Metrobank v. JMC (Case Digest. G.R. No. 235511)
CASE DIGEST: 
THIRD DIVISION [ G.R. No. 235511, June 20, 2018 ] METROPOLITAN BANK AND TRUST COMPANY, PETITIONER, VS. JUNNEL'S MARKETING CORPORATION, PURIFICACION DELIZO, AND BANK OF COMMERCE, RESPONDENTS.
[G.R. No. 235565] BANK OF COMMERCE, PETITIONER, VS. JUNNEL'S MARKETING CORPORATION, PURIFICACION DELIZO, AND METROPOLITAN BANK AND TRUST COMPANY RESPONDENTS. DECISION. VELASCO JR., J.:
SUMMARY OF FACTS: The instant case involves the unauthorized payment of valid checks, i.e., the payment of checks to persons other than the payee named therein or his order. The subject checks herein are considered valid because they are complete and bear genuine signatures.
FACTS: Respondent Junnel's Marketing Corporation (JMC) is a domestic corporation engaged in the business of selling wines and liquors. It has a current account with Metrobank[4] from which it draws checks to pay its different suppliers. Among JMC's suppliers are Jardine Wines and Spirits (Jardine) and Premiere Wines (Premiere).
ANOMALY discovered by JMC involving eleven (11) checks (subject checks) it had issued to the orders of Jardine and Premiere on various dates between October 1998 to May 1999. CHARGED against JMC's current account but were, for some reason, not covered by any official receipt from Jardine or Premiere. The subject checks, which are all crossed checks and amounting to P1,481,292.00 in total. Seven checks to Jardine. Four checks to Premiere.
Meanwhile, on 30 April 2000, respondent Purificacion Delizo (Delizo), a former accountant of JMC, confessed that, during her time as an accountant for JMC, she stole several company checks drawn against JMC's current account. She professed that the said checks were never given to the named payees but were forwarded by her to one Lita Bituin (Bituin). Delizo further admitted that she, Bituin and an unknown bank manager colluded to cause the deposit and encashing of the stolen checks and shared in the proceeds thereof.
JMC surmised that the subject checks are among the checks purportedly stolen by Delizo.RTC. JMC collected sum of money[8] against Delizo, Bankcom and Metrobank. Alleged "tortious and felonious" scheme of Delizo and the "negligent and unlawful acts" of Bankcom and Metrobank.
RTC ruled that Bankcom and Metrobank are liable based on a 2/3-1/3 ratio. CA agreed but said Metrobank's liability is based on failure to ascertain that only four (4) out of the 11 subject checks were stamped by Bankcom with the express guarantees "ALL PRIOR ENDORSEMENTS AND/OR LACK OF ENDORSEMENT GUARANTEED" and "NON-NEGOTIABLE" as required by Section 17 of the PCHC Rules and Regulations.[18]
ISSUES:
THEREFORE, the Court held (1) Metrobank liable to return to JMC the entire amount of the subject checks plus interest and (2) Bankcom liable to reimburse Metrobank the same amount plus interest.
ISSUE [1]: Both Bank of America and the present case involved crossed checks payable to the order of a specified payee that were deposited in a collecting bank under an account not belonging to the payee or his indorsee but which, upon presentment, were subsequently honored by the drawee bank.
Bank of America held that, in cases involving the unauthorized payment of valid checks, the drawee bank becomes liable to the drawer for the amount of the checks but the drawee bank, in turn, can seek reimbursement from the collecting bank. The rationale of this rule on sequence of recovery lies in the very basis and nature of the liability of a drawee bank and a collecting bank in said cases. The liability of the drawee bank is based on its contract with the drawer and its duty to charge to the latter's accounts only those payables authorized by him. A drawee bank is under strict liability to pay the check only to the payee or to the payee's order. When the drawee bank pays a person other than the payee named in the check, it does not comply with the terms of the check and violates its duty to charge the drawer's account only for properly payable items.(BDO Unibank v. Lao[22])
On the other hand, the liability of the collecting bank is anchored on its guarantees as the last endorser of the check. Under Section 66 of the Negotiable Instruments Law, an endorser warrants "that the instrument is genuine and in all respects what it purports to be; that he has good title to it; that all prior parties had capacity to contract; and that the instrument is at the time of his endorsement valid and subsisting."
It has been repeatedly held that in check transactions, the collecting bank generally suffers the loss because it has the duty to ascertain the genuineness of all prior endorsements considering that the act of presenting the check for payment to the drawee is an assertion that the party making the presentment has done its duty to ascertain the genuineness of the endorsements. If any of the warranties made by the collecting bank turns out to be false, then the drawee bank may recover from it up to the amount of the check.
