G.R. No. 199161 - Philippine National Bank vs. Cua

On February 9, 2005, respondent James T. Cua filed a Complaint for Sum of Money with Damages against petitioner Philippine National Bank (PNB), docketed as Civil Case No. CV-05-0066.
James alleged that he and his brother Antonio maintained a US Dollar Savings Time Deposit with PNB since 1996, evidenced by Certificate of Time Deposit (CTD) No. B-630178 (issued December 9, 2002), a replacement of CTD No. B-658788, with a face value of US$50,860.53.
The complainant and his brother had the practice of pre-signing loan application documents to have standby loans available, but James claimed he never actually availed of any loan proceeds.
On May 6, 2004, James learned he had an allegedly due loan obligation with PNB which he denied having borrowed against.
In September 2004, James requested a release of P500,000.00 secured by his CTD No. B-630178 to revive his business. PNB rejected the loan application, which James claimed caused damage for lost business opportunity and income amounting to roughly P1,000,000.00.
PNB, through its vice president in a letter dated November 17, 2004, explained that the dollar time deposit had been applied to settle loans that James allegedly had and for which he executed loan application and related documents.
After PNB failed to release the time deposit proceeds despite demands, James filed suit to recover the full amount in his dollar time deposit.

PNB admitted James applied for loans but asserted he actually received the loan proceeds using his time deposit as collateral.
PNB alleged that James was extended four separate loans, including one dated February 14, 2001, evidenced by Promissory Note (PN) No. 0011628152240004.
The loan dated February 14, 2001, was renewed on February 26, 2002, as per PN No. 0011628152240006.
PNB contended that demands for repayment were made but James failed to pay, prompting PNB to set off his obligations against his dollar time deposit.
PNB prayed for dismissal of James' complaint and sought damages for moral, exemplary damages, and attorney’s fees amounting altogether to over P1,600,000.00.

James testified that he never signed any document acknowledging receipt of loan proceeds, and presented:

Photocopy of CTD No. B-630178 showing the time deposit account;
Complaint letter dated September 9, 2004, contesting the loan charged against his time deposit;
PNB’s letter dated November 17, 2004, explaining loan application denial; and
Demand letter from his counsel for release of his dollar time deposit.

Witness Edna Palomares, loans officer, who testified about James’ loan transactions, including a dollar loan dated February 14, 2001, secured by CTD No. 629914 and evidenced by PN No. 0011628152240004;
That the subject loan matured without payment, justifying application of the time deposit (now CTD No. B-630178) to settle the loan;
Documentary exhibits including notarized Loan Application/Approval Form dated February 26, 2002, promissory notes dated February 14, 2001 and February 26, 2002, and a machine-validated Miscellaneous Ticket dated February 14, 2001 purportedly indicating disbursement of loan proceeds.

The RTC ruled in favor of James, holding PNB failed to prove it released loan proceeds to James despite claiming setoff against his time deposit.
The RTC gave little evidentiary weight to PNB’s Miscellaneous Ticket (not signed by James) and dismissed the counterclaims for lack of merit.
Ordered PNB to pay the amount of US$50,860.53 plus interest, attorney’s fees of P500,000.00 (later modified) and costs.
PNB’s motion for reconsideration was denied.

The CA affirmed the RTC decision with modification, reducing attorney’s fees from P500,000.00 to P50,000.00, finding the original amount exorbitant.
The CA agreed PNB failed to substantiate its affirmative defense and claim that James received loan proceeds.

Whether the CA erred in not finding that the promissory note is the best evidence of receipt of loan proceeds;
Whether the CA erred in disregarding notarized promissory notes despite rules favoring public documents; and
Whether the CA erred in not holding James bound by his promissory notes given the presumption that a person manages his own affairs and voluntarily executed the notes.

Whether the Court of Appeals erred in holding that there was no evidence that James received the loan proceeds despite the existence of promissory notes.
Whether the Court of Appeals erred in disregarding the notarized promissory notes despite the absence of evidence sufficient to overcome the parol evidence rule and presumption in favor of public documents under Rule 132, Section 23 of the Rules of Court.
Whether the Court of Appeals erred in not ruling that James was bound by his promissory notes given the presumption that every person takes ordinary care of his concerns and voluntarily executed such documents.