Go vs. Court of Appeals

A party in a civil case must establish his claim by preponderance of evidence, which is the weight, credit, and value of the aggregate evidence on either side — evidence which is more convincing to the court as worthy of belief than that offered in opposition. The Court cannot infer civil liability from a party's failure to verify the existence of a person, nor can it rely on hearsay testimony to establish a material fact, where the party's participation in an alleged fraudulent scheme is not proven by competent evidence.

National Steel Corporation (NSC) purchased two Philippine National Bank (PNB) Manager's Checks as payment for customs duties and taxes due on its importation of steel plates. The checks were made payable to the Collector of Customs and bore the notation "For Payee's Account." The checks were delivered to LMC Brokerage Firm, and the steel plates were released from the Bureau of Customs. When NSC later learned that the official receipts issued to it were fake, it was required to pay the customs duties a second time. Security Bank & Trust Company (SBTC), after discovering the anomaly, paid PNB the sum of P2,352,966.00 as reimbursement for the proceeds of the two checks which PNB had to refund to NSC.

National Steel Corporation (NSC) purchased two Philippine National Bank (PNB) Manager's Checks: Check No. J-81-006142, dated May 11, 1982, in the sum of P911,981.00 (the "first check"), and Check No. J-81-00698, dated May 14, 1982, in the sum of P1,511,293.00 (the "second check"), as payment for customs duties and taxes due on NSC's importation of steel plates. Both checks bore the notation "For Payee's Account" and were made payable to the Collector of Customs. Edmund Ulibarri, an NSC official, delivered the checks to LMC Brokerage Firm, and the steel plates were released from the Bureau of Customs, with official receipts supposedly indicating payment delivered to NSC.

On May 31, 1982, the first check was deposited with Security Bank and Trust Company (SBTC), Caloocan City Branch, and credited on June 1, 1982, in Current Account No. 2110-0282-47, maintained by a certain Robert Santos with SBTC's Congressional Branch, Quezon City, which was opened only the day before. On June 21, 1982, another account in the name of Roberto Santos (C/A No. 3310-0031-03) was opened in SBTC's Caloocan City Branch. On the same day, the second check was deposited in C/A No. 2110-0282-47 in the Congressional Branch but credited to the newly opened C/A No. 3310-0031-03. The Congressional Branch accepted the check and sent it for clearing, and forwarded the deposit slip and the receipt for transfer of the account to the Caloocan City Branch. Thereafter, withdrawals of funds for the two Robert Santos accounts were made.

NSC later learned that the official receipts issued to it for payment of customs duties and taxes were fake and was required to pay the customs duties a second time. SBTC, after discovering the anomaly, paid PNB the sum of P2,352,966.00 as reimbursement for the proceeds of the two checks which PNB had to refund to NSC. SBTC's internal investigation revealed the participation of petitioner Dick Go, Assistant Manager-in-charge of SBTC Congressional Branch Accounting Department, together with his co-accused Eduardo L. Lauchengco and Generoso B. Fermin, in the opening of the Robert Santos accounts, the deposit in said accounts of the subject two checks although payable to the Collector of Customs, and the siphoning of the proceeds of the checks.

The Court of Appeals, in reversing the trial court, made "corrections and deletions" to the trial court's factual findings and found "additional facts to complete the story." It found that the Congressional Branch Account was opened on May 31, 1982, admittedly with the participation of Dick Go, who insisted that he met a real live person who was a walk-in client. The Caloocan City Branch account was opened on June 21, 1982, with the intervention of Eduardo Lauchengco, who reserved and opened the account without accomplishing the necessary papers and received the corresponding checkbook which he then delivered to Dick Go. Earlier, on June 3, 1982, a bank account in the name of Fernando Cruz was opened with the Philippine Bank of Communication by Generoso Fermin, who admitted opening the fictitious account and making withdrawals therein but claimed this was to accommodate Dick Go, a former officemate. Eventually, the total sum of P902,500.00 was withdrawn from the Congressional Branch Account and P536,722.00 from the Caloocan City Branch Account, with some funds later traced to have been deposited in the Fernando Cruz Account, in the account of Eduardo Lauchengco's mother, and others in the name of the other defendants in the civil action who were not charged in the criminal cases.

The trial court found that the bank employees involved in the opening of the Robert Santos account were negligent, observing that the cashier, Dolores Satuito, who was in charge of New Accounts, was neither investigated, punished, nor called to the witness stand. The trial court gathered the impression that "a big cover-up was initiated to spare many people in the SBTC, the PNB, the Bureau of Customs, and, perhaps, even some people at the NSC, by the prosecution of minor employees of the bank."