ISSUE [2]: Metrobank is Liable to JMC.
Metrobank, as drawee bank, is liable to return to JMC the amount of the subject checks.
A drawee bank is contractually obligated to follow the explicit instructions of its drawer-clients when paying checks issued by them.[23] The drawer's instructions -- including the designation of the payee or to whom the check should be paid -- are reflected on the face and by the terms thereof.[24] When a drawee bank pays a person other than the payee named on the check, it essentially commits a breach of its obligation and renders the payment it made unauthorized.[25] In such cases and under normal circumstances, the drawee bank may be held liable to the drawer for the amount charged against the latter's account.[26]
Such liability is a strict liability.[27] This means that once an unauthorized payment on a check has been made, the resulting liability of the drawee bank to the drawer for such payment attaches even if the former had acted merely upon the guarantees of a collecting bank.[28] Indeed, it is only when the unauthorized payment of a check had been caused or was attended by the fault or negligence of the drawer himself can the drawee bank be excused, whether wholly or partially, from being held liable to the drawer for the said payment.[29]
In the present case, it is apparent that Metrobank had breached JMC's instructions when it paid the value of the subject checks to Bankcom for the benefit of a certain Account No. 0015-32987-7. The payment to Account No. 0015-32987-7 was unauthorized as it was established that the said account does not belong to Jardine or Premiere, the payees of the subject checks, or to their indorsees. In addition, causal or concurring negligence on the part of JMC had not been proven. Under such circumstances, Metrobank is clearly liable to return to JMC the amount of the subject checks.
ISSUE [3]: No, Metrobank's insistence that it should be absolved for it merely complied with Section 17 of the PCHC Rules and Regulations and thereby only relied upon the concomitant guarantees of Bankcom when it paid the subject checks, cannot stand insofar as JMC is concerned. The bank on which a check is drawn, known as the drawee bank, is under strict liability, based on the contract between the bank and its customer (drawer), to pay the check only to the payee or the payee's order.
Accordingly, we find Metrobank liable to return to JMC the amount of the subject checks.
ISSUE [4]: Bankcom is Liable to Metrobank
While Metrobank's reliance upon the guarantees of Bankcom does not excuse it from being liable to JMC, such reliance ENABLES Metrobank to seek reimbursement from Bankcom -- the collecting bank.
A collecting or presenting bank-i.e., the bank that receives a check for deposit and that presents the same to the drawee bank for payment-is an indorser of such check.[31] When a collecting bank presents a check to the drawee bank for payment, the former thereby assumes the same warranties assumed by an indorser of a negotiable instrument pursuant to Section 66 of the Negotiable Instruments Law. These warranties are: (1) that the instrument is genuine and in all respects what it purports to be; (2) that the indorser has good title to it; (3) that all prior parties had capacity to contract; and (4) that the instrument is, at the time of the indorsement, valid and subsisting.[32] If any of the foregoing warranties turns out to be false, a collecting hank becomes liable to the drawee bank for payments made under such false warranty.
Here, it is clear that Bankcom had assumed the warranties of an indorser when it forwarded the subject checks to PCHC for presentment to Metrobank. By such presentment, Bankcom effectively guaranteed to Metrobank that the subject checks had been deposited with it to an account that has good title to the same. This guaranty, however, is a complete falsity because the subject checks were, in truth, deposited to an account that neither belongs to the payees of the subject checks nor to their indorsees. Hence, as the subject checks were paid under Bankcom's false guaranty, the latter-as collecting bank-stands liable to return the value of such checks to Metrobank.
ISSUE [5]: No, Bankcom's assertion that it should be absolved as the subject checks were allegedly never deposited with it must fail. Such allegation is readily disproved by the fact that the subject checks all contained, at their dorsal side, a stamp bearing Bankcom's tracer/ID band.[33] Under the PCHC Rules and Regulations, the stamped tracer/ID band of Bankcom signifies that the checks had been deposited with it and that Bankcom indorsed the said checks and sent them to PCHC.[34]
ISSUE [6]: No, the liability of Bankcom to be affected by the fact that only four (4) out of the eleven (11) subject checks were actually stamped with the guarantees "ALL PRIOR ENDORSEMENTS AND/OR LACK OF ENDORSEMENT GUARANTEED" and "NON-NEGOTIABLE" as required under Section 17 of the PCHC Rules and Regulations. The stamping of such guarantees is not necessary to fix the liability of Bankcom as an indorser for all the subject checks.
