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 Onates 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
(Onates Representative) to Onates Trust Account, and were later withdrawn by him.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 Onates 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 Onates motion, the RTC ordered to create a Board to examine the records of
Onates 7 trust accounts. The Board submitted reports of withdrawals without withdrawal slips
from Onates account. LBP did not file any comment or objection to the Boards consolidated
report.
RTC RULING:
The RTC dismissed LBPs complaint for failure to establish that P4M was allegedly
miscredited to Onates accounts, and ordered to restore the P1.5M set-off amount to Onates
account On Onates counterclaim, RTC rules that under the IMAs, LBP had authority to
withdraw even without withdrawal slips from Onates account.
Motion for reconsideration by LBP was denied. Both parties appealed to the CA.
CA RULING:
CA denied LBPs appeal and granted Onates. 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 banks 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 Onates 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.