Title
Far East Bank and Trust Co. vs. Tentmakers Group, Inc.
Case
G.R. No. 171050
Decision Date
Jul 4, 2012
FEBTC sued TGI and its officers for unpaid loans, claiming they signed promissory notes. Respondents denied receiving proceeds, alleging bank manager fraud. SC ruled FEBTC failed to comply with banking regulations, lacked proof of receipt, and was negligent, affirming CA's dismissal of the complaint.
promissory notes
unpaid loans
dismissal of complaint

Case Summary (G.R. No. 171050)

Factual Background

Gregoria, identified as President of TGI, and Rhoel, identified as Treasurer of TGI, affixed their signatures on three promissory notes for loans contracted with FEBTC. Two promissory notes were executed on July 5, 1996: Promissory Note No. 2-038-965034 for P255,000.00 and Promissory Note No. 2-038-965040 for P155,000.00. Respondents alleged that they had signed on blank promissory notes intended for future use. The sixty-day notes became due and demandable on September 3, 1996. A third note, Promissory Note No. 2-038-965003 for P140,000.00, was allegedly executed on August 7, 1996 as a thirty-day note, allegedly in the same manner.

After FEBTC made a demand that was allegedly futile, it filed a complaint before the RTC seeking payment of the principal sums and claiming a total of P887,613.37 inclusive of interest, penalty charges, and attorneys’ fees. Gregoria and Rhoel were impleaded as jointly and severally liable with TGI. Respondents denied that FEBTC had the right to demand payment from them, asserting that there was no board resolution from TGI authorizing Gregoria and Rhoel to receive proceeds and authorizing FEBTC to release loans. They claimed that FEBTC violated Central Bank rules and its own policies by failing to require such board resolution as a condition sine qua non before granting a loan to a corporation, allegedly for the protection of depositors and borrowers. They further alleged that FEBTC’s branch manager, Liza Liwanag, told Gregoria and Rhoel that they could obtain additional working capital by signing promissory notes in advance while the notes were blank, and that the branch manager’s act and FEBTC’s noncompliance with bank policy caused damage to FEBTC because FEBTC’s own employee supposedly defrauded the bank. Respondents also asserted that they had no knowledge of any loan taken out in their name and that FEBTC could not present proof that respondents had received the amounts stated in the promissory notes.

In their Answer with Counterclaim and Cross-claim, respondents added that Salvador Bernardo, Jr. and Luisa Bernardo of Eliezer Crafts were the ones who received the proceeds, and they alleged error in impleading those persons as cross-defendants. Respondents did not appear during pre-trial, and the RTC permitted FEBTC to present evidence ex parte. Their motions for reconsideration and to admit a pre-trial brief were denied.

RTC Proceedings and Judgment

After trial, the RTC rendered judgment in favor of FEBTC. The dispositive portion ordered TGI, Gregoria, and Rhoel to be jointly and severally liable to pay FEBTC P1,181,764.68, plus attorneys’ fees equivalent to 10% of the total amount claimed. The RTC found sufficient basis for FEBTC’s claim. It held that Gregoria and Rhoel’s liability was premised on their assumption of personal and solidary liability by signing the promissory notes. It also upheld the validity and binding effect of the notes, reasoning that respondents did not deny the due execution of the documents or the signatures appearing thereon.

CA Decision and Resolution

On July 28, 2005, the CA reversed the RTC and dismissed FEBTC’s complaint. The CA took judicial notice of customary banking practice for loan agreements and concluded that, despite the existence of promissory notes, FEBTC failed to present a board resolution or a corporate secretary’s certificate designating the signatories, and there was no showing that the signatories disclosed that they were acting as corporate agents. The CA also found no collaterals or securities to ensure payment.

The CA attributed the irregularities to FEBTC’s failure to comply with guidelines under the Manual of Regulations for Banks (MORB) and concluded that the transaction appeared akin to an “inside job,” whereby a branch manager or bank employee secured the signatures of Gregoria and Rhoel and then filled in blank promissory notes. The CA stressed that banks must maintain adequate audit mechanisms to ensure compliance with banking rules and to safeguard public confidence. It also found no evidence that respondents or TGI actually received the proceeds of the three promissory notes.