To begin with, jurisprudence has it that a collecting bank's mere act of presenting a check for payment to the drawee bank is itself an assertion, on the part of the former, that it had done its duty to ascertain the validity of prior indorsements. (Banco De Oro v. Equitable Banking Corporation[36])
More than such pronouncement, however, Section 17 of the PCHC Rules and Regulations expressly provides that checks "cleared through the PCHC" that do not bear the mentioned guarantees shall nonetheless "be deemed guaranteed by the [collecting bank] as to all prior endorsements and/or lack of endorsement" such that "no drawee bank shall return any [check] received by it through clearing by reason only of the absence or lack of such guarantee ... as long as there is evidence appearing on the [check] itself that the same had been deposited with the [collecting bank] x x x."
In the present case, all the subject checks have been transmitted by Bankcom to the PCHC for clearing and presentment to Metrobank. As earlier adverted to, all of the said checks also bear the PCHC machine sprayed tracer/ID band of Bankcom. These are enough to fix the liability of Bankcom as an indorser of the subject checks even sans the stamp.
ISSUE [7]: The sequence of recovery in cases of unauthorized payment of checks, however, does not ordinarily stop with the collecting bank. In the event that it is made to reimburse the drawee bank, the collecting bank can seek similar reimbursement from the very persons who caused the checks to be deposited and received the unauthorized payments.[37] Such persons are the ones ultimately liable for the unauthorized payments and their liability rests on their absolute lack of valid title to the checks that they were able to encash.
ISSUE: [8]: No, the doctrine of comparative negligence (the 60-40 liability rule) does not apply here.
Instead of applying the rule on the sequence of recovery to the case at bench, the RTC and the CA held both Metrobank and Bankcom liable to JMC in accordance with a fixed ratio. In so doing, the RTC and the CA seemingly relied on the doctrine of comparative negligence[38] as applied in the cases of Bank of the Philippine Islands v. Court of Appeals[39] and Allied Banking Corporation v. Lio Sim Wan.[40] In both cases, the Court held the drawee bank and collecting bank liable for the wrongful encashment of checks under a 60% and 40% ratio.
It must be emphasized, however, that the factual contexts of Bank of the Philippine Islands and Allied Banking Corporation are starkly different from the instant case. BPI involved a cashier's check issued via a fake phone call request and the collecting bank was duped into opening a fake account. Allied Banking involved a manager's check issued against via a fake phone call and the collecting bank deposited the money into a wrong account despite forgery.
A glaring peculiarity in the cases of Bank of the Philippine Islands and Allied Banking Corporation is that the drawee bank-which is essentially also the drawer in the scenario-is not only guilty of wrongfully paying a check but also of negligence in issuing such check. Indeed, this is the very reason why the drawee bank in the two cases were adjudged co-liable with the collecting bank under a fixed ratio and the former was not allowed to claim reimbursement from the latter.[41] The drawee bank cannot claim that its participation in the wrongful payment of a check was merely limited to its reliance on the guarantees of the collecting bank. In other words, the drawee bank was held liable in its own right because it was the one that negligently issued the checks in the first place.
CASE DIGEST ENDS HERE. BELOW ARE THE FALLO AND CITATIONS IN THE FULL TEXT.
WHEREFORE, the consolidated appeals are DENIED. The Decision dated 22 March 2017 and Resolution dated 19 October 2017 of the Court of Appeals (CA) in CA-G.R. CV No. 102462 are herein MODIFIED with respect to the individual liabilities of the Metropolitan Bank and Trust Company and the Bank of Commerce, as follows:
Costs against the Metropolitan Bank and Trust Company and the Bank of Commerce.
SO ORDERED.
Leonen, Martires, and Gesmundo, JJ., concur.
Bersamin, J., on leave.
[1] Both appeals are made via a Petition for Review on Certiorari under Rule 45 of the Rules of Court.
[2] Rollo (G.R. No. 235565), pp. 39-52. The decision was penned by Associate Justice Ramon M. Bato, Jr. for the Eleventh Division of the Court of Appeals with Associate Justices Manuel M. Barrios and Renato C. Francisco concurring.
[3] Id. at 54-55. The resolution was penned by Associate Justice Ramon M. Bato, Jr. for the Former Eleventh Division of the Court of Appeals with Associate Justices Manuel M. Barrios and Renato C. Francisco concurring.
[4] Specifically, Metrobank F.B. Harrison branch.
