged shares of stocks of Insular Farms Inc. would
be sold at public auction on March 10, 1958 at 8:00 A.M. to satisfy Insular Farms' obligation.
Briefly, the facts of the case are as follows:
On March 8, 1958, the private respondents commenced the case below by filing a complaint for
reconveyance and damages with prayer for writ of preliminary injunction before the Court of First
Instance of Manila docketed as Civil Case No. 35524. On the same date the Court granted the prayer
for a writ of pre- preliminary injunction.
On April 15, 1955, herein private respondents Joseph and Eleanor Hart discovered an area consisting
of 480 hectares of tidewater land in Tambac Gulf of Lingayen which had great potential for the
cultivation of fish and saltmaking. They organized Insular Farms Inc., applied for and, after eleven
months, obtained a lease from the Department of Agriculture for a period of 25 years, renewable for
another 25 years.
However, on March 19, 1958, the trial court, acting on the urgent petitions for dissolution of preliminary
injunction filed by petitioners PBC and Babst on March 11 and March 14,1958, respectively, lifted the
writ of preliminary injunction.
Subsequently Joseph Hart approached businessman John Clarkin, then President of Pepsi-Cola
Bottling Co. in Manila, for financial assistance.
On July 15, 1956, Joseph Hart and Clarkin signed a Memorandum of Agreement pursuant to which: a)
of 1,000 shares out-standing, Clarkin was issued 500 shares in his and his wife's name, one share to J.
Lapid, Clarkin's secretary, and nine shares in the name of the Harts were indorsed in blank and held by
Clarkin so that he had 510 shares as against the Harts' 490; b) Hart was appointed President and
General Manager as a result of which he resigned as Acting Manager of the First National City Bank at
the Port Area, giving up salary of P 1,125.00 a month and related fringe benefits.
Due to financial difficulties, Insular Farms Inc. borrowed P 250,000.00 from Pacific Banking Corporation
sometime in July of 1956.
On July 31, 1956 Insular Farms Inc. executed a Promissory Note of P 250,000.00 to the bank payable in
five equal annual installments, the first installment payable on or before July 1957. Said note provided
that upon default in the payment of any installment when due, all other installments shall become due
and payable.
This loan was effected and the money released without any security except for the Continuing Guaranty
The next day, or on March 20, 1958 respondents Hart received a notice from PBC signed by Babst that
the shares of stocks of Insular Farms will be sold at public auction on March 21,1958 at 8:00 A.M.
In the morning of March 21, 1958, PBC through its lawyer notary public sold the 1,000 shares of stocks
of Insular Farms to Pacific Farms for P 285,126.99. The latter then sold its shares of stocks to its own
stockholders, who constituted themselves as stockholders of Insular Farms and then resold back to
Pacific Farms Inc. all of Insular Farms assets except for a certificate of public convenience to operate an
iceplant.
On September 28, 1959 Joseph Hart filed another case for I recovery of sum of money comprising his
investments and earnings against Insular Farms, Inc. before the Court of First Instance of Manila,
docketed as Civil Case No. 41557.
The two cases below having been heard jointly, the court of origin through then Judge Serafin R.
Cuevas rendered a decision on August 3, 1972, the pertinent portions of which are as follows:
xxx xxx xxx
It is plaintiffs' contention that the sale by Pacific Banking Corporation of the shares of stock of plaintiffs
MJRTB
to the Pacific Farms on March 21, 1958 is void on the ground that when said shares were pledged to
the bank it was done to cause an indefinite extension of time to pay their obligation under the
promissory note marked Exh. E. Plaintiffs observed that under said promissory note marked Exh. E, no
demand was made whatsoever by the bank for its payment. The bank merely asked for more collateral
in addition to Clarkin's continuing guarantee In other words, it is the view of the plaintiffs that the pledge
of said shares of stock upersed the terms and conditions of the promissory note marked Exh. E and that
the same was only to insure an indefinite extension on the part of the plaintiffs to pay their obligation
under said promissory note.
Plaintiffs accuse defendants of conspiracy or a unity of purpose in divesting said plaintiffs of their shares
of stock and relieving Clarkin of his guarantee and obligation to Hart as well as to enable the bank to
recover its loan with a big profit and Pacific Farms, of which Papa was President, to take over Insular
Farms.
Plaintiffs contend that the purchase by Pacific Farms of the shares of stock of Insular Farms is void, the
former having been organized like the latter for the purpose of engaging in agriculture (Section 190-1/7
of the Corporation Law); and that the transfer of all the substantial assets of Insular Farms to Pacific
Farms for the nominal cost of P10,000.00 is in violation of the Bulk Sales Law, plaintiffs and other
creditors of Insular Farms not having been notified of said sale and that said sale was not registered in
accordance with said law (Bulk Sales Law) which in effect is in fraud of creditors.
As a result of defendant's acts, plaintiffs contend that they lost their 490 shares, the return of their 10
shares from Clarkin and their exclusive and irrevocable right to preference in the purchase of Clarkin's
50% in Insular Farms not to mention the mental anguish, pain, suffering and embarrassment on their
part for which they are entitled to at least P 100,000.00 moral damages. They also claim that they have
been deprived of their expected profits to be realized from the operations and development of Insular
Farms; the sum of P 112,500.00 representing salary and pecuniary benefits of Joseph C. Hart from the
First National City Bank of New York when he was required to resign by Clarkin, and finally, Joseph C.
Hart and his wife being the beneficial owners of 499 shares in Insular Farms that were pledged to the
Pacific Banking Corporation which was sold for P 142,176.37 to satisfy the obligation of Insular Farms,
the latter became indebted to plaintiffs for said amount with interest from March 21, 1958, the date of
the auction sale.
On the other hand, defendant Pacific Banking Corporation contends that it merely exercised its legal
right under the law when it caused the foreclosure of the pledged (sic) executed by plaintiffs, together
with defendant John P. Clarkin to secure a loan of P 250,000.00, said loan having become overdue.
True the payment of a note my be extended by an oral agreement, but that agreement to extend the
time of payment in order to be valid must be for a definite time (Philippine Engineering Co. vs. Green,
48 Phil. 466,468). Such being the case, it is the opinion of the Court that plaintiffs contention that there
was an indefinite extension of time with respect to the payment of the loan in question appears to be
untenable. It cannot be admitted that the terms and conditions of the pledged (sic) superseded the
terms and conditions of the promissory note.
With respect to the charge of conspiracy or unity of purpose on the part of all defendants to divest
plaintiffs of the latter's shares of stock, relieving Clarkin of his guaranty and obligation to Hart, to enable
the bank to recover its loan and to enable Pacific Farms to take over Insular Farms, suffice it to state
that the charge of conspiracy has not been sufficiently established.
Considering plaintiffs' contention that the purchase by Pacific Farms of the shares of stock of Insular
Farms and the transfer of all of the substantial assets of Insular Farms to Pacific Farms are in violation
of the Provisions of the Bulk Sales Law, the Court cannot see its way in crediting plaintiffs' contention
considering the prevailing jurisprudence on the mater (People vs. Wong Szu Tung, 50 OG, pp. 48-57,
58-69, March 26,1954).
With respect, however, to the claim of plaintiff Joseph C. Hart for payment of salary as Director and
General Manager of Insular Farms for a period of almost one year at the rate of P 2,000.00 a month, the
Court believes that said plaintiff is entitled to said amount. On the basis of equity and there appearing
sufficient proof that said plaintiff has served the corporation not only as Director but as General
Manager, the Court believes that he should be paid by the Insular Farms, Inc. the sum of P 25,333.30,
representing his salaries for the period March 1, 1957 to March 20,1958.
Again, with respect to the advances in the form of loans to the corporation made by plaintiff Joseph C.
Hart, the Court is of the opinion that he should be reimbursed and paid therefor, together with interest
thereon from March 21, 1958, or the sum of P 86,366.91. This is so because said loans were ratified by
the Board of Directors of Insular Farms, Inc. in a special meeting held on July 22, 1957. There is no
showing that the aforesaid special meeting was irregularly or improperly held.
The Court having maintained that the auction sale conducted by the Bank's Notary Public which
resulted in the purchase by Pacific Farms of the 1,000 shares of stock of Insular Farms, 490 of which
were owned by plaintiffs, to be valid, the Court cannot approve the claim of plaintiffs for the
reconveyance to them of said 490 shares of stock of Insular Farms. If there is anybody to answer for the
pledging of said shares of stock to the bank, there is no one except the defendant John Clarkin who
induced plaintiff to do so. Again, it is noteworthy to note that Clarkin owned and controlled 501 shares of
said outstanding shares of stock and have not made any claim for the reconveyance of the same.
In view of the foregoing, judgment is hereby rendered in favor of plaintiffs and against defendant Insular
Farms, Inc., sentencing the latter to pay the former the sum of P 25,333.30, representing unpaid
salaries to plaintiff Joseph C. Hart; the further sum of P 86,366.91 representing loans made by plaintiffs
to Insular Farms, Inc. and attorney's fees equivalent to 10% of the amount due plaintiffs.
With respect to the other claims of plaintiffs, the same are hereby denied in the same manner that all
counter-claims filed against said Plaintiff are dismissed. Likewise, Francisco T. Papa's cross-claim
against defendant Pacific Farms, Inc. is, as it is hereby, ordered dismissed for insufficiency of evidence.
(pp. 462-467 of the Record on Appeal [p. 83, Rollo])
Dissatisfied with the foregoing decision, private respondents appealed the two consolidated cases to the
Court of Appeals contending that:
I
THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFFS' CONTENTION TO THE EFFECT
THAT THERE WAS AN INDEFINITE EXTENSION OF TIME WITH RESPECT TO THE PAYMENT OF
THE LOAN IN QUESTION "APPEARS TO BE UNTENABLE
II
THE LOWER COURT ERRED IN HOLDING THAT THE SALE BY THE PACIFIC BANKING
CORPORATION OF THE SHARES OF STOCKS OF PLAINTIFFS WITH THE PACIFIC FARMS, INC.
MJRTB
ON MARCH 21, 1958 IS VALID.
resolution, dated March 19, 1958 dissolving the writ of preliminary injunction and expressly allowing the
foreclosure sale.
III
THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFFS' CHARGE OF CONSPIRACY
AGAINST THE DEFENDANTS HAS NOT BEEN SUFFICIENTLY ESTABLISHED."
IV
THE LOWER COURT ERRED IN NOT HOLDING DEFENDANTS LIABLE FOR DAMAGES CAUSED
TO THE PLAINTIFFS BY THEIR INDIVIDUAL AND COLLECTIVE ACTS WHICH ARE CONTRARY TO
THE PROVISIONS OF THE CIVIL CODE ON HUMAN RELATIONS.
V
THE LOWER COURT WAS CORRECT IN HOLDING THAT "IF THERE IS ANYBODY TO ANSWER
FOR THE PLEDGE OF SAID SHARES OF STOCK TO THE BANK, THERE IS NO ONE EXCEPT
DEFENDANT JOHN P. CLARKIN WHO INDUCED PLAINTIFFS TO DO SO", BUT ERRED IN NOT
FINDING DEFENDANT JOHN P. CLARKIN LIABLE AS PRAYED FOR IN PLAINTIFFS' COMPLAINT."
(pp. 9-10, Rollo)
On December 9, 1986, the Court of Appeals rendered its assailed decision, the dispositive portion of
which follows:
IN VIEW WHEREOF, judgment modified, such that defendant Babst and defendant Pacific Banking are
both condemned in their primary capacity to pay unto Hart the sum of P l00,000.00 with legal interest
from the date of the foreclosure sale on 19 February 1958 until fully paid, plus P 15,000.00 as attorney's
