FIRST DIVISION
[G.R. No. 170149. August 17, 2016.]
SECURITY BANK CORPORATION, petitioner, vs. COURT OF APPEALS, LILY IBAÑEZ REYES-LAO, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution dated August 17, 2016 which reads as follows:
"G.R. No. 170149 — SECURITY BANK CORPORATION, Petitioner, v. COURT OF APPEALS, LILY IBAÑEZ REYES-LAO, Respondents.
By petition for review on certiorari, the petitioner seeks the review and reversal of the judgment promulgated on June 30, 2005 in C.A.-G.R. CV No. 57611, 1 whereby the Court of Appeals (CA) affirmed the judgment rendered by the Regional Trial Court (RTC), Branch 103, in Quezon City 2 but modified the rate of interest.
Antecedents
The antecedent facts as summarized by the CA are as follows:
Sometime in June 1994, plaintiff Lily Ibañez Reyes-Lao (hereinafter plaintiff Lao) was introduced to defendant Edward Chua (hereinafter defendant Chua), President and General Manager of Wondertex Finishing (hereinafter Wondertex), a corporation engaged in the garments business with office located at the ITC Compound, Bagbaguin, Valenzuela, Metro Manila.
On July 11, 1994 and August 19, 1994, plaintiff Lao extended loans to Wondertex through defendant Chua in the total sum of three million four hundred seventy six thousand pesos (P3,476,000.00) represented by three (3) China Banking Corporation (CBC) Manager's Checks (MC) all payable to Wondertex Finishing, to wit: SaCIDT
|
Manager's Check No.
|
Date
|
Amount
|
| 018028 | July 11, 1994 |
P2,000,000.00
|
| 018027 | July 11, 1994 |
878,000.00
|
| 019191 | August 19, 1994 |
598,000.00
|
The aforementioned checks were duly received by defendant Chua. Subsequently, MC Nos. 018027 and 019191 were deposited to Wondertex's account with Equitable Banking Corporation while MC No. 018028 was deposited by defendant Chua to his account with Security Bank and Trust Co. (hereinafter SBTC) under the account name, Edrick's Marketing (hereinafter Edrick), a single proprietorship.
When plaintiff Lao demanded payment of the loans extended to Wondertex, the last of which was made on April 20, 1995, the latter refused to pay the P2,000,000.00 loan covered by MC No. 018028 on the ground that the said check was not credited to any of its bank accounts. In the meantime, defendant Chua issued eight (8) replacement SBTC checks to cover payment of the loan obligations, all drawn against Edrick's account. However, the said checks were dishonoured for the reason "account closed" or "drawn against insufficient funds."
Thereafter, plaintiff Lao through a demand letter dated May 16, 1995 addressed to SBTC's Branch Manager, Lolita Ang, sought indemnification of the value of MC No. 018028 in the amount of P2,000,000.00 for crediting the account of Edrick's Marketing instead of the named payee, Wondertex Finishing. For failure of SBTC to heed plaintiff Lao's demand, the latter initiated a complaint for damages against the former, its Branch Manager, Lolita Ang, and defendant Chua, before the Regional Trial Court (RTC) of Quezon City, docketed as Civil Case No. Q-95-24431.
Defendant Chua, in his answer, admitted having obtained loans from plaintiff Lao in the total amount of P3,476,000.00 in behalf of Wondertex. He likewise admitted the deposit of CBC MC No. 018028 in the amount of P2,000,000.00 to the account of Edrick's Marketing which he claimed to be Wondertex's account with SBTC. Moreover, he contended that the eight (8) SBTC replacement checks were issued by him not in his personal capacity but as President and General Manager of Wondertex and that had not the Executive Committee and Carina Chua caused the closure of the account of Edrick's Marketing with SBTC, abolished his position, and removed him as president and general manager of Wondertex on April 5, 1995, the replacement checks would not have been dishonored.
