This document summarizes a court case between Metropol Financing & Investment Corporation and Sambok Motors Company. Sambok Motors indorsed a promissory note made by Dr. Villaruel to Metropol with the words "with recourse", meaning Metropol could seek payment from Sambok if Dr. Villaruel defaulted. When Dr. Villaruel did default, Metropol sued Sambok for payment. The court found that by indorsing "with recourse", Sambok became generally liable as the indorser, rather than just a qualified indorser, and was therefore responsible for paying the amount owed if the note was dishonored. The court
This document summarizes a court case between Metropol Financing & Investment Corporation and Sambok Motors Company. Sambok Motors indorsed a promissory note made by Dr. Villaruel to Metropol with the words "with recourse", meaning Metropol could seek payment from Sambok if Dr. Villaruel defaulted. When Dr. Villaruel did default, Metropol sued Sambok for payment. The court found that by indorsing "with recourse", Sambok became generally liable as the indorser, rather than just a qualified indorser, and was therefore responsible for paying the amount owed if the note was dishonored. The court
This document summarizes a court case between Metropol Financing & Investment Corporation and Sambok Motors Company. Sambok Motors indorsed a promissory note made by Dr. Villaruel to Metropol with the words "with recourse", meaning Metropol could seek payment from Sambok if Dr. Villaruel defaulted. When Dr. Villaruel did default, Metropol sued Sambok for payment. The court found that by indorsing "with recourse", Sambok became generally liable as the indorser, rather than just a qualified indorser, and was therefore responsible for paying the amount owed if the note was dishonored. The court
This document summarizes a court case between Metropol Financing & Investment Corporation and Sambok Motors Company. Sambok Motors indorsed a promissory note made by Dr. Villaruel to Metropol with the words "with recourse", meaning Metropol could seek payment from Sambok if Dr. Villaruel defaulted. When Dr. Villaruel did default, Metropol sued Sambok for payment. The court found that by indorsing "with recourse", Sambok became generally liable as the indorser, rather than just a qualified indorser, and was therefore responsible for paying the amount owed if the note was dishonored. The court
METROPOL (BACOLOD) FINANCING & INVESTMENT CORPORATION, plaintiff-appellee, vs. SAMBOK MOTORS COMPANY and NG SAMBOK SONS MOTORS CO., LTD., defendant-appellants. SYLLABUS 1. MERCANTILE LAW; PROMISSORY NOTE; QUALIFIED INDORSEMENT; EFFECT THEREOF. A qualified indorsement constitutes the indorser a mere assignor of the title to the instrument. It may be made by adding to the indorser's signature the words "without recourse" or any words of similar import. Such an indorsement relieves the indorser of the general obligation to pay if the instrument is dishonored but not of the liability arising from warranties on the instrument as provided in Section 65 of the Negotiable Instruments Law. However, appellant Sambok indorse the note "with recourse'' and even waived the notice of demand, dishonor, protest and presentment. 2. ID.; ID.; ADDITION OF THE WORDS "WITH RECOURSE" DO NOT MAKE THE INDORSEMENT QUALIFIED; CASE AT BAR. Appellant, by indorsing the note "with recourse'' does not make itself a qualified indorser but a general indorser who is secondarily liable, because by such indorsement, it agreed that if Dr. Villaruel fails to pay the note, plaintiff-appellee can go after said appellant. The effect of such indorsement is that the note was indorsed without qualification. A person who indorses without qualification engages that on due presentment, the note shall be accepted or paid, or both as the case may be, and that if it be dishonored, he will pay the amount thereof to the holder. Appellant Sambok's intention of indorsing the note without qualification is made even more apparent by the fact that the notice of' demand, dishonor, protest and presentment were all waived. The words added by said appellant do not limit his liability, but rather confirm his obligations as a general indorser. 3. ID.; ID.; AFTER DISHONORED BY NON-PAYMENT, PERSON SECONDARILY LIABLE BECOMES THE PRINCIPAL DEBTOR. The lower court did not err in not declaring appellant as only secondarily liable because after an instrument is dishonored by, non-payment. the person secondarily liable thereon ceases to be such and becomes a principal debtor. His liability becomes the same as that of the original obligor. Consequently, the holder need not even proceed against the maker before suing the indorser. D E C I S I O N DE CASTRO, J p: The former Court of Appeals, by its resolution dated October 16, 1974 certified this case to this Court the issue raised therein being one purely of law. On April 15, 1969 Dr. Javier Villaruel executed a promissory note in favor of Ng Sambok Sons Motors Co., Ltd., in the amount of P15,939.00 payable in twelve (12) equal monthly installments, beginning May 18, 1969, with interest at the rate of one percent per month. It is further provided that in case on non-payment of any of the installments, the total principal sum then remaining unpaid shall become due and payable with an additional interest equal to twenty-five percent of the total amount due. LLphil On the same date, Sambok Motors Company (hereinafter referred to as Sambok), a sister company of Ng Sambok Sons Motors Co., Ltd., and under the same management as the former, negotiated and indorsed the note in favor of plaintiff Metropol Financing & Investment Corporation with the following indorsement: "Pay to the order of Metropol Bacolod Financing & Investment Corporation with recourse. Notice of Demand; Dishonor; Protest; and Presentment are hereby waived. SAMBOK MOTORS CO. (BACOLOD) By: RODOLFO G. NONILLO Asst. General Manager" The maker, Dr. Villaruel defaulted in the payment of his installments when they became due, so on October 30, 1969 plaintiff formally presented the promissory note for payment to the maker. Dr. Villaruel failed to pay the promissory note as demanded, hence plaintiff notified Sambok as indorsee of said note of the fact that the same has been dishonored and demanded payment. Sambok failed to pay, so on November 26, 1969 plaintiff filed a complaint for collection of a sum of money before the Court of First Instance of Iloilo, Branch I. Sambok did not deny its liability but contended that it could not be obliged to pay until after its co- defendant Dr. Villaruel, has been declared insolvent. During the pendency of the case in the trial court, defendant Dr. Villaruel died, hence, on October 24, 1972 the lower court, on motion, dismissed the case against Dr. Villaruel pursuant to Section 21, Rule 3 of the Rules of Court. 1 On plaintiff's motion for summary judgment, the trial court rendered its decision dated September 12, 1973, the dispositive portion of which reads as follows: "WHEREFORE, judgment is rendered: "(a) Ordering Sambok Motors Company to pay to the plaintiff the sum of P15,939.00 plus the legal rate of interest from October 30, 1969; "(b) Ordering same defendant to pay to plaintiff the sum equivalent to 25% of P15,939.00 plus interest thereon until fully paid; and cdrep "(c) To pay the cost of suit." Not satisfied with the decision, the present appeal was instituted, appellant Sambok raising a lone assignment of error as follows: "The trial court erred in not dismissing the complaint by finding defendant-appellant Sambok Motors Company as assignor and a qualified indorsee of the subject promissory note and in not holding it as only secondarily liable thereof." Appellant Sambok argues that by adding the words "with recourse" in the indorsement of the note, it becomes a qualified indorser; that being a qualified indorser, it does not warrant that if P a g e | 2
said note is dishonored by the maker on presentment, it will pay the amount to the holder; that it only warrants the following pursuant to Section 65 of the Negotiable Instruments Law: (a) that the instrument is genuine and in all respects what it purports to be; (b) that he has a good title to it; (c) that all prior parties had capacity to contract; (d) that he has no knowledge of any fact which would impair the validity of the instrument or render it valueless. The appeal is without merit. A qualified indorsement constitutes the indorser a mere assignor of the title to the instrument. It may be made by adding to the indorser's signature the words "without recourse" or any words of similar import. 2 Such an indorsement relieves the indorser of the general obligation to pay if the instrument is dishonored but not of the liability arising from warranties on the instrument as provided in Section 65 of the Negotiable Instruments Law already mentioned herein. However, appellant Sambok indorsed the note "with recourse" and even waived the notice of demand, dishonor, protest and presentment. "Recourse" means resort to a person who is secondarily liable after the default of the person who is primarily liable. 3 Appellant, by indorsing the note "with recourse" does not make itself a qualified indorser but a general indorser who is secondarily liable, because by such indorsement, it agreed that if Dr. Villaruel fails to pay the note, plaintiff-appellee can go after said appellant. The effect of such indorsement is that the note was indorsed without qualification. A person who indorses without qualification engages that on due presentment, the note shall be accepted or paid, or both as the case may be, and that if it be dishonored, he will pay the amount thereof to the holder. 4 AppellantSambok's intention of indorsing the note without qualification is made even more apparent by the fact that the notice of demand, dishonor, protest and presentment were all waived. The words added by said appellant do not limit his liability, but rather confirm his obligation as a general indorser. Lastly, the lower court did not err in not declaring appellant as only secondarily liable because after an instrument is dishonored by non-payment, the person secondarily liable thereon ceases to be such and becomes a principal debtor. 5 His liability becomes the same as that of the original obligor. 6 Consequently, the holder need not even proceed against the maker before suing the indorser. LLphil WHEREFORE, the decision of the lower court is hereby affirmed. No costs. SO ORDERED. Makasiar, Concepcion, Jr., Guerrero and Escolin, JJ., concur. ||| (Metropol Financing & Investment Corp. v. Sambok Motors Co., Ltd., G.R. No. L-39641, February 28, 1983)