fees, also to earn legal interest from the date of the filing of Civil Case Nos. 35524, until fully paid, plus
the costs, but subject to reimbursement of Pacific Banking from Babst whatever Pacific Banking should
pay unto Hart on account of this judgment, the other defendants are absolved with no more
pronouncement as to costs with respect to them. (pp. 62-63, Rollo)
Hence this petition with petitioners contending that:
a. Respondent Court of Appeals committed a grave error in not applying in favor of the herein petitioner
the clear unequivocal ruling of this Honorable Court in the case of Philippine Engineering vs. Green, 48
Phil. 466, that "an agreement to extend the time of payment in order to be valid must be for a definite
time," which was relied upon by the trial court in overruling the private respondents' claim that
petitioners had granted them orally an indefinite extension of time to pay the loan.
d. Respondent Court of Appeals committed a grave error in condemning petitioners to pay damages to
private respondents notwithstanding that petitioner bank merely exercised a right under the law in
foreclosing the pledge.
e. Respondent Court of Appeals committed a grave error in holding petitioner Chester G. Babst
personally liable to private respondents under Articles 2180 and 2181 of the New civil Code.
f. Respondent Court of Appeals committed a grave error in sentencing petitioner Chester G. Babst to
reimburse his co-petitioner bank, whatever amounts the latter may be required to pay the private
respondents on account of the judgment, notwithstanding that said bank had not filed a cross-claim
against him and there was absolutely no litigation between them. (pp. 14-15, Rollo)
We find for the respondents on the following grounds:
First, petitioners allege that the Court of Appeals erred in deviating from the principle and rule of stare
decisis by not applying in favor of petitioners the ruling in the case of Philippine Engineering v.
Green (48 Phil. 466) that "an agreement to extend the time of payment in order to be valid must be for a
definite time" which was relied upon by the trial court in overruling the private respondents' claim that
the petitioners had granted them orally an indefinite extension of time to pay the loan.
A reading of the Philippine Engineering Co. case shows that the authority quoted from (i.e. 8 Corpus
Juris 425-429) was not the ground used by the Court in not giving credit to therein defendant's
statement as to the purported agreement for an indefinite extension of time for the payment of the note.
The principle relied upon in that case was the dead man's statute. The Court stated that the reason for
not believing the purported agreement for extension of time to pay the note was that there was no
sufficient proof of the purported agreement because:
Here we have only the defendant's statement as to the purported agreement for an indefinite period of
grace, with one now dead. Such proof falls far short of satisfying the rules of evidence. (Phil.
Engineering v. Green, 48 Phil. p. 468)
In the case at bar, the parties to the purported agreement, Hart and Babst, were still alive, and both
testified in the trial court regarding the purported extension. Their testimonies are in fact, quoted in the
decision of the respondent Court of Appeals (pp. 49-54, Rollo).
We also note, that the rule which states that there can be no valid extension of time by oral agreement
unless the extension is for a definite time, is not absolute but admits of qualifications and exceptions.
b. Respondent Court of Appeals committed a grave error in finding that petitioner bank agreed to an
indefinite extension of time to pay the loan on the basis of the testimony of private respondent Hart
contained in his deposition which was admitted in evidence over the petitioners' objection; and that said
finding is clearly violative of parol evidence rule.
The general rule is that an agreement to extend the time of payment, in order to be valid, must be for a
definite time, although it seems that no precise date be fixed, it being sufficient that the time can be
readily determined. (8 C.J. 425)
c. Respondent Court of Appeals committed a grave error in ignoring the legal presumption of good faith
established by Article 527 of the New Civil Code when it imputed bad faith to petitioner in foreclosing the
pledge and in not considering the issue to have been finally disposed of by the trial court in its
In case the period of extension is not precise, the provisions of Article 1197 of the Civil Code should
apply. In this case, there was an agreement to extend the payment of the loan, including the first
installment thereon which was due on or before July 1957. As the Court of Appeals stated:
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...-and here, this court is rather well convinced that Hart had been given the assurance by the conduct
of Babst, Executive Vice President of Pacific Bank, that payment would not as yet be pressed, and
under 1197 New Civil Code, the meaning must be that there having been intended a period to pay
modifying the fixed period in original promissory note, really, the cause of action of Pacific Bank would
have been to ask the Courts for the fixing of the term; (pp. 59-60, Rollo)
The pledge executed as collateral security on February 9, 1958 no longer contained the provision on an
installment of P 50,000.00 due on or before July 1957. This can mean no other thing than that the time
of payment of the said installment of P 50,000.00 was extended.
It is settled that bills and notes may be varied by subsequent agreement. Thus, conditions may be
introduced and arrangements made changing the terms of payment (10 CJS 758). The agreement for
extension of the parties is clearly indicated and may be inferred from the acts and declarations of the
parties, as testified to in court (pp. 49-52, Rollo).
The pledge constituted on February 19, 1958 on the shares of stocks of Insular Farms, Inc. was
sufficient consideration for the extension, considering that this pledge was the additional collateral
required by Pacific Banking in addition to the continuing guarantee of Clarkin.
Petitioners contend that the admission of Joseph Hart's testimony regarding the extension of time to
pay, over the petitioners' objections, was violative of the parol evidence rule. This argument is untenable
in view of the fact that Hart's testimony regarding the oral agreement for extension of time to pay was
admitted in evidence without objection from petitioner Babst when the same was first offered as
evidence before the trial court. Without need therefore of a lengthy discussion of the background facts
on this issue, and even granting that said testimony violated the parol evidence rule, it was nevertheless
properly admitted for failure of petitioner to timely object to the same. Well settled is the rule that failure
to object to parol evidence constitutes a waiver to the admissibility of said parol evidence (see Talosig v.
Vda. de Niebe, 43 SCRA 472).
Petitioners likewise argue that the Court of Appeals erred in ignoring the presumption of good faith
provided in Art. 527 of the Civil Code when it imputed bad faith to petitioners in foreclosing the pledge,
They argue in support thereof that the extrajudicial foreclosure was held only after it was sanctioned by
the trial court; and that the main ground alleged by the private respondents against the foreclosure was
the alleged grant by Pacific Banking Corporation of an indefinite extension of time to pay the obligation;
that private respondents did not adduce any evidence to prove the grant of extension, for which reason
the trial court did not believe that there was such a grant, that in view thereof, the foreclosure which
even the Court of Appeals considered as valid, cannot be considered to have been done in bad faith.
The presumption of good faith of possession provided in Article 527, is only a presumption juris tantum
Said presumption cannot stand in the light of the evidence to the contrary in the record.
It was established that there was an agreement to extend indefinitely the payment of the installment of
P50,000.00 in July 1957 as provided in the promissory note. Consequently, Pacific Banking Corporation
was precluded from enforcing the payment of the said installment of July 1957, before the expiration of
the indefinite period of extension, which period had to be fixed by the court as provided in Art. 1197 of
the Civil Code (10 CJS p. 7611, citing Drake vs. Pueblo Nat. Bank, 96 P. 999, 44 Colo. 49).
Even the pledge which modified the fixed period in the original promissory note, did not provide for
dates of payment of installments, nor of any fixed date of maturity of the whole amount of indebtedness.
Accordingly, the date of maturity of the indebtedness should be as may be determined by the proper
court under Art. 1197 of the Civil Code. Hence, the disputed foreclosure and the subsequent sale were
premature.
The whole indebtedness was guaranteed by the continuing guaranty of Clarkin, who had a
corresponding deposit with Pacific Banking which guaranty and deposit, Babst and Charles Chua,
president of Pacific Banking, had actual knowledge of.
The Court of Appeals noted that no demand for payment of the P50,000.00 was made right after it
allegedly fell due. It was only on March 4, 1958 or 13 days after the execution of the pledge instrument
on February 19,1958 that PBC presented its demand for payment to Insular Farms.
As found by the Court of Appeals, there was really no investigation of Insular Farms' ability to pay the
loan after the pledge was executed but before the demand for payment, considering that the latter was
made barely two weeks after the execution of the pledge.
The inconsistency of the petitioner's position vis-a-vis the evidence on record is apparent. According to
Babst, the investigation was made by Mr. Joseph Tupaz, who rendered his report (TSN, IX: 6-9, C
Babst). The report, however, as found by the Court of Appeals,, was dated August 28, 1957 way before
the pledge was executed on February 19, 1958. Babst also Identified an auditor's report by Sycip,
Gorres and Velayo dated March 17, 1958. The first paragraph of the report states that the auditors went
to inspect Insular Farms pursuant to a request of Babst dated March 5, 1958 that is, as found by the
Court of Appeals just one day after Babst had through his letter of March 4,1958, threatened Insular
Farms, Clarkin and Hart, with the remedies available to Pacific Bank if the whole loan was not paid
within 48 hours. This can also mean that the investigation by the auditing firm was a well conceived
subterfuge, when all the while, foreclosure was already intended against private respondents.
On account of the foregoing, the Court of Appeals concluded that the foreclosure was an act of bad
faith:
5th-Foregoing cannot but convince this Court that the foreclosure was not an act of good faith on the
part of the Pacific Banking for it must be bound by the acts or representations, active or tacit of its agent
or its Executive Vice-President Babst, ... (pp. 56-57, Rollo)
Petitioners furthermore claim that the Court of Appeals erred in ordering them to pay damages to private
respondents as they were merely exercising a light under the law in foreclosing the pledge. They also
argue that assuming that private respondent suffered damages on account of the foreclosure, such
damages would be aminimum absque injuria, the damage having been caused by the lawful and proper
exercise of the right to foreclosure, and an act of prudence on the part of Pacific Banking Corporation to
protect its own interests and those of its depositors.
In the light of the above discussion and our finding that the foreclosure sale was premature and done in
bad faith, petitioners are liable for damages arising from a quasi-delict. We see no compelling reason to
set aside the findings of the respondent court on this matter.
Finally, the petitioners claim that it was error for the respondent court to hold petitioner Chester G. Babst
personally liable to private respondents under Articles 2180 and 2181 of the Civil Code. Petitioners also
contend that it was error to order Chester G. Babst to reimburse Pacific Banking whatever Pacific
Banking may be required to pay the private respondents, inasmuch as Pacific Banking has not filed a
MJRTB
cross claim against Chester G. Babst.