[5] The idea of an audit was conceived by JMC after it received communication from Jardine requesting for the settlement of an invoice that-per JMC's records-was supposedly covered by a check it (JMC) already issued (See rollo [G.R. No. 235565], p. 40).
[6] As revealed in the dorsal portion of the checks.
[7] Rollo (G.R. No. 235565), p. 61.
[8] Id. at 56-60.
[9] Id.
[10] Rollo (G.R. No. 235511), pp. 84-90; 91-95; and 96-100.
[11] Id. at 93-94.
[12] Rollo (G.R. No. 235565), pp. 220-234.
[13] Id.
[14] Id. at 233-234.
[15] Id. at 220-234.
[16] Id. at 39-52.
[17] Id. at 52.
[18] Id. at 39-52.
[19] Id.
[20] See rollo (G.R. No. 235511), pp. 10-30; rollo (G.R. No. 235565), pp. 10-31.
[21] G.R. Nos. 141001 & 141018, 21 May 2009.
[22] G.R. No. 227005, 19 June 2017.
[23] Bank of America v. Associated Citizens Bank, G.R. Nos. 141001 and 141018, 21 May 2009.
[24] Id.
[25] Id.
[26] Id.
[27] See Bank of America v. Associated Citizens Bank, G.R. Nos. 141001 and 141018, 21 May 2009, and Associated Bank v. Court of Appeals, G.R. Nos. 107382 and 107612, 31 January 1996.
[28] See Bank of America v. Associated Citizens Bank, G.R. Nos. 141001 and 141018, 21 May 2009.
[29] See Gempesaw v. Court of Appeals, G.R. No. 92244, 9 February 1993 and Bank of America v. Philippine Racing Club, G.R. No. 150228, 30 July 2009.
[30] G.R. Nos. 141001 and 141018, 21 May 2009.
[31] Associated Bank v. Court of Appeals, G.R. Nos. 107382 and 107612, 31 January 1996.
[32] Section 66 of the Negotiable Instruments Law.
[33] Rollo (G.R. No. 235565), p. 230.
[34] See Section 17 of PCHC Rules and Regulations.
[35] Rollo (G.R. No. 235565), p. 230.
[36] G.R. No. 74917, 20 January 1998.
[37] See Bank of America v. Associated Citizens Bank, G.R. Nos. 141001 and 141018, 21 May 2009.
[38] The doctrine of comparative negligence is a legal principle that limits the extent of reparation that may be recovered by a person who is guilty of contributory negligence. Under this doctrine, a person who is guilty of contributory negligence, though allowed to seek recourse against the principal tortfeasor, must nonetheless bear a portion of the losses proportionate to the amount of his negligence. The application of this doctrine is sanctioned in our jurisdiction by the second sentence of Article 2179 of the Civil Code.
[39] G.R. No. 102383, 26 November 1992.
[40] G.R. No. 133179, 27 March 2008.
[41] Id.
[42] G.R. No. 189871, 13 August 2013
[43] Article 1980 of the Civil Code of the Philippines.
[44] Confronted with a similar scenario, the case of Associated Bank v. Court of Appeals, G.R. Nos. 107382 and 107612 ruled that the drawee bank should just be subjected to a 6% legal interest. The pertinent portion of the ruling reads:
[46] See Associated Bank v. Court of Appeals, id.
THIRD DIVISION [ G.R. No. 235511, June 20, 2018 ] METROPOLITAN BANK AND TRUST COMPANY, PETITIONER, VS. JUNNEL'S MARKETING CORPORATION, PURIFICACION DELIZO, AND BANK OF COMMERCE, RESPONDENTS.[G.R. No. 235565] BANK OF COMMERCE, PETITIONER, VS. JUNNEL'S MARKETING CORPORATION, PURIFICACION DELIZO, AND METROPOLITAN BANK AND TRUST COMPANY RESPONDENTS. DECISION. VELASCO JR., J.:
SUMMARY OF FACTS: The instant case involves the unauthorized payment of valid checks, i.e., the payment of checks to persons other than the payee named therein or his order. The subject checks herein are considered valid because they are complete and bear genuine signatures.
FACTS: Respondent Junnel's Marketing Corporation (JMC) is a domestic corporation engaged in the business of selling wines and liquors. It has a current account with Metrobank[4] from which it draws checks to pay its different suppliers. Among JMC's suppliers are Jardine Wines and Spirits (Jardine) and Premiere Wines (Premiere).
ANOMALY discovered by JMC involving eleven (11) checks (subject checks) it had issued to the orders of Jardine and Premiere on various dates between October 1998 to May 1999. CHARGED against JMC's current account but were, for some reason, not covered by any official receipt from Jardine or Premiere. The subject checks, which are all crossed checks and amounting to P1,481,292.00 in total. Seven checks to Jardine. Four checks to Premiere.
