Paid but not received

Who has the burden to prove that an obligation has been paid, the creditor or the debtor? This is the issue in this case of a bank and one of its depositors.

The depositor here was Trining, a working wife for over nineteen years. In preparation for her retirement, Trining opened four US dollar time deposits of $15,000 each or a total of $ 60,000, with a big commercial bank(the bank) where Domingo, her husband, was working. The deposits were evidenced by certificates with maturity date of January 23, 1987, and were payable to bearer at 4.5 percent interest per annum. The certificates bore markings which indicate that her deposits would be renewed, or "rolled over" and earn interest if not withdrawn on maturity by the surrender of the certificates duly endorsed.

Thus, after the maturity, Trining kept her dollars in the bank so that it would earn interest and so that she could use the funds after she retired. She did not withdraw the money even if she and Domingo went to the States in 1989 for the latter’s medical treatment. When Domingo died in January 1993, Trining decided to return to the Philippines. On July 29,1996 or after the lapse of more than nine (9) years and eight (8) months from the issuance of the time deposit certificates, Trining went to the bank to withdraw her deposits and presented the said certificates. But to her dismay, the bank told her that Domingo had already withdrawn the deposits on their maturity dates way back on January 23, 1987. It presented documents particularly four dollar demand drafts of US$15,110.96 each issued to her husband Domingo. The bank claimed that it did not demand the surrender of the subject certificates of deposit since Domingo was one of it’s senior managers. When the bank still refused to allow Trining to withdraw the amount despite demands, she already sued the bank.

Could Trining still recover her deposits?

Yes.

The certificates of deposit are still in the possession of Trining, the bearer and lawful holder. They have not been indorsed or delivered to the bank. A certificate of deposit is a written acknowledgment by a bank or banker of the receipt of a sum of money on deposit which the bank or banker promises to pay to the depositor, to the order of the depositor, or to some other person or his order, whereby the relation of debtor and creditor between the bank and the depositor is created. The principle that payment, in order to discharge a debt, must be made to someone authorized to receive it is applicable to the payment of certificates of time deposit. A bank acts at its peril when it pays deposits evidenced by a certificate of deposit, without its production or surrender after proper indorsement. It will be protected only if it makes payment to the holder of the certificate who surrenders it indorsed by the payee unless it has notice of the invalidity of the indorsement or the holder’s want of title. As a rule, one who pleads payment has the burden of proving it. Even where the plaintiff-creditor (depositor) must allege non-payment, the general rule is that the burden rests on the defendant-debtor (bank) to prove payment rather than on the plaintiff to prove non-payment. The debtor has the burden of showing with legal certainty that the obligation has been discharged by payment.

In this case the certificates of deposit were clearly marked payable to "bearer" which means to the person in possession of the certificates duly indorsed. The bank should not have paid Domingo or any third party without requiring the surrender of the certificates of time deposit duly indorsed.

The accommodation given to Domingo in not requiring the surrender of the certificates was made in violation of the bank’s policies and procedures. The bank should have required him to surrender the certificates even after it has paid the deposits. But it never required him to do so even long after such payment and before his retirement from the service.

So the bank should allow Trining to withdraw her deposit of $60,000 with accrued interest and pay her moral damages of P50,000, exemplary damage of P50,000 and P20,000 attorney’s fees (Far East Bank vs. Querimit, G.R. 148582, January 16, 2002).

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