SECURITY BANK AND TRUST COMPANY vs ERIC GAN

Facts:

Eric Gan opened a current account with Security Bank. SBTC alleged that it had an agreement with Gan
wherein the latter would deposit an initial amount in his current account and he could draw checks on said account
provided there were sufficient funds to cover them. Furthermore, under a special arrangement with SBTCs branch
manager Gan was allowed to transfer funds from his account to another persons account also within the same
branch.
Gan availed of such arrangement several times by depositing checks in his account and even before they
cleared, he withdrew the proceeds thereof and transferred them to the other account. These transactions were
covered by what were known as "debit memos" since Gan had no sufficient funds to cover the amounts he
transferred.
Later on, Gan purportedly incurred an overdraft or negative balance in his account. As of December 14,
1982, the overdraft balance came up to P153,757.78. According to SBTC, Gan refused pay despite repeated
demands.
SBTC filed a complaint for sum of money against respondent to recover the P297,060.01 with 12% interest
per annum.
Gan denied liability to petitioner for the said amount. He contended that the alleged overdraft resulted from
transactions done without his knowledge and consent.
RTC dismissed the complaint. It held that petitioner was not able to prove that respondent owed it the
amount claimed considering that the ledger cards it presented were merely hearsay evidence.

Issue: WON the entries made by Mercado in the ledger were competent evidence to prove how and when the
negative balance was incurred as provided under sec. 43 of rule 130.

Ruling: NO
To prove its claim, SBTC presented Patricio Mercado who was the bookkeeper who handled the account of
respondent and recorded his transactions in a ledger. Based on this ledger, respondent allegedly had a negative
balance of P153,757.78. This resulted from transfers of funds from respondents current account to another persons
account. These transfers were made under the authority of the Branch Manager. Respondent categorically denied
that he ever authorized these "funds transfers."
The entries in the ledger, as testified to by Mercado, were not competent evidence to prove that respondent
consented to the transfers of funds. These entries merely showed that the transfers were indeed made and that the
Branch Manager approved them. SBTCs claim that Gan availed of a special arrangement to transfer funds from his
account to another persons account was a bare allegation that was never substantiated. Admittedly, Mercado had no
personal knowledge of this arrangement. In fact, when asked about the details of the alleged consent given by
respondent to the transfers, he stated that he could not remember because Gan talked to the Branch Manager and
not to him. SBTC could have presented the Branch Manager whom they alleged allowed the special arrangement
with respondent. But it did not.
Neither can we accept SBTCs argument that the entries made by Mercado in the ledger were competent
evidence to prove how and when the negative balance was incurred. SBTC invokes Section 43 of Rule 130:

Entries in the course of business. Entries made at, or near the time of the transactions to which they refer, by a
person deceased, or unable to testify, who was in a position to know the facts therein stated, may be received as
prima facie evidence, if such person made the entries in his professional capacity or in the performance of duty and
in the ordinary or regular course of business or duty.

Under this exception to the hearsay rule, the admission in evidence of entries in corporate books required the
satisfaction of the following conditions:

1. the person who made the entry must be dead, or unable to testify;

2. the entries were made at or near the time of the transactions to which they refer;

3. the entrant was in a position to know the facts stated in the entries;

4. the entries were made in his professional capacity or in the performance of a duty, whether legal, contractual,
moral or religious; and

5. the entries were made in the ordinary or regular course of business or duty.

The ledger entries did not meet the first and third requisites.

Mercado, petitioners bookkeeper who prepared the entries, was presented to testify on the transactions pertaining to
the account of respondent. It was in the course of his testimony that the ledger entries were presented. There was,
therefore, neither justification nor necessity for the presentation of the entries as the person who made them was
available to testify in court.
Moreover, Mercado had no personal knowledge of the facts constituting the entries, particularly those entries which
resulted in the negative balance. He had no knowledge of the truth or falsity of these entries.

Let us be clear, at the outset, what the transactions covered by the debit memos are. They are, at bottom, credit
accommodations said to have been granted by the banks branch manager Mr. [Q]ui to the defendant, and they are,
therefore loans, to prove which competent testimonial or documentary evidence must be presented. In the fac[e] of
the denial by the defendant of the existence of any such agreement, and the absence of any document reflecting it,
the testimony of a party to the transaction, i.e., Mr. [Q]ui, or of any witness to the same, would be necessary. The
plaintiff failed to explain why it did not or could not present any party or witness to the transactions, but even if it had a
reason why it could not, it is clear that the existence of the agreements cannot be established through the testimony
of Mr. Mercado, for he was [not in] a position to [know] those facts. As a subordinate, he could not have done more
than record what was reported to him by his superior the branch manager, and unless he was allowed to be privy to
the latters dealings with the defendant, the information that he received and entered in the ledgers was incapable of
being confirmed by him.