[G.R. No. 130756. January 21, 1999.] ESTER B. MARALIT, petitioner, vs. JESUSA CORAZON L. IMPERIAL, respondent. SYNOPSIS Petitioner Ester B. Maralit filed three complaints for estafa through falsification of commercial documents through reckless imprudence against respondent Jesusa Corazon L.Imperial. Maralit alleged that she was the assistant manager of the Naga City Branch of the Philippine National Bank (PNB), that respondent deposited in her savings account at the PNB three United States Treasury Warrants and withdrew their peso equivalent, and that the treasury warrants were subsequently returned one after the other by the United States Treasury on the ground that the amounts were altered. As a consequence thereof, Maralit was held personally liable by the PNB for the amount of the treasury warrants totaling P320,287.30. After trial, the Municipal Trial Court of Naga City (MTC) rendered judgment finding no ground to hold the accused criminally liable for which she was charged, hence, Corazon Imperial is ACQUITTED of all the charges against her. The accused, however was held civilly liable as indorser of the checks which are the subject matter of the criminal action. The decision having become final and executory, the MTC ordered the enforcement of the civil liability arising from the criminal action. Respondent moved to quash the writ of execution issued by the MTC on the ground that the judgment did not order the accused to pay a specific amount of money to a particular person as it merely adjudicated the criminal aspect but not the civil aspect, hence, there was no judgment which can be the subject of execution. The motion was denied by the MTC for lack of merit. Respondent filed a petition for certiorari and prohibition in the Regional Trial Court of Naga City (RTC), contending that the writ of execution issued by the MTC was at variance with the judgment in the criminal cases. The RTC held that the decision of the MTC did not really find respondent liable for P320,286.46 because in fact it was petitioner who was found responsible for making the defraudation possible. Petitioner moved for reconsideration but was denied. In this petition, petitioner contends that the phrase "civilly liable" in the judgment part of the MTC's decision also connotes an order to pay on respondent's part. HCEcaT The Supreme Court reversed the decision of the Regional Trial Court of Naga City. The Court ruled that to affirm the RTC's decision would be to hold that respondent was absolved from both criminal and civil liability by the MTC. Such reading of the MTC decision will not, however, bear analysis. For one, the dispositive portion of the decision of the MTC expressly declares respondent to be "civilly liable" as indorser of the checks which is the subject matter of the criminal action. To find therefore that there is no declaration of civil liability of respondent would be to disregard the judgment of the MTC. Worse, it would be to amend a final and executory decision of a court. The ambiguity of the MTC's decision can easily be clarified by a resort to the text of the decision or, what is properly called, the opinion part. By P a g e | 3
doing so, it is clear that it can only be to petitioner that respondent was made liable as the former was the offended party in the case. SYLLABUS REMEDIAL LAW; CRIMINAL PROCEDURE; JUDGMENT; ANY AMBIGUITY IN A DECISION CAN EASILY BE CLARIFIED BY A RESORT TO THE TEXT OF THE DECISION OR, WHAT IS PROPERLY CALLED, THE OPINION PART. In this case, to affirm the RTC's decision would be to hold that respondent was absolved from both criminal and civil liability by the MTC. Such reading of the MTC decision will not, however, bear analysis. For one, the dispositive portion of the decision of the MTC expressly declares respondent to be "civilly liable as indorser of the checks which is [sic] the subject matter of the criminal action." To find therefore that there is no declaration of civil liability of respondent would be to disregard the judgment of the MTC. Worse, it would be to amend a final and executory decision of a court. It is argued that the decision of the MTC did not order respondent, as accused in the case, to pay a specific amount of money to any particular person such that it could not be an adjudication of respondent's civil liability. However, the ambiguity can easily be clarified by a resort to the text of the decision or, what is properly called, the opinion part. Doing so, it is clear that it can only be to petitioner that respondent was made liable as the former was the offended party in the case. As for what amount respondent is liable, it can only be for the total amount of the treasury warrants subject of the case, determined according to their peso equivalent, in the decision of the MTC. For another, that respondent should pay petitioner the amounts of the altered treasury warrants is the logical consequence of the MTC's holding that private respondent is civilly liable for the treasury warrants subject of the case. D E C I S I O N MENDOZA, J p: This is a petition for review on certiorari of the decision, dated August 26, 1997, and the resolution, dated September 29, 1997, of the Regional Trial Court of Naga City (Branch 21) in Special Civil Case No. RTC '97-3744. cdphil The facts are as follows: Petitioner Ester B. Maralit filed three complaints for estafa through falsification of commercial documents through reckless imprudence against respondent Jesusa Corazon L.Imperial. 1 Maralit alleged that she was assistant manager of the Naga City branch of the Philippine National Bank (PNB); that on May 20, 1992, June 1, 1992, and July 1, 1992 respondent Imperial separately deposited in her savings account at the PNB three United States treasury warrants bearing USTW Nos. 2034-91254963, 2034-91180047, and 2034-33330760 and on the same days withdrew their peso equivalent of P59,216.86, P130,743.60, and P130,326.00, respectively; and that the treasury warrants were subsequently returned one after the other by the United States Treasury, through the Makati branch of the Citibank, on the ground that the amounts thereof had been altered. Maralit claimed that, as a consequence, she was held personally liable by the PNB for the total amount of P320,287.30. In her counter-affidavit, respondent claimed that she merely helped a relative, Aida Abengoza, encash the treasury warrants; that she deposited the treasury warrants in her savings account and then withdrew their peso equivalent with the approval of petitioner; that she gave the money to Aida Abengoza; that she did not know that the amounts on the treasury warrants had been altered nor did she represent to petitioner that the treasury warrants were genuine; and that upon being informed of the dishonor of the warrants she immediately contacted Aida Abengoza and signed an acknowledgment of debt promising to pay the total amount of the treasury warrants. After preliminary investigation, the City Prosecutor of Naga City filed three informations against respondent in the Municipal Trial Court of Naga City (Branch 3). On September 26, 1996, judgment was rendered as follows: WHEREFORE, in view of the foregoing considerations, the Court finds no ground to hold the accused criminally liable for which she is charged, hence Corazon Jesusa L. Imperial is ACQUITTED of all the charges against her. The accused however is civilly liable as indorser of the checks which is (sic) the subject matter of the criminal action. 2 The decision having become final and executory, the MTC, on November 11, 1996, ordered the enforcement of the civil liability against the accused arising from the criminal action. 3 The writ of execution, dated December 9, 1996, directed the sheriff as follows: 4 NOW, THEREFORE, you are hereby commanded to cause the execution of the aforesaid judgment in the amount of THREE HUNDRED TWENTY THOUSAND TWO HUNDRED EIGHTY SIX & 46/100 (P320,286.46) ONLY, equivalent to the amount of the 3 three US$ checks amounting to $12,621.13, and to levy the goods and chattels of the defendant/s, except those which are exempt from execution and to make the sale thereat in accordance with the procedure outlined by Rule 39, Revised Rules of Court and such cases made and provided, together with all your lawful fees for the services of this writ. Accordingly, the sheriff served a notice of garnishment on the PNB. Respondent at first moved to declare her savings account exempt from execution on the ground that the same represented her salary as an employee of the Commission on Audit, which was not even sufficient for her expenses and that of her family. Later, she moved to quash the writ of execution on the ground "that the judgment did not order the accused to pay [a] specific amount of money to a particular person as it merely adjudicated the criminal aspect but not the civil aspect hence there was no judgment rendered which can be the subject of execution." Both motions of respondent were denied by the MTC for lack of merit in its order, dated February 24, 1997. 5 Accordingly, an alias writ of execution was issued. On April 14, 1997, respondent filed a petition for certiorari and prohibition in the Regional Trial Court of Naga City, contending that the writ of execution issued by the MTC was at variance with the judgment in the criminal cases. P a g e | 4