Meanwhile, on 30 April 2000, respondent Purificacion Delizo (Delizo), a former accountant of JMC, confessed that, during her time as an accountant for JMC, she stole several company checks drawn against JMC's current account. She professed that the said checks were never given to the named payees but were forwarded by her to one Lita Bituin (Bituin). Delizo further admitted that she, Bituin and an unknown bank manager colluded to cause the deposit and encashing of the stolen checks and shared in the proceeds thereof.
JMC surmised that the subject checks are among the checks purportedly stolen by Delizo.RTC. JMC collected sum of money[8] against Delizo, Bankcom and Metrobank. Alleged "tortious and felonious" scheme of Delizo and the "negligent and unlawful acts" of Bankcom and Metrobank.
RTC ruled that Bankcom and Metrobank are liable based on a 2/3-1/3 ratio. CA agreed but said Metrobank's liability is based on failure to ascertain that only four (4) out of the 11 subject checks were stamped by Bankcom with the express guarantees "ALL PRIOR ENDORSEMENTS AND/OR LACK OF ENDORSEMENT GUARANTEED" and "NON-NEGOTIABLE" as required by Section 17 of the PCHC Rules and Regulations.[18]
ISSUES:
- What is the sequence of payment between a drawee bank and a collecting bank in case of payment and deposit of money in a collecting bank under an account not belonging to the proper payee or indorsee?
- Is Metrobank liable to JMC?
- Does Section 17 of the PCHC Rules and Regulations and its relupon the concomitant guarantees of Bankcom when it paid the subject checks a valid defense on the part of Metrobank?
- Is Bankcom liable to Metrobank?
- Is it valid defense for Bankcom to say that the checks were never deposited?
- Does it affect Bankcom's liability that only 4/11 checks were stamped with "ALL PRIOR ENDORSEMENTS AND/OR LACK OF ENDORSEMENT GUARANTEED"?
- If liable to Metrobank, does Bankcom have any recourse or does the liability stop in the collecting bank?
- Does the comparative liability (the 60-40 liability rule) apply here?
HELD: The consolidated appeals must be DENIED as neither Metrobank nor Bankcom are entitled to absolution. HOWEVER, the Supreme Court modified the manner by which Metrobank and Bankcom are held liable. Instead of holding both Metrobank and Bankcom liable to JMC in accordance with a fixed ratio, FOUND that the two banks should have been ordered sequentially liable for the entire amount of the subject checks pursuant to the seminal case of Bank of America v. Associated Citizens Bank.[21]
THEREFORE, the Court held (1) Metrobank liable to return to JMC the entire amount of the subject checks plus interest and (2) Bankcom liable to reimburse Metrobank the same amount plus interest.
ISSUE [1]: Both Bank of America and the present case involved crossed checks payable to the order of a specified payee that were deposited in a collecting bank under an account not belonging to the payee or his indorsee but which, upon presentment, were subsequently honored by the drawee bank.
Bank of America held that, in cases involving the unauthorized payment of valid checks, the drawee bank becomes liable to the drawer for the amount of the checks but the drawee bank, in turn, can seek reimbursement from the collecting bank. The rationale of this rule on sequence of recovery lies in the very basis and nature of the liability of a drawee bank and a collecting bank in said cases. The liability of the drawee bank is based on its contract with the drawer and its duty to charge to the latter's accounts only those payables authorized by him. A drawee bank is under strict liability to pay the check only to the payee or to the payee's order. When the drawee bank pays a person other than the payee named in the check, it does not comply with the terms of the check and violates its duty to charge the drawer's account only for properly payable items.(BDO Unibank v. Lao[22])
On the other hand, the liability of the collecting bank is anchored on its guarantees as the last endorser of the check. Under Section 66 of the Negotiable Instruments Law, an endorser warrants "that the instrument is genuine and in all respects what it purports to be; that he has good title to it; that all prior parties had capacity to contract; and that the instrument is at the time of his endorsement valid and subsisting."
It has been repeatedly held that in check transactions, the collecting bank generally suffers the loss because it has the duty to ascertain the genuineness of all prior endorsements considering that the act of presenting the check for payment to the drawee is an assertion that the party making the presentment has done its duty to ascertain the genuineness of the endorsements. If any of the warranties made by the collecting bank turns out to be false, then the drawee bank may recover from it up to the amount of the check.
ISSUE [2]: Metrobank is Liable to JMC.
