Beruflich Dokumente
Kultur Dokumente
Article 2205 of the Civil Code provides that actual or compensatory damages may
be received "(2) for injury to the plaintiff s business standing or commercial
credit." There is no question that the petitioner did sustain actual injury as a result
of the dishonored checks and that the existence of the loss having been established
"absolute certainty as to its amount is not required." 7 Such injury should bolster
all the more the demand of the petitioner for moral damages and justifies the
examination by this Court of the validity and reasonableness of the said claim.
We agree that moral damages are not awarded to penalize the defendant but to
compensate the plaintiff for the injuries he may have suffered. 8 In the case at bar,
the petitioner is seeking such damages for the prejudice sustained by it as a result
of the private respondent's fault. The respondent court said that the claimed losses
are purely speculative and are not supported by substantial evidence, but if failed
to consider that the amount of such losses need not be established with exactitude
precisely because of their nature. Moral damages are not susceptible of pecuniary
estimation. Article 2216 of the Civil Code specifically provides that "no proof of
pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or
exemplary damages may be adjudicated." That is why the determination of the
amount to be awarded (except liquidated damages) is left to the sound discretion
of the court, according to "the circumstances of each case."
From every viewpoint except that of the petitioner's, its claim of moral damages in
the amount of P1,000,000.00 is nothing short of preposterous. Its business
certainly is not that big, or its name that prestigious, to sustain such an extravagant
pretense. Moreover, a corporation is not as a rule entitled to moral damages
because, not being a natural person, it cannot experience physical suffering or
such sentiments as wounded feelings, serious anxiety, mental anguish and moral
shock. The only exception to this rule is where the corporation has a good
reputation that is debased, resulting in its social humiliation. 9
We shall recognize that the petitioner did suffer injury because of the private
respondent's negligence that caused the dishonor of the checks issued by it. The
immediate consequence was that its prestige was impaired because of the
bouncing checks and confidence in it as a reliable debtor was diminished. The
private respondent makes much of the one instance when the petitioner was sued
in a collection case, but that did not prove that it did not have a good reputation
that could not be marred, more so since that case was ultimately settled. 10 It does
not appear that, as the private respondent would portray it, the petitioner is an
unsavory and disreputable entity that has no good name to protect.
Considering all this, we feel that the award of nominal damages in the sum of
P20,000.00 was not the proper relief to which the petitioner was entitled. Under
Article 2221 of the Civil Code, "nominal damages are adjudicated in order that a
right of the plaintiff, which has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of indemnifying the plaintiff for
any loss suffered by him." As we have found that the petitioner has indeed
incurred loss through the fault of the private respondent, the proper remedy is the
one week later or twenty-three days after the deposit was made. It bears repeating
that the record does not contain any satisfactory explanation of why the error was
made in the first place and why it was not corrected immediately after its
discovery. Such ineptness comes under the concept of the wanton manner
contemplated in the Civil Code that calls for the imposition of exemplary
damages.
After deliberating on this particular matter, the Court, in the exercise of its
discretion, hereby imposes upon the respondent bank exemplary damages in the
amount of P50,000.00, "by way of example or correction for the public good," in
the words of the law. It is expected that this ruling will serve as a warning and
deterrent against the repetition of the ineptness and indefference that has been
displayed here, lest the confidence of the public in the banking system be further
impaired.
ACCORDINGLY, the appealed judgment is hereby MODIFIED and the private
respondent is ordered to pay the petitioner, in lieu of nominal damages, moral
damages in the amount of P20,000.00, and exemplary damages in the amount of
P50,000.00 plus the original award of attorney's fees in the amount of P5,000.00,
and costs.
SO ORDERED.
SIMEX INTERNATIONAL (MANILA), INCORPORATED, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and TRADERS ROYAL
BANK, respondents.
BOTTOMLINE: You got preexisting 90K and you deposited 100K, but it was not
updated by the bank, 8 checks bounced and you lost business partners. (burn
down the bank? hahaha) Can you demand moral and exemplary damages?
FACTS: We are concerned in this case with the question of damages, specifically
moral and exemplary damages The petitioner is a private corporation engaged in
the exportation of food products. It buys these products from various local
suppliers and then sells them abroad, particularly in the United States, Canada and
the Middle East. Most of its exports are purchased by the petitioner on credit. The
petitioner was a depositor of the respondent bank and maintained a checking
account in its branch at Romulo Avenue, account in the said bank the amount of
P100,000.00, thus increasing its balance as of that date to P190,380.74. , the
petitioner issued several checks against its deposit but was surprised to learn later
that they had been dishonored for insufficient funds. There were 8 dishonored
checks.
The California Manufacturing Corporation sent on June 9, 1981, a letter
of demand to the petitioner, threatening prosecution if the dishonored check issued
to it was not made good. . Malabon also canceled the petitioner's credit line and
later, or on September 20, 1988, that he was given the dishonored demand draft
and a covering letter. It was then that he actually paid in cash the registration fees
as he had earlier promised.
Meanwhile, on September 19, 1988, petitioner Consuelo Puyat-Reyes
arrived in Sydney. She too was embarrassed and humiliated at the registration
desk of the conference secretariat when she was told in the presence and within
the hearing of other delegates that she could not be registered due to the dishonor
of the subject foreign exchange demand draft. She felt herself trembling and
unable to look at the people around her. Fortunately, she saw her husband coming
toward her. He saved the situation for her by telling the secretariat member that he
had already arranged for the payment of the registration fees in cash once he was
shown the dishonored demand draft. Only then was petitioner Puyat-Reyes given
her name plate and conference kit.
At the time the incident took place, petitioner Consuelo Puyat-Reyes was a
member of the House of Representatives representing the lone Congressional
District of Makati, Metro Manila. She has been an officer of the Manila Banking
Corporation and was cited by Archbishop Jaime Cardinal Sin as the top lady
banker of the year in connection with her conferment of the Pro-Ecclesia et
Pontifice Award. She has also been awarded a plaque of appreciation from the
Philippine Tuberculosis Society for her extraordinary service as the Societys
campaign chairman for the ninth (9th) consecutive year.
On November 23, 1988, the petitioners filed in the Regional Trial Court of
Makati, Metro Manila, a complaint for damages, docketed as Civil Case No. 882468, against the respondent bank due to the dishonor of the said foreign
exchange demand draft issued by the respondent bank. The petitioners claim that
as a result of the dishonor of the said demand draft, they were exposed to
unnecessary shock, social humiliation, and deep mental anguish in a foreign
country, and in the presence of an international audience.
On November 12, 1992, the trial court rendered judgment in favor of the
defendant (respondent bank) and against the plaintiffs (herein petitioners), the
dispositive portion of which states:
WHEREFORE, judgment is hereby rendered in favor of the defendant, dismissing
plaintiffs complaint, and ordering plaintiffs to pay to defendant, on its
counterclaim, the amount of P50,000.00, as reasonable attorneys fees. Costs
against the plaintiff.
SO ORDERED.[5]
The petitioners appealed the decision of the trial court to the Court of
Appeals. On July 22, 1994, the appellate court affirmed the decision of the trial
court but in effect deleted the award of attorneys fees to the defendant (herein
respondent bank) and the pronouncement as to the costs. The decretal portion of
their depositors with the highest degree of care. But the said ruling applies only to
cases where banks act under their fiduciary capacity, that is, as depositary of the
deposits of their depositors. But the same higher degree of diligence is not
expected to be exerted by banks in commercial transactions that do not involve
their fiduciary relationship with their depositors.
Considering the foregoing, the respondent bank was not required to exert
more than the diligence of a good father of a family in regard to the sale and
issuance of the subject foreign exchange demand draft. The case at bar does not
involve the handling of petitioners deposit, if any, with the respondent
bank. Instead, the relationship involved was that of a buyer and seller, that is,
between the respondent bank as the seller of the subject foreign exchange demand
draft, and PRCI as the buyer of the same, with the 20 th Asian Racing Conference
Secretariat in Sydney, Australia as the payee thereof. As earlier mentioned, the
said foreign exchange demand draft was intended for the payment of the
registration fees of the petitioners as delegates of the PRCI to the 20 th Asian
Racing Conference in Sydney.
The evidence shows that the respondent bank did everything within its
power to prevent the dishonor of the subject foreign exchange demand draft. The
erroneous reading of its cable message to Westpac-Sydney by an employee of the
latter could not have been foreseen by the respondent bank. Being unaware that its
employee erroneously read the said cable message, Westpac-Sydney merely stated
that the respondent bank has no deposit account with it to cover for the amount of
One Thousand Six Hundred Ten Australian Dollar (AU$1610.00) indicated in the
foreign exchange demand draft. Thus, the respondent bank had the impression
that Westpac-New York had not yet made available the amount for reimbursement
to Westpac-Sydney despite the fact that respondent bank has a sufficient deposit
dollar account with Westpac-New York. That was the reason why the respondent
bank had to re-confirm and repeatedly notify Westpac-New York to debit its
(respondent banks) deposit dollar account with it and to transfer or credit the
corresponding amount to Westpac-Sydney to cover the amount of the said demand
draft.
In view of all the foregoing, and considering that the dishonor of the subject
foreign exchange demand draft is not attributable to any fault of the respondent
bank, whereas the petitioners appeared to be under estoppel as earlier mentioned,
it is no longer necessary to discuss the alleged application of Section 61 of the
Negotiable Instruments Law to the case at bar. In any event, it was established that
the respondent bank acted in good faith and that it did not cause the
embarrassment of the petitioners in Sydney, Australia. Hence, the Court of
Appeals did not commit any reversable error in its challenged decision.
WHEREFORE, the petition is hereby DENIED, and the assailed decision
of the Court of Appeals is AFFIRMED. Costs against the petitioners.
SO ORDERED.
CONCEPCION, C.J.:
This is an original quo warranto proceeding, initiated by the Solicitor General, to
dissolve the Security and Acceptance Corporation for allegedly engaging in
banking operations without the authority required therefor by the General Banking
Act (Republic Act No. 337). Named as respondents in the petition are, in addition
to said corporation, the following, as alleged members of its Board of Directors
and/or Executive Officers, namely:
NAME
POSITION
Rosendo T. Resuello
Pablo Tanjutco
Director
Arturo Soriano
Director
Ruben Beltran
Director
Bienvenido V. Zapa
Pilar G. Resuello
Ricardo D. Balatbat
Jose R. Sebastian
been repeated 59,463 times, and that its continuance inflicts injury upon the
public, owing to the number of persons affected thereby.
It is urged, however, that this case should be remanded to the Court of First
Instance of Manila upon the authority of Veraguth vs. Isabela Sugar Co. (57 Phil.