The Court of Appeals applied Article 2180 of the Civil Code, under which, "employers shall be liable for
the damages caused by their employees ... acting within the scope of their assigned tasks." Chester G.
Babst, as admitted, was Executive Vice-President of Pacific Banking Corporation and "acted only upon
direction by the Board of Directors of the Pacific Banking Corporation." (p. 127, Rollo) The appellate
court also applied Article 2181 of the same Code which provides that "whoever pays for the damages
caused by his dependents or employees may recover from the latter what he has paid or delivered in
satisfaction of the claim." (Art. 2181, Civil Code)
It must be noted, however, that as between Pacific Banking and Babst, the law merely gives the
employer a right to reimbursement from the employee for what is paid to the private respondent. Article
2181 does not make recovery from the employee a mandatory requirement. A right to relief shall be
recognized only when the party concerned asserts it through a proper pleading filed in court. In this
case, the employer, Pacific Banking Corporation did not manifest any claim against Babst by filing a
cross-claim before the trial court; thus, it cannot make its light automatically enforceable. Babst was
made a party to the case upon the complaint of the private respondents in his official capacity as
Executive Vice President of the bank. In the absence of a cross-claim against Babst, the court has no
basis for enforcing a right against him to which his co-defendant may be entitled. We leave the matter to
the two petitioners' own internal arrangements or actions should the bank decide to charge its own
officer.
WHEREFORE, the petition for review on certiorari is DISMISSED subject to a MODIFICATION with
respect to the personal liability of petitioner Chester G. Babst to Pacific Banking Corporation which is
SET ASIDE.
SO ORDERED.
COURT OF APPEALS, ANNABELLE A. SALAZAR, and