There is good reason why evidence of this nature is incorrigibly hearsay. Entries in business records which spring
from the duty of other employees to communicate facts occurring in the ordinary course of business are prima facie
admissible, the duty to communicate being itself a badge of trustworthiness of the entries, but not when they purport
to record what were independent agreements arrived at by some bank officials and a client. In this case, the entries
become mere casual or voluntary reports of the official concerned. To permit the ledgers, prepared by the bank at its
own instance, to substitute the contract as proof of the agreements with third parties, is to set a dangerous precedent.
Business entries are allowed as an exception to the hearsay rule only under certain conditions specified in Section
43, which must be scrupulously observed to prevent them from being used as a source of undue advantage for the
party preparing them.

Thus, petitioner did not prove that respondent had incurred a negative balance in his account. Consequently, there
was nothing to show that respondent was indebted to it in the amount claimed.

EMMANUEL B. AZNAR vs. CITIBANK, N.A.,

Facts:

Emmanuel B. Aznar (Aznar), a known businessman in Cebu, is a holder of a Preferred Master Credit Card
(Mastercard) issued by Citibank with a credit limit of 150,000.00. As he and his wife, Zoraida, planned to take their
two grandchildren, Melissa and Richard Beane, on an Asian tour, Aznar made a total advance deposit of 485,000.00
with Citibank with the intention of increasing his credit limit to 635,000.00.
With the use of his Mastercard, Aznar purchased plane tickets to Kuala Lumpur for his group worth
237,000.00. On July 17, 1994, Aznar, his wife and grandchildren left Cebu for the said destination.
Aznar claims that when he presented his Mastercard in some establishments in Malaysia, Singapore and
Indonesia, the same was dishonored. And when he tried to use the same in I in Indonesia to purchase plane tickets
to Bali, it was again dishonored for the reason that his card was blacklisted by Citibank. Such dishonor forced him to
buy the tickets in cash.
Aznar filed a complaint for damages against Citibank.
To prove that they did not blacklist Aznars card, Citibanks Credit Card Department Head, Dennis Flores,
presented Warning Cancellation Bulletins which contained the list of its canceled cards covering the period of Aznars
trip.

Issue: WON Aznar has established his claim against Citibank.

The answer is no.

It is basic that in civil cases, the burden of proof rests on the plaintiff to establish his case based on a preponderance
of evidence. The party that alleges a fact also has the burden of proving it.

As correctly found by the RTC in its May 29, 1998 Decision, Aznar failed to prove with a preponderance of evidence
that Citibank blacklisted his Mastercard or placed the same on the "hot list."

Aznar in his testimony admitted that he had no personal knowledge that his Mastercard was blacklisted by Citibank
and only presumed such fact from the dishonor of his card.

The dishonor of Aznars Mastercard is not sufficient to support a conclusion that said credit card was blacklisted by
Citibank, especially in view of Aznars own admission that in other merchant establishments in Kuala Lumpur and
Singapore, his Mastercard was accepted and honored.

Aznar puts much weight on the ON-LINE AUTHORIZATION FOREIGN ACCOUNT ACTIVITY REPORT, a computer
print-out handed to Aznar by Ingtan Agency, marked as Exh. "G", to prove that his Mastercard was dishonored for
being blacklisted. On said print-out appears the words "DECL OVERLIMIT" opposite Account No. 5423-3920-0786-
7012.
As correctly pointed out by the RTC and the CA, however, such exhibit cannot be considered admissible as its
authenticity and due execution were not sufficiently established by petitioner.

The prevailing rule is Section 20 of Rule 132 of the Rules of Court. It provides that whenever any private document
offered as authentic is received in evidence, its due execution and authenticity must be proved either by (a) anyone
who saw the document executed or written; or (b) by evidence of the genuineness of the signature or handwriting of
the maker.

Aznar, who testified on the authenticity of Exh. "G," did not actually see the document executed or written, neither
was he able to provide evidence on the genuineness of the signature or handwriting of Nubi, who handed to him said
computer print-out.

Aznar next invokes Section 43 of Rule 130 of the Rules of Court, which pertains to entries in the course of business,
to support Exh. "G". Said provision reads:

Sec. 43. Entries in the course of business. Entries made at, or near the time of the transactions to which they refer,
by a person deceased or unable to testify, who was in a position to know the facts therein stated, may be received as
prima facie evidence, if such person made the entries in his professional capacity or in the performance of duty and
in the ordinary or regular course of business or duty.