The RTC issued a writ of preliminary injunction enjoining enforcement of the writ of execution issued by the MTC. On August 26, 1997, it rendered a decision, which, among other things, made permanent the injunction. The RTC held that the decision of the MTC did not really find respondent liable for P320,286.46 because in fact it was petitioner who was found responsible for making the defraudation possible. prcd Petitioner moved for reconsideration alleging that respondent filed her petition for certiorari and prohibition more than three months after the MTC had ordered execution of its decision on November 11, 1996. However, her motion was denied on September 28, 1997. 6 The RTC held that the three-month period should be counted from April 1, 1997, when the alias writ of execution was issued, or from April 7, 1997, when the MTC denied private respondent's motion for reconsideration of the order denying her motion to quash the writ of execution. The RTC likewise found the second ground of petitioner's motion for reconsideration, i.e., that its decision was contrary to law and jurisprudence, devoid of merit. Hence, this petition. Petitioner raises the following issues: 7 1. Whether respondent's Petition for Certiorari and Prohibition under Rule 65 of the Rules of Court was filed out of time; 2. Whether this case warrants the relaxation of the rule that "Certiorari is not a substitute for a lost or lapsed appeal." 3. Whether or not the MTC committed grave abuse of discretion amounting to lack or excess of jurisdiction, when it issued the Order of Execution, Writ of Execution and Alias Writ of Execution to implement its final and executory civil judgment in Criminal Cases No. 68697, 68698 and 68699, which reads: ". . . The accused however is civilly liable as indorser of the checks subject matter of the criminal action." 4. Whether or not the MTC merely adjudicated the criminal aspect but not the civil aspect of Criminal Cases 68697, 68698 and 68699. 5. Whether there was substantial variance as between the dispositive portion of the civil judgment and the writ of execution issued thereunder. 6. Whether or not a court exercising certiorari jurisdiction has the authority to modify or alter the final and executory decision of the lower court even by way of an obiter dictum. Petitioner contends that the phrase "civilly liable" in the judgment part of the MTC's decision also connotes an order to pay on respondent's part. It may fairly be assumed that the decision of the MTC was an adjudication of both the criminal and civil liability of respondent inasmuch as it does not appear that petitioner instituted a separate civil action or reserved or waived the right to bring such action. The question is whether the decision of the MTC finds respondent civilly liable and, in the affirmative, for how much. As already stated, the RTC held that the MTC did not really find respondent liable. In reaching that conclusion, the RTC said: A mere reading of the dispositive portion of the judgment and the writ of execution will readily show that there is variance between the two. Whereas, the judgment pronounced [respondent herein] to be "civilly liable as indorser of the checks which is the subject matter of the criminal action," the writ of execution commanded the Sheriff "to cause the execution of the aforesaid judgment in the amount of THREE HUNDRED TWENTY THOUSAND TWO HUNDRED EIGHTY SIX & 46/100 (P320,286.46) ONLY, equivalent to the amount of the 3 three US$ checks amounting to $12,621.13, . . . ." In the judgment, nothing is mentioned about the amount for which [respondent herein] is liable as indorser, but in the writ of execution, the civil liability of the [respondent herein] has already been fixed at P320,286.46. The variance, therefor, between the judgment and the writ of execution is substantial because it consists of the addition of the amount of the civil liability of the [respondent herein]. xxx xxx xxx . . . The [MTC's] findings of facts and conclusions of law as expressed in the body of the decision do not support the dispositive portion of the judgment that [respondent herein] is civilly liable. On the contrary a reading of the body of the judgment in question will show that [respondent] is not civilly liable. For three (3) times, the Court stated in the body of its decision that it is [petitioner] Maralit herself who should be faulted and be held responsible for the payment of the dishonored US Dollar checks. Hereunder quoted are portions of the body of the decision in question showing that [respondent] herein should not be held civilly liable and that it was [petitioner]Maralit who should be blamed and be held responsible: . . . The Court however is quite intrigue[d] on why the accused was allowed to encash the peso equivalent despite the fact that the check was deposited for collection and clearing. It is the established procedure of banks that out of town checks and US Treasury Warrants should first be cleared before the same is to be paid. More so if the holder is a second indorser. The private complainant in this regard explained that [as assistant branch manager] she has the discretion and that there is no hold order appearing in the savings account of the accused. She likewise explained that she trusted the accused whom she knew is working in the same building and a depositor. In short she took the risk of approving the withdrawal of the peso equivalent, without the check being cleared and if the same is dishonored she should be responsible. (page 5, judgment). The information accuses the accused for disregarding the banking laws and procedure of the PNB. This is a generous statement. In the first place the accused is not an employee of the bank. She has no control nor supervision over its employees. If there is anyone who has disregarded banking laws, it is the private complainant for approving withdrawals before the check were cleared. Mrs. Maralit is more knowledgeable of the banking procedures of the bank of which she is the assistant manager. She knows the risk of approving encashment before clearing. She took the risk therefore she should be responsible for the outcome of the risk she has taken. (page 6, Judgment). The Court is of the opinion that there was negligence on both the complainant and the accused but greater responsibility should be borne by the private complainant. The accused could not have encashed and deposited the checks without her approval. If the P a g e | 5
complainant was not remiss in her duty in imposing the banking rules strictly, then these things could not have happened. (page 7, Judgment). 8 This portion of the decision of the MTC actually refers to respondent's criminal liability and not her civil liability. More specifically, the portion in question refers to the allegations in the three informations that respondent committed falsification of commercial documents through reckless imprudence by "1) taking advantage of [her] position as state auditor of the Commission on Audit assigned at the PNB, Naga Branch, 2) disregard[ing] existing procedure, banking laws, policies, and circulars of the PNB, 3) . . . not tak[ing] the necessary precaution to determine the genuineness of the Treasury Warrants and the alteration of the amount[s] therein deposited and [in] encash[ing] the checks, and 4) . . . [her] negligence, carelessness, and imprudence [which] caused damage and loss to [petitioner]." 9 Nevertheless, the MTC held that respondent was civilly liable as the penultimate paragraph of its decision makes clear: The Court sympathizes with the complainant that there was indeed damage and loss, but said loss is chargeable to the accused who upon her indorsements warrant that the instrument is genuine in all respect what it purports to be and that she will pay the amount thereof in case of dishonor. (Sec. 66, Negotiable Instrument Law)10 Thus, while the MTC found petitioner partly responsible for the encashment of the altered checks, it found respondent civilly liable because of her indorsements of the treasury warrants, in addition to the fact that respondent executed a notarized acknowledgment of debt promising to pay the total amount of said warrants. llcd In this case, to affirm the RTC's decision would be to hold that respondent was absolved from both criminal and civil liability by the MTC. Such reading of the MTC decision will not, however, bear analysis. For one, the dispositive portion of the decision of the MTC expressly declares respondent to be "civilly liable as indorser of the checks which is [sic] the subject matter of the criminal action." To find therefore that there is no declaration of civil liability of respondent would be to disregard the judgment of the MTC. Worse, it would be to amend a final and executory decision of a court. It is argued that the decision of the MTC did not order respondent, as accused in the case, to pay a specific amount of money to any particular person such that it could not be an adjudication of respondent's civil liability. However, the ambiguity can easily be clarified by a resort to the text of the decision or, what is properly called, the opinion part. Doing so, it is clear that it can only be to petitioner that respondent was made liable as the former was the offended party in the case. As for what amount respondent is liable, it can only be for the total amount of the treasury warrants subject of the case, determined according to their peso equivalent, in the decision of the MTC. For another, that respondent should pay petitioner the amounts of the altered treasury warrants is the logical consequence of the MTC's holding that private respondent is civilly liable for the treasury warrants subject of the case. 11 WHEREFORE, the decision of the Regional Trial Court of Naga City (Branch 21) is REVERSED. cdlex SO ORDERED. ||| (Maralit v. Imperial, G.R. No. 130756, January 21, 1999)
[G.R. No. 128927. September 14, 1999.] REMEDIOS NOTA SAPIERA, petitioner, vs. COURT OF APPEALS and RAMON SUA, respondents. SYNOPSIS On several occasions, petitioner Remedios Nota Sapiera, a sari- sari store owner, purchased from Monrico Mart certain grocery items and paid for them with checks issued by one Arturo de Guzman. These checks were signed at the back by petitioner. When presented for payment the checks were dishonored because the drawer's account was already closed. Private respondent Ramon Sua informed Arturo de Guzman and petitioner about the dishonor but both failed to pay the value of the checks. Consequently, four charges of estafa were filed against petitioner with the Regional Trial Court of Dagupan City. After trial, the court a quo acquitted petitioner of all the charges of estafa but did not rule on whether she could be held civilly liable for the checks she indorsed to private respondent. In a petition for mandamus filed by private respondent, the Court of Appeals rendered a decision holding petitioner liable for the value of the checks. SEcAIC Hence, this petition for review. The Court ruled that the dismissal of the criminal cases against petitioner did not erase her civil liability since the dismissal was due to insufficiency of evidence and not from a declaration from the court that the fact from which the civil action might arise did not exist. An accused acquitted of estafa may nevertheless be held civilly liable where the facts established by the evidence so warrant. The accused should be adjudged liable for the unpaid value of the checks signed by her in favor of the complainant. SYLLABUS 1. REMEDIAL LAW; CRIMINAL PROCEDURE; CIVIL LIABILITY NOT EXTINGUISHED BY ACQUITTAL OF ACCUSED. Section 2, par. (b), of Rule 111 of the Rules of Court, as amended, specifically provides: "Extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil might arise did not exist. The judgment of acquittal extinguishes the liability of the accused for damages only when it includes a declaration that the fact from which the civil liability might arise did not exist. Thus, the civil liability is not extinguished by acquittal where: (a) the acquittal is based on reasonable doubt; (b) where the court expressly declares that the liability of the accused is not criminal but only civil in nature; and, (c) where the civil liability is not derived from or based on the criminal act of which the accused is acquitted. TIcEDC 2. ID.; ID.; ID.; CASE AT BAR. The dismissal of the criminal cases against petitioner did not erase her civil liability since the P a g e | 6
