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This petition for review on certiorari seeks to reverse and set aside the Decision 1 

of the
Court of Appeals (CA) which affirmed with modification the 28 November 2007
Decision2 of the Regional Trial Court of Parañaque City, a case for sum of money with
damages.

Respondent James T. Cua (James) filed a Complaint for Sum of Money with
Damages3 against herein petitioner Philippine National Bank (PNB), James averred that
since 1996, he and his brother, Antonio T. Cua (Antonio) maintained a US Dollar
Savings Time Deposit with PNB

Sucat, Parañaque branch, evidenced by Certificate of Time Deposit issued and which
replaced CTD has a face value of US$50,860.53. James continued that he and Antonio
had the practice of pre-signing loan application documents with PNB for the purpose of
having a standby loan or ready money available anytime.

James learned that he had a loan obligation with PNB which had allegedly become due
and demandable. He maintained, however, that although he had pre-signed loan
documents for pre-arranged loans with his time deposit as collateral, he had never
availed of its proceeds.

Sometime in September 2004, to see if his dollar time deposit was still existing and in
order to revive his cash-strapped machine shop business, James requested from PNB
the release of P500,000.00 to be secured by CTD No. B-630178. To his surprise, PNB
rejected his loan application which refusal, he claims, caused damage and prejudice in
terms of lost business opportunity and loss of income in the amount of more or less
P1,000,000.00

James inquired about the reason for the denial of his application. In a letter-reply dated
17 November 2004, PNB, through its vice president, explained that his dollar time
deposit had been applied in payment to the loans he had with the bank, in accordance
with the loan application and other documents he had executed.

Thereafter, James demanded the release of his entire dollar time deposit asserting that
he never made use of any loan amount from his pre-arranged loan from the time he
was issued CTD No. B-630178; and that it was only in September 2004 that he
requested the release of the proceeds of his pre-arranged loan. After PNB failed to heed
his demand, James filed a complaint for sum of money praying that PNB return to him
the entire amount of the account.

Trial on the merits thereafter ensued, during which James testified for his cause. He
stated that he was a businessman and a college graduate. He affirmed the allegations
in his Complaint and asserted that he did not sign any document evidencing receipt of
the loan referred to by PNB and for which his dollar time deposit had been applied in
payment.5 To further substantiate his claim, he presented the following documents: (1)
a photocopy of CTD No. B-630178,6 to show that James and his brother have a US
Dollar Time Deposit with PNB; (2) letter dated 9 September 2004, 7 to show that James
complained against an alleged loan charged against his time deposit; (3) PNB's letter-
reply dated 17 November 2004,8 explaining the reason for the denial of his request;
and (d) the letter of James' counsel to PNB demanding the release of his dollar time
deposit.9
Application/Approval Form12 dated 26 February 2002; (2) PN No.
001162815224000413 dated 14 February 2001 in the amount of US$50,000.00; (3) PN
No. 001162815224000614 dated 26 February 2002 in the amount of US$50,000.00; and
(4) a machine-validated Miscellaneous Ticket 15 dated 14 February 2001 which
purportedly indicates that James received the proceeds of the loan in the amount of
US$49,655.34.

The RTC ruled in favor of James. It explained that the burden of proof shifted from
James to PNB when the latter asserted an affirmative defense – that the loan proceeds
were released to James and, thus, PNB properly applied his time deposit as payment of
his unpaid loan in accordance with the provisions of the promissory note. PNB,
however, failed to substantiate this affirmative defense.

Since it has not been established that James had an outstanding debt to PNB, the
latter's application of the former's time deposit to the alleged loan is improper.
Necessarily, James is entitled to the return of his dollar time deposit.

In its appealed decision, the CA affirmed with modification order of the RTC.

The appellate court concurred with the trial court that the burden of proof shifted to
PNB. Unfortunately, PNB failed to substantiate its claims. The appellate court, thus,
found no reversible error in the trial court's disquisition that PNB should be held liable
to James.

Issue: whether PNB sufficiently established James' receipt of the loan proceeds.

Ruling: YES. Rule 130, Section 9 of the Rules of Court provides for the parol evidence
rule which states that when the terms of an agreement have been reduced into writing,
it is considered as containing all the terms agreed upon and there can be, between the
parties and their successors-in-interest, no evidence of such terms other than the
contents of the written agreement. This rule admits of exceptions. A party may present
evidence to modify, explain or add to the terms of a written agreement if he puts in
issue in his pleading any of the following: (a) an intrinsic ambiguity, mistake or
imperfection in the written agreement; (b) the failure of the written agreement to
express the true intent and agreement of the parties thereto; (c) the validity of the
written agreement; or (d) the existence of other terms agreed to by the parties or their
successors-in-interest after the execution of the written agreement. However, to
overcome the presumption that the written agreement contains all the terms of the
agreement, the parol evidence must be clear and convincing and of such sufficient
credibility as to overturn the written agreement.

Promissory notes is the most convincing evidence.

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