266). In this connection, it should be noted that this Court is vested with original
jurisdiction, concurrently with courts of first instance, to hear and decide quo
warranto cases and, that, consequently, it is discretionary for us to entertain the
present case or to require that the issues therein be taken up in said Civil Case No.
52342. The Veraguth case cited by herein defendants, in support of the second
alternative, is not in point, because in said case there were issues of fact which
required the presentation of evidence, and courts of first instance are, in general,
better equipped than appellate courts for the taking of testimony and the
determination of questions of fact. In the case at bar, there is, however, no dispute
as to the principal facts or acts performed by the corporation in the conduct of its
business. The main issue here is one of law, namely, the legal nature of said facts
or of the aforementioned acts of the corporation. For this reason, and because
public interest demands an early disposition of the case, we have deemed it best to
determine the merits thereof.
Wherefore, the writ prayed for should be, as it is hereby granted and defendant
corporation is, accordingly, ordered dissolved. The appointment of receiver herein
issued pendente lite is hereby made permanent, and the receiver is, accordingly,
directed to administer the properties, deposits, and other assets of defendant
corporation and wind up the affairs thereof conformably to Rules 59 and 66 of the
Rules of Court. It is so ordered.
Republic of the Philippines vs. Security Credit and Acceptance Corporation G.R.
No. L-20583, January 23, 1967
MARCH 16, 2014LEAVE A COMMENT
An investment company which loans out the money of its customers, collects the
interest and charges a commission to both lender and borrower, is a bank. It is
conceded that a total of 59,463 savings account deposits have been made by the
public with the corporation and its 74 branches, with an aggregate deposit of
P1,689,136.74, which has been lent out to such persons as the corporation
deemed suitable therefore. It is clear that these transactions partake of the
nature of banking, as the term is used in Section 2 of the General Banking Act.
Facts: The Solicitor General filed a petition for quo warranto to dissolve the
Security and Acceptance Corporation, alleging that the latter was engaging in
banking operations without the authority required therefor by the General Banking
Held.
collects the interest and charges a commission to both lender and borrower, is a
documents and records relative to the business operations of the corporation. After
bank. It is conceded that a total of 59,463 savings account deposits have been
examination of the same, the intelligence division of the Central Bank submitted a
made by the public with the corporation and its 74 branches, with an aggregate
memorandum to the then Acting Deputy Governor of Central Bank finding that
deposit of P1,689,136.74, which has been lent out to such persons as the
the corporation is engaged in banking operations. It was found that Security and
the nature of banking, as the term is used in Section 2 of the General Banking Act.
Hence, defendant corporation has violated the law by engaging in banking without
undertaken by the corporation, the same had managed to induce the public to open
That the illegal transactions thus undertaken by defendant corporation warrant its
dissolution is apparent from the fact that the foregoing misuser of the corporate
funds and franchise affects the essence of its business, that it is willful and has
branches, as well as its officers and agents, from performing the banking
been repeated 59,463 times, and that its continuance inflicts injury upon the
Superintendent of Banks of the Central Bank was then appointed by the Supreme
EN BANC
In their defense, Security and Acceptance Corporation averred that the the
corporation had filed with the Superintendent of Banks an application for
conversion into a Security Savings and Mortgage Bank, with defendants Zapa,
proposed directors.
Issue:
Balatbat, Tanjutco (Pablo and Vito, Jr.), Soriano, Beltran and Sebastian as
operations.
CONCEPCION, C.J.:
This is an original action for certiorari, prohibition and injunction, with
Upon the filing of the petition herein and of the requisite bond, we issued, on
August 14, 1962, a writ of preliminary injunction restraining and prohibiting
respondents herein from enforcing the order above quoted.
The main respondent in this case, the First Mutual Savings and Loan
Organization, Inc. hereinafter referred to as the Organization is a registered
non-stock corporation, the main purpose of which, according to its Articles of
Incorporation, dated February 14, 1961, is "to encourage . . . and implement
savings and thrift among its members, and to extend financial assistance in the
form of loans," to them. The Organization has three (3) classes of
"members,"1 namely: (a) founder members who originally joined the
organization and have signed the pre-incorporation papers with the
exclusive right to vote and be voted for ; (b) participating members
with "no right to vote or be voted for" to which category all other members
belong; except (c) honorary members, so made by the board of trustees, "at the
exclusive discretion" thereof due to "assistance, honor, prestige or help
extended in the propagation" of the objectives of the Organization without any
pecuniary expenses on the part of said honorary members.
On February 14, 1962, the legal department of the Central Bank of the Philippines
hereinafter referred to as the Bank rendered an opinion to the effect that the
Organization and others of similar nature are banking institutions, falling within
the purview of the Central Bank Act.2 Hence, on April 1 and 3, 1963, the Bank
caused to be published in the newspapers the following:
ANNOUNCE ME NT
To correct any wrong impression which recent newspaper reports on "savings and
loan associations" may have created in the minds of the public and other
interested parties, as well as to answer numerous inquiries from the public, the
Central Bank of the Philippines wishes to announce that all "savings and loan
associations" now in operation and other organizations using different corporate
Moreover, on April 23, 1962, the Governor of the Bank directed the coordination
of "the investigation and gathering of evidence on the activities of the savings and
loan associations which are operating contrary to law." Soon thereafter, or on May
18, 1962, a member of the intelligence division of the Bank filed with the
Municipal Court of Manila a verified application for a search warrant against the
Organization, alleging that "after close observation and personal investigation, the
premises at No. 2745 Rizal Avenue, Manila" in which the offices of the
Organization were housed "are being used unlawfully," because said
Organization is illegally engaged in banking activities, "by receiving deposits of
money for deposit, disbursement, safekeeping or otherwise or transacts the
business of a savings and mortgage bank and/or building and loan association . . .
without having first complied with the provisions of Republic Act No. 337" and
that the articles, papers, or effects enumerated in a list attached to said application,
as Annex A thereof.3 are kept in said premises, and "being used or intended to be
used in the commission of a felony, to wit: violation of Sections 2 and 6 of
Republic Act No. 337."4 Said articles, papers or effects are described in the
aforementioned Annex A, as follows:
I. BOOKS OF ORIGINAL ENTRY
(1) General Journal
(2) Columnar Journal or Cash Book
(a) Cash Receipts Journal or Cash Receipt Book
(b) Cash Disbursements Journal or Cash Disbursement Book
II. BOOKS OF FINAL ENTRY
(4) And other documents and articles which are being used or intended to
be used in unauthorized banking activities and operations contrary to law.
Upon the filing of said application, on May 18, 1962, Hon. Roman Cancino, as
Judge of the said municipal court, issued the warrant above referred
to,5 commanding the search of the aforesaid premises at No. 2745 Rizal Avenue,
Manila, and the seizure of the foregoing articles, there being "good and sufficient
reasons to believe" upon examination, under oath, of a detective of the Manila
Police Department and said intelligence officer of the Bank that the
Organization has under its control, in the address given, the aforementioned
articles, which are the subject of the offense adverted to above or intended to be
used as means for the commission of said off offense.
Forthwith, or on the same date, the Organization commenced Civil Case No.
50409 of the Court of First Instance of Manila, an original action for "certiorari,
prohibition, with writ of preliminary injunction and/or writ of preliminary
mandatory injunction," against said municipal court, the Sheriff of Manila, the
Manila Police Department, and the Bank, to annul the aforementioned search
warrant, upon the ground that, in issuing the same, the municipal court had acted
"with grave abuse of discretion, without jurisdiction and/or in excess of
jurisdiction" because: (a) "said search warrant is a roving commission general in
its terms . . .;" (b) "the use of the word 'and others' in the search warrant . . .
permits the unreasonable search and seizure of documents which have no relation
whatsoever to any specific criminal act . . .;" and (c) "no court in the Philippines
has any jurisdiction to try a criminal case against a corporation . . ."
The Organization, likewise, prayed that, pending hearing of the case on the merits,
a writ of preliminary injunction be issued ex parte restraining the aforementioned
search and seizure, or, in the alternative, if the acts complained of have been
partially performed, that a writ of preliminary mandatory injunction be forthwith
issuedex parte, ordering the preservation of the status quo of the parties, as well as
the immediate return to the Organization of the documents and papers so far
seized under, the search warrant in question. After due hearing, on the petition for
said injunction, respondent, Hon. Jesus P. Morfe, Judge, who presided over the
branch of the Court of First Instance of Manila to which said Case No. 50409 had
been assigned, issued, on July 2, 1962, the order complained of.
It is interesting to note, also, that the Organization does not seriously contest the
main facts, upon which the action of the Bank is based. The principal issue raised
by the Organization is predicated upon the theory that the aforementioned
transactions of the Organization do not amount to " banking," as the term is used
in Republic Act No. 337. We are satisfied, however, in the light of the
circumstance obtaining in this case, that the Municipal Judge did not commit a
grave abuse of discretion in finding that there was probable cause that the
Organization had violated Sections 2 and 6 of the aforesaid law and in issuing the
warrant in question, and that, accordingly, and in line with Alverez vs. Court of
First Instance (64 Phil. 33), the search and seizure complained of have not been
proven to be unreasonable.
HELD: SW is upheld.
wording of the warrant may make it assume the character of a general warrant, in
another context it may be considered perfectly alright.
Wherefore, the order of respondent Judge dated July 2, 1962, and the writ of
preliminary mandatory injunction issued in compliance therewith are hereby
annulled, and the writ of preliminary injunction issued by this Court on August
14, 1962, accordingly, made permanent, with costs against respondent First
Mutual Savings and Loan Organization, Inc. It is so ordered.
SW only for one offense, if issued for more than two, it is void. Scatter
shot warrant.
FACTS: First Mutual Savings and Loan Organization encourage savings among
1.
Readily identify the items to be seized, thus prevent them from seizing
its members and extend financial assistance thru loans. Central bank said that the
the wrong items
Organization and others with similar nature are banking institutions and that the
Org have never been authorized. CB applied for SW because of the Orgs illegal
receipt of deposits of money for deposit, disbursementswithout compliance
2.
What if theres discrepancy between the address in the caption and in the
body? Not sufficient to invalidate. It is sufficient as long as you can identify the
place intended and distinguish it from other places in the community.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 123498
able to recover possession of the same when the money was redeposited by
Franco, it had the right to set up its ownership thereon and freeze Francos
accounts.
