G.R. No. 1300 - McCullough vs. R. Aenlle and Co.

On November 29, 1991, Warliza Sarande deposited a check (TCBT Check No. 0249188) amounting to P225,000.00 into her account at PCI Bank’s Magsaysay Avenue Branch in Davao City.
On December 5, 1991, upon inquiring about the clearance status of the check, Sarande received an affirmative answer from PCI Bank.
Relying on the bank’s assurance, Sarande issued two checks drawn against the proceeds of the deposited amount.
One of these checks, PCI Bank Check No. 073661 dated December 5, 1991 for P132,000.00, was issued to respondent Rowena Ong in connection with a business transaction.

Upon presenting Check No. 073661 at the PCI Bank branch, Rowena Ong requested its conversion into a manager’s check, which the bank duly provided by issuing Manager’s Check No. 10983, also dated December 5, 1991.
On December 6, 1991, Ong deposited this manager’s check into her account at Equitable Banking Corporation’s Davao City Branch.
On December 9, 1991, a check return-slip was received by Ong indicating that PCI Bank had stopped payment on Manager’s Check No. 10983 on the ground of irregular issuance.
Despite multiple demands for payment by Ong, PCI Bank refused to honor the check, prompting her to file a complaint for the recovery of the sum, along with claims for damages and attorney’s fees.

PCI Bank contended that TCBT Check No. 0249188 had been returned on December 5, 1991, because the account against which it was drawn was already closed.
The bank alleged it had immediately notified both Sarande and Ong of this return and requested that Ong return the manager’s check, as the return of the original check indicated a failure of consideration.
During the pre-trial phase, Ong filed a motion for summary judgment. PCI Bank and its counsel failed to appear or file any opposition, leading the trial court to instruct Ong to submit her exhibits in writing and serve them to PCI Bank.
PCI Bank did not submit any written comment, and consequently, the trial court granted Ong’s motion for summary judgment on March 2, 1995, ordering PCI Bank to pay P132,000.00.

PCI Bank filed a motion for reconsideration which was denied on April 11, 1996.
After additional evidence regarding claims for damages was presented, the trial court rendered a decision on May 3, 1999, awarding moral damages of P50,000.00, exemplary damages of P20,000.00, actual expenses of P3,500.00, attorney’s fees of P20,000.00, and costs.
PCI Bank appealed the decision before the Court of Appeals in a decision dated October 29, 2002, which denied its appeal and affirmed the lower court’s orders.
Unperturbed by the appellate ruling, PCI Bank elevated the case to the Supreme Court through a petition for review, raising several issues regarding summary judgment, unjust enrichment, the application of the holder in due course doctrine, and the bank’s counterclaim.

Whether the Court of Appeals committed a reversible error by sustaining the lower court’s summary judgment despite allegations that genuine, material, and factual issues existed requiring further presentation of evidence.
Whether the Court of Appeals erred in sustaining the lower court’s decision granting the reliefs sought by Ong, potentially enriching her unjustly at the expense of PCI Bank, particularly given that the check in question was allegedly unfunded.
Whether the Court of Appeals committed reversible errors in affirming the awarding of damages to Ong when the evidence on record might not justify such awards.
Whether the Court of Appeals erred in holding that Ong was a holder in due course, specifically in relation to the elements of good faith and for value in the issuance of the manager’s check.
Whether the Court of Appeals committed a reversible error in denying PCI Bank’s counterclaim, considering that it was argued that Ong’s complaint lacked merit.