G.R. No. 160260 - Westmont Bank vs. Dela Rosa-Ramos

Respondent Myrna Dela Rosa-Ramos had a checking/current account since 1986 with United Overseas Bank Philippines (formerly Associated Bank, later Westmont Bank, now United Overseas Bank Philippines) at the Sto. Cristo Branch, Binondo, Manila.
During her transactions with the Bank, she became acquainted with Domingo Tan, a Signature Verifier employed by the Bank.

Tan offered a "special arrangement" wherein he would finance or place sufficient funds in her account to cover overdrafts or when checks she issued exceeded her account balance to prevent dishonor of checks.
The arrangement began in 1987 and continued until 1998, with a fee of P50 per day for every P40,000 financed.
To guarantee payment, Dela Rosa-Ramos issued postdated checks covering principal plus interest; occasionally, she paid in cash.

Four Associated Bank checks drawn against her account payable to "cash" were involved:

Check No. 467322 was originally dated August 28, 1987 but was altered to May 8, 1988 without authorization; Tan deposited it into William Co's account despite clear alteration, resulting in the amount being charged to Dela Rosa-Ramos' account.
Check No. 510290 was for payment to Co for cigarettes purchased; it was dishonored and replaced by a "good customer" check and cash, but Tan re-deposited the dishonored check to Co’s account without returning it to Dela Rosa-Ramos.
Check No. 613307 was an undated guarantee check; Tan placed the date June 14, 1988 and it was dishonored due to insufficient funds with a stop payment order. Tan did not return this check to Dela Rosa-Ramos and re-deposited it into Co’s account.
Check Nos. 510290 and 613307 were both dishonored for insufficient funds. Co revealed that these checks were deposited to cover a P432,500.00 cash allegedly taken by Tan from him. Under threat of exposing her affair with a married man, Dela Rosa-Ramos was coerced to replace the two checks with Check No. 598648 in the same amount.
Check No. 613306 was undated when delivered; Tan placed the July 4, 1988 date. On July 5, 1988, although her account balance was P121,989.66 (insufficient to cover the check), a check from Lee See Bin for P170,000 was deposited, enabling Tan to encash Check No. 613306 and withdraw the entire balance. Later, Dela Rosa-Ramos learned that the Lee See Bin check was not funded and the Bank demanded she return the deficiency.

Dela Rosa-Ramos filed a complaint against Tan and the Bank to recover P754,689.66, representing the total withdrawn or charged amount; complaint was later amended to include Co.
Tan’s partial direct testimony was stricken for non-appearance in cross-examination; he later passed away.
On September 16, 1998, the Regional Trial Court (RTC) ruled in favor of Dela Rosa-Ramos, ordering the Bank, Tan, and Co jointly and severally liable to pay P754,689.66 plus interest, moral damages, exemplary damages, attorney's fees, and costs. Counterclaims by defendants were dismissed.
Co and the Bank appealed to the Court of Appeals (CA). Co’s appeal was dismissed for failure to file a brief.
On February 14, 2003, the CA affirmed the RTC decision with modification: defendants liable only for P521,989.00 covering Check Nos. 467322, 613307, and P121,989.66 for Check No. 613306. Award for moral damages and attorney’s fees were deleted.
The Bank filed a motion for partial reconsideration which the CA denied on October 2, 2003. The Bank then filed a Petition for Review under Rule 45 before the Supreme Court.

Whether the Court of Appeals gravely erred in holding the Bank, Tan, and Co jointly and severally liable without delineating the source of their respective obligations to Dela Rosa-Ramos.

Whether the judgment award against the Bank relative to Check No. 467322 lacks legal basis as it is founded on pure speculation.

Whether the Court of Appeals erred by finding that Dela Rosa-Ramos’ account was debited with the amount of Check No. 613307 despite the RTC’s finding that the check was dishonored for insufficient funds.

Whether the CA erred in holding the Bank liable for P121,989.96 based on Check No. 613306 despite acknowledging no manifest irregularity.

Whether the Court of Appeals erred in failing to pass upon the Bank’s cross-claim against Tan.