FEBTC’s motion for reconsideration was denied by the CA in a January 6, 2006 resolution for lack of merit, prompting FEBTC to file the present Rule 45 petition.

The Issues and the Parties’ Contentions

The core issue was whether the CA decision was grounded entirely on speculations, surmises, or conjectures when it ruled for the respondents. FEBTC argued that it complied with banking requirements through TGI board resolutions authorizing Gregoria and Rhoel to transact business with the bank. It maintained that the RTC had already effectively resolved the materiality of those resolutions and that Gregoria and Rhoel were solidarily liable by virtue of their signatures on the promissory notes. FEBTC also contended that respondents did not specifically deny under oath the genuineness and due execution required by Section 8, Rule 8 of the Rules of Court, and that FEBTC’s demand was the exercise of creditor rights against solidary debtors. It insisted that the CA’s “inside job” inference was unsupported by evidence and that the CA erred in considering allegations that third persons received proceeds, because the proceeds were allegedly credited to TGI’s account, not to any entity called Eliezer Crafts.

Respondents countered that they did not receive the proceeds represented by the promissory notes and that FEBTC failed to present checks, vouchers, or documents proving actual receipt by Gregoria and Rhoel. They argued that the RTC erred in holding them personally liable, claiming they were mere signatories acting in behalf of TGI. They pointed to a certificate of board resolution submitted to FEBTC to show corporate authority, while reiterating that they had not received the loan amounts stated in the promissory notes.

Legal Basis and Reasoning of the Court

The Court treated the petition as principally challenging the correctness of the CA’s factual findings, given FEBTC’s arguments on compliance, receipt of proceeds, and the evidentiary sufficiency for the CA’s “inside job” inference. Invoking settled procedural limits, the Court held that in Rule 45 petitions only questions of law may be raised, and the Court is not a trier of facts; it does not reweigh evidence. CA factual findings were therefore generally binding unless an exception applied. The Court found that FEBTC failed to show that any recognized exception warranted a reexamination of the CA’s factual findings.

Even assuming factual issues could be considered, the Court held that FEBTC’s position still failed. The Court agreed with the CA that FEBTC presented no document evidencing that Gregoria and Rhoel, or TGI for that matter, received the amounts demanded in the complaint. The Court found no evidentiary support in the records for actual receipt of the proceeds stated in the three promissory notes. It further held that FEBTC violated the applicable rules and regulations of the Bangko Sentral ng Pilipinas (BSP) by failing to strictly follow Section X319 of the Manual of Regulations for Banks on Loans Against Personal Security. The Court emphasized the MORB requirements that, before granting unsecured credit accommodations against personal security, banks must exercise proper caution by ascertaining the borrowers’ financial capacity and must require submission of specified documents, including stamped income tax returns and, for exposures beyond P500,000.00, a certified balance sheet and profit and loss statement. The Court noted that the evidentiary records showed that these guidelines—particularly by the bank manager—were not complied with.

The Court also adopted the CA’s articulation of customary documentary controls expected for loan approvals and release of proceeds, including: duly signed promissory notes; evidence of receipt of proceeds; board resolution and notarized corporate secretary’s certificate identifying authorized signatories when a corporation is involved; disclosure of the principal when agents sign; and securities such as Real Estate Mortgage, Chattel Mortgage, or pledges to secure payment. The Court held that, although promissory notes existed, there was no proof of receipt of proceeds by respondents. It found that there was also no board resolution/corporate secretary’s certificate designating authorized signatories specifically for the loans covered by the promissory notes. Additionally, there were no collaterals or pledges to ensure repayment.

The Court further sustained the CA’s view that FEBTC failed in surveillance of its people and that the bank auditors could have detected the anomalies: absence of a board resolution/corporate secretary’s certificate; absence of collateral despite an unsecured loan; and lack of disclosure as to the principal borrower. It reiterated the doctrine that banking business is impressed with public interest and that banks are expected to exercise a very high standard of diligence in the selection and supervision of employees. It stated that a bank’s liability to clients is not merely vicarious but primary, and defenses based on due diligence in employee selection and supervision did not matter when the bank

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