Metrobank, as drawee bank, is liable to return to JMC the amount of the subject checks.
A drawee bank is contractually obligated to follow the explicit instructions of its drawer-clients when paying checks issued by them.[23] The drawer's instructions -- including the designation of the payee or to whom the check should be paid -- are reflected on the face and by the terms thereof.[24] When a drawee bank pays a person other than the payee named on the check, it essentially commits a breach of its obligation and renders the payment it made unauthorized.[25] In such cases and under normal circumstances, the drawee bank may be held liable to the drawer for the amount charged against the latter's account.[26]
Such liability is a strict liability.[27] This means that once an unauthorized payment on a check has been made, the resulting liability of the drawee bank to the drawer for such payment attaches even if the former had acted merely upon the guarantees of a collecting bank.[28] Indeed, it is only when the unauthorized payment of a check had been caused or was attended by the fault or negligence of the drawer himself can the drawee bank be excused, whether wholly or partially, from being held liable to the drawer for the said payment.[29]
In the present case, it is apparent that Metrobank had breached JMC's instructions when it paid the value of the subject checks to Bankcom for the benefit of a certain Account No. 0015-32987-7. The payment to Account No. 0015-32987-7 was unauthorized as it was established that the said account does not belong to Jardine or Premiere, the payees of the subject checks, or to their indorsees. In addition, causal or concurring negligence on the part of JMC had not been proven. Under such circumstances, Metrobank is clearly liable to return to JMC the amount of the subject checks.
ISSUE [3]: No, Metrobank's insistence that it should be absolved for it merely complied with Section 17 of the PCHC Rules and Regulations and thereby only relied upon the concomitant guarantees of Bankcom when it paid the subject checks, cannot stand insofar as JMC is concerned. The bank on which a check is drawn, known as the drawee bank, is under strict liability, based on the contract between the bank and its customer (drawer), to pay the check only to the payee or the payee's order.
Accordingly, we find Metrobank liable to return to JMC the amount of the subject checks.
ISSUE [4]: Bankcom is Liable to Metrobank
While Metrobank's reliance upon the guarantees of Bankcom does not excuse it from being liable to JMC, such reliance ENABLES Metrobank to seek reimbursement from Bankcom -- the collecting bank.
A collecting or presenting bank-i.e., the bank that receives a check for deposit and that presents the same to the drawee bank for payment-is an indorser of such check.[31] When a collecting bank presents a check to the drawee bank for payment, the former thereby assumes the same warranties assumed by an indorser of a negotiable instrument pursuant to Section 66 of the Negotiable Instruments Law. These warranties are: (1) that the instrument is genuine and in all respects what it purports to be; (2) that the indorser has good title to it; (3) that all prior parties had capacity to contract; and (4) that the instrument is, at the time of the indorsement, valid and subsisting.[32] If any of the foregoing warranties turns out to be false, a collecting hank becomes liable to the drawee bank for payments made under such false warranty.
Here, it is clear that Bankcom had assumed the warranties of an indorser when it forwarded the subject checks to PCHC for presentment to Metrobank. By such presentment, Bankcom effectively guaranteed to Metrobank that the subject checks had been deposited with it to an account that has good title to the same. This guaranty, however, is a complete falsity because the subject checks were, in truth, deposited to an account that neither belongs to the payees of the subject checks nor to their indorsees. Hence, as the subject checks were paid under Bankcom's false guaranty, the latter-as collecting bank-stands liable to return the value of such checks to Metrobank.
ISSUE [5]: No, Bankcom's assertion that it should be absolved as the subject checks were allegedly never deposited with it must fail. Such allegation is readily disproved by the fact that the subject checks all contained, at their dorsal side, a stamp bearing Bankcom's tracer/ID band.[33] Under the PCHC Rules and Regulations, the stamped tracer/ID band of Bankcom signifies that the checks had been deposited with it and that Bankcom indorsed the said checks and sent them to PCHC.[34]
ISSUE [6]: No, the liability of Bankcom to be affected by the fact that only four (4) out of the eleven (11) subject checks were actually stamped with the guarantees "ALL PRIOR ENDORSEMENTS AND/OR LACK OF ENDORSEMENT GUARANTEED" and "NON-NEGOTIABLE" as required under Section 17 of the PCHC Rules and Regulations. The stamping of such guarantees is not necessary to fix the liability of Bankcom as an indorser for all the subject checks.