JULIO R. TEMPLONUEVO,
Respondents.
Promulgated:
January 25, 2007
x-----------------------------------------------------------------------------------------x
DECISION
AZCUNA, J.:
This is a petition for review under Rule 45 of the Rules of Court seeking the reversal of the
Decision[1] dated April 3, 1998, and the Resolution[2] dated November 9, 1998, of the Court of Appeals in
CA-G.R. CV No. 42241.
The facts[3] are as follows:
A.A. Salazar Construction and Engineering Services filed an action for a sum of money with
damages against herein petitioner Bank of the Philippine Islands (BPI) on December 5, 1991 before
Branch 156 of the Regional Trial Court (RTC) of Pasig City. The complaint was later amended by
substituting the name of Annabelle A. Salazar as the real party in interest in place of A.A. Salazar
Construction and Engineering Services. Private respondent Salazar prayed for the recovery of the
amount of Two Hundred Sixty-Seven Thousand, Seven Hundred Seven Pesos and Seventy Centavos
(P267,707.70) debited by petitioner BPI from her account. She likewise prayed for damages and
attorneys fees.
Petitioner BPI, in its answer, alleged that on August 31, 1991, Julio R. Templonuevo, third-party
defendant and herein also a private respondent, demanded from the former payment of the amount of
Two Hundred Sixty-Seven Thousand, Six Hundred Ninety-Two Pesos and Fifty Centavos (P267,692.50)
representing the aggregate value of three (3) checks, which were allegedly payable to him, but which
were deposited with the petitioner bank to private respondent Salazars account (Account No. 02031187-67) without his knowledge and corresponding endorsement.
Accepting that Templonuevos claim was a valid one, petitioner BPI froze Account No. 02010588-48 of A.A. Salazar and Construction and Engineering Services, instead of Account No. 0203-118767 where the checks were deposited, since this account was already closed by private respondent
Salazar or had an insufficient balance.
Private respondent Salazar was advised to settle the matter with Templonuevo but they did not
arrive at any settlement. As it appeared that private respondent Salazar was not entitled to the funds
represented by the checks which were deposited and accepted for deposit, petitioner BPI decided to
debit the amount of P267,707.70 from her Account No. 0201-0588-48 and the sum of P267,692.50 was
paid to Templonuevo by means of a cashiers check. The difference between the value of the checks
(P267,692.50) and the amount actually debited from her account (P267,707.70) represented bank
charges in connection with the issuance of a cashiers check to Templonuevo.
FIRST DIVISION
BANK OF THE PHILIPPINEISLANDS,
G.R. No. 136202

