Case Digest (G.R. No. 205839)
Case Digest (G.R. No. 205839)
Facts:
Land Bank of the Philippines, G.R. No. 205839; Ma. Lorena Flores and Alexander Cruz v. Narciso L. Kho, G.R. No. 205840, July 07, 2016, Supreme Court Second Division, Brion, J., writing for the Court.
Petitioner Land Bank of the Philippines (Land Bank) and its Araneta Branch Manager Ma. Lorena Flores and Officer‑in‑Charge Alexander Cruz (petitioners in G.R. No. 205840) sought review of the Court of Appeals’ (CA) August 30, 2012 decision and February 14, 2013 resolution in CA‑G.R. CV No. 93881, which had set aside the Regional Trial Court’s (RTC) dismissal of Civil Case No. Q‑06‑57154 and remanded the case for further proceedings. The respondent is Narciso L. Kho (Kho), sole proprietor of United Oil Petroleum.
In late December (as presented in the record), Kho dealt with a supplier, Red Orange International Trading (represented by Rudy Medel), who required payment by a Land Bank manager’s check. On December 28, 2005, Kho opened Savings Account No. 0681‑0681‑80 at Land Bank’s Araneta branch and deposited manager’s checks and other checks totaling P25,993,537.37. He purchased Land Bank Manager’s Check No. 07410 for P25,000,000.00, postdated January 2, 2006, payable to Red Orange; the check was prepared and signed by Araneta branch officers Recem Macarandan and Leida Benitez. Kho requested and received a photocopy of the manager’s check, which he gave to Medel as proof of funds.
The business transaction with Red Orange failed to push through. On January 2, 2006 Kho picked up the genuine check No. 07410 from the bank and P25,000,000.00 was debited from his account. On January 3–5, 2006 the Bank of the Philippine Islands (BPI) informed Land Bank that a deposit had been made purporting to be check No. 07410; Land Bank’s Central Clearing Department faxed a copy of the deposited instrument to the Araneta branch, its officers compared particulars and confirmed the deposited check, and Flores informed Kho that the check had cleared. Kho protested, producing the genuine check which had remained in his possession; the copy deposited with BPI was spurious.
Kho demanded cancellation of the manager’s check and release of the remaining funds (about P995,207.27) but the branch refused, citing an ongoing investigation and a standing freeze on the account. On January 23, 2006 Kho filed a Complaint for Specific Performance and Damages (Civil Case No. Q‑06‑57154) against Land Bank, Flores and Cruz (the latter two also impleaded in their personal capacities). Land Bank asserted Kho’s negligence — giving Medel a photocopy and failing to notify the bank that the deal did not push through — as proximate causes of the loss.
On April 30, 2009 the RTC (Quezon City, Branch 81) dismissed Kho’s complaint, relying on Associated Bank v. Court of Appeals and finding that Kho’s failure to exercise ordinary care precluded him from asserting forgery; it also held Flores and Cruz not personally liable, acting in good faith. Kho appealed to the CA (docketed CA‑G.R. CV No. 93881). On August 30, 2012 the CA set aside the RTC decision and remanded for further proceedings, reasoning that Land Bank’s internal investigation (not concluded at trial) was crucial and the RTC had preemptively decided issues that the investigation might elucidate.
Land Bank, Flores and Cruz filed separate petitions for review on certiorari to the Supreme Court. Land Bank argued the investigation’s findings were immaterial and that Kho’s negligence nonetheless precluded him from asserting forgery; Flores and Cruz maintained they incurred no personal liability because they acted in good faith within the scope of their official duties. Kho adopted the CA’s reasoning.
Issues:
- Did the Court of Appeals err in remanding the case to the RTC for consideration of Land Bank’s investigation report?
- Did the RTC err in dismissing Kho’s complaint and concluding that Kho’s negligence precluded him from asserting forgery of the manager’s check?
- Are Flores and Cruz personally liable to Kho for the bank’s loss?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)