Case Digest (G.R. No. 168274)
Facts:
- Parties Involved: Petitioner - Far East Bank & Trust Company; Respondent - Gold Palace Jewellery Co., represented by Judy L. Yang, Julie Yang-Go, and Kho Soon Huat.
- Transaction Details: In June 1998, Samuel Tagoe purchased jewelry worth PHP 258,000 from Gold Palace at SM-North EDSA.
- Payment Method: Tagoe used Foreign Draft No. M-069670 for PHP 380,000 issued by United Overseas Bank (Malaysia) BHD, payable to Gold Palace and addressed to Land Bank of the Philippines (LBP).
- Bank Inquiry: Judy Yang, Gold Palace's assistant general manager, was advised by Far East Bank's SM North EDSA Branch not to release the jewelry until the draft was cleared.
- Invoice Issuance: Yang issued a cash invoice to Tagoe, informing him that the jewelry would only be released upon draft clearance.
- Draft Deposit: On June 2, 1998, Julie Yang-Go deposited the draft in Gold Palace's account with Far East Bank.
- Draft Clearance: The draft was cleared by LBP, and Gold Palace's account was credited with the amount.
- Jewelry Release: On June 6, 1998, Tagoe collected the jewelry, and Yang issued a check for PHP 122,000 as change, which was encashed.
- Draft Issue: On June 26, 1998, LBP informed Far East that the draft had been materially altered from PHP 300 to PHP 380,000 and returned it.
- Refund and Debit: Far East refunded PHP 380,000 to LBP and debited Gold Palace's account but could only debit PHP 168,053.36 due to insufficient funds.
- Demand for Payment: Far East demanded the remaining PHP 211,946.64 from Gold Palace, which was unpaid, leading to a civil case for the sum and damages.
- RTC Ruling: The RTC ruled in favor of Far East, ordering Gold Palace to pay PHP 211,946.64 and PHP 50,000 in attorney's fees.
- CA Ruling: On appeal, the CA reversed the RTC's decision, ruling Far East failed to notify Gold Palace of the draft's dishonor and that Gold Palace was not liable as it did not alter the draft.
- CA Awards: The CA awarded Gold Palace's counterclaim for actual damages, exemplary damages, and attorney's fees.
- Further Action: Far East's motion for reconsideration was denied, prompting a petition for review on certiorari before the Supreme Court.
Issue:
- (Unlock)
Ruling:
- Gold Palace Jewellery Co. is not liable for the altered draft.
- Far East Bank & Trust Company cannot debit Gold...(Unlock)
Ratio:
- Petition Denied: The Supreme Court denied the petition and affirmed the CA's decision with modifications.
- Negotiable Instruments Law: Under the NIL, the drawee bank (LBP) is liable for payment of the draft according to its tenor at the time of payment.
- Draft Clearance: LBP cleared and paid the draft, thus recognizing its obligation to pay the raised amount.
- Holder in Due Course: Gold Palace, being a holder in due course, relied on the drawee bank's clearance and payment.
- Good Faith: The Court emphasized that Gold Palace was not involved in the alteration, was not negligent, and acted in good faith.
- Drawee Bank's Responsibility: The drawee bank, having paid the draft, could not repudiate the payment to a due course holder.
- Verification Duty: The drawee bank is in a better position to verify the draft's authent...continue reading
Case Digest (G.R. No. 168274)
Facts:
The case involves Far East Bank & Trust Company (petitioner) and Gold Palace Jewellery Co., represented by Judy L. Yang, Julie Yang-Go, and Kho Soon Huat (respondents). The controversy began in June 1998 when a foreigner named Samuel Tagoe purchased jewelry worth P258,000 from Gold Palace's store located at SM-North EDSA. He offered Foreign Draft No. M-069670, issued by the United Overseas Bank (Malaysia) BHD, as payment, which was addressed to the Land Bank of the Philippines (LBP) and payable to Gold Palace for P380,000. Before accepting the draft, Judy Yang, the assistant general manager of Gold Palace, consulted with a teller at Far East Bank's branch nearby. The teller informed her that the draft was similar to a manager's check but advised against releasing the jewelry until the draft cleared. Following this advice, Yang issued a cash invoice to Tagoe, informing him that the jewelry would be released upon clearance of the draft.
On June 2, 1998, Gold Palace deposited the draft into its account at Far East Bank. The draft was subsequently cleared by LBP, which debited UOB's account and credited Gold Palace's account with the amount. On June 6, 1998, after confirming the draft's clearance, Gold Palace released the jewelry to Tagoe and issued him a check for P122,000 as change. This check was later encashed by Far East Bank.
However, on June 26, 1998, LBP notified Far East that the draft had been materially altered from P300.00 to P380,000. Consequently, Far East refunded LBP the amount paid and debited Gold Palace's account without prior written notice, on...