Under this rule, however, the following conditions are required:

1. the person who made the entry must be dead, or unable to testify;

2. the entries were made at or near the time of the transactions to which they refer;

3. the entrant was in a position to know the facts stated in the entries;

4. the entries were made in his professional capacity or in the performance of a duty, whether legal, contractual,
moral or religious; and

5. the entries were made in the ordinary or regular course of business or duty.47

As correctly pointed out by the RTC in its May 29, 1998 Decision, there appears on the computer print-out the name
of a certain "Victrina Elnado Nubi" and a signature purportedly belonging to her, and at the left dorsal side were
handwritten the words "Sorry for the delay since the records had to be retrieved. Regards. Darryl Mario." It is not
clear therefore if it was Nubi who encoded the information stated in the print-out and was the one who printed the
same. The handwritten annotation signed by a certain Darryl Mario even suggests that it was Mario who printed the
same and only handed the print-out to Nubi. The identity of the entrant, required by the provision above mentioned,
was therefore not established. Neither did petitioner establish in what professional capacity did Mario or Nubi make
the entries, or whether the entries were made in the performance of their duty in the ordinary or regular course of
business or duty.

And even if Exh. "G" is admitted as evidence, it only shows that the use of the credit card of petitioner was denied
because it was already over the limit. There is no allegation in the Complaint or evidence to show that there was
gross negligence on the part of Citibank in declaring that the credit card has been used over the limit.

The Court is also perplexed that stated on Exh. "G" is the amount of "6,289,195.10" opposite petitioner's account
number, which data, petitioner did not clarify.48 As plaintiff in this case, it was incumbent on him to prove that he did
not actually incur the said amount which is above his credit limit. As it is, the Court cannot see how Exh. "G" could
help petitioner's claim for damages.

The claim of petitioner that Citibank blacklisted his card through fraud or gross negligence is likewise effectively
negated by the evidence of Citibank which was correctly upheld by the RTC and the CA, to wit:

xxx Mr. Dennis Flores, the Head of the Credit Card Department of defendant Bank, presented documents known as
Warning Cancellation Bulletin for July 10, 17, 24, and 31, 1994 (Exhibits 3, 3-1 to 3-38, 4, 4-1 to 4-38 5, 5-1 to
5-39 and 6, 6-1 to 6-39), for August 7, 1994 (Exhibit[s] 7, 7-1 to 7-37), for August 8, 1994 (Exhibit[s] 8, 8-1 to
8-20) which show that plaintiffs Citibank preferred mastercard was not placed in a hot list or was not blacklisted.

The Warning Cancellation Bulletins (WCB) (Exhibits 3, 4, 5, 6, 7, 8 and their submarkings) which covered the
period of four (4) days in July 1994 (from July 10, 17, 24 and 31, 1994), and two (2) days in August 1994, (August 7
and 8, 1994), when plaintiff traveled in the aforementioned Asian countries showed that said Citibank preferred
mastercard had never been placed in a hot list or the same was blacklisted, let alone the fact that all the credit cards
which had been cancelled by the defendant bank were all contained, reported and listed in said Warning Cancellation
Bulletin which were issued and released on a regular basis.

These three hundred (300) Warning Cancellation Bulletins pieces of documentary proofs, all in all, adduced by
defendant pointed to the fact that said plaintiffs credit card (sic) was not among those found in said bulletins as
having been cancelled for the period for which the said bulletins had been issued.
Between said computer print-out (Exhibit G) and the Warning Cancellation Bulletins (Exhibits 3 to 8 and their
submarkings) the latter documents adduced by defendant are entitled to greater weight than that said computer print
out presented by plaintiff that bears on the issue of whether the plaintiffs preferred master card was actually placed in
the hot list or blacklisted for the following reasons:

The first reason is that the due execution and authentication of these Warning Cancellation Bulletins (or WCB) have
been duly established and identified by defendants own witness, Dennis Flores, one of the banks officers, who is the
head of its credit card department, and, therefore, competent to testify on the said bulletins as having been issued by
the defendant bank showing that plaintiffs preferred master credit card was never blacklisted or placed in the Banks
hot list. But on the other hand, plaintiffs computer print out (Exhibit G) was never authenticated or its due execution
had never been duly established. Thus, between a set of duly authenticated commercial documents, the Warning
Cancellation Bulletins (Exhibits 3 to 8 and their submarkings), presented by defendants (sic) and an
unauthenticated private document, plaintiffs computer print out (Exhibit G), the former deserves greater evidentiary
weight supporting the findings of this Court that plaintiffs preferred master card (Exhibit 1) had never been
blacklisted at all or placed in a so-called hot list by defendant.