dismissal was due to insufficiency of evidence and not from a declaration from the court that the fact from which the civil action might arise did not exist. An accused acquitted of estafa may nevertheless be held civilly liable where the facts established by the evidence so warrant. The accused should be adjudged liable for. the unpaid value of the checks signed by her in favor of the complainant. 3. ID.; ID.; ID.; RATIONALE. The rationale behind the award of civil indemnity despite a judgment of acquittal when evidence is sufficient to sustain the award was explained by the Code Commission in connection with Art. 29 of the Civil Code, to wit: The old rule that the acquittal of the accused in a criminal case also releases him from civil liability is one of the most serious flaws in the Philippine legal system. It has given rise to numberless instances of miscarriage of justice, where the acquittal was due to a reasonable doubt in the mind of the court as to the guilt of the accused. The reasoning followed is that inasmuch as the civil responsibility is derived from the criminal offense, when the latter is not proved, civil liability cannot be demanded. This is one of those cases where confused thinking leads to unfortunate and deplorable consequences. Such reasoning fails to draw a clear line of demarcation between criminal liability and civil responsibility, and to determine the logical result of the distinction. The two liabilities are separate and distinct from each other. One affects the social order and the other private rights. One is for punishment or correction of the offender while the other is for reparation of damages suffered by the aggrieved party . . . It is just and proper that for the purposes of imprisonment of or fine upon the accused, the offense should be proved beyond reasonable doubt. But for the purpose of indemnifying the complaining party, why should the offense also be proved beyond reasonable doubt? Is not the invasion or violation of every private right to be proved only by preponderance of evidence? Is the right of the aggrieved person any less private because the wrongful act is also punishable by the criminal law. 4. MERCANTILE LAW; NEGOTIABLE INSTRUMENTS; PERSON DEEMED AN INDORSER WHEN SHE SIGNED BACK OF CHECK WITHOUT INDICATION AS TO HOW SHE SHOULD BE BOUND THEREBY. It is undisputed that the four (4) checks issued by de Guzman were signed by petitioner at the back without any indication as to how she should be bound thereby and, therefore, she is deemed to be an indorser thereof. TcSHaD D E C I S I O N BELLOSILLO, J p: REMEDIOS NOTA SAPIERA appeals to us through this petition for review the Decision of the Court of Appeals 1 which acquitted her of the crime of estafa but held her liable nonetheless for the value of the checks she indorsed in favor of private respondent Ramon Sua. cdrep On several occasions petitioner Remedios Nota Sapiera, a sari- sari store owner, purchased from Monrico Mart certain grocery items, mostly cigarettes, and paid for them with checks issued by one Arturo de Guzman: (a) PCIB Check No. 157059 dated 26 February 1987 for P140,000.00; (b) PCIB Check No. 157073 dated 26 February 1987 for P28,000.00; (c) PCIB Check No. 157057 dated 27 February 1987 for P42,150.00; and, d) Metrobank Check No. DAG 045104758 PA dated 2 March 1987 for P125,000.00. These checks were signed at the back by petitioner. When presented for payment the checks were dishonored because the drawer's account was already closed. Private respondent Ramon Sua informed Arturo de Guzman and petitioner about the dishonor but both failed to pay the value of the checks. Hence, four (4) charges of estafa were filed against petitioner with the Regional Trial Court of Dagupan City, docketed as Crim. Cases Nos. D-8728, D-8729, D-8730 and D- 8731. Arturo de Guzman was charged with two (2) counts of violation of B.P. Blg. 22, docketed as Crim. Cases Nos. D-8733 and D-8734. These cases against petitioner and de Guzman were consolidated and tried jointly. On 27 December 1989 the court a quo 2 acquitted petitioner of all the charges of estafa but did not rule on whether she could be held civilly liable for the checks she indorsed to private respondent. The trial court found Arturo de Guzman guilty of Violation of B.P. Blg. 22 on two (2) counts and sentenced him to suffer imprisonment of six (6) months and one (1) day in each of the cases, and to pay private respondent P167,150.00 as civil indemnity. Private respondent filed a notice of appeal with the trial court with regard to the civil aspect but the court refused to give due course to the appeal on the ground that the acquittal of petitioner was absolute. Private respondent then filed a petition for mandamus with the Court of Appeals, docketed as CA-GR SP No. 24626, praying that the courta quo be ordered to give due course to the appeal on the civil aspect of the decision. The Court of Appeals granted the petition and ruled that private respondent could appeal with respect to the civil aspect the judgment of acquittal by the trial court. prcd On 22 January 1996, the Court of Appeals in CA-GR CV No. 36376 rendered the assailed Decision insofar as it sustained the appeal of private respondent on the civil aspect and ordering petitioner to pay private respondent P335,000.00 representing the aggregate face value of the four (4) checks indorsed by petitioner plus legal interest from the notice of dishonor. Petitioner filed a motion for reconsideration of the Decision. On 19 March 1997 the Court of Appeals issued a Resolution noting the admission of both parties that private respondent had already collected the amount of P125,000.00 from Arturo de Guzman with regard to his civil liability in Crim. Cases Nos. 8733 and 8734. The appellate court noted that private respondent was the same offended party in the criminal cases against petitioner and against de Guzman. Criminal Cases Nos. 8733 and 8734 against De Guzman, and Crim. Cases Nos. 8730 and 8729 against petitioner, involved the same checks, to wit: PCIB Checks Nos. 157057 for P42,150.00 and Metrobank Check No. DAG- 045104758 PA for P125,000.00. Thus, the Court of Appeals ruled that private respondent could not recover twice on the same checks. Since he had collected P125,000.00 as civil indemnity in Crim. Cases Nos. 8733 and 8734, this amount should be deducted from the sum total of the civil indemnity due him arising from the estafa cases against petitioner. The appellate court then corrected its previous award, which was erroneously placed at P335,000.00, to P335,150.00 as the sum total of the amounts of the four (4) checks involved. Deducting the amount of P125,000.00 already collected by P a g e | 7
private respondent, petitioner was adjudged to pay P210,150.00 as civil liability to private respondent. Hence, this petition alleging that respondent Court of Appeals erred in holding petitioner civilly liable to private respondent because her acquittal by the trial court from charges of estafa in Crim. Cases Nos. D- 8728, D-8729, D-8730 and D-8731 was absolute, the trial court having declared in its decision that the fact from which the civil liability might have arisen did not exist. We cannot sustain petitioner. The issue is whether respondent Court of Appeals committed reversible error in requiring petitioner to pay civil indemnity to private respondent after the trial court had acquitted her of the criminal charges. Section 2, par. (b), of Rule 111 of the Rules of Court, as amended, specifically provides: "Extinction of the penal action does not carry with it extinction of the civil, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil might arise did not exist. The judgment of acquittal extinguishes the liability of the accused for damages only when it includes a declaration that the fact from which the civil liability might arise did not exist. Thus, the civil liability is not extinguished by acquittal where: (a) the acquittal is based on reasonable doubt; (b) where the court expressly declares that the liability of the accused is not criminal but only civil in nature; and, (c) where the civil liability is not derived from or based on the criminal act of which the accused is acquitted. 3 Thus, underArt. 29 of the Civil Code When the accused in a criminal prosecution is acquitted on the ground that his guilt has not been proved beyond reasonable doubt, a civil action for damages for the same act or omission may be instituted. Such action requires only a preponderance of evidence. Upon motion of the defendant, the court may require the plaintiff to file a bond to answer for damages in case the complaint should be found to be malicious. dctai In a criminal case where the judgment of acquittal is based upon reasonable doubt, the court shall so declare. In the absence of any declaration to that effect, it may be inferred from the text of the decision whether or not acquittal is due to that ground. An examination of the decision in the criminal cases reveals these findings of the trial court Evidence for the prosecution tends to show that on various occasions, Remedios Nota Sapiera purchased from Monrico Mart grocery items (mostly cigarettes) which purchases were paid with checks issued by Arturo de Guzman; that those purchases and payments with checks were as follows: (a) Sales Invoice No. 20104 dated February 26, 1987 in the amount of P28,000.00; that said items purchased were paid with PCIBank Check No. 157073 dated February 26, 1987; (b) Sales Invoice No. 20108 dated February 26, 1987 in the amount of P140,000.00; that said items purchased were paid with PCIBank No. 157059 dated February 26, 1987; (c) Sales Invoice No. 20120 dated February 27, 1987 in the amount of P42,150.00; that said items were paid with PCIBank Check No. 157057 dated February 27, 1987; (d) Sales Invoice No. 20148 and 20149 both dated March 2, 1987 in the amount of P120,103.75; said items were paid with Metrobank Check No. 045104758 dated March 