GR 108630; (April, 1996) (Digest)
G.R. No. 108630. April 2, 1996.
PHILIPPINE NATIONAL BANK, petitioner, vs. COURT OF APPEALS and LORETO TAN, respondents.
FACTS
Private respondent Loreto Tan was the owner of land expropriated by the government. The expropriation court ordered petitioner Philippine National Bank (PNB), where the expropriation price was deposited, to release the amount of P32,480.00 to Tan. Instead of delivering the manager’s check to Tan, PNB, through its Assistant Branch Manager Juan Tagamolila, delivered it to Sonia Gonzaga. Gonzaga presented a purported Special Power of Attorney (SPA) from Tan authorizing her to receive the funds. She then deposited and withdrew the money. Tan denied ever executing an SPA in Gonzaga’s favor and demanded payment from PNB, which was refused.
Tan filed a complaint to recover the amount. PNB defended its action by claiming Gonzaga was duly authorized, but it failed to present the original SPA in court despite being ordered to do so. The testimonies of PNB’s own witnesses regarding the payee of the check were conflicting. PNB also filed a third-party complaint against the Gonzaga spouses, but this was dismissed due to failure to serve summons.
ISSUE
Whether PNB validly discharged its obligation to pay Tan by delivering the check to Sonia Gonzaga.
RULING
No. PNB failed to prove valid payment. Under Article 1233 of the Civil Code, the burden of proving payment lies with the debtor. PNB failed to discharge this burden. The existence and contents of the alleged SPA were crucial to prove Gonzaga’s authority. The best evidence rule applies as the contents of the document were in issue. PNB’s failure to present the original SPA was fatal to its defense. Mere testimonial evidence regarding its existence was insufficient, especially given the conflicting testimonies from PNB’s own employees on whether the check was payable to Gonzaga or to Tan.
The Supreme Court affirmed the appellate court’s decision holding PNB liable for the principal amount with legal interest. It also reinstated the trial court’s award of attorney’s fees, as Tan was compelled to litigate to protect his interest due to PNB’s unjustified refusal to pay. However, the deletion of exemplary damages was sustained, as there was no clear evidence of fraudulent, wanton, or oppressive conduct on PNB’s part, and no compensatory damages were awarded to serve as a basis for such an award.