BPI-FB contends that its position is not unlike that of an owner of personal
property who regains possession after it is stolen, and to illustrate this point, BPIFB gives the following example: where Xs television set is stolen by Y who
thereafter sells it to Z, and where Z unwittingly entrusts possession of the TV set
to X, the latter would have the right to keep possession of the property and
preclude Z from recovering possession thereof. To bolster its position, BPI-FB
cites Article 559 of the Civil Code, which provides:
Article 559. The possession of movable property acquired in good faith is
equivalent to a title. Nevertheless, one who has lost any movable or has been
unlawfully deprived thereof, may recover it from the person in possession of the
same.
If the possessor of a movable lost or of which the owner has been unlawfully
deprived, has acquired it in good faith at a public sale, the owner cannot obtain its
return without reimbursing the price paid therefor.
BPI-FBs argument is unsound. To begin with, the movable property mentioned in
Article 559 of the Civil Code pertains to a specific or determinate thing. 30 A
determinate or specific thing is one that is individualized and can be identified or
distinguished from others of the same kind.31
In this case, the deposit in Francos accounts consists of money which, albeit
characterized as a movable, is generic and fungible. 32 The quality of being
fungible depends upon the possibility of the property, because of its nature or the
will of the parties, being substituted by others of the same kind, not having a
distinct individuality.33
Significantly, while Article 559 permits an owner who has lost or has been
unlawfully deprived of a movable to recover the exact same thing from the current
possessor, BPI-FB simply claims ownership of the equivalent amount of money,
i.e., the value thereof, which it had mistakenly debited from FMICs account and
credited to Tevestecos, and subsequently traced to Francos account. In fact, this
is what BPI-FB did in filing the Makati Case against Franco, et al. It staked its
claim on the money itself which passed from one account to another, commencing
with the forged Authority to Debit.
It bears emphasizing that money bears no earmarks of peculiar ownership,34 and
this characteristic is all the more manifest in the instant case which involves
money in a banking transaction gone awry. Its primary function is to pass from
hand to hand as a medium of exchange, without other evidence of its
title.35 Money, which had passed through various transactions in the general
course of banking business, even if of traceable origin, is no exception.
Garnishment only on September 27, 1989, several days after the two checks he
issued were dishonored by BPI-FB on September 20 and 21, 1989. Verily, it was
premature for BPI-FB to freeze Francos accounts without even awaiting service
of the Makati RTCs Notice of Garnishment on Franco.
Additionally, it should be remembered that the enforcement of a writ of
attachment cannot be made without including in the main suit the owner of the
property attached by virtue thereof. Section 5, Rule 13 of the Rules of Court
specifically provides that "no levy or attachment pursuant to the writ issued x x x
shall be enforced unless it is preceded, or contemporaneously accompanied, by
service of summons, together with a copy of the complaint, the application for
attachment, on the defendant within the Philippines."
Franco was impleaded as party-defendant only on May 15, 1990. The Makati RTC
had yet to acquire jurisdiction over the person of Franco when BPI-FB garnished
his accounts.43 Effectively, therefore, the Makati RTC had no authority yet to bind
the deposits of Franco through the writ of attachment, and consequently, there was
no legal basis for BPI-FB to dishonor the checks issued by Franco.
Fifth. Anent the CAs finding that BPI-FB was in bad faith and as such liable for
the advance interest it deducted from Francos time deposit account, and for moral
as well as exemplary damages, we find it proper to reinstate the ruling of the trial
court, and allow only the recovery of nominal damages in the amount
of P10,000.00. However, we retain the CAs award of P75,000.00 as attorneys
fees.
In granting Francos prayer for interest on his time deposit account and for moral
and exemplary damages, the CA attributed bad faith to BPI-FB because it (1)
completely disregarded its obligation to Franco; (2) misleadingly claimed that
Francos deposits were under garnishment; (3) misrepresented that Francos
current account was not on file; and (4) refused to return the P400,000.00 despite
the fact that the ostensible owner, Quiaoit, wanted the amount returned to Franco.
In this regard, we are guided by Article 2201 of the Civil Code which provides:
Fourth. Notwithstanding all the foregoing, BPI-FB continues to insist that the
dishonor of Francos checks respectively dated September 11 and 18, 1989 was
legally in order in view of the Makati RTCs supplemental writ of attachment
issued on September 14, 1989. It posits that as the party that applied for the writ
of attachment before the Makati RTC, it need not be served with the Notice of
Garnishment before it could place Francos accounts under garnishment.
The argument is specious. In this argument, we perceive BPI-FBs clever but
transparent ploy to circumvent Section 4,42 Rule 13 of the Rules of Court. It
should be noted that the strict requirement on service of court papers upon the
parties affected is designed to comply with the elementary requisites of due
process. Franco was entitled, as a matter of right, to notice, if the requirements of
due process are to be observed. Yet, he received a copy of the Notice of
Article 2201. In contracts and quasi-contracts, the damages for which the obligor
who acted in good faith is liable shall be those that are the natural and probable
consequences of the breach of the obligation, and which the parties have foreseen
or could have reasonable foreseen at the time the obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the nonperformance of the obligation. (Emphasis supplied.)
We find, as the trial court did, that BPI-FB acted out of the impetus of selfprotection and not out of malevolence or ill will. BPI-FB was not in the corrupt
We have had occasion to hold that in the absence of fraud or bad faith,47 moral
damages cannot be awarded; and that the adverse result of an action does not per
se make the action wrongful, or the party liable for it. One may err, but error alone
is not a ground for granting such damages. 48
No pronouncement as to costs.
Franco could not point to, or identify any particular circumstance in Article 2219
of the Civil Code,50 upon which to base his claim for moral damages.1wphi1
Thus, not having acted in bad faith, BPI-FB cannot be held liable for moral
damages under Article 2220 of the Civil Code for breach of contract.51
We also deny the claim for exemplary damages. Franco should show that he is
entitled to moral, temperate, or compensatory damages before the court may even
consider the question of whether exemplary damages should be awarded to
him.52 As there is no basis for the award of moral damages, neither can exemplary
damages be granted.
While it is a sound policy not to set a premium on the right to litigate, 53 we,
however, find that Franco is entitled to reasonable attorneys fees for having been
compelled to go to court in order to assert his right. Thus, we affirm the CAs
grant of P75,000.00 as attorneys fees.
SO ORDERED.
BPI vs Court of Appeals, 538 SCRA 184, GR No. 123498, November 23, 2007
Posted by Pius Morados on January 12, 2012
(Negotiable Instruments Money as a medium of exchange)
Facts: Franco opened 3 accounts with BPI with the total amount of
P2,000,000.00. The said amount used to open these accounts is traceable to a
check issued by Tevesteco. The funding for the P2,000,000.00 check was part of
the P80,000,000.00 debited by BPI from FMICs account (with a deposit of
P100,000,000.00) and credited to Tevestecos account pursuant to an Authority to
Debit which was allegedly forged as claimed by FMIC.
Tevesteco effected several withdrawals already from its account amounting to
P37,455,410.54 including the P2,000,000.00 paid to Franco.
Franco issued two checks which were dishonoured upon presentment for payment
due to garnishment of his account filed by BPI.
BPI claimed that it had a better right to the amounts which consisted of part of the
money allegedly fraudulently withdrawn from it by Tevesteco and ending up in
The petitioner urges us to review and set aside the amended Decision 1 of 6 March
1992 of respondent Court of Appeals in CA- G.R. CV No. 25739 which modified
the Decision of 15 November 1990 of Branch 19 of the Regional Trial Court
(RTC) of Manila in Civil Case No. 87-42967, entitled Bank of the Philippine
Islands (successor-in-interest of Commercial Bank and Trust Company) versus
Eastern Plywood Corporation and Benigno D. Lim. The Court of Appeals had
affirmed the dismissal of the complaint but had granted the defendants'
counterclaim for P331,261.44 which represents the outstanding balance of their
account with the plaintiff.
As culled from the records and the pleadings of the parties, the following facts
were duly established:
Private respondents Eastern Plywood Corporation (Eastern) and
Benigno D. Lim (Lim), an officer and stockholder of Eastern, held at least one
joint bank account ("and/or" account) with the Commercial Bank and Trust Co.
(CBTC), the predecessor-in-interest of petitioner Bank of the Philippine Islands
(BPI). Sometime in March 1975, a joint checking account ("and" account) with
Lim in the amount of P120,000.00 was opened by Mariano Velasco with funds
withdrawn from the account of Eastern and/or Lim. Various amounts were later
deposited or withdrawn from the joint account of Velasco and Lim. The money
therein was placed in the money market.
Velasco died on 7 April 1977. At the time of his death, the outstanding balance of
the account stood at P662,522.87. On 5 May 1977, by virtue of an Indemnity
Undertaking executed by Lim for himself and as President and General Manager
of Eastern, 2 one-half of this amount was provisionally released and transferred to
one of the bank accounts of Eastern with CBTC. 3
Thereafter, on 18 August 1978, Eastern obtained a loan of P73,000.00 from CBTC
as "Additional Working Capital," evidenced by the "Disclosure Statement on
Loan/Credit Transaction" (Disclosure Statement) signed by CBTC through its
branch manager, Ceferino Jimenez, and Eastern, through Lim, as its President and
General Manager. 4 The loan was payable on demand with interest at 14% per
annum.
For this loan, Eastern issued on the same day a negotiable promissory note for
P73,000.00 payable on demand to the order of CBTC with interest at 14% per
annum. 5 The note was signed by Lim both in his own capacity and as President
and General Manager of Eastern. No reference to any security for the loan appears
on the note. In the Disclosure Statement, the box with the printed word
"UNSECURED" was marked with "X" meaning unsecured, while the line with
the words "this loan is wholly/partly secured by" is followed by the typewritten
words "Hold-Out on a 1:1 on C/A No. 2310-001-42," which refers to the joint
account of Velasco and Lim with a balance of P331,261.44.
In addition, Eastern and Lim, and CBTC signed another document entitled
15 November 1990 dismissing the complaint because BPI failed to make out its
case. Furthermore, it ruled that "the promissory note in question is subject to the
'hold-out' agreement," 10 and that based on this agreement, "it was the duty of
plaintiff Bank [BPI] to debit the account of the defendants under the promissory
note to set off the loan even though the same has no fixed maturity." 11 As to the
defendants' counterclaim, the trial court, recognizing the fact that the entire
amount in question had been withdrawn by Velasco's heirs pursuant to the order of
the intestate court in Sp. Proc. No. 8959, denied it because the "said claim cannot
be awarded without disturbing the resolution" of the intestate court. 12
Both parties appealed from the said decision to the Court of Appeals. Their appeal
was docketed as CA-G.R. CV No. 25739.
On 23 January 1991, the Court of Appeals rendered a decision affirming the
decision of the trial court. It, however, failed to rule on the defendants' (private
respondents') partial appeal from the trial court's denial of their counterclaim.
