Case Digest (G.R. No. 227005)
Facts:
BDO Unibank, Inc. v. Engr. Selwyn Lao, G.R. No. 227005, June 19, 2017, Supreme Court Second Division, Mendoza, J., writing for the Court.On March 9, 1999, Engr. Selwyn S. Lao (Lao) filed a complaint for collection of sum of money with the Regional Trial Court (RTC), Branch 55, Manila, against Equitable Banking Corporation (now BDO Unibank, Inc. or BDO), Everlink Pacific Ventures, Inc. (Everlink), and Wu Hsieh a.k.a. George Wu (Wu). Lao alleged he (doing business as “Selwyn Lao Construction” and majority shareholder of Wing An Construction and Development Corporation) issued two Equitable crossed checks payable to Everlink—Check Nos. 0127‑242249 (P273,300.00) and 0127‑242250 (P336,500.00)—as down payments for sanitary wares, but Everlink failed to deliver. Lao later learned the checks were deposited in accounts at International Exchange Bank (now Union Bank of the Philippines or Union Bank) belonging to Wu and New Wave Plastic (New Wave), represented by Willy Antiporda (Antiporda). He withdrew the claim against Everlink after it ceased to exist.
BDO answered that, as the drawee, its duties were limited to examining genuineness of signatures and sufficiency of funds, and that the paying/collecting bank (Union Bank) was responsible for depositing proceeds to the payee’s account. On August 24, 2001 Lao filed an amended complaint adding Union Bank as an additional defendant for allowing the crossed checks to be deposited in accounts other than the payee’s.
At trial BDO presented witnesses who testified BDO examined signatures, found sufficient funds, and paid the checks after Union Bank presented them and represented they were credited to Everlink. Union Bank’s witness testified that Check No. 0127‑242249 was credited to Everlink’s account, while Check No. 0127‑242250 was credited to New Wave’s account pursuant to an accommodation arrangement (including a Deed of Undertaking executed by Antiporda), and that the collecting bank stamped endorsements on the checks guaranteeing prior endorsements.
The RTC, in a July 9, 2012 Decision, absolved BDO of liability but found Union Bank negligent for permitting the deposit and crediting of Check No. 0127‑242250 to New Wave without proper endorsement. The court ordered Union Bank to pay Lao P336,500.00 (value of Check No. 0127‑242250), plus moral damages (P50,000), exemplary damages (P100,000), and attorney’s fees (P50,000); the complaints against Equitable (BDO) and Wu were dismissed. Union Bank appealed to the Court of Appeals (CA).
The CA, in an October 14, 2015 Decision, affirmed the RTC “with modifications”: it ordered BDO to pay Lao P336,500.00 with legal interest from filing of the complaint and directed Union Bank to reimburse BDO that amount; it deleted the award of damages and attorney’s fees. BDO filed a motion for partial reconsideration arguing it was not a party to the appeal and that the RTC’s dismissal of its liability had become final; the CA denied the motion by Resolution dated September 6, 2016, relying on jurisprudence (notably...(Subscriber-Only)
Issues:
- May the Court of Appeals, on appeal by Union Bank, rule against BDO and order BDO to pay Lao despite BDO not being a party to the appeal and the RTC having absolved BDO of liability (i.e., was the CA’s imposition of liability on BDO procedurally permissible)?
- In an unauthorized encashment/deposit of a crossed check, what is the proper sequence of recovery among drawer, drawee bank, and collecting bank, and may the payee/drawer recover directly from the negligent col...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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