On the other hand, defendants SBTC and Lolita Ang, in their defense, averred that defendant Chua, as President and General Manager of Wondertex, opened SBTC Current Account No. 3310-01785-5 sometime in February 21, 1994 under the account name Edrick's Marketing on his representation that it was the marketing arm of Wondertex; that on July 11, 1994, defendant Chua, in his capacity as officer of Wondertex, endorsed CBC MC No. 018028, and deposited it to the account of Edrick's Marketing; that the same was cleared by the drawee bank CBC on July 13, 1994; that since plaintiff Lao had never been a client or depositor of SBTC and has no privity of contract with it, the former has no cause of action against them. They further interpose a cross-claim against defendant Chua for the monetary awards that may be adjudged against them. 3
After trial, the RTC rendered judgment on December 10, 1996, 4viz.:
ACCORDINGLY, judgment is hereby rendered as follows:
1. The defendants Security Bank and Trust Co. Presently known and registered as Security Banking Corp., its successors and/or assigns, Edward Chua, and Lolita Ang are hereby ordered to pay the plaintiff Lily Ibañez Reyes-Lao, jointly and solidarily, the sum of TWO MILLION PESOS (P2,000,000.00) representing the value of China Banking Corporation MC Check No. 018028 involved in this case, with interest at 12% per annum from the finality of judgment in this case until fully paid; cHECAS
2. EDWARD CHUA is ordered to pay Lily Ibañez Reyes-Lao the sum of P40,000.00 as attorney's fees and defendants Security Bank and Lolita Ang are ordered to pay Mrs. Lao, jointly and solidarily, the sum of P10,000.00 as attorney's fees;
3. The claims for moral and exemplary damages of Mrs. Lao and the counterclaims for damages by all the defendants against Mrs. Lao are hereby DISMISSED;
4. On the cross-claim of Defendants Security Bank and Lolita Ang, it is hereby ordered that Edward Chua must pay the sum of TWO MILLION PESOS (P2,000,000.00) to said defendants Security Bank and Trust Co. or its successor Security Banking Corporation and assigns or other lawful successors, including the herein adjudged interest thereon, once when and after said financial obligation or any part thereof herein adjudged in favor of Mrs. Lily Ibañez Reyes-Lao are paid for, voluntarily or by compulsory process, by said cross-claimants bank and Mrs. Ang. No award for attorney's fees on the cross-claim is adjudged.
SO ORDERED.
All the parties appealed to the CA. However, respondent Edward Chua's appeal was dismissed because of his failure to pay the required docket fees despite notice; consequently, the decision of the RTC attained finality and became executory as to him.
The petitioner interposed the following issues on appeal:
A.
THE LOWER COURT ERRED IN DECLARING THAT DEFENDANTS-APPELLANTS SECURITY BANK AND TRUST COMPANY AND LOLITA ANG COMMITTED BREACH OF GOOD BANKING SENSE AND SECURITY RULES.
B.
THE LOWER COURT ERRED IN DECLARING WITHOUT MERIT THE ARGUMENT THAT SINCE DEFENDANTS-APPELLANTS HAVE BEEN RECEIVING FROM EDWARD CHUA CHECKS FOR DEPOSIT TO THE ACCOUNT OF EDRICK'S MARKETING ISSUED BY SEVERAL DIFFERENT DRAWERS PAYABLE TO WONDERTEX THEREFORE DEFENDANTS-APPELLANTS SHOULD NOT BE FAULTED FOR ACCEPTING FOR DEPOSIT MC NO. 018028.
C.
THE LOWER COURT ERRED IN DECLARING THAT DEFENDANTS-APPELLANTS FAILED TO UNDERSTAND THE PLAIN AND SIMPLE MEANING AND IMPORT OF A CROSS CHECK.
D.
THE LOWER COURT ERRED IN NOT DISMISSING THE AMENDED COMPLAINT FILED BY PLAINTIFF-APPELLEE ON THE GROUND OF NO CAUSE OF ACTION AGAINST DEFENDANTS-APPELLANTS SBC AND LOLITA ANG. 5 AHDacC
On June 30, 2005, the CA affirmed the decision of the RTC with modification as to the rate of interest, 6 to wit:
WHEREFORE, premises considered, the instant appeal is partly GRANTED. The assailed decision of the RTC of Quezon City, Branch 103, in Civil Case No. Q-95-24431 dated December 10, 1996 is MODIFIED only in so far as the rate of interest is concerned, such that the rate shall be computed at 6% per annum from date of judgment of the RTC until its finality and thereafter, an interest of 12% per annum shall be imposed until the same is fully satisfied. The rest of the appealed decision stands.
