Case Summary (G.R. No. 177526)
Relevant Facts
Between March and August of 1989, Joe Kuan Food Corporation issued five checks in favor of Chowking, amounting to a total of P556,981.86. Chowking's accounting manager, Rino T. Manzano, presented these checks at PSBank’s Bustos branch, where they were cashed solely based on his signature, without the required endorsements from other authorized officers. Subsequently, Manzano misappropriated the proceeds. Upon discovery of the fraud, Chowking demanded reimbursement from PSBank, leading to the filing of a complaint after the bank declined to pay.
Initial Trial Court Ruling
The Regional Trial Court (RTC) found in favor of Chowking on August 24, 1998, mandating PSBank and Santos to collectively reimburse Chowking the amount encashed with interest, along with attorney's fees, exemplary damages, and unrealized profits. The court dismissed the complaint against PSBank's president, Antonio S. Abacan. However, on January 11, 1999, the RTC reversed its previous decision and ruled that Chowking's negligence in allowing Manzano to encash the checks was the proximate cause of the loss, thereby dismissing Chowking's complaint against PSBank and Santos.
Court of Appeals Disposition
Chowking appealed the RTC’s decision, and on January 31, 2007, the Court of Appeals (CA) made a ruling reinstating the RTC’s original decision while modifying certain damage awards. The CA concluded that PSBank had acted negligently by cashing checks with insufficient endorsements and reaffirmed Santos's liability for her negligence, highlighting that the bank's internal procedures were not followed.
Legal Principles Invoked
In addressing the claims of negligence and liability, the CA applied relevant provisions of the Civil Code, particularly Articles 2176 and 2180, which govern liability for damages caused by employees in the course of their employment. It emphasized that banks must exercise the highest degree of diligence owing to their significant public trust responsibilities. The CA found that PSBank's failure in supervision and adherence to its own encashment policies led to the negligent actions of Santos, rendering the bank liable.
Issues Presented
The issues brought before the CA included whether Chowking was estopped from asserting its claim against PSBank and whether its own negligence was the proximate cause of its loss. The CA ruled that equitable estoppel did not apply because Chowking had not made any false representations regarding its checks; it had previously all
...continue readingCase Syllabus (G.R. No. 177526)
Case Overview
- This case involves a petition for review on certiorari regarding the Decision of the Court of Appeals (CA) which reinstated the ruling of the Regional Trial Court (RTC) in favor of Chowking Food Corporation.
- The RTC had ordered Philippine Savings Bank (PSBank) and its Bustos Branch Head, Erlinda O. Santos, to reimburse Chowking for five illegally encashed checks totaling P556,981.86.
Facts of the Case
- Between March 15, 1989, and August 10, 1989, Joe Kuan Food Corporation issued five checks in favor of Chowking, totaling P556,981.86.
- Chowking's acting accounting manager, Rino T. Manzano, endorsed and encashed these checks at PSBank's Bustos branch, where they were honored by Santos despite lacking the signatures of other authorized officers.
- Manzano subsequently absconded with the proceeds from the checks.
- Upon discovering Manzano's actions, Chowking demanded reimbursement from PSBank, which refused, leading to a complaint filed by Chowking for damages.
Initial Court Proceedings
- Chowking's complaint named PSBank, Santos, and PSBank's president, Antonio S. Abacan, as defendants.
- PSBank and Santos filed cross claims and third-party complaints against Manzano, who could not be served summons.
- Chowking moved for summary judgment, which was opposed by PSBank, but the RTC denied the motion.
- The RTC ultimately ruled in favor of Chowking, ordering PSBank and Santos to pay the claimed amount plus interest, attor