Upon their motion for reconsideration, the Court of Appeals promulgated on 6
March 1992 an Amended Decision 13 wherein it ruled that the settlement of
Velasco's estate had nothing to do with the claim of the defendants for the return
of the balance of their account with CBTC/BPI as they were not privy to that case,
and that the defendants, as depositors of CBTC/BPI, are the latter's creditors;
hence, CBTC/BPI should have protected the defendants' interest in Sp. Proc. No.
8959 when the said account was claimed by Velasco's estate. It then ordered BPI
"to pay defendants the amount of P331,261.44 representing the outstanding
balance in the bank account of defendants." 14
On 22 April 1992, BPI filed the instant petition alleging therein that the Holdout
Agreement in question was subject to a suspensive condition stated therein, viz.,
that the "P331,261.44 shall become a security for respondent Lim's promissory
note only if respondents' Lim and Eastern Plywood Corporation's interests to that
amount are established as a result of a final and definitive judicial action or a
settlement between and among the contesting parties thereto." 15 Hence, BPI
asserts, the Court of Appeals erred in affirming the trial court's decision
dismissing the complaint on the ground that it was the duty of CBTC to debit the
account of the defendants to set off the amount of P73,000.00 covered by the
promissory note.
Private respondents Eastern and Lim dispute the "suspensive condition" argument
of the petitioner. They interpret the findings of both the trial and appellate courts
that the money deposited in the joint account of Velasco and Lim came from
Eastern and Lim's own account as a finding that the money deposited in the joint
account of Lim and Velasco "rightfully belong[ed] to Eastern Plywood
Corporation and/or Benigno Lim." And because the latter are the rightful owners
of the money in question, the suspensive condition does not find any application
in this case and the bank had the duty to set off this deposit with the loan. They
add that the ruling of the lower court that they own the disputed amount is the
final and definitive judicial action required by the Holdout Agreement; hence, the
the account to the said heirs; hence, it was under no judicial compulsion to do so.
The authorization given to the heirs of Velasco cannot be construed as a final
determination or adjudication that the account belonged to Velasco. We have ruled
Republic of the Philippines
SUPREME COURT
Manila
Yes The collection suit of BPI is based on the promissory note for P73,000.00. On
its face, the note is an unconditional promise to pay the said amount, and as stated
by the respondent Court of Appeals, further correctly ruled that BPI was not a
holder in due course because the note was not indorsed to BPI by the payee,
CBTC. Only a negotiation by indorsement could have operated as a valid transfer
to make BPI a holder in due course. It acquired the note from CBTC by the
contract of merger or sale between the two banks. BPI, therefore, took the note
subject to the Holdout Agreement.
It is clear from paragraph 02 thereof that CBTC, or BPI as its successor-ininterest, had every right to demand that Eastern and Lim settle their liability under
the promissory note. It cannot be compelled to retain and apply the deposit in Lim
and Velasco's joint account to the payment of the note. What the agreement
conferred on CBTC was a power, not a duty. Generally, a bank is under no duty or
obligation to make the application. To apply the deposit to the payment of a loan
is a privilege, a right of set-off which the bank has the option to exercise.
Also, paragraph 05 of the Holdout Agreement itself states that notwithstanding the
agreement, CBTC was not in any way precluded from demanding payment from
Eastern and from instituting an action to recover payment of the loan. What it
provides is an alternative, not an exclusive, method of enforcing its claim on the
note. When it demanded payment of the debt directly from Eastern and Lim, BPI
had opted not to exercise its right to apply part of the deposit subject of the
Holdout Agreement to the payment of the promissory note for P73,000.00.
Yes. The account was proved and established to belong to Eastern even if it was
deposited in the names of Lim and Velasco. As the real creditor of the bank,
Eastern has the right to withdraw it or to demand payment thereof. BPI cannot be
relieved of its duty to pay Eastern simply because it already allowed the heirs of
Velasco to withdraw the whole balance of the account.
As early as 12 May 1979, CBTC was notified by the Corporate Secretary of
Eastern that the deposit in the joint account of Velasco and Lim was being claimed
by them and that one-half was being claimed by the heirs of Velasco. 23
Moreover, the order of the court in Sp. Proc. No. 8959 merely authorized the heirs
of Velasco to withdraw the account. BPI was not specifically ordered to release
SECOND DIVISION
G.R. No. 82027 March 29, 1990
SARMIENTO, J.:
This case is a chapter in an earlier suit decided by this Court 1 involving the
probate of the two wills of the late Dolores Luchangco Vitug, who died in New
York, U. S.A., on November 10, 1980, naming private respondent Rowena
Faustino-Corona executrix. In our said decision, we upheld the appointment of
Nenita Alonte as co-special administrator of Mrs. Vitug's estate with her (Mrs.
Vitug's) widower, petitioner Romarico G. Vitug, pending probate.
On January 13, 1985, Romarico G. Vitug filed a motion asking for authority from
the probate court to sell certain shares of stock and real properties belonging to the
estate to cover allegedly his advances to the estate in the sum of P667,731.66, plus
interests, which he claimed were personal funds. As found by the Court of
Appeals, 2the alleged advances consisted of P58,147.40 spent for the payment of
estate tax, P518,834.27 as deficiency estate tax, and P90,749.99 as "increment
thereto." 3 According to Mr. Vitug, he withdrew the sums of P518,834.27 and
P90,749.99 from savings account No. 35342-038 of the Bank of America, Makati,
Metro Manila.
On April 12, 1985, Rowena Corona opposed the motion to sell on the ground that
the same funds withdrawn from savings account No. 35342-038 were conjugal
partnership properties and part of the estate, and hence, there was allegedly no
ground for reimbursement. She also sought his ouster for failure to include the
sums in question for inventory and for "concealment of funds belonging to the
Vitug insists that the said funds are his exclusive property having acquired the
same through a survivorship agreement executed with his late wife and the bank
on June 19, 1970. The agreement provides:
We hereby agree with each other and with the BANK OF
AMERICAN NATIONAL TRUST AND SAVINGS
ASSOCIATION (hereinafter referred to as the BANK), that all
money now or hereafter deposited by us or any or either of us
with the BANK in our joint savings current account shall be the
property of all or both of us and shall be payable to and
collectible or withdrawable by either or any of us during our
lifetime, and after the death of either or any of us shall belong to
and be the sole property of the survivor or survivors, and shall
be payable to and collectible or withdrawable by such survivor
or survivors.
We further agree with each other and the BANK that the receipt
or check of either, any or all of us during our lifetime, or the
receipt or check of the survivor or survivors, for any payment or
withdrawal made for our above-mentioned account shall be
valid and sufficient release and discharge of the BANK for such
payment or withdrawal. 5
The trial courts 6 upheld the validity of this agreement and granted "the motion to
sell some of the estate of Dolores L. Vitug, the proceeds of which shall be used to
pay the personal funds of Romarico Vitug in the total sum of P667,731.66 ... ."7
On the other hand, the Court of Appeals, in the petition for certiorari filed by the
herein private respondent, held that the above-quoted survivorship agreement
constitutes a conveyance mortis causa which "did not comply with the formalities
of a valid will as prescribed by Article 805 of the Civil Code," 8 and secondly,
assuming that it is a mere donation inter vivos, it is a prohibited donation under
the provisions of Article 133 of the Civil Code. 9
The dispositive portion of the decision of the Court of Appeals states:
WHEREFORE, the order of respondent Judge dated November
26, 1985 (Annex II, petition) is hereby set aside insofar as it
granted private respondent's motion to sell certain properties of
the estate of Dolores L. Vitug for reimbursement of his alleged
advances to the estate, but the same order is sustained in all
other respects. In addition, respondent Judge is directed to
include provisionally the deposits in Savings Account No.
35342-038 with the Bank of America, Makati, in the inventory
of actual properties possessed by the spouses at the time of the
In his petition, Vitug, the surviving spouse, assails the appellate court's ruling on
the strength of our decisions inRivera v. People's Bank and Trust
Co. 11 and Macam v. Gatmaitan 12 in which we sustained the validity of
"survivorship agreements" and considering them as aleatory contracts. 13
The petition is meritorious.
The conveyance in question is not, first of all, one of mortis causa, which should
be embodied in a will. A will has been defined as "a personal, solemn, revocable
and free act by which a capacitated person disposes of his property and rights and
declares or complies with duties to take effect after his death." 14 In other words,
the bequest or device must pertain to the testator. 15 In this case, the monies
subject of savings account No. 35342-038 were in the nature of conjugal funds In
the case relied on, Rivera v. People's Bank and Trust Co., 16 we rejected claims
that a survivorship agreement purports to deliver one party's separate properties in
favor of the other, but simply, their joint holdings:
xxx xxx xxx
... Such conclusion is evidently predicated on the assumption
that Stephenson was the exclusive owner of the funds-deposited
in the bank, which assumption was in turn based on the facts (1)
that the account was originally opened in the name of
Stephenson alone and (2) that Ana Rivera "served only as
housemaid of the deceased." But it not infrequently happens that
a person deposits money in the bank in the name of another; and
in the instant case it also appears that Ana Rivera served her
master for about nineteen years without actually receiving her
salary from him. The fact that subsequently Stephenson
transferred the account to the name of himself and/or Ana
Rivera and executed with the latter the survivorship agreement
in question although there was no relation of kinship between
them but only that of master and servant, nullifies the
assumption that Stephenson was the exclusive owner of the
bank account. In the absence, then, of clear proof to the
contrary, we must give full faith and credit to the certificate of
deposit which recites in effect that the funds in question
belonged to Edgar Stephenson and Ana Rivera; that they were
joint (and several) owners thereof; and that either of them could
withdraw any part or the whole of said account during the
lifetime of both, and the balance, if any, upon the death of
either, belonged to the survivor. 17
xxx xxx xxx
money pool.
The validity of the contract seems debatable by reason of its "survivor-take-all"
feature, but in reality, that contract imposed a mere obligation with a term, the
term being death. Such agreements are permitted by the Civil Code. 24
Under Article 2010 of the Code:
ART. 2010. By an aleatory contract, one of the parties or both
reciprocally bind themselves to give or to do something in
consideration of what the other shall give or do upon the
happening of an event which is uncertain, or which is to occur at
an indeterminate time.
Under the aforequoted provision, the fulfillment of an aleatory contract depends
on either the happening of an event which is (1) "uncertain," (2) "which is to
occur at an indeterminate time." A survivorship agreement, the sale of a
sweepstake ticket, a transaction stipulating on the value of currency, and insurance
have been held to fall under the first category, while a contract for life annuity or
pension under Article 2021, et sequentia, has been categorized under the
second. 25 In either case, the element of risk is present. In the case at bar, the risk
was the death of one party and survivorship of the other.
