Title
Security Bank and Trust Co. vs. Court of Appeals
Case
G.R. No. 112214
Decision Date
Jun 18, 1998
A.T. Diaz Realty issued a P60,000 check to Ricardo Lorenzo's agent, Crispulo Arboleda, for land purchase. Diaz ordered a stop payment, but SBTC mistakenly encashed it. SBTC sued Arboleda and Amador Libongco to recover the funds, but the Supreme Court ruled in favor of Arboleda and Libongco, stating they were entitled to the payment and SBTC was not liable due to a clause in the stop payment order.
bank
check
mistaken encashment
A

Case Digest (G.R. No. 112214)

Facts:

  • Parties and nature of the action
  • Security Bank & Trust Company (SBTC) (petitioner) filed an action against Crispulo Arboleda and Amador Libongco (private respondents) for recovery of a sum of money with damages and preliminary attachment.
  • The dispute arose from SBTC’s encashment of a check that was covered by a stop payment order issued by A.T. Diaz Realty, through Anita Diaz.
  • Underlying land transaction and issuance of checks
  • Sometime in 1983, A.T. Diaz Realty, through Anita Diaz, bought from Ricardo Lorenzo his undivided share in a parcel of land owned in common with Servando Solomon.
  • In connection with the transaction, Diaz issued a check for P60,000.00 in the name of Ricardo Lorenzos agent, Crispulo Arboleda.
  • The P60,000.00 check was dated November 7, 1983, and was to be drawn against the current account of A.T. Diaz Realty in the Marikina branch of SBTC.
  • Diaz represented that the money formed part of the purchase price to:
1) pay capital gains tax on the transaction; and 2) reimburse Solomon for payments he had made for delinquent real estate taxes on the land.
  • In return, Solomon was to deliver to Diaz the title to the land.
  • On November 8, 1983, Solomon informed Diaz that since he had not yet been reimbursed by Arboleda, he could not deliver the title.
  • Diaz decided to reimburse Solomon and to pay the capital gains tax herself.
  • Diaz issued two additional checks:
1) one for P20,000.00 in the name of Solomon for reimbursement; and 2) another for P40,000.00 payable to bearer for payment of the tax.
  • Stop payment order and encashment by respondent
  • After issuing the two checks, Diaz ordered SBTC to stop payment on the original P60,000.00 check.
  • Diaz allegedly advised Arboleda of the stop payment order and requested the return of the check to her.
  • Instead of returning the check, Arboleda encashed it on November 24, 1983.
  • SBTC employees failed to notice the stop payment order and allowed encashment to proceed.
  • SBTC’s bank-account arrangement and posting of the stop payment order
  • It appeared that A.T. Diaz Realty had two accounts with SBTC:
1) a savings account; and 2) a current account.
  • SBTC had an agreement for automatic transfer, allowing the drawer to draw a check against the current account supported by funds from the savings account if current account funds were insufficient.
  • The stop payment order issued by A.T. Diaz Realty was posted in the current account ledger.
  • When the check was presented for encashment, bank personnel consulted the savings account ledger instead of the current account ledger.
  • Because no stop payment order was posted in the savings account ledger, the check was encashed.
  • Discovery of the error and subsequent events involving Arboleda and Libongco
  • SBTC discovered the error on November 25, 1983.
  • SBTC recredited P60,000.00 to A.T. Diaz Realty’s account.
  • SBTC bank officials went to see Arboleda to ask for return of the P60,000.00.
  • Arboleda told the officials that the money had been turned over to Amador Libongco.
  • When bank officials asked Libongco, Libongco did not deny receipt of the money but stated he would return it provided Diaz showed the receipt for payment of the capital gains tax.
  • Diaz failed to show receipts.
  • Arboleda and Libongco refused to return the money.
  • Pleadings and defenses of private respondents
  • SBTC filed the suit.
  • In their answer, Arboleda and Libongco denied any obligation to return the money.
  • They alleged the money was due them as:
1) P45,000.00 as payment for the balance of the purchase price; and 2) P15,000.00 as payment for Arboleda’s commission as agent.
  • Arboleda denied having been notified of the stop payment order.
  • Libongco denied having received the money.
  • Libongco died on January 19, 1989, and the case against him was dismissed.
  • Trial court rulings (Regional Trial Court, Branch 58, Makati)
  • On May 21, 1990, the Regional Trial Court dismissed SBTC’s complaint.
  • The trial court ruled Arboleda had no obligation ...(Subscriber-Only)

Issues:

  • Whether SBTC had a right to recover from Arboleda the value of the P60,000.00 check encashed despite a stop payment order.
  • Whether the defenses available to Anita Diaz (the drawer of the check) were relevant to SBTC’s action even if Anita Diaz was not impleaded.
  • Whether Arboleda was obligated to return the proceeds, considering:
  • the alleged entitlement of Arboleda to commission and the alleged remaining purchase price balance; and
  • the trial court’s findings regarding the claimed capital gains tax and the purported misrepresentation underl...(Subscriber-Only)

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)
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