• Disregard of Trial Court Findings: Petitioner argued that the Court of Appeals gravely abused its discretion when it disregarded the findings of fact of the trial court and reversed its decision on the basis of mere conclusions without support in, nor citation of, specific evidence, or that its findings and decision are premised on the absence of evidence and are contradicted by the evidence on record, or that it overlooked certain relevant facts not disputed by the parties.

• Error in Allowing Recovery: Petitioner argued that the Court of Appeals committed an error of law in allowing the respondent bank to recover from petitioner the amounts it paid to PNB representing the proceeds of the two PNB manager's checks placed in the Robert Santos account.

• Hearsay Testimony: Petitioner contended that the Court of Appeals' finding that the checkbook of the Robert Santos account was delivered by Eduardo Lauchengco to Dick Go was based on hearsay testimony, because the witness merely testified on the basis of what was related to her by the person who allegedly gave the checkbook, but the person who allegedly gave the checkbook himself did not testify to that effect at all.

• Petitioner's Position and Participation: SBTC alleged that petitioner took advantage of his position as Assistant Branch Manager in facilitating the opening of Current Account No. 2110-0282-47 with the SBTC Congressional Branch in the name of one Robert Santos with full knowledge that he was inexistent; that he took advantage of his position in processing the deposit in the Robert Santos account of a crossed PNB Manager's Check with the notation "For Payee's Account Only" and made payable to the Collector of Customs; that he took advantage of his position in causing the deposit in the Robert Santos account of another crossed PNB Manager's Check; and that he appropriated the proceeds of said checks despite knowledge that said checks were payable to the Collector of Customs, hence, were government funds which cannot be accepted by SBTC for deposit pursuant to a Central Bank prohibition.

• Civil Liability: Whether, on the basis of the same factual findings of the trial court, petitioner can be held civilly liable for the amounts SBTC paid to PNB representing the proceeds of the two PNB manager's checks placed in the Robert Santos account.

• Hearsay Evidence: Whether the Court of Appeals erred in relying on hearsay testimony to find that the checkbook of the Robert Santos account was delivered by Eduardo Lauchengco to petitioner.

• Civil Liability: No. The Court of Appeals' finding of civil liability was based on a non sequitur — one cannot logically infer from petitioner's failure to get in touch with Robert Santos that the latter is a fictitious or inexistent person. The bank failed to establish by preponderance of evidence the indispensable participation of petitioner in the opening of the accounts, the depositing of the PNB checks, and the siphoning of the proceeds.

• Hearsay Evidence: Yes, the Court of Appeals erred. The testimonies of prosecution witnesses Lourdes Gabriel and Ester Mendoza on the delivery of the checkbook were clearly hearsay, as neither had first-hand knowledge that the checkbook was indeed delivered by Eduardo Lauchengco to Dick Go and received by Dick Go himself.

• Civil Liability: The Court applied the standard of preponderance of evidence in civil cases, defined as "the weight, credit, and value of the aggregate evidence on either side" — evidence which is more convincing to the court as worthy of belief than that offered in opposition. The Court of Appeals based its finding of civil liability on two facts: (a) petitioner initiated the opening of the Robert Santos account; and (b) Robert Santos is a fictitious or inexistent person, implying that petitioner and Robert Santos are one and the same person. The Court of Appeals relied on petitioner's testimony that he did not bother to find out if Robert Santos actually exists and failed to get in touch with him at his given address, and on the testimonies of Teresita Hulinganga and Sergio Matutina that they never saw Robert Santos in person. The Court held this ratiocination was a non sequitur — one cannot logically infer from petitioner's failure to get in touch with Robert Santos that the latter is fictitious. The testimonies of Hulinganga and Matutina only tend to prove that they have neither seen nor talked to nor knew of the existence of Robert Santos, and nothing else. Moreover, it appeared from SBTC's investigation report that Robert Santos exists, as testified to by Ester Mendoza, Manager of SBTC's Auditing Department, who stated that Dick Go admitted to her that he talked to this Robert Santos. The Court also noted that the trial court did not directly state that Robert Santos does not exist. As to the opening of the account, the Court found that the trial court correctly observed that the alleged non-existence of Robert Santos and the participation of petitioner were based on the "bare verbal statements" of Hulinganga and Matutina, while petitioner's oral testimony that he met Robert Santos in person and that it was Hulinganga who opened the account was corroborated by documentary evidence identified and admitted by Hulinganga herself. The Court applied the rule that documentary evidence prevails over testimonial evidence. The Court further noted that the trial court found that the fault for the irregularity in the acceptance and deposit of the PNB Manager's checks was traceable to the concerned tellers of the bank who "admittedly, negligently, improperly, and in violation of their duties, accepted the said checks into the account of Robert Santos." The trial court also observed that the cashier, Dolores Satuito, who was in charge of New Accounts, was neither investigated, punished, nor called to the witness stand, and that a "big cover-up was initiated to spare many people in the SBTC, the PNB, the Bureau of Customs, and, perhaps, even some people at the NSC."

