G.R. No. 170865 - Philippine National Bank vs. Spouses Cheah

A woman, Ofelia Cheah, agreed to accommodate her friend Filipina Tuazon’s request to have a foreign check cleared and encashed for a service fee of 2.5%.
Filipina’s check, a Bank of America Check No. 190 drawn against Bank of America Alhambra Branch in California with a face amount of US$300,000.00, was deposited by Ofelia in her joint dollar account with her husband, Cheah Chee Chong, at Philippine National Bank (PNB) Buendia Branch.
The bank officer, after processing the transaction and referring them to Division Chief Alberto Garin, explained that clearance normally takes 15 banking days.

PNB sent the check for clearance through its correspondent bank, Philadelphia National Bank.
On November 6, 1992, PNB received a credit advice indicating that the proceeds were temporarily credited to the Cheah’s account even before the lapse of the clearing period.
By November 16, 1992, PNB informed Ofelia that the check had been cleared, prompting immediate withdrawal of funds on November 17 and 18, 1992.
Shortly after the withdrawals, a SWIFT message from Philadelphia National Bank (dated November 13, 1992) later indicated that the check had been returned for insufficient funds (i.e., it was a rubber check).

Upon learning of the check’s dishonor, Ofelia immediately contacted Filipina to recover the withdrawn funds; however, Filipina informed her that the money had already been distributed among several beneficiaries.
In an effort to recover the lost funds, the spouses Cheah enlisted the help of the National Bureau of Investigation, which later recovered a partial amount (approximately US$20,000.00) from some of the beneficiaries.
Facing mounting difficulties, the spouses Cheah subsequently proposed the mortgage of their condominium units to cover the withdrawn amount, formalized by a letter drafted by PNB, though this arrangement did not materialize.

PNB sent a demand letter to the spouses Cheah demanding the return of the withdrawn money, froze their peso and dollar deposits, and filed a complaint in the Manila Regional Trial Court (Civil Case No. 94-71022) for recovery of approximately US$298,950.25 (or its peso equivalent) plus interests and attorney’s fees.
The spouses Cheah counterclaimed, arguing that they were not the sole parties at fault, asserting that PNB’s premature release of funds—without waiting for the 15-day clearing period as required by its own General Circular No. 52-101/88—was the proximate cause of the loss.
The Regional Trial Court (RTC) ruled in favor of PNB, holding the spouses Cheah partially negligent based on contributory negligence and invoking the principle of solutio indebiti to require reimbursement.
Dissatisfied with the RTC decision, the spouses Cheah appealed to the Court of Appeals.

Whether PNB’s act of releasing the proceeds of a US dollar check before the lapse of the prescribed 15-day clearing period constitutes negligence that contributed to the loss.
Whether the spouses Cheah’s decision to deposit a large, cash-payable foreign check and to withdraw the funds prematurely also amounts to contributory negligence.

Whether the principle of solutio indebiti, which mandates the return of money received by mistake, applies when gross negligence is present.
Whether both parties should equally suffer the loss as a result of their respective failures—the bank for not adhering to standard banking practices and the depositors for their lack of vigilance.

Whether PNB, as an expert in banking procedures, was required to observe extraordinary diligence in verifying the authenticity and fund sufficiency of a foreign check.
How the doctrine of the “last clear chance” applies in situations where the bank had subsequent opportunity to prevent the loss incurred.