Petitioner,
- versus -
Present:
PUNO, C.J., Chairperson,
SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.
In the answer to the third-party complaint, private respondent Templonuevo admitted the
payment to him of P267,692.50 and argued that said payment was to correct the malicious deposit made
by private respondent Salazar to her private account, and that petitioner banks negligence and tolerance
regarding the matter was violative of the primary and ordinary rules of banking. He likewise contended
that the debiting or taking of the reimbursed amount from the account of private respondent Salazar by
petitioner BPI was a matter exclusively between said parties and may be pursuant to banking rules and
regulations, but did not in any way affect him. The debiting from another account of private respondent
Salazar, considering that her other account was effectively closed, was not his concern.
After trial, the RTC rendered a decision, the dispositive portion of which reads thus:
MJRTB
WHEREFORE, premises considered, judgment is hereby rendered in

favor of the plaintiff [private respondent Salazar] and against the defendant
[petitioner BPI] and ordering the latter to pay as follows:
1.
2.
3.
4.
5.
6.
The amount of P267,707.70 with 12% interest thereon

from September 16, 1991 until the said amount is fully paid;
The amount of P30,000.00 as and for actual damages;
The amount of P50,000.00 as and for moral damages;
The amount of P50,000.00 as and for exemplary damages;
The amount of P30,000.00 as and for attorneys fees; and
Costs of suit.
The counterclaim is hereby ordered DISMISSED for lack of factual basis.

The third-party complaint [filed by petitioner] is hereby likewise ordered
DISMISSED for lack of merit.
VII.
The Honorable Court erred in affirming the decision of the lower court dismissing
the third-party complaint of BPI.[7]
The issues center on the propriety of the deductions made by petitioner from private
respondent Salazars account. Stated otherwise, does a collecting bank, over the objections of its
depositor, have the authority to withdraw unilaterally from such depositors account the amount it had
previously paid upon certain unendorsed order instruments deposited by the depositor to another
account that she later closed?
Petitioner argues thus:
1.
There is no presumption in law that a check payable to order, when found in the
possession of a person who is neither a payee nor the indorsee thereof, has been
lawfully transferred for value. Hence, the CA should not have presumed that
Salazar was a transferee for value within the contemplation of Section 49 of the
Negotiable Instruments Law,[8] as the latter applies only to a holder defined under
Section 191of the same.[9]
2.
Salazar failed to adduce sufficient evidence to prove that her possession of the
three checks was lawful despite her allegations that these checks were deposited
pursuant to a prior internal arrangement with Templonuevo and that petitioner was
privy to the arrangement.
3.
The CA should have applied the Civil Code provisions on legal compensation
because in deducting the subject amount from Salazars account, petitioner was
merely rectifying the undue payment it made upon the checks and exercising its
prerogative to alter or modify an erroneous credit entry in the regular course of its
business.
4.
II.
The Court of Appeals committed reversible error in NOT applying the provisions of
Articles 22, 1278 and 1290 of the Civil Code in favor of BPI.
The debit of the amount from the account of A.A. Salazar Construction and
Engineering Services was proper even though the value of the checks had been
originally credited to the personal account of Salazar because A.A. Salazar
Construction and Engineering Services, an unincorporated single proprietorship,
had no separate and distinct personality from Salazar.
5.
III.
The Court of Appeals committed a reversible error in holding, based on a
misapprehension of facts, that the account from which BPI debited the amount
of P267,707.70 belonged to a corporation with a separate and distinct personality.
Assuming the deduction from Salazars account was improper, the CA should not
have dismissed petitioners third-party complaint against Templonuevo because the
latter would have the legal duty to return to petitioner the proceeds of the checks
which he previously received from it.
6.
Third-party defendants [i.e., private respondent Templonuevos]