• Hearsay Evidence: The Court defined hearsay as "all evidence which is not founded upon the personal knowledge of the witness from whom it is elicited and which consequently does not depend for its credibility and weight upon the confidence which the court may have in him." From the testimony of prosecution witnesses Lourdes Gabriel and Ester Mendoza, it appeared that both did not have first-hand knowledge that the checkbook was indeed delivered by Eduardo Lauchengco to Dick Go and that it was received by Dick Go himself. Lourdes Gabriel testified only as to what Eduardo Lauchengco told her — that Dick Go would be the one to sign the checkbook. Ester Mendoza testified that Eduardo Lauchengco told her that he left the checkbook on top of Dick Go's table. Hence, their testimonies on that point were clearly hearsay.

• Preponderance of Evidence — The standard of proof in civil cases, defined as "the weight, credit, and value of the aggregate evidence on either side," usually considered synonymous with "greater weight of the evidence" or "greater weight of the credible evidence." It means "probability of the truth" — evidence which is more convincing to the court as worthy of belief than that offered in opposition. The Court applied this standard in determining that SBTC failed to prove petitioner's indispensable participation in the fraudulent scheme.

• Non Sequitur — A conclusion that does not logically follow from the premises. The Court held that the Court of Appeals' inference that Robert Santos was fictitious because petitioner failed to get in touch with him was a non sequitur, as one cannot logically infer non-existence from a failure to verify existence.

• Documentary Evidence Prevails Over Testimonial Evidence — In weighing evidence, documentary evidence prevails over testimonial evidence. The Court applied this rule where petitioner's oral testimony was corroborated by documentary evidence identified and admitted by the prosecution's own witness, Hulinganga.

• Hearsay Evidence — All evidence which is not founded upon the personal knowledge of the witness from whom it is elicited and which consequently does not depend for its credibility and weight upon the confidence which the court may have in him. Briefly, hearsay evidence is information relayed from another person to the witness before it reaches the court. The Court held that testimonies of witnesses who testified only as to what another person told them, without first-hand knowledge of the fact, are clearly hearsay and cannot be the basis of a finding of liability.

• "Plainly, the above ratiocination is non sequitur. One cannot logically infer from petitioner's failure to get in touch with Robert Santos that the latter is a fictitious or inexistent person." — This passage states the core flaw in the Court of Appeals' reasoning and is the basis for reversing the finding of civil liability.

• "In the weighing of evidence, documentary evidence prevails over testimonial evidence." — This passage articulates the rule applied by the Court in preferring petitioner's documentary corroboration over the "bare verbal statements" of the prosecution witnesses.

• "The term 'hearsay' as used in the rules of evidence signifies all evidence which is not founded upon the personal knowledge of the witness from whom it is elicited and which consequently does not depend for its credibility and weight upon the confidence which the court may have in him. Briefly, hearsay evidence is information relayed from another person to the witness before it reaches the court." — This passage defines the hearsay rule applied by the Court to exclude the testimonies of Lourdes Gabriel and Ester Mendoza regarding the delivery of the checkbook.

• Reyes vs. Court of Appeals, 258 SCRA 651 (1996) — Cited for the rule that factual findings of the trial court, when adopted and confirmed by the Court of Appeals, are final and conclusive and may not be reviewed on appeal, except in ten enumerated instances, including when the findings of the Court of Appeals are contrary to those of the trial court, when the findings are conclusions without citation of specific evidence, and when the findings are premised on the absence of evidence.

• GSIS vs. Court of Appeals, 222 SCRA 685 (1993) — Cited for the rule that documentary evidence prevails over testimonial evidence in the weighing of evidence.

• Rule 133, Section 1, Rules of Court — Provides the guidelines in determining preponderance of evidence in civil cases: the court may consider all the facts and circumstances of the case, the witnesses' manner of testifying, their intelligence, their means and opportunity of knowing the facts to which they are testifying, the nature of the facts to which they testify, the probability or improbability of their testimony, their interest or want of interest, and their personal credibility. The Court applied this provision in weighing the evidence presented by both parties.

Davide, Jr., Puno, Kapunan, and Pardo, JJ., concurred.