2, 1987 in the amount of P125,000.00. That all these checks were deposited with the Consolidated Bank and Trust Company, Dagupan Branch, for collection from the drawee bank; That when presented for payment by the collecting bank to the drawee bank, said checks were dishonored due to account closed, as evidenced by check return slips; . . . . From the evidence, the Court finds that accused Remedios Nota Sapiera is the owner of a sari-sari store inside the public market; that she sells can(ned) goods, candies and assorted grocery items; that she knows accused Arturo De Guzman, a customer since February 1987; that de Guzman purchases from her grocery items including cigarettes; that she knows Ramon Sua; that she has business dealings with him for 5 years; that her purchase orders were in clean sheets of paper; that she never pays in check; that Ramon Sua asked her to sign subject checks as identification of the signature of Arturo de Guzman; that she pays in cash; sometimes delayed by several days; that she signed the four (4) checks on the reverse side; that she did not know the subject invoices; that de Guzman made the purchases and he issued the checks; that the goods were delivered to de Guzman; that she was not informed of dishonored checks; and that counsel for Ramon Sua informed de Guzman and told him to pay . . . . LLjur In the case of accused Remedios Nota Sapiera, the prosecution failed to prove conspiracy. Based on the above findings of the trial court, the exoneration of petitioner of the charges of estafa was based on the failure of the prosecution to present sufficient evidence showing conspiracy between her and the other accused Arturo de Guzman in defrauding private respondent. However, by her own testimony, petitioner admitted having signed the four (4) checks in question on the reverse side. The evidence of the prosecution shows that petitioner purchased goods from the grocery store of private respondent as shown by the sales invoices issued by private respondent; that these purchases were paid with the four (4) subject checks issued by de Guzman; that petitioner signed the same checks on the reverse side; and when presented for payment, the checks were dishonored by the drawee bank due to the closure of the drawer's account; and, petitioner was informed of the dishonor. We affirm the findings of the Court of Appeals that despite the conflicting versions of the parties, it is undisputed that the four (4) checks issued by de Guzman were signed by petitioner at the back without any indication as to how she should be bound thereby and, therefore, she is deemed to be an indorser thereof. The Negotiable Instruments Law clearly provides SECTION 17. Construction where instrument is ambiguous. Where the language of the instrument is ambiguous, or there are admissions therein, the following rules of construction apply: . . . . (f) Where a signature is so placed upon the instrument that it is not clear in what capacity the person making the same intended to sign, he is deemed an indorser. . . P a g e | 8
SECTION 63. When person deemed indorser. A person placing his signature upon an instrument otherwise than as maker, drawer or acceptor, is deemed to be an indorser unless he clearly indicates by appropriate words his intention to be bound in some other capacity. SECTION 66. Liability of general indorser. Every indorser who indorses without qualification, warrants to all subsequent holders in due course: (a) The matters and things mentioned in subdivisions (a), (b) and (c) of the next preceding section; and (b) That the instrument is, at the time of the indorsement, valid and subsisting; And, in addition, he engages that, on due presentment, it shall be accepted or paid or both, as the case may be, according to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder or to any subsequent indorser who may be compelled to pay it. cdtai The dismissal of the criminal cases against petitioner did not erase her civil liability since the dismissal was due to insufficiency of evidence and not from a declaration from the court that the fact from which the civil action might arise did not exist. 4 An accused acquitted of estafa may nevertheless be held civilly liable where the facts established by the evidence so warrant. The accused should be adjudged liable for the unpaid value of the checks signed by her in favor of the complainant. 5 The rationale behind the award of civil indemnity despite a judgment of acquittal when evidence is sufficient to sustain the award was explained by the Code Commission in connection with Art. 29 of the Civil Code, to wit: The old rule that the acquittal of the accused in a criminal case also releases him from civil liability is one of the most serious flaws in the Philippine legal system. It has given rise to numberless instances of miscarriage of justice, where the acquittal was due to a reasonable doubt in the mind of the court as to the guilt of the accused. The reasoning followed is that inasmuch as the civil responsibility is derived from the criminal offense, when the latter is not proved, civil liability cannot be demanded. This is one of those cases where confused thinking leads to unfortunate and deplorable consequences. Such reasoning fails to draw a clear line of demarcation between criminal liability and civil responsibility, and to determine the logical result of the distinction. The two liabilities are separate and distinct from each other. One affects the social order and the other private rights. One is for punishment or correction of the offender while the other is for reparation of damages suffered by the aggrieved party . . . . It is just and proper that for the purposes of imprisonment of or fine upon the accused, the offense should be proved beyond reasonable doubt. But for the purpose of indemnifying the complaining party, why should the offense also be proved beyond reasonable doubt? Is not the invasion or violation of every private right to be proved only by preponderance of evidence? Is the right of the aggrieved person any less private because the wrongful act is also punishable by the criminal law? 6 Finally, with regard to the computation of the civil liability of petitioner, the finding of the Court of Appeals that petitioner is civilly liable for the aggregate value of the unpaid four (4) checks subject of the criminal cases in the sum of P335,150.00, less the amount of P125,000.00 already collected by private respondent pending appeal, resulting in the amount of P210,150.00 still due private respondent, is a factual matter which is binding and conclusive upon this Court. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated 22 January 1996 as amended by its Resolution dated 19 March 1997 ordering petitioner Remedios Nota Sapiera to pay private respondent Ramon Sua the remaining amount of P210,150.00 as civil liability, is AFFIRMED. Costs against petitioners. SO ORDERED. Cdpr Mendoza, Quisumbing and Buena, JJ., concur. ||| (Sapiera v. Court of Appeals, G.R. No. 128927, September 14, 1999)
[G.R. No. 112392. February 29, 2000.] BANK OF THE PHILIPPINE ISLANDS, petitioner, vs. COURT OF APPEALS and BENJAMIN C. NAPIZA, respondents. SYNOPSIS By way of accommodation and only for the purpose of clearing, Benjamin Napiza (private respondent herein), deposited a check in the amount of $2,500.00 in his dollar deposit with the petitioner Bank of the Philippine Islands. This check belongs to Henry Chan. Napiza delivered to Chan a signed blank withdrawal slip, with the understanding that as soon as the check is cleared, both of them would go to the bank to withdraw the amount of the check upon private respondent's presentation to the bank of his passbook. However, using the same blank withdrawal slip, a bank employee was able to withdraw the amount of $2,541.67, which was made payable to Ramon A. de Guzman and Agnes C. de Guzman. Later, the bank received a communication that the deposited check was a counterfeit. The bank informed respondent Napiza that the check bounced, hence, the latter tried to locate P a g e | 9
Chan. Since Napiza was unable to locate Chan, the bank demanded payment from him. Napiza refused to pay on the ground that the check was deposited for clearing purposes only to accommodate Chan. As a result, petitioner bank filed a complaint against private respondent for the return of the amount of $2,500.00 or the prevailing peso equivalent plus interest, attorney's fees, and litigation costs. The lower court dismissed the complaint. The lower court held that having committed a mistake of not waiting for the clearance of the check before authorizing the withdrawal of its value, petitioner should suffer the resultant loss. The Court of Appeals affirmed the lower court's decision and stressed that the mere deposit of the check did not mean that it was already the property of the depositor. The check had to be cleared and its proceeds can only be withdrawn upon presentation of a passbook in accordance with the bank's rules and regulations. Hence, this petition. SCaITA The Supreme Court denied the petition. The Court of Appeals correctly held that in depositing the check in his name, private respondent did not become the outright owner of the amount stated therein. Under petitioner bank's own rule, by depositing the check, private respondent was merely designating petitioner as the collecting bank. This is in consonance with the rule that a negotiable instrument, such as a check, is not a legal tender. SYLLABUS 1. COMMERCIAL LAW; NEGOTIABLE INSTRUMENTS LAW; WARRANTIES OF A PERSON NEGOTIATING AN INSTRUMENT; APPLICATION IN CASE AT BAR. Section 65, on the other hand, provides for the following warranties of a person negotiating an instrument by delivery or by qualified indorsement: (a) that the instrument is genuine and in all respects what it purports to be; (b) that he has a good title to it; and (c) that all prior parties had capacity to contract. In People vs. Maniego, this Court described the liabilities of an indorser as follows: "Appellant's contention that as mere indorser, she may not be liable on account of the dishonor of the checks indorsed by her, is likewise untenable. Under the law, the holder or last indorsee of a negotiable instrument has the right 'to enforce payment of the instrument for the full amount thereof against all parties liable thereon.' Among the 'parties liable thereon' is an indorser of the instrument, i.e., 'a person placing his signature upon an instrument otherwise than as a maker, drawer or acceptor ** unless he clearly indicated by appropriate words his intention to be bound in some other capacity.' Such an indorser 'who indorses without qualification,' inter alia'engages that on due presentment, ** (the instrument) shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it be dishonored, and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or any subsequent indorser who may be compelled to pay it.' Maniego may also be deemed an 'accommodation party' in the light of the facts, i.e., a person 'who has signed the instrument as maker, drawer, acceptor, or indorser, without receiving value therefor, and for the purpose of lending his name to some other person.' As such, she is under the law 'liable on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew ** (her) to be only an accommodation party,' although she has the right, after paying the holder, to obtain reimbursement from the party accommodated, 'since the relation between them is in effect that of principal and surety, the accommodation party being the surety.'" It is thus clear that ordinarily private respondent may be held liable as an indorser of the check or even as an accommodation party. However, to hold private respondent liable for the amount of the check he deposited by the strict application of the law and without considering the attending circumstances in the case would result in an injustice and in the erosion of the public trust in the banking system. The interest of justice thus demands looking into the events that led to the encashment of the check. 