Facts:
Traders Royal Bank (Petitioner) sought review of the Court of Appeals decision in favor of
Radio Philippines Network, Inc. (RPN),
Intercontinental Broadcasting Corporation (IBC), and
Banahaw Broadcasting Corporation (BBC) (Respondents) concerning three managers checks allegedly issued to the
Bureau of Internal Revenue (BIR) but paid to unknown persons. On April 15, 1985, the BIR assessed the networks for tax liabilities for taxable years 1978 to 1983. On March 25, 1987, Lourdes C. Vera, plaintiffs’ comptroller, requested settlement of the tax obligations; the BIR granted the request and, on June 26, 1986, the networks purchased from TRB three managers checks numbered 30652 (P4,155,835.00), 30650 (P3,949,406.12) and 30796 (P1,685,475.75) intended to pay their taxes. TRB, through its Broadcast City Branch manager, delivered the checks to Mrs. Vera for presentation to the BIR. In September 1988 the BIR again assessed the networks and discovered the checks had neither been delivered nor paid to the BIR; instead they were presented for payment by unknown persons and bore clearing imprints indicating presentation at the
Security Bank and Trust Company (SBTC), Taytay Branch. Because of unpaid liabilities the networks paid the BIR P18,962,225.25 in compromise and demanded reimbursement from TRB and SBTC. The trial court, in a decision rendered February 17, 1985, held TRB liable for actual damages of P9,790,716.87, ordered SBTC, as collecting bank, to reimburse TRB, awarded exemplary damages and attorneys’ fees of twenty-five percent of recovery, and imposed costs. The Court of Appeals modified the judgment by absolving SBTC from liability and holding TRB solely liable for damages and costs; TRB filed the present petition raising negligence, SBTC’s alleged indorsement, and the propriety of exemplary damages as errors of law.
Issues:
Should
Traders Royal Bank be held solely liable for payment of the three managers checks negotiated to persons other than the payee; was
Security Bank and Trust Company liable as collecting bank and indorser for the disputed checks; and were the awards of exemplary damages and attorneys’ fees proper?
Ruling:
Ratio:
Doctrine: