Facts:

The case involves the petitioner, Bank of America NT&SA, and the respondent, Air Cargo and Travel Corporation (ACTC), with Toshiyuki Minami as an additional respondent. This case was decided on November 11, 1986. ACTC owned an account with Bank of America, identified by the number 19842-01-2, while Toshiyuki Minami, the president of ACTC in Japan, had an account numbered 24506-01-7 with the same bank. On March 10, 1981, Bank of America received a tested telex advising them to pay $23,595 to the account owned by Minami. Despite the fact that the funds were intended for ACTC, the bank erroneously credited the amount to Minami's account, referencing both Minami's name and the business name of ACTC in the telex. Subsequently, on March 12, 1981, Minami withdrew the equivalent of PHP 180,000 from his account.

ACTC claimed that the funds should have been credited to its account and sought restitution from Bank of America. The bank refused the claim, leading ACTC to file a s

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Facts:

Parties and Accounts

• Petitioner: Bank of America NT&SA.
• Respondents:
• The Hon. First Civil Cases Division, Intermediate Appellate Court.
• Air Cargo and Travel Corporation (ACTC), a private respondent.
• Relevant account details:
• ACTC is the owner of Account Number 19842-01-2 with Bank of America.
• Defendant Toshiyuki Minami, President of ACTC in Japan, is the owner of Account Number 24506-01-7 with Bank of America.

The Tested Telex Advise and Transaction

• On March 10, 1981, Bank of America received a tested telex advise from Kyowa Bank of Japan stating:
• “ADVISE PAY USDLS 23,595. - TO YOUR A/C NBR 24506-01-7 OF A. C. TRAVEL CORPORATION MR. TOSHIYUKO MINAMI.”
• The telex was “tested” meaning it was signed in a confidential code to verify the authenticity of the instruction.
• Bank’s Action on the Telex Advise:
• The bank credited US$23,595.00 to Account Number 24506-07-1 (a typographical error for Account Number 24506-01-7) belonging to Minami.
• On March 12, 1981, Minami withdrew the Philippine Peso equivalent (P180,000.00) of US$23,595.00 from the same account.

Contractual Relationship and Arrangement

• There existed a prior agreement between Kyowa Bank of Japan and Bank of America whereby:
• Kyowa Bank could instruct Bank of America to pay amounts to a third party (beneficiary).
• Bank of America would then bill Kyowa for the amount disbursed.
• The agreement required verification of instructions through a confidential coded signature to ensure that the telegraphic orders indeed originated from Kyowa Bank.

Conflicting Claims and Subsequent Proceedings

• Initial Transaction Confusion:
• ACTC contended that the remittance was intended for its account (Account Number 19842-01-2) based on an application by Tokyo Tourist Corporation through Kyowa Bank in early 1981 for telegraphic transfer in favor of ACTC.
• BANKAMERICA’s employees noted ambiguity in the tested telex, particularly the mention of “A.C. TRAVEL CORPORATION MR. TOSHIYUKO MINAMI” which could result in doubt regarding the true beneficiary.
• Subsequent Credit to Minami:
• Despite the noted ambiguity, on May 10-11, 1981, Bank of America credited the amount to Minami’s account (misstated as 24506-07-1 instead of 24506-01-7).
• Legal Action by ACTC:
• ACTC demanded that the amount be credited to its account and sought restitution from Bank of America.
• When Bank of America refused, ACTC filed a suit on February 18, 1982, for damages against both Bank of America and Minami.
• Minami was declared in default in the trial court proceedings.

Trial Court and Appellate Court Decisions

• Trial Court Decision (Pasig):
• Ordered that Bank of America and Minami pay ACTC:
• US$23,595.00 (or its equivalent in Philippine Pesos at a specified exchange rate) as actual damages plus interest at 12% per annum.

ii. P50,000.00 as temperate and exemplary damages. iii. P10,000.00 as attorney’s fees along with the costs of the suit. ii. The processor’s failure to verify whether the beneficiary was ACTC or Minami contributed to the mistake.

Additional Observations and Submissions

• ACTC's Comment:
• ACTC argued that the remittance was intended for its account.
• Provided context that Tokyo Tourist Corporation, a party with business dealings with ACTC, had initiated the telegraphic transfer arrangement through Kyowa Bank.
• Bank of America’s Position:
• Emphasized that the account number appearing in the telex (24506-01-7) clearly identified the beneficiary as Minami.
• Asserted that the ambiguity regarding the name did not override the proper identification provided by the account number.

Issue:

Beneficiary Identification

• Whether the tested telex advise – despite its ambiguous phrasing – clearly identified the intended beneficiary as Minami by prioritizing the account number over the mention of ACTC.
• Whether the reference to “A.C. TRAVEL CORPORATION MR. TOSHIYUKO MINAMI” should legally be interpreted as designating Minami exclusively, or as a dual reference encompassing both ACTC and Minami.

Obligations Under the Contractual Arrangement

• Whether Bank of America was correct in crediting the amount to Minami’s account in light of the prior agreement with Kyowa Bank which possibly allowed for payments to a third party.
• Whether the bank’s alleged negligence in failing to consult higher officials or verify the beneficiary contributed materially to the misdirection of funds.

Implications on Stipulation Pour Autrui

• Whether the contractual setup between Kyowa Bank and Bank of America, involving a stipulation pour autrui, compels the bank to strictly follow the identification provided by Kyowa’s instructions despite any ambiguity.
• Whether ACTC, not being a direct party to the agreement between Kyowa Bank and Bank of America, has any standing to dispute the beneficiary identification.

Assessment of Procedural and Evidentiary Aspects

• Whether the prior conduct or lack of protest by Tokyo Tourist Corporation (the entity initiating the telegraphic transfer) impacts the interpretation of the intended beneficiary.
• Whether the bank’s internal processes and the actions of its clerks and processors amount to gross negligence liable for redress.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)