2. ID.; ID.; CHECK DEPOSIT; COLLECTING BANK OR LAST ENDORSER SUFFERS THE LOSS, AS A GENERAL RULE; RATIONALE; CASE AT BAR. As correctly held by the Court of Appeals, in depositing the check in his name, private respondent did not become the outright owner of the amount stated therein. Under the above rule, by depositing the check with petitioner, private respondent was, in a way, merely designating petitioner as the collecting bank. This is in consonance with the rule that a negotiable instrument, such as a check, whether a manager's check or ordinary check, is not legal tender. As such, after receiving the deposit, under its own rules, petitioner shall credit the amount in private respondent's account or infuse value thereon only after the drawee bank shall have paid the amount of the check or the check has been cleared for deposit. Again, this is in accordance with ordinary banking practices and with this Court's pronouncement that "the collecting bank or last endorser generally suffers the loss because it has the duty to ascertain the genuineness of all prior endorsements considering that the act of presenting the check for payment to the drawee is an assertion that the party making the presentment has done its duty to ascertain the genuineness of the endorsements." The rule finds more meaning in this case where the check involved is drawn on a foreign bank and therefore collection is more difficult than when the drawee bank is a local one even though the check in question is a manager's check. Said ruling brings to light the fact that the banking business is affected with public interest. By the nature of its functions, a bank is under obligation to treat the accounts of its depositors "with meticulous care, always having in mind the fiduciary nature of their relationship." 3. CIVIL LAW; QUASI-DELICTS; NEGLIGENCE; DEFINED; WHEN PRESENT; CASE AT BAR. As such, in dealing with its depositors, a bank should exercise its functions not only with the diligence of a good father of a family but it should do so with the highest degree of care. In the case at bar, petitioner, in allowing the withdrawal of private respondent's deposit, failed to exercise the diligence of a good father of a family. In total disregard of its own rules, petitioner's personnel negligently handled private respondent's account to petitioner's detriment. As this Court once said on this matter: "Negligence is the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would do. The seventy-eight (78)-year-old, yet still relevant, case of Picart vs. Smith, provides the test by which to determine the existence of negligence in a particular case which may be stated as follows: Did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary conduct of the discreet pater-familias of the Roman law. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation P a g e | 10
before him. The law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that." 4. ID.; ID.; ID.; PROXIMATE CAUSE, DEFINED; PRESENCE THEREOF IN CASE AT BAR. While it is true that private respondent's having signed a blank withdrawal slip set in motion the events that resulted in the withdrawal and encashment of the counterfeit check, the negligence of petitioner's personnel was the proximate cause of the loss that petitioner sustained. Proximate cause, which is determined by a mixed consideration of logic, common sense, policy and precedent, is that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred." The proximate cause of the withdrawal and eventual loss of the amount of $2,500.00 on petitioner's part was its personnel's negligence in allowing such withdrawal in disregard of its own rules and the clearing requirement in the banking system. In so doing, petitioner assumed the risk of incurring a loss on account of a forged or counterfeit foreign check and hence, it should suffer the resulting damage. D E C I S I O N YNARES-SANTIAGO, J p: This is a petition for review on certiorari of the Decision 1 of the Court of Appeals in CA-G.R. CV No. 37392 affirming in toto that of the Regional Trial Court of Makati, Branch 139, 2 which dismissed the complaint filed by petitioner Bank of the Philippine Islands against Benjamin C. Napiza for sum of money. On September 3, 1987, private respondent deposited in Foreign Currency Deposit Unit (FCDU) Savings Account No. 028- 187 3 which he maintained in petitioner bank's Buendia Avenue Extension Branch, Continental Bank Manager's Check No. 00014757 4 dated August 17, 1984, payable to "cash" in the amount of Two Thousand Five Hundred Dollars ($2,500.00) and duly endorsed by private respondent on its dorsal side. 5 It appears that the check belonged to a certain Henry Chan who went to the office of private respondent and requested him to deposit the check in his dollar account by way of accommodation and for the purpose of clearing the same. Private respondent acceded, and agreed to deliver to Chan a signed blank withdrawal slip, with the understanding that as soon as the check is cleared, both of them would go to the bank to withdraw the amount of the check upon private respondent's presentation to the bank of his passbook. Using the blank withdrawal slip given by private respondent to Chan, on October 23, 1984, one Ruben Gayon, Jr. was able to withdraw the amount of $2,541.67 from FCDU Savings Account No. 028-187. Notably, the withdrawal slip shows that the amount was payable to Ramon A. de Guzman and Agnes C. de Guzman and was duly initialed by the branch assistant manager, Teresita Lindo. 6 On November 20, 1984, petitioner received communication from the Wells Fargo Bank International of New York that the said check deposited by private respondent was a counterfeit check 7 because it was "not of the type or style of checks issued by Continental Bank International." 8 Consequently, Mr. Ariel Reyes, the manager of petitioner's Buendia Avenue Extension Branch, instructed one of its employees, Benjamin D. Napiza IV, who is private respondent's son, to inform his father that the check bounced. 9Reyes himself sent a telegram to private respondent regarding the dishonor of the check. In turn, private respondent's son wrote to Reyes stating that the check had been assigned "for encashment" to Ramon A. de Guzman and/or Agnes C. de Guzman after it shall have been cleared upon instruction of Chan. He also said that upon learning of the dishonor of the check, his father immediately tried to contact Chan but the latter was out of town. 10 Private respondent's son undertook to return the amount of $2,500.00 to petitioner bank. On December 18, 1984, Reyes reminded private respondent of his son's promise and warned that should he fail to return that amount within seven (7) days, the matter would be referred to the bank's lawyers for appropriate action to protect the bank's interest. 11 This was followed by a letter of the bank's lawyer dated April 8, 1985 demanding the return of the $2,500.00. 12 In reply, private respondent wrote petitioner's counsel on April 20, 1985 13 stating that he deposited the check "for clearing purposes" only to accommodate Chan. He added: "Further, please take notice that said check was deposited on September 3, 1984 and withdrawn on October 23, 1984, or a total period of fifty (50) days had elapsed at the time of withdrawal. Also, it may not be amiss to mention here that I merely signed an authority to withdraw said deposit subject to its clearing, the reason why the transaction is not reflected in the passbook of the account. Besides, I did not receive its proceeds as may be gleaned from the withdrawal slip under the captioned signature of recipient. "If at all, my obligation on the transaction is moral in nature, which (sic) I have been and is (sic) still exerting utmost and maximum efforts to collect from Mr. Henry Chan who is directly liable under the circumstances. xxx xxx xxx" On August 12, 1986, petitioner filed a complaint against private respondent, praying for the return of the amount of $2,500.00 or the prevailing peso equivalent plus legal interest from date of demand to date of full payment, a sum equivalent to 20% of the total amount due as attorney's fees, and litigation and/or costs of suit. Private respondent filed his answer, admitting that he indeed signed a "blank" withdrawal slip with the understanding that the amount deposited would be withdrawn only after the check in question has been cleared. He likewise alleged that he instructed the party to whom he issued the signed blank withdrawal slip to return it to him after the bank draft's clearance so that he could lend that party his passbook for the purpose of withdrawing the amount of $2,500.00. However, without his knowledge, said party was able to withdraw the amount of $2,541.67 from his dollar savings account through collusion with one of petitioner's employees. Private respondent added that he had "given the plaintiff fifty-one (51) days with which to clear the bank draft in question." Petitioner should have disallowed the withdrawal because his passbook was not presented. He claimed that P a g e | 11