SO ORDERED. 7
The CA cogently observed in its decision:
Defendants-appellants' contentions are bereft of merit.
It has been ruled that a check with two (2) parallel lines in the upper left hand corner means that it could only be deposited and not converted to cash. The effect of crossing a check, thus, relates to the mode of payment, meaning the drawer had intended the check for deposit only to the account of the rightful person, i.e., the payee named therein. As such, it is the duty of the collecting bank, SBTC, to ascertain that the check is deposited to the account of the payee; it is bound to scrutinize the check and to know its depositors before it could make the clearing indorsement "all prior indorsements and/or lack of indorsement guaranteed."
In the instant case, it is undisputed that MC No. 018028 was payable to "Wondertex Finishing" and had been specifically crossed "For Payee's Account Only". However, defendants-appellants allowed defendant Chua to deposit the same to the account of Edrick Marketing without verifying from Wondertex the accuracy of defendant Chua's representation that the said entity is connected with Wondertex. Such failure to inquire into the validity of Chua's representation was an apparent breach of duty for which they should be held liable. Moreover, an examination of the following documents, namely, the Certificate of Registration of Business Name of Edrick's Marketing, the Articles of Incorporation and By-Laws of Wondertex, the latter's Financial Statement and the Secretary's Certificate authorizing defendant Chua to open an account for Wondertex at Equitable Banking Corporation, Valenzuela, relied upon by defendants-appellants in allowing the questioned deposit failed to support their claim that defendant Chua was authorized to deposit checks pertaining to Wondertex into the Edrick Marketing account or that the latter is its "marketing arm."
Defendants-appellants having accepted the check in question from a person other than the payee, they are guilty of negligence and are liable for the wrongful payment thereof. "The law imposes a duty of diligence on the collecting bank to scrutinize checks deposited with it, for the purpose of determining their genuineness and regularity. The collecting bank, being primarily engaged in banking, holds itself out to the public as the expert on this field, and the law thus holds it to high standard of conduct." As correctly pointed out by the RTC — "Bank Managers are not just supposed to listen to the word of their clientele; they are at the same time called upon by lessons accumulated throughout the ages of banking experience, to adopt legal and extra legal measures that would protect their bank and the financial system against persons and forces that would naturally infest them. Vigilance is still the name of the game in the banking system; so it has been; so it will be in the far future." IDSEAH
Thus, the Supreme Court pronounced in the case of Westmont Bank vs. Ong that —
. . . As a general rule, a bank or corporation who has obtained possession of a check upon an unauthorized or forged indorsement of the payee's signature and who collects the amount of the check from the drawee, is liable for the proceeds thereof to the payee or other owner, notwithstanding that the amount has been paid to the person from whom the check was obtained.
The theory of the rule is that the possession of the check on the forged or unauthorized indorsement is wrongful, and when the money had been collected on the check, the bank or other person or corporation can he held as for moneys had and received, and the proceeds are held for the rightful owners who may recover them. The position of the bank taking the check on the forged or unauthorized indorsement is the same as if it had taken the check and collected the money without indorsement at all and the act of the bank amounts to conversion of the check.
Having established that defendants-appellants failed to perform the necessary care and precaution in crediting MC No. 018028 to the proper payee, they were correctly held liable to return the amount of P2,000,000.00 covered by MC No. 018028 which was wrongfully credited to the account of Edrick Marketing.
Finally, this Court finds defendants-appellants' claim that plaintiff Lao has no cause of action against them misplaced. As defined, a cause of action is the act or omission by which a party violates the right of another. In the instant case, the negligence committed by the defendants-appellants in crediting MC No. 018028 to an account other than that of the named payee, in violation of basic banking procedure, is a breach of duty for which the law, particularly Article 2176 of the Civil Code, holds them accountable for damages. 8
Issues
In this appeal, the petitioner insists that the CA committed reversible error in rendering judgment in favor of respondent Lily I. Reyes-Lao (Reyes-Lao).