However, as we have warned:
xxx xxx xxx
But although the survivorship agreement is per se not contrary
to law its operation or effect may be violative of the law. For
instance, if it be shown in a given case that such agreement is a
mere cloak to hide an inofficious donation, to transfer property
in fraud of creditors, or to defeat the legitime of a forced heir, it
may be assailed and annulled upon such grounds. No such vice
has been imputed and established against the agreement
involved in this case. 26
xxx xxx xxx
There is no demonstration here that the survivorship agreement had been executed
for such unlawful purposes, or, as held by the respondent court, in order to
frustrate our laws on wills, donations, and conjugal partnership.
The conclusion is accordingly unavoidable that Mrs. Vitug having predeceased
her husband, the latter has acquired upon her death a vested right over the
amounts under savings account No. 35342-038 of the Bank of America. Insofar as
the respondent court ordered their inclusion in the inventory of assets left by Mrs.
deposit of P2,250. Prior thereto, Arthur Canlas had an existing separate personal
checking account No. 210-442-41 in the same branch.
WHEREFORE, the decision of the respondent appellate court, dated June 29,
1987, and its resolution, dated February 9, 1988, are SET ASIDE.
When the respondent spouses opened their joint current account, the "new
accounts" teller of the bank pulled out from the bank's files the old and existing
signature card of respondent Arthur Canlas for Current Account No. 210-442-41
for use as I D and reference. By mistake, she placed the old personal account
number of Arthur Canlas on the deposit slip for the new joint checking account of
the spouses so that the initial deposit of P2,250 for the joint checking account was
miscredited to Arthur's personal account (p. 9, Rollo). The spouses subsequently
deposited other amounts in their joint account.
No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
However, when respondent Vivienne Canlas issued a check for Pl,639.89 in April
1977 and another check for P1,160.00 on June 1, 1977, one of the checks was
dishonored by the bank for insufficient funds and a penalty of P20 was deducted
from the account in both instances. In view of the overdrawings, the bank tried to
call up the spouses at the telephone number which they had given in their
application form, but the bank could not contact them because they actually reside
in Porac, Pampanga. The city address and telephone number which they gave to
the bank belonged to Mrs. Canlas' parents.
On December 15, 1977, the private respondents filed a complaint for damages
against CBTC in the Court of First Instance of Pampanga (p. 113, Rollo).
On February 27, 1978, the bank filed a motion to dismiss the complaint for
improper venue. The motion was denied.
GRIO-AQUINO, J.:
In a decision dated September 3, 1984, the Intermediate Appellate Court (now
Court of Appeals) in AC-G.R. CV No. 69178 entitled, "Arthur A. Canlas, et al.,
Plaintiff-Appellees vs. Commercial Bank and Trust Company of the Philippines,
Defendant-Appellant," reduced to P105,000 the P465,000 damage-award of the
trial court to the private respondents for an error of a bank teller which resulted in
the dishonor of two small checks which the private respondents had issued against
their joint current account. This petition for review of that decision was filed by
the Bank.
The respondent spouses, Arthur and Vivienne Canlas, opened a joint current
account No. 210-520-73 on April 25, 1977 in the Quezon City branch of the
Commercial Bank and Trust Company of the Philippines (CBTC) with an initial
During the pendency of the case, the Bank of the Philippine Islands (BPI) and
CBTC were merged. As the surviving corporation under the merger agreement
and under Section 80 (5) of the Corporation Code of the Philippines, BPI took
over the prosecution and defense of any pending claims, actions or proceedings by
and against CBTC.
On May 5, 1981, the Regional Trial Court of Pampanga rendered a decision
against BPI, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered sentencing
defendant to pay the plaintiff the following:
1. P 5,000.00 as actual damages;
2. P 150,000.00 for plaintiff Arthur Canlas and P150,000.00 for
plaintiff Vivienne S. Canlas representing moral damages;
3. P 150.000.00 as exemplary damages;
communicating with the private respondents in case any problems should arise
involving the account. No waiver of their provincial residence for purposes of
determining the venue of an action against the bank may be inferred from the socalled "misrepresentation" of their true residence.
The appellate court based its award of moral and exemplary damages, and
attorney's fees on its finding that the mistake committed by the new accounts
teller of the petitioner constituted "serious" negligence (p. 38, Rollo). Said court
further stressed that it cannot absolve the petitioner from liability for damages to
the private respondents, even on the assumption of an honest mistake on its part,
because of the embarrassment that even an honest mistake can cause its depositors
(p. 31, Rollo).
There is no merit in petitioner's argument that it should not be considered
negligent, much less held liable for damages on account of the inadvertence of its
bank employee for Article 1173 of the Civil Code only requires it to exercise the
diligence of a good father of family.
In Simex International (Manila), Inc. vs. Court of Appeals (183 SCRA 360, 367),
this Court stressed the fiduciary nature of the relationship between a bank and its
depositors and the extent of diligence expected of it in handling the accounts
entrusted to its care.
In every case, the depositor expects the bank to treat his account
with the utmost fidelity, whether such account consists only of a
few hundred pesos or of millions. The bank must record every
single transaction accurately, down to the last centavo, and as
promptly as possible. This has to be done if the account is to
reflect at any given time the amount of money the depositor can
dispose of as he sees fit, confident that the bank will deliver it as
and to whomever he directs. A blunder on the part of the bank,
such as the dishonor of a check without good reason, can cause
the depositor not a little embarrassment if not also financial loss
and perhaps even civil and criminal litigation.
The point is that as a business affected with public interest and
because of the nature of its functions, the bank is under
obligation to treat the accounts of its depositors with meticulous
care, always having in mind the fiduciary nature of their
relationship. . . .
The bank is not expected to be infallible but, as correctly observed by respondent
Appellate Court, in this instance, it must bear the blame for not discovering the
mistake of its teller despite the established procedure requiring the papers and
bank books to pass through a battery of bank personnel whose duty it is to check
and countercheck them for possible errors. Apparently, the officials and
employees tasked to do that did not perform their duties with due care, as may be
Issue: WON the petitioner bank was guilty of gross negligence in the handling of
private respondents bank account.
Held: There is no merit in petitioners argument that it should not be considered
negligent, much less held liable for damages on account of the inadvertence of its
bank employee for Article 1173 of the Civil Code only requires it to exercise the
While the bank's negligence may not have been attended with malice and bad
faith, nevertheless, it caused serious anxiety, embarrassment and humiliation to
the private respondents for which they are entitled to recover reasonable moral
damages (American Express International, Inc. vs. IAC, 167 SCRA 209). The
award of reasonable attorney's fees is proper for the private respondents were
compelled to litigate to protect their interest (Art. 2208, Civil Code). However, the
absence of malice and bad faith renders the award of exemplary damages
improper (Globe Mackay Cable and Radio Corp. vs. Court of Appeals, 176 SCRA
778).
THIRD DIVISION
SO ORDERED.
BPI vs. IAC, 206 SCRA 408, February 21, 1992
FERNAN, C.J.:
The instant petition for review on certiorari questions the propriety of the
respondent appellate court's award of nominal damages and attorney's fees to
private respondent whose name was used by a syndicate in encashing two U.S.
treasury checks at petitioner bank.
for investigation regarding the complaint filed by Go against him for estafa by
passing altered dollar checks. Initially, Jazmin was investigated by constabulary
officers in Lingayen, Pangasinan and later, at Camp Holmes, La Trinidad,
Benguet. He was shown xerox copies of U.S. Government checks Nos. 5-449-076
and 5-448-890 payable to the order of Floverto Jasmin in the respective amounts
of $1,810.00 and $913.40. The latter amount was actually for only $13.40; while
the records do not show the unaltered amount of the other treasury check.
Jazmin denied that he was the person whose name appeared on the checks; that he
received the same and that the signature on the indorsement was his. He likewise
denied that he opened an account with Solidbank or that he deposited and
encashed therein the said checks. Eventually, the investigators found that the
person named "Floverto Jazmin" who made the deposit and withdrawal with
Solidbank was an impostor.
On September 24, 1976, Jazmin filed with the then Court of First Instance of
Pangasinan, Branch II at Lingayen a complaint against Agustin Y. Go and the
Consolidated Bank and Trust Corporation for moral and exemplary damages in
the total amount of P90,000 plus attorney's fees of P5,000. He alleged therein that
Go allowed the deposit of the dollar checks and the withdrawal of their peso
equivalent "without ascertaining the identity of the depositor considering the
highly suspicious circumstances under which said deposit was made; that instead
of taking steps to establish the correct identity of the depositor, Go "immediately
and recklessly filed (the) complaint for estafa through alteration of dollar check"
against him; that Go's complaint was "an act of vicious and wanton recklessness
and clearly intended for no other purpose than to harass and coerce the plaintiff
into paying the peso equivalent of said dollar checks to the CBTC branch office in
Baguio City" so that Go would not be "disciplined by his employer;" that by
reason of said complaint, he was "compelled to present and submit himself" to
investigations by the constabulary authorities; and that he suffered humiliation
and embarrassment as a result of the filing of the complaint against him as well as
"great inconvenience" on account of his age (he was a septuagenarian) and the
distance between his residence and the constabulary headquarters. He averred that
his peace of mind and mental and emotional tranquility as a respected citizen of
the community would not have suffered had Go exercised "a little prudence" in
ascertaining the identity of the depositor and, for the "grossly negligent and
reckless act" of its employee, the defendant CBTC should also be held
responsible. 4
In their answer, the defendants contended that the plaintiff had no cause of action
against them because they acted in good faith in seeking the "investigative
assistance" of the Philippine Constabulary on the swindling operations against
banks by a syndicate which specialized in the theft, alteration and encashment of
dollar checks. They contended that contrary to plaintiff s allegations, they verified
the signature of the depositor and their tellers conducted an Identity check. As
counterclaim, they prayed for the award of P100,000 as compensatory and moral
The defendants appealed to the Court of Appeals. On January 24, 1984, said court
(then named Intermediate Appellate Court) rendered a decision 7 finding as
evident negligence Go's failure to notice the substantial difference in the identity
of the depositor and the payee in the check, concluded that Go's negligence in the
performance of his duties was "the proximate cause why appellant bank was
swindled" and that denouncing the crime to the constabulary authorities "merely
aggravated the situation." It ruled that there was a cause of action against the
defendants although Jazmin had nothing to do with the alteration of the checks,
because he suffered damages due to the negligence of Go. Hence, under Article
2180 of the Civil Code, the bank shall be held liable for its manager's negligence.