petitioner had no one to blame except itself "for being grossly negligent"; in fact, it had allegedly admitted having paid the amount in the check "by mistake" . . . "if not altogether due to collusion and/or bad faith on the part of (its) employees." Charging petitioner with "apparent ignorance of routine bank procedures," by way of counterclaim, private respondent prayed for moral damages of P100,000.00, exemplary damages of P50,000.00 and attorney's fees of 30% of whatever amount that would be awarded to him plus an honorarium of P500.00 per appearance in court. Private respondent also filed a motion for admission of a third party complaint against Chan. He alleged that "thru statagem and/or manipulation," Chan was able to withdraw the amount of $2,500.00 even without private respondent's passbook. Thus, private respondent prayed that third party defendant Chan be made to refund to him the amount withdrawn and to pay attorney's fees of P5,000.00 plus P300.00 honorarium per appearance. Petitioner filed a comment on the motion for leave of court to admit the third party complaint, wherein it asserted that per paragraph 2 of the Rules and Regulations governing BPI savings accounts, private respondent alone was liable "for the value of the credit given on account of the draft or check deposited." It contended that private respondent was estopped from disclaiming liability because he himself authorized the withdrawal of the amount by signing the withdrawal slip. Petitioner prayed for the denial of the said motion so as not to unduly delay the disposition of the main case asserting that private respondent's claim could be ventilated in another case. Private respondent replied that for the parties to obtain complete relief and to avoid multiplicity of suits, the motion to admit third party complaint should be granted. Meanwhile, the trial court issued orders on August 25, 1987 and October 28, 1987 directing private respondent to actively participate in locating Chan. After private respondent failed to comply, the trial court, on May 18, 1988, dismissed the third party complaint without prejudice. On November 4, 1991, a decision was rendered dismissing the complaint. The lower court held petitioner could not hold private respondent liable based on the check's face value alone. To so hold him liable "would render inutile the requirement of 'clearance' from the drawee bank before the value of a particular foreign check or draft can be credited to the account of a depositor making such deposit." The lower court further held that "it was incumbent upon the petitioner to credit the value of the check in question to the account of the private respondent only upon receipt of the notice of final payment and should not have authorized the withdrawal from the latter's account of the value or proceeds of the check." Having admitted that it committed a "mistake" in not waiting for the clearance of the check before authorizing the withdrawal of its value or proceeds, petitioner should suffer the resultant loss. On appeal, the Court of Appeals affirmed the lower court's decision. The appellate court held that petitioner committed "clear gross negligence" in allowing Ruben Gayon, Jr. to withdraw the money without presenting private respondent's passbook and, before the check was cleared and in crediting the amount indicated therein in private respondent's account. It stressed that the mere deposit of a check in private respondent's account did not mean that the check was already private respondent's property. The check still had to be cleared and its proceeds can only be withdrawn upon presentation of a passbook in accordance with the bank's rules and regulations. Furthermore, petitioner's contention that private respondent warranted the check's genuineness by endorsing it is untenable for it would render useless the clearance requirement. Likewise, the requirement of presentation of a passbook to ascertain the propriety of the accounting reflected would be a meaningless exercise. After all, these requirements are designed to protect the bank from deception or fraud. The Court of Appeals cited the case of Roman Catholic Bishop of Malolos, Inc. v. IAC, 14 where this Court stated that a personal check is not legal tender or money, and held that the check deposited in this case must be cleared before its value could be properly transferred to private respondent's account. Without filing a motion for the reconsideration of the Court of Appeal's Decision, petitioner filed this petition for review on certiorari, raising the following issues: 1. WHETHER OR NOT RESPONDENT NAPIZA IS LIABLE UNDER HIS WARRANTIES AS A GENERAL INDORSER. 2. WHETHER OR NOT A CONTRACT OF AGENCY WAS CREATED BETWEEN RESPONDENT NAPIZA AND RUBEN GAYON. 3. WHETHER OR NOT PETITIONER WAS GROSSLY NEGLIGENT IN ALLOWING THE WITHDRAWAL. Petitioner claims that private respondent, having affixed his signature at the dorsal side of the check, should be liable for the amount stated therein in accordance with the following provision of the Negotiable Instruments Law (Act No. 2031): "SECTION 66. Liability of general indorser. Every indorser who indorses without qualification, warrants to all subsequent holders in due course (a) The matters and things mentioned in subdivisions (a), (b), and (c) of the next preceding section; and (b) That the instrument is at the time of his indorsement, valid and subsisting. And, in addition, he engages that on due presentment, it shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it be dishonored, and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to pay it." Section 65, on the other hand, provides for the following warranties of a person negotiating an instrument by delivery or by qualified indorsement: (a) that the instrument is genuine and in all respects what it purports to be; (b) that he has good title to it, and (c) that all prior parties had capacity to contract. 15 In People v. Maniego, 16 this Court described the liabilities of an indorser as follows: "Appellant's contention that a mere indorser, she may not be liable on account of the dishonor of the checks indorsed by her, is P a g e | 12
likewise untenable. Under the law, the holder or last indorsee of a negotiable instrument has the right 'to enforce payment of the instrument for the full amount thereof against all parties liable thereon.' Among the 'parties liable thereon' is an indorser of the instrument, i.e., 'a person placing his signature upon an instrument otherwise than as maker, drawer or acceptor ** unless he clearly indicated by appropriate words his intention to be bound in some other capacity.' Such an indorser 'who indorses without qualification,' inter alia 'engages that on due presentment, ** (the instrument) shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it be dishonored, and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or any subsequent indorser who may be compelled to pay it.' Maniego may also be deemed an 'accommodation party' in the light of the facts, i.e., a person 'who has signed the instrument as maker, drawer, acceptor, or indorser, without receiving value therefor, and for the purpose of lending his name to some other person.' As such, she is under the law 'liable on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew ** (her) to be only an accommodation party,' although she has the right, after paying the holder, to obtain reimbursement from the party accommodated, 'since the relation between them is in effect that of principal and surety, the accommodation party being the surety." It is thus clear that ordinarily private respondent may be held liable as an indorser of the check or even as an accommodation party. 17 However, to hold private respondent liable for the amount of the check he deposited by the strict application of the law and without considering the attending circumstances in the case would result in an injustice and in the erosion of the public trust in the banking system. The interest of justice thus demands looking into the events that led to the encashment of the check. Petitioner asserts that by signing the withdrawal slip, private respondent "presented the opportunity for the withdrawal of the amount in question." Petitioner relied "on the genuine signature on the withdrawal slip, the personality of private respondent's son and the lapse of more than fifty (50) days from date of deposit of the Continental Bank draft, without the same being returned yet." 18 We hold however, that the propriety of the withdrawal should be gauged by compliance with the rules thereon that both petitioner bank and its depositors are duty-bound to observe. In the passbook that petitioner issued to private respondent, the following rules on withdrawal of deposits appear: "4. Withdrawals must be made by the depositor personally but in some exceptional circumstances, the Bank may allow withdrawal by another upon the depositor's written authority duly authenticated; and neither a deposit nor a withdrawal will be permitted except upon the presentation of the depositor's savings passbook, in which the amount deposited withdrawn shall be entered only by the Bank. 5. Withdrawals may be made by draft, mail or telegraphic transfer in currency of the account at the request of the depositor in writing on the withdrawal slip or by authenticated cable. Such request must indicate the name of the payee/s, amount and the place where the funds are to be paid. Any stamp, transmission and other charges related to such withdrawals shall be for the account of the depositor and shall be paid by him/her upon demand. Withdrawals may also be made in the form of travelers checks and in pesos. Withdrawals in the form of notes/bills are allowed subject however, to their (availability). 6. Deposits shall not be subject to withdrawal by check, and may be withdrawn only in the manner above provided, upon presentation of the depositor's savings passbook and with the withdrawal form supplied by the Bank at the counter." 