To begin with, jurisprudence has it that a collecting bank's mere act of presenting a check for payment to the drawee bank is itself an assertion, on the part of the former, that it had done its duty to ascertain the validity of prior indorsements. (Banco De Oro v. Equitable Banking Corporation[36])
More than such pronouncement, however, Section 17 of the PCHC Rules and Regulations expressly provides that checks "cleared through the PCHC" that do not bear the mentioned guarantees shall nonetheless "be deemed guaranteed by the [collecting bank] as to all prior endorsements and/or lack of endorsement" such that "no drawee bank shall return any [check] received by it through clearing by reason only of the absence or lack of such guarantee ... as long as there is evidence appearing on the [check] itself that the same had been deposited with the [collecting bank] x x x."
In the present case, all the subject checks have been transmitted by Bankcom to the PCHC for clearing and presentment to Metrobank. As earlier adverted to, all of the said checks also bear the PCHC machine sprayed tracer/ID band of Bankcom. These are enough to fix the liability of Bankcom as an indorser of the subject checks even sans the stamp.
ISSUE [7]: The sequence of recovery in cases of unauthorized payment of checks, however, does not ordinarily stop with the collecting bank. In the event that it is made to reimburse the drawee bank, the collecting bank can seek similar reimbursement from the very persons who caused the checks to be deposited and received the unauthorized payments.[37] Such persons are the ones ultimately liable for the unauthorized payments and their liability rests on their absolute lack of valid title to the checks that they were able to encash.
ISSUE: [8]: No, the doctrine of comparative negligence (the 60-40 liability rule) does not apply here.
Instead of applying the rule on the sequence of recovery to the case at bench, the RTC and the CA held both Metrobank and Bankcom liable to JMC in accordance with a fixed ratio. In so doing, the RTC and the CA seemingly relied on the doctrine of comparative negligence[38] as applied in the cases of Bank of the Philippine Islands v. Court of Appeals[39] and Allied Banking Corporation v. Lio Sim Wan.[40] In both cases, the Court held the drawee bank and collecting bank liable for the wrongful encashment of checks under a 60% and 40% ratio.
It must be emphasized, however, that the factual contexts of Bank of the Philippine Islands and Allied Banking Corporation are starkly different from the instant case. BPI involved a cashier's check issued via a fake phone call request and the collecting bank was duped into opening a fake account. Allied Banking involved a manager's check issued against via a fake phone call and the collecting bank deposited the money into a wrong account despite forgery.
A glaring peculiarity in the cases of Bank of the Philippine Islands and Allied Banking Corporation is that the drawee bank-which is essentially also the drawer in the scenario-is not only guilty of wrongfully paying a check but also of negligence in issuing such check. Indeed, this is the very reason why the drawee bank in the two cases were adjudged co-liable with the collecting bank under a fixed ratio and the former was not allowed to claim reimbursement from the latter.[41] The drawee bank cannot claim that its participation in the wrongful payment of a check was merely limited to its reliance on the guarantees of the collecting bank. In other words, the drawee bank was held liable in its own right because it was the one that negligently issued the checks in the first place.
CASE DIGEST ENDS HERE. BELOW ARE THE FALLO AND CITATIONS IN THE FULL TEXT.
WHEREFORE, the consolidated appeals are DENIED. The Decision dated 22 March 2017 and Resolution dated 19 October 2017 of the Court of Appeals (CA) in CA-G.R. CV No. 102462 are herein MODIFIED with respect to the individual liabilities of the Metropolitan Bank and Trust Company and the Bank of Commerce, as follows:
- The Metropolitan Bank and Trust Company is adjudged liable to pay respondent Junnel's Marketing Corporation the following:
- The principal amount of P 1,481,292.00, and
- Interest on the said principal at the rate of 6% per annum from 28 January 2002 until full satisfaction.
- The Bank of Commerce is adjudged liable to pay the Metropolitan Bank and Trust Company the following:
- The principal amount of P 1,481,292.00, and
- Interest on the said principal at the rate of 6% per annum from 5 March 2003 until full satisfaction.
Costs against the Metropolitan Bank and Trust Company and the Bank of Commerce.
SO ORDERED.
Leonen, Martires, and Gesmundo, JJ., concur.
Bersamin, J., on leave.
[1] Both appeals are made via a Petition for Review on Certiorari under Rule 45 of the Rules of Court.
[2] Rollo (G.R. No. 235565), pp. 39-52. The decision was penned by Associate Justice Ramon M. Bato, Jr. for the Eleventh Division of the Court of Appeals with Associate Justices Manuel M. Barrios and Renato C. Francisco concurring.