The appellate court, however, disallowed the award of moral and exemplary
damages and granted nominal damages instead. It explained thus:
While it is true that denouncing a crime is not negligence under which a
claim for moral damages is available, still appellants are liable under the
law for nominal damages. The fact that appellee did not suffer from any
loss is of no moment for nominal damages are adjudicated in order that a
right of the plaintiff, which has been violated or invaded by the
defendant, maybe vindicated or recognized and not for the purpose of
indemnifying the plaintiff for any loss suffered by him (Article 2221,
New Civil Code). These are damages recoverable where a legal right is
technically violated and must be vindicated against an invasion that has
produced no actual present loss of any kind, or where there has been a
breach of contract and no substantial injury or actual damages
whatsoever have been or can be shown (Elgara vs. Sandijas, 27 Phil.
284). They are not intended for indemnification of loss suffered but for
the vindication or recognition of a right violated or invaded (Ventanilla
vs. Centeno, L-14333, January 28, 1961). And, where the plaintiff as in
the case at bar, the herein appellee has established a cause of action, but
was not able to adduce evidence showing actual damages then nominal
damages may be recovered (Sia vs. Espenilla CA-G.R. Nos. 4520045201-R, April 21, 1975). Consequently, since appellee has no right to
claim for moral damages, then he may not likewise be entitled to
exemplary damages (Estopa vs. Piansay, No. L-14503, September 30,
1960). Considering that he had to defend himself in the criminal charges
filed against him, and that he was constrained to file the instant case, the
attorney's fees to be amended (sic) to plaintiff should be increased to
P3,000.00.
Accordingly, the appellate court ordered Go and Consolidated Bank and Trust
Corporation to pay jointly and severally Floverto Jazmin only NOMINAL
DAMAGES in the sum of Three Thousand Pesos (P 3,000.00) with interest at six
(6%) percent per annum until fully paid and One Thousand Pesos (P 1,000.00) as
attorney's fees and costs of litigation.
While at that stage of events private respondent was still out of the picture, it
definitely was the start of his consequent involvement as his name was illegally
used in the illicit transaction. Again, knowing that its viability depended on the
confidence reposed upon it by the public, the bank through its employees should
have exercised the caution expected of it.
In crimes and quasi-delicts, the defendant shall be liable for all damages which
are the natural and probable consequences of the act or omission complained of. It
is not necessary that such damages have been foreseen or could have reasonably
been foreseen by the defendant. 10 As Go's negligence was the root cause of the
complained inconvenience, humiliation and embarrassment, Go is liable to private
respondents for damages.
Anent petitioner bank's claim that it is not "co-equally liable" with Go for
damages, under the fifth paragraph of Article 2180 of the Civil Code,
"(E)mployers shall be liable for the damages caused by their employees . . . acting
within the scope of their assigned tasks." Pursuant to this provision, the bank is
responsible for the acts of its employee unless there is proof that it exercised the
diligence of a good father of a family to prevent the damage.11 Hence, the burden
of proof lies upon the bank and it cannot now disclaim liability in view of its own
failure to prove not only that it exercised due diligence to prevent damage but that
it was not negligent in the selection and supervision of its employees.
WHEREFORE, the decision of the respondent appellate court is hereby affirmed.
Costs against the petitioners.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 113236
March 5, 2001
42128
940,190.00
42129
880,000.00
42130
981,500.00
The facts of this case, adopted by the CA and based on findings by the trial court,
are as follows:
. . . [D]efendant is a banking corporation. It operates under a certificate
of authority issued by the Central Bank of the Philippines, and among its
activities, accepts savings and time deposits. Said defendant had as one
of its client-depositors the Fojas-Arca Enterprises Company ("FojasArca" for brevity). Fojas-Arca maintaining a special savings account
with the defendant, the latter authorized and allowed withdrawals of
funds therefrom through the medium of special withdrawal slips. These
are supplied by the defendant to Fojas-Arca.
In January 1978, plaintiff and Fojas-Arca entered into a "Franchised
Dealership Agreement" (Exh. B) whereby Fojas-Arca has the privilege to
purchase on credit and sell plaintiff's products.
On January 14, 1978 up to May 15, 1978. Pursuant to the aforesaid
Agreement, Fojas-Arca purchased on credit Firestone products from
plaintiff with a total amount of P4,896,000.00. In payment of these
purchases, Fojas-Arca delivered to plaintiff six (6) special withdrawal
slips drawn upon the defendant. In turn, these were deposited by the
plaintiff with its current account with the Citibank. All of them were
honored and paid by the defendant. This singular circumstance made
plaintiff believe [sic] and relied [sic] on the fact that the succeeding
special withdrawal slips drawn upon the defendant would be equally
sufficiently funded. Relying on such confidence and belief and as a direct
consequence thereof, plaintiff extended to Fojas-Arca other purchases on
credit of its products.
On the following dates Fojas-Arca purchased Firestone products on
credit (Exh. M, I, J, K) and delivered to plaintiff the corresponding
special withdrawal slips in payment thereof drawn upon the defendant, to
wit:
DATE
WITHDRAWAL
SLIP NO.
42127
AMOUNT
P1,198,092.80
Fojas-Arca averred that the pecuniary losses it suffered are a caused by and
In the ordinary and usual course of banking operations, current account deposits
are accepted by the bank on the basis of deposit slips prepared and signed by the
depositor, or the latter's agent or representative, who indicates therein the current
account number to which the deposit is to be credited, the name of the depositor
or current account holder, the date of the deposit, and the amount of the
deposit either in cash or in check.15
Whether or not the acceptance and payment of the special withdrawal slips
The withdrawal slips deposited with petitioner's current account with Citibank
were not checks, as petitioner admits. Citibank was not bound to accept the
withdrawal slips as a valid mode of deposit. But having erroneously accepted
them as such, Citibank and petitioner as account-holder must bear the risks
attendant to the acceptance of these instruments. Petitioner and Citibank could not
now shift the risk and hold private respondent liable for their admitted mistake.
WHEREFORE, the petition is DENIED and the decision of the Court of Appeals
in CA-G.R. CV No. 29546 is AFFIRMED. Costs against petitioner.
SO ORDERED.
Firestone Tire & rubber Co. vs. Court of Appeals
GR No. 113236
March 5, 2001
Quisumbing, J.:
Facts:
Forjas-Arca Enterprise Company is maintaining a special savings account
with Luzon Development Bank, the latter authorized and allowed withdrawals of
funds though the medium of special withdrawal slips. These are supplied by
After validation, Yabut would then fill up the name of RMC in the space left blank
in the duplicate copy and change the account number written thereon, which is
that of her husband's, and make it appear to be RMC's account number, i.e., C.A.
No. 53-01980-3. With the daily remittance records also prepared by Ms. Yabut
and submitted to private respondent RMC together with the validated duplicate
slips with the latter's name and account number, she made her company believe
that all the while the amounts she deposited were being credited to its account
when, in truth and in fact, they were being deposited by her and credited by the
petitioner bank in the account of Cotas. This went on in a span of more than one
(1) year without private respondent's knowledge.
Upon discovery of the loss of its funds, RMC demanded from petitioner bank the
return of its money, but as its demand went unheeded, it filed a collection suit
before the Regional Trial Court of Pasig, Branch 160. The trial court found
petitioner bank negligent and ruled as follows:
In the ordinary and usual course of banking operations, current account deposits
are accepted by the bank on the basis of deposit slips prepared and signed by the
depositor, or the latter's agent or representative, who indicates therein the current
account number to which the deposit is to be credited, the name of the depositor
or current account holder, the date of the deposit, and the amount of the deposit
either in cash or checks. The deposit slip has an upper portion or stub, which is
detached and given to the depositor or his agent; the lower portion is retained by
the bank. In some instances, however, the deposit slips are prepared in duplicate
by the depositor. The original of the deposit slip is retained by the bank, while the
duplicate copy is returned or given to the depositor.
From May 5, 1975 to July 16, 1976, petitioner Romeo Lipana claims to have
entrusted RMC funds in the form of cash totalling P304,979.74 to his secretary,
Irene Yabut, for the purpose of depositing said funds in the current accounts of
RMC with PBC. It turned out, however, that these deposits, on all occasions, were
not credited to RMC's account but were instead deposited to Account No. 5301734-7 of Yabut's husband, Bienvenido Cotas who likewise maintains an account
with the same bank. During this period, petitioner bank had, however, been
regularly furnishing private respondent with monthly statements showing its
current accounts balances. Unfortunately, it had never been the practice of Romeo
Lipana to check these monthly statements of account reposing complete trust and
confidence on petitioner bank.
Irene Yabut's modus operandi is far from complicated. She would accomplish two
(2) copies of the deposit slip, an original and a duplicate. The original showed the
name of her husband as depositor and his current account number. On the
duplicate copy was written the account number of her husband but the name of the
account holder was left blank. PBC's teller, Azucena Mabayad, would, however,
validate and stamp both the original and the duplicate of these deposit slips
retaining only the original copy despite the lack of information on the duplicate
slip. The second copy was kept by Irene Yabut allegedly for record purposes.
Ms. Mabayad, notwithstanding the fact that one of the deposit slips was not
completely accomplished.
copy of the deposit slip, Ms. Irene Yabut would not have the facility with which to
perpetrate her fraudulent scheme with impunity. Apropos, once again, is the
pronouncement made by the respondent appellate court, to wit:
Furthermore, under the doctrine of "last clear chance" (also referred to, at times as
"supervening negligence" or as "discovered peril"), petitioner bank was indeed the
culpable party. This doctrine, in essence, states that where both parties are
negligent, but the negligent act of one is appreciably later in time than that of the
other, or when it is impossible to determine whose fault or negligence should be
attributed to the incident, the one who had the last clear opportunity to avoid the
impending harm and failed to do so is chargeable with the consequences
thereof.19 Stated differently, the rule would also mean that an antecedent
negligence of a person does not preclude the recovery of damages for the
supervening negligence of, or bar a defense against liability sought by another, if
the latter, who had thelast fair chance, could have avoided the impending harm by
the exercise of due diligence. 20 Here, assuming that private respondent RMC was
negligent in entrusting cash to a dishonest employee, thus providing the latter with
the opportunity to defraud the company, as advanced by the petitioner, yet it
cannot be denied that the petitioner bank, thru its teller, had the last clear
opportunity to avert the injury incurred by its client, simply by faithfully
observing their self-imposed validation procedure.
At this juncture, it is worth to discuss the degree of diligence ought to be
exercised by banks in dealing with their clients.
