LBP v Onate

Land Bank of the Philippines vs Emmanuel Onate GR No. 192371 January 15, 2014 Facts: LBP is a government financial institution created under RA 3844. From 1978 to 1980, Onate opened and maintained seven (7) Trust Accounts with LBP, each was covered with an Investment Management Account (IMA) with full discretion, and Onate appointed LBP as his agent with full powers to hold, invest, and reinvest the fund. On October 8, 1981, LBP claims a miscredit of P4M to 5 of Onate’s Trust Account, for as claimed by LBP the checks deposited to these accounts were issued to LBP by their 4 corporate borrowers, who preterminated their loans. Such checks were deposited allegedly by Polonio (Onate’s Representative) to Onate’s Trust Account, and were later withdrawn by him. Onate refused to return such funds after LBP has demanded it from him. A meeting was held yo settle such matter, but has failed to reach an agreement. The issue of miscrediting remained unsettled, and on June 21, 1991, LBP unilaterally set-off the outstanding balance in all of Onate’s Accounts, debiting only P1,528,538.48. LBP filed a complaint for Sum of Money seeking to recover P8,222,687.89 plus legal interest per annum. Onate in his answer, asserted that the set-off was without legal and factual basis. Onate further asserted presence of undocumented withdrawals and such are unauthorized transactions from his accounts and must be credited back to him. Upon Onate’s motion, the RTC ordered to create a Board to examine the records of Onate’s 7 trust accounts. The Board submitted reports of withdrawals without withdrawal slips from Onate’s account. LBP did not file any comment or objection to the Boards consolidated report. RTC RULING: The RTC dismissed LBP’s complaint for failure to establish that P4M was allegedly miscredited to Onate’s accounts, and ordered to restore the P1.5M set-off amount to Onate’s account On Onate’s counterclaim, RTC rules that under the IMA’s, LBP had authority to withdraw even without withdrawal slips from Onate’s account. Motion for reconsideration by LBP was denied. Both parties appealed to the CA. CA RULING: CA denied LBP’s appeal and granted Onate’s. CA affirmed RTC ruling and agreed that Onate is entitled to the unaccounted withdrawals which was reported by the Board which was P60M and $3M. The CA anchored on the bank’s failure to give full disclosure of the services rendered and should conduct its dealings with transparency, as mandated in Bangko Sentral ng Pilipinas Manual of Regulation for Banks (MORB). LBP filed for a Motion for Reconsideration, CA denied, hence LBP filed this Petition for Review on Certiorari.

Issues: 1.

WON the entries in the passbook issued by LBP are subjected to meet the Rule on Presumption of Regularity of entries in the course of business?

2.

WON Onate is entitled to claim P1.5M not pleaded in his counterclaim?

3.

WON Onate is entitled to awards of P60M and $3M alleged as undocumented withdrawals?

Ruling: Petition is denied. The issues raised are factual and do not involve questions of law. The RTC already created a Board to assist in determining the respective cash inflows and outflows of said accounts, which the parties agreed to submit the case based on said reports. LBP failed to prove that the ‘miscredited’ funds came from proceeds of the preterminated loans of corporate borrowers. LBP argument that the entries in the passbook were made in the regular course of business and should be accepted as prima facie evidence of facts is qualified as hearsay, and they should establish the exceptions of the hearsay rule, which are: 1.

Person who made entries is dead, outside of the country, or unable to testify;

2.

Entries were made at or near the time of the transaction to which they refer;

3.

Entrant was in a position to know the facts stated therein;

4.

Entries were made in the professional capacity or in the course of duty of the entrant; and,

5.

Entries were made in the ordinary course of business or duty.

LBP has neither identified the persons who made the entries in the passbooks nor established that they are already dead or unable to testify as required by Section 43 or Rule 130 of the RC. LBP failed to prove that the amount allegedly ‘miscredited’ to Onate’s account came from the proceeds of the pre-terminated loans of its clients. It is worth emphasizing that in civil cases, the party making allegations has the burden of proving them by preponderance of evidence. Mere allegations is not sufficient. Decisions of the CA is affirmed.