[3] Id. at 54-55. The resolution was penned by Associate Justice Ramon M. Bato, Jr. for the Former Eleventh Division of the Court of Appeals with Associate Justices Manuel M. Barrios and Renato C. Francisco concurring.
[4] Specifically, Metrobank F.B. Harrison branch.
[5] The idea of an audit was conceived by JMC after it received communication from Jardine requesting for the settlement of an invoice that-per JMC's records-was supposedly covered by a check it (JMC) already issued (See rollo [G.R. No. 235565], p. 40).
[6] As revealed in the dorsal portion of the checks.
[7] Rollo (G.R. No. 235565), p. 61.
[8] Id. at 56-60.
[9] Id.
[10] Rollo (G.R. No. 235511), pp. 84-90; 91-95; and 96-100.
[11] Id. at 93-94.
[12] Rollo (G.R. No. 235565), pp. 220-234.
[13] Id.
[14] Id. at 233-234.
[15] Id. at 220-234.
[16] Id. at 39-52.
[17] Id. at 52.
[18] Id. at 39-52.
[19] Id.
[20] See rollo (G.R. No. 235511), pp. 10-30; rollo (G.R. No. 235565), pp. 10-31.
[21] G.R. Nos. 141001 & 141018, 21 May 2009.
[22] G.R. No. 227005, 19 June 2017.
[23] Bank of America v. Associated Citizens Bank, G.R. Nos. 141001 and 141018, 21 May 2009.
[24] Id.
[25] Id.
[26] Id.
[27] See Bank of America v. Associated Citizens Bank, G.R. Nos. 141001 and 141018, 21 May 2009, and Associated Bank v. Court of Appeals, G.R. Nos. 107382 and 107612, 31 January 1996.
[28] See Bank of America v. Associated Citizens Bank, G.R. Nos. 141001 and 141018, 21 May 2009.
[29] See Gempesaw v. Court of Appeals, G.R. No. 92244, 9 February 1993 and Bank of America v. Philippine Racing Club, G.R. No. 150228, 30 July 2009.
[30] G.R. Nos. 141001 and 141018, 21 May 2009.
[31] Associated Bank v. Court of Appeals, G.R. Nos. 107382 and 107612, 31 January 1996.
[32] Section 66 of the Negotiable Instruments Law.
[33] Rollo (G.R. No. 235565), p. 230.
[34] See Section 17 of PCHC Rules and Regulations.
[35] Rollo (G.R. No. 235565), p. 230.
[36] G.R. No. 74917, 20 January 1998.
[37] See Bank of America v. Associated Citizens Bank, G.R. Nos. 141001 and 141018, 21 May 2009.
[38] The doctrine of comparative negligence is a legal principle that limits the extent of reparation that may be recovered by a person who is guilty of contributory negligence. Under this doctrine, a person who is guilty of contributory negligence, though allowed to seek recourse against the principal tortfeasor, must nonetheless bear a portion of the losses proportionate to the amount of his negligence. The application of this doctrine is sanctioned in our jurisdiction by the second sentence of Article 2179 of the Civil Code.
[39] G.R. No. 102383, 26 November 1992.
[40] G.R. No. 133179, 27 March 2008.
[41] Id.
[42] G.R. No. 189871, 13 August 2013
[43] Article 1980 of the Civil Code of the Philippines.
[44] Confronted with a similar scenario, the case of Associated Bank v. Court of Appeals, G.R. Nos. 107382 and 107612 ruled that the drawee bank should just be subjected to a 6% legal interest. The pertinent portion of the ruling reads:
The trial court made PNB and Associated Bank liable with legal interest from March 20, 1981, the date of extrajudicial demand made by the Province of Tarlac on PNB. The payments to be made in this case stem from the deposits of the Province of Tarlac in its current account with tl1e PNB. Bank deposits are considered under the law as loans. Central Bank Circular No. 416 prescribes a twelve percent (12%) interest per annum for loans, forebearance of money, goods or credits in the absence of express stipulation. Normally, current accounts are likewise interest-bearing, by express contract, thus excluding them from the coverage of CB Circular No. 416. In this case, however, the actual interest rate, if any, for the current account opened by the Province of Tarlac with PNB was not given in evidence. Hence, the Court deems it wise to affirm the trial court's use of the legal interest rate, or six percent (6%) per annum. The interest rate shall be computed from the date of default, or the date of judicial or extrajudicial demand. (Emphasis supplied)[45] See Associated Bankv. Court of Appeals, G.R. Nos. 107382 and 107612, 31 January 1996.
[46] See Associated Bank v. Court of Appeals, id.