Title
Equitable PCI Bank vs. Tan
Case
G.R. No. 165339
Decision Date
Aug 23, 2010
Bank prematurely debited a postdated check, causing dishonor of other checks, leading to power disconnection and damages awarded for negligence.

Case Summary (G.R. No. 165339)

Petitioner’s and Respondent’s Core Contentions

Petitioner contended that Check No. 275100 was dated May 3, 1992 (a current check) and that the Court of Appeals erred in treating it as postdated May 30, 1992; petitioner also raised procedural objections about assignment of the case within the CA. Respondent contended that Check No. 275100 was postdated May 30, 1992, that the bank improperly debited his account before that date, and that the premature debit caused subsequent dishonors of other checks, leading to a loss of electric service, disruption of business, and unrealized income.

Key Dates

Issuance/deposit and clearing events (1992): Check No. 275100 issued May 13, 1992 (allegedly postdated May 30, 1992) and deposited May 14, 1992; respondent’s balance as of May 14, 1992 was P35,147.59; other checks issued May 9–16, 1992 and later dishonored. RTC decision dated June 21, 1993. Court of Appeals decision dated May 31, 2004 and resolution denying reconsideration dated August 24, 2004.

Applicable Law and Standards

  • 1987 Constitution (applicable as the Supreme Court decision was rendered after 1990 per instruction).
  • Rules of Court, Rule 45 (petition for review on certiorari).
  • R.A. No. 8246 (creation of additional CA divisions and treatment of pending cases submitted for decision).
  • R.A. No. 8791 (General Banking Law of 2000) — cited for the standard of fiduciary duty (the Court applied the high standard of diligence recognized in earlier jurisprudence).
  • Civil Code provisions on damages: Articles 2216, 2224, 2229, 2208 (grounds and measure for temperate, moral, exemplary damages and attorney’s fees).
  • Controlling judicial principles: banks owe the highest degree of diligence to depositors, strict liability of drawee bank to follow drawer’s instruction as reflected on face of check, and proximate-cause principles for recovering consequential losses.

Facts Relevant to Liability

Respondent issued Check No. 275100 (P34,588.72) to Sulpicio Lines; that check was deposited to Solid Bank on May 14, 1992 and, after clearing, the drawee bank (PCIB/Equitable PCI) debited respondent’s account immediately, leaving insufficient funds for other checks that respondent had issued. Two checks payable to ASELCO and ANECO were dishonored for insufficient funds; the electric supply to respondent’s two sawmills was disconnected (late May/early June 1992) and restored only in July and August 1992. Respondent alleged the premature debit of the postdated check caused the chain of dishonors and business losses. Petitioner argued the date on Check No. 275100 was May 3, 1992, and denied responsibility for the disconnection.

Procedural History and Jurisdictional Issue

Respondent sued the bank in the RTC, which dismissed the complaint. The Court of Appeals reversed and awarded damages; the CA denied reconsideration. Petitioner raised an administrative/jurisdictional objection that the CA Fourth Division violated an Office Order requiring re-raffle of cases to new divisions. The Supreme Court rejected that objection because R.A. 8246 expressly excluded cases already submitted for decision from re-raffle; CA-G.R. CV No. 41928 had been submitted for decision prior to the effective date of R.A. 8246, so the CA Fourth Division properly retained and decided the case. Administrative orders cannot override the statute; the statute’s Section 5 controlled the allocation of pending cases.

Standard on Review of Facts

The Supreme Court recognized the general rule that it is not a trier of facts and that factual findings of lower courts are generally binding on review under Rule 45. However, where findings of fact by the trial court and the appellate court diverge, the Supreme Court reexamined the record. Because the RTC and the CA reached differing conclusions on the date shown on the check, the Court performed an independent review of the evidence (including the check’s physical appearance and related correspondence).

Determination of the Check’s Date

The Supreme Court found that the CA’s visual examination of the check was persuasive: the date on the face of Check No. 275100 appears as “5/30/1992” with well-defined strokes separating “5” and “30” and a bar before the year; the marking between “3” and “0” was an unintentional light stroke and the “30” was written as a continuous stroke. The RTC’s inquiry into the asserted purpose of the check (payment for certain bills of lading) was irrelevant to determining the date and therefore its conclusion that the check was dated May 3, 1992 was unsound. Accordingly, the Court accepted the CA’s factual conclusion that the check was postdated for May 30, 1992.

Bank’s Duty, Negligence, and Failure of Internal Controls

The Court reiterated the long-standing rule that banks, because of their fiduciary function and public character, must exercise the highest degree of diligence in handling depositor accounts and ensuring accuracy in recording and honoring instruments. The drawee bank is strictly bound to honor checks according to the drawer’s clearly indicated instruction; payment before the date specified by the drawer violates that duty. Here, the bank failed to detect that Check No. 275100 was postdated and prematurely debited respondent’s account, permitting the check to “pass undetected” through the payee, depository bank, clearing system, and drawee bank. The Court found this lapse indicative of inadequate selection, supervision, and performance by bank personnel, consistent with precedents recognizing enhanced standards for banks and the need for careful teller practices (e.g., requiring counter-signature to clarify ambiguous entries).

Proximate Cause Analysis

The Court applied the proximate-cause doctrine: the proximate cause is the operative cause which, in a continuous sequence unbroken by efficient intervening causes, produces the injury. The Court concluded that petitioner’s negligence in debiting the account before the check’s date was the proximate cause of the subsequent dishonor of checks and of the disconnection of electric service. Respondent’s manner of writing the date did not constitute an efficient intervening cause because the intent to date the check May 30, 1992 was clear and the bank should have resolved any perceived ambiguity by obtaining the drawer’s confirmation or counter-signature before honoring the instrument.

Award of Actual (Unrealized Income) Damages — Reversal

The Court of Appeals had awarded P1,864,500.00 as actual damages based on purchase orders the respondent submitted. The Supreme Court reversed that portion of the award because respondent did not prove pecuniary loss with the required degree of certainty. Many of the purchase orders bore delivery dates before the period of power disconnection; respondent offered no competent proof showing that the orders were not filled or were cancelled due to the interruption. The Court stressed that actual damages must be established with reasonable certainty and cannot rest on speculation or conjectur

...continue reading

Analyze Cases Smarter, Faster
Jur helps you analyze cases smarter to comprehend faster, building context before diving into full texts. AI-powered analysis, always verify critical details.

About Privacy Terms