counterclaim is hereby likewise DISMISSED for lack of factual basis.
SO ORDERED.[4]
On appeal, the Court of Appeals (CA) affirmed the decision of the RTC and held that
respondent Salazar was entitled to the proceeds of the three (3) checks notwithstanding the lack of
endorsement thereon by the payee. The CA concluded that Salazar and Templonuevo had previously
agreed that the checks payable to JRT Construction and Trading [5] actually belonged to Salazar and
would be deposited to her account, with petitioner acquiescing to the arrangement.[6]
Petitioner therefore filed this petition on these grounds:
I.
The Court of Appeals committed reversible error in misinterpreting Section 49 of
the Negotiable Instruments Law and Section 3 (r and s) of Rule 131 of the New
Rules on Evidence.
IV.
The Court of Appeals committed a reversible error in holding, based entirely on
speculations, surmises or conjectures, that there was an agreement between
SALAZAR and TEMPLONUEVO that checks payable to TEMPLONUEVO may be
deposited by SALAZAR to her personal account and that BPI was privy to this
agreement.
V.
The Court of Appeals committed reversible error in holding, based entirely on
speculation, surmises or conjectures, that SALAZAR suffered great damage and
prejudice and that her business standing was eroded.
VI.
The Court of Appeals erred in affirming instead of reversing the decision of the
lower court against BPI and dismissing SALAZARs complaint.
There was no factual basis for the award of damages to Salazar.
The petition is partly meritorious.