In her comment, 9 Reyes-Lao counters that the petition for review on certiorari should be denied because the petitioner thereby raises factual issues that were improper for this mode of appeal; that the CA correctly ruled that the petitioner had violated good banking sense and security rules by crediting Manager's Check No. 018028 to the account of Edrick's Marketing despite its being a crossed check; and that, accordingly, the CA committed no reversible error in ordering the petitioner to pay the value of the Manager's Check No. 018028. 10
In its reply, 11 the petitioner submits that Reyes-Lao does not understand the legal issues being raised, and conveniently ignores the fact that the petition for review on certiorari is anchored on questions of law. 12 aCIHcD
Ruling of the Court
We deny the petition for review on certiorari.
What the petitioner urges the Court to do is to review the factual findings of the lower courts in order to reverse them, and to acquit it from liability to return to Reyes-Lao the amount of P2,000,000.00 representing the face value of Manager's Check No. 018028 plus interest. For the Court to yield to such urging is to impose on the Court the duty to re-examine the evidence on record, and to draw new inferences that would be entirely different from and be the direct opposite of the findings of the lower courts. The imposition is not permitted for two reasons. The first is that the Court is generally concluded by the factual findings of the CA when it affirms those of the trial court. In such instance, the factual findings of the lower courts become binding and conclusive upon the Court, which is not a trier of facts. The second is that this appeal by review on certiorari is confined to the consideration and resolution of legal questions, and does not extend to the consideration and resolution of factual issues. Section 1, Rule 45 of the Rules of Court explicitly states that the petition for review on certiorari shall raise only questions of law, which must be distinctly set forth. In other words, only questions of law may be raised, because the Court cannot undertake the re-examination and review of the evidence presented by the parties during the trial. A question, to be one of law, must not involve an examination of the probative value of the evidence presented by the litigants or any of them. There is a question of law when the doubt arises as to what the law is on a certain state of facts; there is a question of fact when the doubt arises as to the truth or falsehood of alleged facts. 13
The Court has recognized exceptions to the rule limiting review to questions of law, including the following: (a) when the findings are grounded entirely on speculation, surmises or conjectures; (b) when the inference made is manifestly mistaken, absurd or impossible; (c) when there is grave abuse of discretion; (d) when the judgment is based on a misapprehension of facts; (e) when the findings of facts are conflicting; (f) when in making its findings the CA went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (g) when the findings are contrary to those of the trial court; (h) when the findings are conclusions without citation of specific evidence on which they are based; (i) when the facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by the respondent; (j) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; and (k) when the CA manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion. 14
None of the foregoing exceptions obtains herein. At least, the petitioner has not persuasively shown that its appeal can be treated differently.
Nonetheless, Article 2212 of the Civil Code requires that interest due shall earn legal interest from the time it is judicially demanded, although the obligation may be silent upon this point. Conformably with the provision, the interest due shall itself earn legal interest of 6% per annum from the date of finality of the judgment until its full satisfaction, the interim period being deemed to be the equivalent of a forbearance of credit.
WHEREFORE, the Court AFFIRMS the decision promulgated on June 30, 2005 subject to the MODIFICATION that interest of 6% per annum reckoned from the finality of this judgment until its full satisfaction shall further be imposed on the monetary obligations decreed in the judgment, including the accrued interest as of the finality of the judgment; and ORDERS the petitioner to pay the costs of suit.
SO ORDERED." PERLAS-BERNABE, J., took no part; JARDELEZA, J., designated additional member per raffle dated August 15, 2016. cHaCAS
Very truly yours,
(SGD.) EDGAR O. ARICHETADivision Clerk of Court
Footnotes
1. Rollo, pp. 8-17; penned by Associate Justice Estela M. Perlas-Bernabe (now a Member of this Court), with Associate Justices Elvi John S. Asuncion and Hakim S. Abdulwahid concurring.
2. CA rollo, pp. 75-79; penned by Presiding Judge Jaime N. Salazar, Jr.
3. Rollo, pp. 8-11.
4. Supra note 2.
5. Rollo, pp. 13-14.
6. Supra note 1.
7. Id. at 16-17.
8. Id. at 14-16.
9. Id. at 62-72.
10. Id. at 68.
11. Id. at 80-82.
12. Id. at 80.
13. Angeles v. Pascual, G.R. No. 157150, September 21, 2011, 658 SCRA 23, 28-29.
14. Id. at 29-30.