The New Civil Code provides:
Art. 1173. The fault or negligence of the obligor consists in the
omission of that diligence which is required by the nature of the
obligation and corresponds with the circumstances of the
persons, of the time and of the place. When negligence shows
the petitioners are entitled to claim reimbursement from her for whatever they
shall be ordered to pay in this case.
In the case of banks, however, the degree of diligence required is more than that
of a good father of a family. Considering the fiduciary nature of their relationship
with their depositors, banks are duty bound to treat the accounts of their clients
with the highest degree of care. 21
As elucidated in Simex International (Manila), Inc. v. Court of Appeals, 22 in
every case, the depositor expects the bank to treat his account with the utmost
fidelity, whether such account consists only of a few hundred pesos or of millions.
The bank must record every single transaction accurately, down to the last
centavo, and as promptly as possible. This has to be done if the account is to
reflect at any given time the amount of money the depositor can dispose as he sees
fit, confident that the bank will deliver it as and to whomever he directs. A blunder
on the part of the bank, such as the failure to duly credit him his deposits as soon
as they are made, can cause the depositor not a little embarrassment if not
financial loss and perhaps even civil and criminal litigation.
The point is that as a business affected with public interest and because of the
nature of its functions, the bank is under obligation to treat the accounts of its
depositors with meticulous care, always having in mind the fiduciary nature of
their relationship. In the case before us, it is apparent that the petitioner bank was
remiss in that duty and violated that relationship.
Petitioners nevertheless aver that the failure of respondent RMC to cross-check
the bank's statements of account with its own records during the entire period of
more than one (1) year is the proximate cause of the commission of subsequent
frauds and misappropriation committed by Ms. Irene Yabut.
We do not agree.
SO ORDERED.
While it is true that had private respondent checked the monthly statements of
account sent by the petitioner bank to RMC, the latter would have discovered the
loss early on, such cannot be used by the petitioners to escape liability. This
omission on the part of the private respondent does not change the fact that were it
not for the wanton and reckless negligence of the petitioners' employee in
validating the incomplete duplicate deposit slips presented by Ms. Irene Yabut, the
loss would not have occurred. Considering, however, that the fraud was
committed in a span of more than one (1) year covering various deposits, common
human experience dictates that the same would not have been possible without
any form of collusion between Ms. Yabut and bank teller Mabayad. Ms. Mabayad
was negligent in the performance of her duties as bank teller nonetheless. Thus,
EN BANC
[G.R. No. 94723. August 21, 1997]
KAREN E. SALVACION, minor, thru Federico N. Salvacion, Jr., father and
Natural Guardian, and Spouses FEDERICO N. SALVACION, JR.,
and EVELINA E. SALVACION, petitioners, vs. CENTRAL BANK
OF THE PHILIPPINES, CHINA BANKING CORPORATION and
GREG BARTELLI y NORTHCOTT, respondents.
Meanwhile, on April 10, 1989, the trial court granted petitioners motion for
leave to serve summons by publication in the Civil Case No. 89-3214 entitled
Karen Salvacion. et al. vs. Greg Bartelli y Northcott. Summons with the complaint
was published in the Manila Times once a week for three consecutive weeks. Greg
Bartelli failed to file his answer to the complaint and was declared in default on
August 7, 1989. After hearing the case ex-parte, the court rendered judgment in
favor of petitioners on March 29, 1990, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and
against defendant, ordering the latter:
This is in reply to your letter dated April 25, 1989 regarding your
inquiry on Section 113, CB Circular No. 960 (1983).
He then got a Johnsons Baby Oil and he applied it to his sex organ as well as to
her sex organ. After that he forced his sex organ into her but he was not able to do
so. While he was doing it, Karen found it difficult to breathe and she perspired a
lot while feeling severe pain. She merely presumed that he was able to insert his
sex organ a little, because she could not see. Karen could not recall how long the
defendant was in that position. (Id., pp. 8-9)
After that, he stood up and went to the bathroom to wash. He also told Karen to
take a shower and he untied her hands. Karen could only hear the sound of the
water while the defendant, she presumed, was in the bathroom washing his sex
organ. When she took a shower more blood came out from her. In the meantime,
defendant changed the mattress because it was full of blood. After the shower,
Karen was allowed by defendant to sleep. She fell asleep because she got tired
crying. The incident happened at about 4:00 p.m. Karen had no way of
determining the exact time because defendant removed her watch.Defendant did
not care to give her food before she went to sleep. Karen woke up at about 8:00
oclock the following morning. (Id., pp. 9-10)
The following day, February 5, 1989, a Sunday, after breakfast of biscuit and coke
at about 8:30 to 9:00 a.m. defendant raped Karen while she was still bleeding. For
lunch, they also took biscuit and coke.She was raped for the second time at about
12:00 to 2:00 p.m. In the evening, they had rice for dinner which defendant had
stored downstairs; it was he who cooked the rice that is why it looks like
lugaw. For the third time, Karen was raped again during the night. During those
three times defendant succeeded in inserting his sex organ but she could not say
whether the organ was inserted wholly.
Karen did not see any firearm or any bladed weapon. The defendant did not tie her
hands and feet nor put a tape on her mouth anymore but she did not cry for help
for fear that she might be killed; besides, all those windows and doors were
closed. And even if she shouted for help, nobody would hear her. She was so
afraid that if somebody would hear her and would be able to call a police, it was
still possible that as she was still inside the house, defendant might kill
her. Besides, the defendant did not leave that Sunday, ruling out her chance to call
for help. At nighttime he slept with her again. (TSN, Aug. 15, 1989, pp. 12-14)
On February 6, 1989, Monday, Karen was raped three times, once in the morning
for thirty minutes after breakfast of biscuits; again in the afternoon; and again in
the evening. At first, Karen did not know that there was a window because
everything was covered by a carpet, until defendant opened the window for
around fifteen minutes or less to let some air in, and she found that the window
was covered by styrofoam and plywood. After that, he again closed the window
with a hammer and he put the styrofoam, plywood, and carpet back. (Id., pp. 1415)
That Monday evening, Karen had a chance to call for help, although defendant
left but kept the door closed. She went to the bathroom and saw a small window
needed to promote the public interest and the general welfare; that the State
cannot just stand idly by while a considerable segment of the society suffers from
economic distress; that the State had to take some measures to encourage
economic development; and that in so doing persons and property may be
subjected to some kinds of restraints or burdens to secure the general welfare or
public interest. Respondent Central Bank also alleges that Rule 39 and Rule 57 of
the Revised Rules of Court provide that some properties are exempted from
execution/attachment especially provided by law and R.A. No. 6426 as amended
is such a law, in that it specifically provides, among others, that foreign currency
deposits shall be exempted from attachment, garnishment, or any other order or
process of any court, legislative body, government agency or any administrative
body whatsoever.
For its part, respondent China Banking Corporation, aside from giving
reasons similar to that of respondent Central Bank, also stated that respondent
China Bank is not unmindful of the inhuman sufferings experienced by the minor
Karen E. Salvacion from the beastly hands of Greg Bartelli; that it is not only too
willing to release the dollar deposit of Bartelli which may perhaps partly mitigate
the sufferings petitioner has undergone; but it is restrained from doing so in view
of R.A. No. 6426 and Section 113 of Central Bank Circular No. 960; and that
despite the harsh effect to these laws on petitioners, CBC has no other alternative
but to follow the same.
This court finds the petition to be partly meritorious.
On the other hand, respondent Central Bank, in its Comment alleges that the
Monetary Board in issuing Section 113 of CB Circular No. 960 did not exceed its
power or authority because the subject Section is copied verbatim from a portion
of R.A. No. 6426 as amended by P.D. 1246. Hence, it was not the Monetary Board
that grants exemption from attachment or garnishment to foreign currency
deposits, but the law (R.A. 6426 as amended) itself; that it does not violate the
substantive due process guaranteed by the Constitution because a.) it was based
on a law; b.) the law seems to be reasonable; c.) it is enforced according to regular
methods of procedure; and d.) it applies to all members of a class.
Expanding, the Central Bank said; that one reason for exempting the foreign
currency deposits from attachment, garnishment or any other order process of any
court, is to assure the development and speedy growth of the Foreign Currency
Deposit System and the Offshore Banking System in the Philippines; that another
reason is to encourage the inflow of foreign currency deposits into the banking
institutions thereby placing such institutions more in a position to properly
channel the same to loans and investments in the Philippines, thus directly
contributing to the economic development of the country; that the subject section
is being enforced according to the regular methods of procedure; and that it
applies to all currency deposits made by any person and therefore does not violate
the equal protection clause of the Constitution.
Respondent Central Bank further avers that the questioned provision is
Petitioner deserves to receive the damages awarded to her by the court. But
this petition for declaratory relief can only be entertained and treated as a petition
for mandamus to require respondents to honor and comply with the writ of
execution in Civil Case No. 89-3214.
The Court has no original and exclusive jurisdiction over a petition for
declatory relief.[2] However, exceptions to this rule have been recognized. Thus,
where the petition has far-reaching implications and raises questions that should
be resolved, it may be treated as one for mandamus.[3]
Here is a child, a 12-year old girl, who in her belief that all Americans are
good and in her gesture of kindness by teaching his alleged niece the Filipino
language as requested by the American, trustingly went with said stranger to his
apartment, and there she was raped by said American tourist Greg Bartelli. Not
once, but ten times. She was detained therein for four (4) days. This American
tourist was able to escape from the jail and avoid punishment. On the other hand,
the child, having received a favorable judgment in the Civil Case for damages in
the amount of more than P1,000,000.00, which amount could alleviate the
humiliation, anxiety, and besmirched reputation she had suffered and may
continue to suffer for a long, long time; and knowing that this person who had
wronged her has the money, could not, however get the award of damages because
of this unreasonable law. This questioned law, therefore makes futile the favorable
It would be unthinkable, that the questioned Section 113 of Central Bank No.
960 would be used as a device by accused Greg Bartelli for wrongdoing, and in so
doing, acquitting the guilty at the expense of the innocent.
Call it what it may but is there no conflict of legal policy here? Dollar
against Peso? Upholding the final and executory judgment of the lower court
against the Central Bank Circular protecting the foreign depositor? Shielding or
protecting the dollar deposit of a transient alien depositor against injustice to a
national and victim of a crime? This situation calls for fairness legal tyranny.
We definitely cannot have both ways and rest in the belief that we have
served the ends of justice.
IN VIEW WHEREOF, the provisions of Section 113 of CB Circular No.