First, the issue raised by petitioner requires an inquiry into the factual findings made by the
CA. The CAs conclusion that the deductions from the bank account of A.A. Salazar Construction and
Engineering Services were improper stemmed from its finding that there was no ineffective payment to
Salazar which would call for the exercise of petitioners right to set off against the formers bank deposits.
This finding, in turn, was drawn from the pleadings of the parties, the evidence adduced during trial and
upon the admissions and stipulations of fact made during the pre-trial, most significantly the following:
(a)
That Salazar previously had in her possession the following checks:
MJRTB
(1)
(2)
(3)
Solid Bank Check No. CB766556 dated January 30, 1990 in the
amount of P57,712.50;
Solid Bank Check No. CB898978 dated July 31, 1990 in the amount
of P55,180.00; and,
Equitable Banking Corporation Check No. 32380638 dated August 28,
1990 for the amount of P154,800.00;
(b)
That these checks which had an aggregate amount of P267,692.50 were payable
to the order of JRT Construction and Trading, the name and style under which Templonuevo does
business;
(c)
That despite the lack of endorsement of the designated payee upon such checks,
Salazar was able to deposit the checks in her personal savings account with petitioner and encash the
same;
(d)
That petitioner accepted and paid the checks on three (3) separate occasions over
a span of eight months in 1990; and
(e)
That Templonuevo only protested the purportedly unauthorized encashment of the
checks after the lapse of one year from the date of the last check.[10]
Petitioner concedes that when it credited the value of the checks to the account of private
respondent Salazar, it made a mistake because it failed to notice the lack of endorsement thereon by
the designated payee. The CA, however, did not lend credence to this claim and concluded that
petitioners actions were deliberate, in view of its admission that the mistake was committed three times
on three separate occasions, indicating acquiescence to the internal arrangement between Salazar and
Templonuevo. The CA explained thus:
It was quite apparent that the three checks which appellee Salazar
deposited were not indorsed. Three times she deposited them to her account and
three times the amounts borne by these checks were credited to the same. And in
those separate occasions, the bank did not return the checks to her so that she
could have them indorsed. Neither did the bank question her as to why she was
depositing the checks to her account considering that she was not the payee
thereof, thus allowing us to come to the conclusion that defendant-appellant BPI was
fully aware that the proceeds of the three checks belong to appellee.
For if the bank was not privy to the agreement between Salazar and
Templonuevo, it is most unlikely that appellant BPI (or any bank for that matter)
would have accepted the checks for deposit on three separate times nary any
question. Banks are most finicky over accepting checks for deposit without the
corresponding indorsement by their payee. In fact, they hesitate to accept indorsed
checks for deposit if the depositor is not one they know very well.[11]
The CA likewise sustained Salazars position that she received the checks from Templonuevo
pursuant to an internal arrangement between them, ratiocinating as follows:
If there was indeed no arrangement between Templonuevo and the
plaintiff over the three questioned checks, it baffles us why it was only on August 31,
1991 or more than a year after the third and last check was deposited that he
demanded for the refund of the total amount of P267,692.50.
A prudent man knowing that payment is due him would have demanded
payment by his debtor from the moment the same became due and demandable.
More so if the sum involved runs in hundreds of thousand of pesos. By and large,
every person, at the very moment he learns that he was deprived of a thing which
rightfully belongs to him, would have created a big fuss. He would not have waited
for a year within which to do so. It is most inconceivable that Templonuevo did not do
this.[12]
Generally, only questions of law may be raised in an appeal by certiorari under Rule 45 of the
Rules of Court.[13] Factual findings of the CA are entitled to great weight and respect, especially when
the CA affirms the factual findings of the trial court. [14] Such questions on whether certain items of
evidence should be accorded probative value or weight, or rejected as feeble or spurious, or whether or
not the proofs on one side or the other are clear and convincing and adequate to establish a proposition
in issue, are questions of fact. The same holds true for questions on whether or not the body of proofs
presented by a party, weighed and analyzed in relation to contrary evidence submitted by the adverse
party may be said to be strong, clear and convincing, or whether or not inconsistencies in the body of
proofs of a party are of such gravity as to justify refusing to give said proofs weight all these are issues
of fact which are not reviewable by the Court.[15]
This rule, however, is not absolute and admits of certain exceptions, namely: a) when the
conclusion is a finding grounded entirely on speculations, surmises, or conjectures; b) when the
inference made is manifestly mistaken, absurd, or impossible; c) when there is a grave abuse of
discretion; d) when the judgment is based on a misapprehension of facts; e) when the findings of fact
are conflicting; f) when the CA, in making its findings, went beyond the issues of the case and the same
are contrary to the admissions of both appellant and appellee; g) when the findings of the CA are
contrary to those of the trial court; h) when the findings of fact are conclusions without citation of specific
evidence on which they are based; i) when the finding of fact of the CA is premised on the supposed
absence of evidence but is contradicted by the evidence on record; and j) when the CA manifestly
overlooked certain relevant facts not disputed by the parties and which, if properly considered, would
justify a different conclusion.[16]
In the present case, the records do not support the finding made by the CA and the trial court
that a prior arrangement existed between Salazar and Templonuevo regarding the transfer of ownership
of the checks. This fact is crucial as Salazars entitlement to the value of the instruments is based on the
assumption that she is a transferee within the contemplation of Section 49 of the Negotiable Instruments
Law.
Section 49 of the Negotiable Instruments Law contemplates a situation whereby the payee or
indorsee delivers a negotiable instrument for value without indorsing it, thus:
Transfer without indorsement; effect of- Where the holder of an instrument
payable to his order transfers it for value without indorsing it, the transfer vests in the
transferee such title as the transferor had therein, and the transferee acquires in
addition, the right to have the indorsement of the transferor. But for the purpose of
determining whether the transferee is a holder in due course, the negotiation takes
effect as of the time when the indorsement is actually made. [17]
It bears stressing that the above transaction is an equitable assignment and the transferee
acquires the instrument subject to defenses and equities available among prior parties. Thus, if the
transferor had legal title, the transferee acquires such title and, in addition, the right to have the
indorsement of the transferor and also the right, as holder of the legal title, to maintain legal action
against the maker or acceptor or other party liable to the transferor. The underlying premise of this
provision, however, is that a valid transfer of ownership of the negotiable instrument in question has
taken place.
Transferees in this situation do not enjoy the presumption of ownership in favor of holders
since they are neither payees nor indorsees of such instruments. The weight of authority is that the
mere possession of a negotiable instrument does not in itself conclusively establish either the right of
the possessor to receive payment, or of the right of one who has made payment to be discharged from
liability. Thus, something more than mere possession by persons who are not payees or indorsers of the
instrument is necessary to authorize payment to them in the absence of any other facts from which the
authority to receive payment may be inferred.[18]
MJRTB
The CA and the trial court surmised that the subject checks belonged to private respondent
Salazar based on the pre-trial stipulation that Templonuevo incurred a one-year delay in demanding
reimbursement for the proceeds of the same. To the Courts mind, however, such period of delay is not
of such unreasonable length as to estop Templonuevo from asserting ownership over the checks
especially considering that it was readily apparent on the face of the instruments [19] that these were
crossed checks.
In State Investment House v. IAC,[20] the Court enumerated the effects of crossing a check,
thus: (1) that the check may not be encashed but only deposited in the bank; (2) that the check may be
negotiated only once - to one who has an account with a bank; and (3) that the act of crossing the check
serves as a warning to the holder that the check has been issued for a definite purpose so that such
holder must inquire if the check has been received pursuant to that purpose.
Thus, even if the delay in the demand for reimbursement is taken in conjunction with Salazars
possession of the checks, it cannot be said that the presumption of ownership in Templonuevos favor as
the designated payee therein was sufficiently overcome. This is consistent with the principle that if
instruments payable to named payees or to their order have not been indorsed in blank, only such
payees or their indorsees can be holders and entitled to receive payment in their own right.[21]
The presumption under Section 131(s) of the Rules of Court stating that a negotiable
instrument was given for a sufficient consideration will not inure to the benefit of Salazar because the
term given does not pertain merely to a transfer of physical possession of the instrument. The phrase
given or indorsed in the context of a negotiable instrument refers to the manner in which such
instrument may be negotiated. Negotiable instruments are negotiated by transfer to one person or
another in such a manner as to constitute the transferee the holder thereof. If payable to bearer it is
negotiated by delivery. If payable to order it is negotiated by the indorsement completed by delivery.
[22]
The present case involves checks payable to order. Not being a payee or indorsee of the checks,
private respondent Salazar could not be a holder thereof.
It is an exception to the general rule for a payee of an order instrument to transfer the
instrument without indorsement. Precisely because the situation is abnormal, it is but fair to the maker
and to prior holders to require possessors to prove without the aid of an initial presumption in their favor,
that they came into possession by virtue of a legitimate transaction with the last holder.[23] Salazar failed
to discharge this burden, and the return of the check proceeds to Templonuevo was therefore warranted
under the circumstances despite the fact that Templonuevo may not have clearly demonstrated that he
never authorized Salazar to deposit the checks or to encash the same. Noteworthy also is the fact that
petitioner stamped on the back of the checks the words: "All prior endorsements and/or lack of
endorsements guaranteed," thereby making the assurance that it had ascertained the genuineness of
all prior endorsements. Having assumed the liability of a general indorser, petitioners liability to the
designated payee cannot be denied.
Consequently, petitioner, as the collecting bank, had the right to debit Salazars account for the
value of the checks it previously credited in her favor. It is of no moment that the account debited by
petitioner was different from the original account to which the proceeds of the check were credited
because both admittedly belonged to Salazar, the former being the account of the sole proprietorship
which had no separate and distinct personality from her, and the latter being her personal account.
The right of set-off was explained in Associated Bank v. Tan:
[24]
A bank generally has a right of set-off over the deposits therein for the
payment of any withdrawals on the part of a depositor. The right of a collecting bank
to debit a client's account for the value of a dishonored check that has previously
been credited has fairly been established by jurisprudence. To begin with, Article
1980 of the Civil Code provides that "[f]ixed, savings, and current deposits of money
in banks and similar institutions shall be governed by the provisions concerning
simple loan.
Hence, the relationship between banks and depositors has been held to be
that of creditor and debtor. Thus, legal compensation under Article 1278 of the Civil
Code may take place "when all the requisites mentioned in Article 1279 are present,"
as follows:
(1) That each one of the obligors be bound principally, and that
he be at the same time a principal creditor of the
other;
(2) That both debts consist in a sum of money, or if the things
due are consumable, they be of the same kind, and
also of the same quality if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or
controversy, commenced by third persons and
communicated in due time to the debtor.
While, however, it is conceded that petitioner had the right of set-off over the amount it paid
to Templonuevo against the deposit of Salazar, the issue of whether it acted judiciously is an entirely
different matter.[25] As businesses affected with public interest, and because of the nature of their
functions, banks are under obligation to treat the accounts of their depositors with meticulous care,
always having in mind the fiduciary nature of their relationship. [26] In this regard, petitioner was clearly
remiss in its duty to private respondent Salazar as its depositor.
To begin with, the irregularity appeared plainly on the face of the checks. Despite the
obvious lack of indorsement thereon, petitioner permitted the encashment of these checks three times
on three separate occasions. This negates petitioners claim that it merely made a mistake in crediting
the value of the checks to Salazars account and instead bolsters the conclusion of the CA that petitioner
recognized Salazars claim of ownership of checks and acted deliberately in paying the same, contrary
to ordinary banking policy and practice. It must be emphasized that the law imposes a duty of diligence
on the collecting bank to scrutinize checks deposited with it, for the purpose of determining their
genuineness and regularity. The collecting bank, being primarily engaged in banking, holds itself out to
the public as the expert on this field, and the law thus holds it to a high standard of conduct. [27] The
taking and collection of a check without the proper indorsement amount to a conversion of the check by
the bank.[28]
More importantly, however, solely upon the prompting of Templonuevo, and with full
knowledge of the brewing dispute between Salazar and Templonuevo, petitioner debited the account
held in the name of the sole proprietorship of Salazar without even serving due notice upon her. This
ran contrary to petitioners assurances to private respondent Salazar that the account would remain
untouched, pending the resolution of the controversy between her and Templonuevo. [29] In this
connection, the CA cited the letter dated September 5, 1991 of Mr. Manuel Ablan, Senior Manager of
petitioner banks Pasig/Ortigas branch, to private respondent Salazar informing her that her account had
been frozen, thus:
From the tenor of the letter of Manuel Ablan, it is safe to conclude that
Account No. 0201-0588-48 will remain frozen or untouched until herein [Salazar] has
settled matters with Templonuevo. But, in an unexpected move, in less than two
weeks (eleven days to be precise) from the time that letter was written, [petitioner]
bank issued a cashiers check in the name of Julio R. Templonuevo of the J.R.T.
Construction and Trading for the sum of P267,692.50 (Exhibit 8) and debited said
amount from Ms. Arcillas account No. 0201-0588-48 which was supposed to be
frozen or controlled. Such a move by BPI is, to Our minds, a clear case of
negligence, if not a fraudulent, wanton and reckless disregard of the right of its
depositor.
The records further bear out the fact that respondent Salazar had issued several checks
drawn against the account of A.A. Salazar Construction and Engineering Services prior to any notice of
deduction being served. The CA sustained private respondent Salazars claim of damages in this regard:
MJRTB
The act of the bank in freezing and later debiting the amount
of P267,692.50 from the account of A.A. Salazar Construction and Engineering
Services caused plaintiff-appellee great damage and prejudice particularly when she
had already issued checks drawn against the said account. As can be expected, the
said checks bounced. To prove this, plaintiff-appellee presented as exhibits
photocopies of checks dated September 8, 1991, October 28, 1991, and November
14, 1991 (Exhibits D, E and F respectively)[30]
These checks, it must be emphasized, were subsequently dishonored, thereby causing
private respondent Salazar undue embarrassment and inflicting damage to her standing in the business
community. Under the circumstances, she was clearly not given the opportunity to protect her interest
when petitioner unilaterally withdrew the above amount from her account without informing her that it
had already done so.
For the above reasons, the Court finds no reason to disturb the award of damages granted by
the CA against petitioner. This whole incident would have been avoided had petitioner adhered to the
standard of diligence expected of one engaged in the banking business. A depositor has the right to
recover reasonable moral damages even if the banks negligence may not have been attended with
malice and bad faith, if the former suffered mental anguish, serious anxiety, embarrassment and
humiliation.[31] Moral damages are not meant to enrich a complainant at the expense of defendant. It is
only intended to alleviate the moral suffering she has undergone. The award of exemplary damages is
justified, on the other hand, when the acts of the bank are attended by malice, bad faith or gross
negligence. The award of reasonable attorneys fees is proper where exemplary damages are awarded.
It is proper where depositors are compelled to litigate to protect their interest.[32]
WHEREFORE, the petition is partially GRANTED. The assailed Decision dated April 3, 1998
and Resolution dated April 3, 1998 rendered by the Court of Appeals in CA-G.R. CV No.
42241 are MODIFIED insofar as it ordered petitioner Bank of the Philippine Islands to return the amount
of Two Hundred Sixty-seven Thousand Seven Hundred and Seven and 70/100 Pesos (P267,707.70) to
respondent Annabelle A. Salazar, which portion is REVERSED and SET ASIDE. In all other respects,
the same are AFFIRMED.
No costs.
SO ORDERED.
MJRTB

