GR 199161; (April, 2018) (Digest)
G.R. No. 199161 . April 18, 2018. PHILIPPINE NATIONAL BANK, Petitioner, vs. JAMES T. CUA, Respondent.
FACTS
Respondent James T. Cua maintained a US Dollar Time Deposit with petitioner Philippine National Bank (PNB). He alleged a practice of pre-signing loan documents to establish a standby credit line but claimed he never availed of any loan proceeds. In 2004, PNB denied his new loan application and informed him that his time deposit had been applied to settle matured loan obligations. Cua filed a complaint for sum of money, insisting he never received any loan proceeds and demanding the return of his deposit.
PNB countered that Cua had indeed availed of several loans, presenting promissory notes he executed. It asserted that upon the maturity and non-payment of a 2002 loan, it rightfully set off the obligation against his time deposit as stipulated in the promissory note. The Regional Trial Court ruled for Cua, finding PNB failed to prove he received the loan proceeds. The Court of Appeals affirmed this decision.
ISSUE
Whether the Court of Appeals erred in ruling that PNB failed to discharge its burden of proving that Cua received the proceeds of the loan, thereby justifying the set-off against his time deposit.
RULING
Yes, the Supreme Court reversed the rulings of the lower courts. The core issue hinged on the application of the parole evidence rule and the burden of proof. Cua’s defense rested on his allegation that the signed promissory notes were merely pre-signed for future loans and that he never received the proceeds. However, the promissory note, a written contract, contained an express provision authorizing PNB to apply any of his deposits to the obligation upon default.
The Court emphasized that a promissory note is a negotiable instrument, and the terms written therein constitute the agreement of the parties. To overcome the presumption that the written agreement contains all the terms, any contrary oral agreement must be established by clear and convincing evidence. Cua’s bare and uncorroborated allegation was insufficient to overturn the clear terms of the written instrument. Consequently, the lower courts erred in disregarding the terms of the promissory note based on Cua’s unsubstantiated claim. PNB’s right to set off the deposit was established by the default and the contractual stipulation. The case was remanded for proceedings on PNB’s counterclaim.