19 Under these rules, to be able to withdraw from the savings account deposit under the Philippine foreign currency deposit system, two requisites must be presented to petitioner bank by the person withdrawing an amount: (a) a duly filled-up withdrawal slip; and (b) the depositor's passbook. Private respondent admits that he signed a blank withdrawal slip ostensibly in violation of Rule No. 6 requiring that the request for withdrawal must name the payee, the amount to be withdrawn and the place where such withdrawal should be made. That the withdrawal slip was in fact a blank one with only private respondent's two signatures affixed on the proper spaces is buttressed by petitioner's allegation in the instant petition that had private respondent indicated therein the person authorized to receive the money, then Ruben Gayon, Jr. could not have withdrawn any amount. Petitioner contends that "(i)n failing to do so (i.e., naming his authorized agent), he practically authorized any possessor thereof to write any amount and to collect the same." 20 Such contention would have been valid if not for the fact that the withdrawal slip itself indicates a special instruction that the amount is payable to "Ramon A. de Guzman &/or Agnes C. de Guzman." Such being the case, petitioner's personnel should have been duly warned that Gayon, who was also employed in petitioner's Buendia Ave. Extension branch, 21 was not the proper payee of the proceeds of the check. Otherwise, either Ramon or Agnes de Guzman should have issued another authority to Gayon for such withdrawal. Of course, at the dorsal side of the withdrawal slip is an "authority to withdraw" naming Gayon the person who can withdraw the amount indicated in the check. Private respondent does not deny having signed such authority. However, considering petitioner's clear admission that the withdrawal slip was a blank one except for private respondent's signature, the unavoidable conclusion is that the typewritten name of "Ruben C. Gayon, Jr." was intercalated and thereafter it was signed by Gayon or whoever was allowed by petitioner to withdraw the amount. Under these facts, there could not have been a principal-agent relationship between private respondent and Gayon so as to render the former liable for the amount withdrawn. Moreover, the withdrawal slip contains a boxed warning that states: "This receipt must be signed and presented with the corresponding foreign currency savings passbook by the depositor in person. For withdrawals thru a representative, depositor should accomplish the authority at the back." The requirement of presentation of the passbook when withdrawing an amount cannot be given mere lip service even though the person making the withdrawal is authorized by the depositor to do so. This is clear from Rule No. 6 set out by petitioner so that, for the protection of the bank's interest and as a reminder to the depositor, the withdrawal shall be entered in the depositor's passbook. The fact that private respondent's passbook was not presented during the withdrawal is evidenced by the entries therein showing that the last transaction that he made with the bank was on September 3, P a g e | 13
1984, the date he deposited the controversial check in the amount of $2,500.00. 22 In allowing the withdrawal, petitioner likewise overlooked another rule that is printed in the passbook. Thus: "2. All deposits will be received as current funds and will be repaid in the same manner; provided, however, that deposits of drafts, checks, money orders, etc. will be accepted as subject to collection only and credited to the account only upon receipt of the notice of final payment. Collection charges by the Bank's foreign correspondent in effecting such collection shall be for the account of the depositor. If the account has sufficient balance, the collection shall be debited by the Bank against the account. If, for any reason, the proceeds of the deposited checks, drafts, money orders, etc., cannot be collected or if the Bank is required to return such proceeds, the provisional entry therefor made by the Bank in the savings passbook and its records shall be deemed automatically cancelled regardless of the time that has elapsed, and whether or not the defective items can be returned to the depositor; and the Bank is hereby authorized to execute immediately the necessary corrections, amendments or changes in its record, as well as on the savings passbook at the first opportunity to reflect such cancellation." (Emphasis supplied.) As correctly held by the Court of Appeals, in depositing the check in his name, private respondent did not become the outright owner of the amount stated therein. Under the above rule, by depositing the check with petitioner, private respondent was, in a way, merely designating petitioner as the collecting bank. This is in consonance with the rule that a negotiable instrument, such as a check, whether a manager's check or ordinary check, is not legal tender. 23 As such, after receiving the deposit, under its own rules, petitioner shall credit the amount in private respondent's account or infuse value thereon only after the drawee bank shall have paid the amount of the check or the check has been cleared for deposit. Again, this is in accordance with ordinary banking practices and with this Court's pronouncement that "the collecting bank or last endorser generally suffers the loss because it has the duty to ascertain the genuineness of all prior endorsements considering that the act of presenting the check for payment to the drawee is an assertion that the party making the presentment has done its duty to ascertain the genuineness of the endorsements." 24 The rule finds more meaning in this case where the check involved is drawn on a foreign bank and therefore collection is more difficult than when the drawee bank is a local one even though the check in question is a manager's check. 25 In Banco Atlantico v. Auditor General, 26 Banco Atlantico, a commercial bank in Madrid, Spain, paid the amounts represented in three (3) checks to Virginia Boncan, the finance officer of the Philippine Embassy in Madrid. The bank did so without previously clearing the checks with the drawee bank, the Philippine National Bank in New York, on account of the "special treatment" that Boncan received from the personnel of Banco Atlantico's foreign department. The Court held that the encashment of the checks without prior clearance is "contrary to normal or ordinary banking practice specially so where the drawee bank is a foreign bank and the amounts involved were large." Accordingly, the Court approved the Auditor General's denial of Banco Atlantico's claim for payment of the value of the checks that was withdrawn by Boncan. Said ruling brings to light the fact that the banking business is affected with public interest. By the nature of its functions, a bank is under obligation to treat the accounts of its depositors "with meticulous care, always having in mind the fiduciary nature of their relationship." 27 As such, in dealing with its depositors a bank should exercise its functions not only with the diligence of a good father of a family but it should do so with the highest degree of care. 28 In the case at bar, petitioner, in allowing the withdrawal of private respondent's deposit, failed to exercise the diligence of a good father of a family. In total disregard of its own rules, petitioner's personnel negligently handled private respondent's account to petitioner's detriment. As this Court once said on this matter: "Negligence is the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would do. The seventy-eight (78)-year-old, yet still relevant, case of Picart v. Smith, provides the test by which to determine the existence of negligence in a particular case which may be stated as follows: Did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary conduct of the discreet pater-familias of the Roman law. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that." 29 Petitioner violated its own rules by allowing the withdrawal of an amount that is definitely over and above the aggregate amount of private respondent's dollar deposits that had yet to be cleared. The bank's ledger on private respondent's account shows that before he deposited $2,500.00, private respondent had a balance of only $750.00. 30Upon private respondent's deposit of $2,500.00 on September 3, 1984, that amount was credited in his ledger as a deposit resulting in the corresponding total balance of $3,250.00. 31 On September 10, 1984, the amount of $600.00 and the additional charges of $10.00 were indicated therein as withdrawn thereby leaving a balance of $2,640.00. On September 30, 1984, an interest of $11.59 was reflected in the ledger and on October 23, 1984, the amount of $2,541.67 was entered as withdrawn with a balance of $109.92. 32 On November 19, 1984 the word "hold" was written beside the balance of $109.92. 33 That must have been the time when Reyes, petitioner's branch manager, was informed unofficially of the fact that the check deposited was a counterfeit, but petitioner's Buendia Ave. Extension Branch received a copy of the communication thereon from Wells Fargo Bank International in New York the following day, November 20, 1984. 34 According to Reyes, Wells Fargo Bank International handled the clearing of checks drawn against U.S. banks that were deposited with petitioner. 35 From these facts on record, it is at once apparent that petitioner's personnel allowed the withdrawal of an amount bigger than the original deposit of $750.00 and the value of the check deposited in the amount of $2,500.00 although they had not yet received notice from the clearing bank in the United States on whether or P a g e | 14
not the check was funded. Reyes' contention that after the lapse of the 35-day period the amount of a deposited check could be withdrawn even in the absence of a clearance thereon, otherwise it could take a long time before a depositor could make a withdrawal, 36 is untenable. Said practice amounts to a disregard of the clearance requirement of the banking system. While it is true that private respondent's having signed a blank withdrawal slip set in motion the events that resulted in the withdrawal and encashment of the counterfeit check, the negligence of petitioner's personnel was the proximate cause of the loss that petitioner sustained. Proximate cause, which is determined by a mixed consideration of logic, common sense, policy and precedent, is "that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause produces the injury, and without which the result would not have occurred." 37 The proximate cause of the withdrawal and eventual loss of the amount of $2,500.00 on petitioner's part was its personnel's negligence in allowing such withdrawal in disregard of its own rules and the clearing requirement in the banking system. In so doing, petitioner assumed the risk of incurring a loss on account of a forged or counterfeit foreign check and hence, it should suffer the resulting damage. WHEREFORE, the petition for review on certiorari is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 37392 is AFFIRMED. SO ORDERED. ||| (BPI v. Court of Appeals, G.R. No. 112392, February 29, 2000)