960 and PD No. 1246, insofar as it amends Section 8 of R.A. 6426 are hereby held
to be INAPPLICABLE
to this case because of its peculiar
circumstances. Respondents are hereby REQUIRED to COMPLY with the writ of
execution issued in Civil Case No. 89-3214, Karen Salvacion, et al. vs. Greg
Bartelli y Northcott, by Branch CXLIV, RTC Makati and to RELEASE to
petitioners the dollar deposit of respondent Greg Bartelli y Northcott in such
amount as would satisfy the judgment.
SO ORDERED.
KAREN E. SALVACION, minor, thru Federico N. Salvacion, Jr., father and
Natural Guardian, and Spouses FEDERICO N. SALVACION, JR., and
EVELINA
E.
SALVACION, petitioners,
vs.
For the reasons stated above, the Solicitor General thus submits that the
dollar deposit of respondent Greg Bartelli is not entitled to the
protection of Section 113 of Central Bank Circular No. 960 and PD No.
1246 against attachment, garnishment or other court processes.[6]
In fine, the application of the law depends on the extent of its
justice. Eventually, if we rule that the questioned Section 113 of Central Bank
Circular No. 960 which exempts from attachment, garnishment, or any other order
or process of any court. Legislative body, government agency or any
administrative body whatsoever, is applicable to a foreign transient, injustice
would result especially to a citizen aggrieved by a foreign guest like accused Greg
Bartelli. This would negate Article 10 of the New Civil Code which provides that
in case of doubt in the interpretation or application of laws, it is presumed that the
lawmaking body intended right and justice to prevail. Ninguno non deue
enriquecerse tortizerzmente con damo de otro.Simply stated, when the statute is
silent or ambiguous, this is one of those fundamental solutions that would respond
to the vehement urge of conscience. (Padilla vs. Padilla, 74 Phil. 377)
CENTRAL
BANK
OF
THE
PHILIPPINES,
CHINA
BANKING
later invoked R.A. No. 1405 as its answer to it. Deputy Sheriff sent his reply to
stated, when the statute is silent or ambiguous, this is one of those fundamental
CBC saying that the garnishment did not violate the secrecy of bank deposits
unthinkable, that the questioned Section 113 of Central Bank No. 960 would be
made by virtue of a court order which has placed the subject deposits in custodia
legis. CBC replied and invoked Section 113 of Central Bank Circular No. 960 to
the effect that the dollar deposits of Greg Bartelli are exempt from attachment,
garnishment, or any other order or process of any court, legislative body,
Call it what it may but is there no conflict of legal policy here? Dollar against
Peso? Upholding the final and executory judgment of the lower court against the
ISSUE:
victim of a crime? This situation calls for fairness against legal tyranny.
Republic of the Philippines
SUPREME COURT
Manila
Whether or not Sec. 113 of Central Bank Circular 960 and Sec. 8 of RA 6426
amended by PD 1246 otherwise known as the Foreign Currency Deposit Act be
made applicable to a foreign transient.
THIRD DIVISION
HELD:
NO. The provisions of Section 113 of CB Circular No. 960 and PD No. 1246,
DECISION
RATIO:
[T]he application of the law depends on the extent of its justice. Eventually, if we
rule that the questioned Section 113 of Central Bank Circular No. 960 which
exempts from attachment, garnishment, or any other order or process of any court,
legislative body, government agency or any administrative body whatsoever, is
applicable to a foreign transient, injustice would result especially to a citizen
aggrieved by a foreign guest like accused Greg Bartelli. This would negate Article
AUSTRIA-MARTINEZ, J>:
The sole issue for resolution in the Petition for Review on Certiorari1 before us is
whether the Court of Appeals (CA) committed an error of law in its July 4, 2002
Decision2 in CA-G.R. SP No. 62919 in ordering the implementation of a writ of
execution against the funds of the National Electrification Administration (NEA).
There being no dispute as to the facts,3 the following findings of the CA are
adopted:4
10 of the New Civil Code which provides that in case of doubt in the
interpretation or application of laws, it is presumed that the lawmaking body
intended right and justice to prevail.
Danilo Morales and 105 other employees5 (Morales, et al.) of the NEA filed with
the Regional Trial Court (RTC), Branch 88, Quezon City, a class suit6 against their
employer for payment of rice allowance, meal allowance, medical/dental/optical
Budget and Management within 30 days from receipt and every 30 days
thereafter, until the 90 day period has lapsed.
The motion to direct DBP to release to the petitioners the NEA funds garnished
earlier amounting to P16,591.429 is also DENIED.
SO ORDERED.18 (Emphasis ours)
Morales, et al. filed a Partial Motion for Reconsideration19 but the RTC denied it.20
Meanwhile, in a letter dated June 28, 2000, former DBM Secretary Benjamin E.
Diokno informed NEA Administrator Conrado M. Estrella III of the denial of the
NEA request for a supplemental budget on the ground that the claims under R.A.
No. 6758 which the RTC had ordered to be settled cannot be paid because
Morales, et al. are not "incumbents of positions as of July 1, 1989 who are
actually receiving and enjoying such benefits."21
Moreover, in an Indorsement dated March 23, 2000, the Commission on Audit
(COA) advised NEA against making further payments in settlement of the claims
of Morales, et al.. Apparently, COA had already passed upon claims similar to
those of Morales, et al. in its earlier "Decision No. 95-074" dated January 25,
1995. Portions of the Indorsement read as follows:
This Office concurs with the above view. The court may have exceeded its
jurisdiction when it entertained the petition for the entitlement of the after-hired
employees which had already been passed upon by this Commission in COA
Decision No. 95-074 dated January 25, 1995. There, it was held that: "the
adverse action of this Commission sustaining the disallowance made by the
Auditor, NEA, on the payment of fringe benefits granted to NEA employees hired
from July 1, 1989 to October 31, 1989 is hereby reconsidered. Accordingly,
subject disallowance is lifted."
Thus, employees hired after the extended date of October 31, 1989, pursuant to
the above COA decision cannot defy that decision by filing a petition for
mandamus in the lower court. Presidential Decree No. 1445 and the 1987
Constitution prescribe that the only mode for appeal from decisions of this
Commission is on certiorari to the Supreme Court in the manner provided by
law and the Rules of Court. Clearly, the lower court had no jurisdiction when it
entertained the subject case of mandamus. And void decisions of the lower
court can never attain finality, much less be executed. Moreover, COA was not
made a party thereto, hence, it cannot be compelled to allow the payment of
claims on the basis of the questioned decision.
PREMISES CONSIDERED, the auditor of NEA should post-audit the
disbursement vouchers on the bases of this Commission's decision particularly the
above-cited COA Decision No. 94-074 [sic] and existing rules and regulations, as
Parenthetically, the records at hand do not indicate when Morales, et al. were
appointed. Even the December 16, 1999 RTC Decision is vague for it merely
states that they were appointed after June 30, 1989, which could mean that they
were appointed either before the cut-off date of October 31, 1989 or after.23 Thus,
there is not enough basis for this Court to determine that the foregoing COA
Decision No. 95-074 adversely affects Morales, et al..Moreover, the records do
not show whether COA actually questioned the December 16, 1999 RTC Decision
before this Court.
On July 18, 2000, Morales, et al. filed a Motion for an Order to Implement Writ of
Execution, pointing out that the reason cited in the May 17, 2000 RTC Order for
suspension of the implementation of the writ of execution no longer exists given
that DBM already denied NEAs request for funding.24 They also filed a Petition
to Cite NEA Board of Administrators Mario Tiaoqui, Victoria Batungbacal,
Federico Puno and Remedios Macalingcag in Contempt of Court25 for allegedly
withholding appropriations to cover their claims.
Acting first on the petition for contempt, the RTC issued a Resolution dated
December 11, 2000, to wit:
The court is aware of its order dated May 17, 2000, particularly the directive upon
respondents to inform this court and the petitioners of the prospect of obtaining
funds from the Department of Budget and Management within the period
specified. From the comments of the respondents, it appears they did or are
doing their best to secure the needed funds to satisfy the judgment sought to be
enforced. In this regard, Administrative Circular No. 10-2000 of the Supreme
Court provides:
"In order to prevent possible circumvention of the rules and procedures of the
Commission on Audit, judges are hereby enjoined to observe utmost caution,
prudence and judiciousness in the issuance of writs of execution to satisfy money
judgments against government agencies and local government units.
Judges should bear in mind that in Commissioner of Public Highways v. San
Diego (31 SCRA 617, 625 [1970], this Court explicitly stated:
"The universal rule that where the State gives its consent to be sued by private
parties either by general or special law, it may limit claimant's action only up to
the completion of proceedings anterior to the stage of execution and the power of
the court ends when the judgment is rendered, since government funds and
properties may not be seized under writs of execution or garnishment to satisfy
such judgment, is based on obvious considerations of public policy.
of a sum of money.
The RTC exceeded the scope of its judgment when, in its February 22, 2000 Writ
of Execution, it directed petitioners to "extend to [respondents] the benefits and
allowances to which they are entitled but which until now they have been
deprived of as enumerated under Sec. 5 of DBM CCC No. 10 and x x x to cause
their inclusion in the Provident Fund Membership."35 Worse, it countenanced the
issuance of a notice of garnishment against the funds of petitioners with DBP to
the extent of P16,581,429.00 even when no such amount was awarded in its
December 16, 1999 Decision.
However, in its subsequent Orders dated May 17, 2000 and January 8, 2001, the
RTC attempted to set matters right by directing the parties to now await the
outcome of the legal processes for the settlement of respondents claims.
That is only right.
In its plain text, the December 16, 1999 RTC Decision merely directs petitioners
to "settle the claims of [respondents] and other employees similarly situated." 34 It
does not require petitioners to pay a certain sum of money to respondents. The
judgment is only for the performance of an act other than the payment of money,
implementation of which is governed by Section 11, Rule 39 of the Rules of
Court, which provides:
Section 11. Execution of special judgments. - When a judgment requires the
performance of any act other than those mentioned in the two preceding sections,
a certified copy of the judgment shall be attached to the writ of execution and
shall be served by the officer upon the party against whom the same is rendered,
or upon any other person required thereby, or by law, to obey the same, and such
party or person may be punished for contempt if he disobeys such judgment.
Garnishment cannot be employed to implement such form of judgment. Under
Section 9 of Rule 39, to wit:
Section 9. Execution of judgments for money, how enforced. xxxx
(c) Garnishment of debts and credits. - The officer may levy on debts due the
judgment obligor and other credits, including bank deposits, financial interests,
royalties, commissions and other personal property not capable of manual
delivery in the possession or control of third parties. Levy shall be made by
serving notice upon the person owing such debts or having in his possession or
control such credits to which the judgment obligor is entitled. The garnishment
shall cover only such amount as will satisfy the judgment and all lawful fees.
Garnishment is proper only when the judgment to be enforced is one for payment