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[G.R. No. 138954.

November 25, 2004]

BANKING LAWS - Assignment No. 3

BANKING LAWS - Assignment No. 3

reasonable doubt. As aptly pointed out by the lower court:

BANKING LAWS - Assignment No. 3

Petitioner now raises the following issues:

BANKING LAWS - Assignment No. 3

teller, the Court articulated:

BANKING LAWS - Assignment No. 3

BANKING LAWS - Assignment No. 3

BANKING LAWS - Assignment No. 3

G.R. No. L-45656 May 5, 1989

GUTIERREZ, JR., J.:

Briefly, the facts of the case are as follows:

BANKING LAWS - Assignment No. 3

BANKING LAWS - Assignment No. 3

ON MARCH 21, 1958 IS VALID.

BANKING LAWS - Assignment No. 3

BANKING LAWS - Assignment No. 3

cross claim against Chester G. Babst.

COURT OF APPEALS, ANNABELLE A. SALAZAR, and

G.R. No. 136202

BANKING LAWS - Assignment No. 3

WHEREFORE, premises considered, judgment is hereby rendered in

The amount of P267,707.70 with 12% interest thereon

The counterclaim is hereby ordered DISMISSED for lack of factual basis.

Third-party defendants [i.e., private respondent Templonuevos]

BANKING LAWS - Assignment No. 3

There was no factual basis for the award of damages to Salazar.

The petition is partly meritorious.

That Salazar previously had in her possession the following checks:

BANKING LAWS - Assignment No. 3

BANKING LAWS - Assignment No. 3

BANKING LAWS - Assignment No. 3

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