Case Digest (G.R. No. 175350) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Equitable Banking Corporation v. Special Steel Products, Inc. and Augusto L. Pardo, decided on June 13, 2012 under the 1987 Constitution, Special Steel Products, Inc. (SSPI), a steel‐product seller, and its president and majority shareholder Augusto L. Pardo sued Equitable Banking Corporation (Equitable) and Jose Isidoro “Jolly” Uy for damages after three crossed checks, each bearing the restrictive notation “account payee only” and drawn by SSPI’s customer International Copra Export Corporation (Interco) against Equitable, were diverted by Uy and deposited into his personal Equitable accounts. SSPI had invoiced Interco P985,234.98 for welding electrodes sold in early 1991, with a contractual 36% per annum interest on overdue payments. Interco issued the three checks in July 1991, and Uy, an Interco purchasing officer, misrepresented his title to the checks, which Equitable grossly negligently accepted and guaranteed on their back despite no endorsement by SSPI. Uy withdrew t Case Digest (G.R. No. 175350) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Background
- Special Steel Products, Inc. (SSPI), a domestic steel‐selling corporation, with Augusto L. Pardo as president and majority stockholder.
- International Copra Export Corporation (Interco), SSPI’s regular customer; Jose Isidoro Uy (alias Jolly Uy), Interco purchasing officer and son‐in‐law of its majority stockholder.
- Equitable Banking Corporation (Equitable), depository bank of Interco and Uy.
- Sale of Welding Electrodes and Issuance of Checks
- SSPI sold welding electrodes to Interco under three invoices:
- No. 65042 (P325,976.34) dated February 14, 1991; due March 16, 1991.
- No. 65842 (P345,412.80) and No. 65843 (P313,845.84) both dated April 11, 1991; due May 11, 1991.
- Interco issued three “account payee only” crossed checks on July 10, 16 and 29, 1991, drawn on Equitable, aggregating P1,178,140.12.
- Fraudulent Deposit and Misappropriation
- Uy presented each check to Equitable, claimed title thereto and demanded deposit into his personal accounts (Nos. 18841-2 and 03474-0).
- Equitable, relying on Uy’s familial ties and valued‐client status, accepted the deposits, stamped “All prior endorsement and/or lack of endorsement guaranteed,” and credited Uy’s accounts.
- Uy immediately withdrew the proceeds; SSPI never received payment.
- Attempts to Collect, Court Proceedings and Judgments
- SSPI demanded payment from Interco (Oct 1991, Jan 1992); Interco denied liability, claimed checks issued; SSPI denied receipt.
- Equitable refused SSPI’s request for information on confidentiality grounds.
- Interco eventually paid face value plus partial interest (June 1993); SSPI lost P437,040.35 in stipulated interest (36% p.a.).
- SSPI and Pardo sued Uy and Equitable for quasi-delict, claiming actual, moral (P3 M), exemplary (P500 K) damages, attorney’s fees (P200 K), and obtained preliminary attachment.
- RTC awarded all claims; CA affirmed.
- SC partially granted Equitable’s petition:
- Reduced actual damages to 6% p.a. on check values for 23 months.
- Reduced Pardo’s moral damages to P50,000.
- Allowed Equitable’s cross-claim against Uy (recovery of any amounts it pays).
- Awarded Equitable P30,204.36 actual damages for wrongful attachment.
Issues:
- Whether SSPI has a cause of action against Equitable for quasi-delict.
- Whether SSPI can recover, as actual damages, the stipulated 36% p.a. interest from Equitable.
- Whether speculative fears and imagined scenarios may ground moral damages.
- Whether the preliminary attachment of Equitable’s properties was wrongful.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)