Case Summary (G.R. No. 176464)
Factual Background
This case arises from the assessment of tax obligations against the respondents—RPN, IBC, and BBC—for the taxable years 1978 to 1983 by the Bureau of Internal Revenue (BIR). To settle these obligations, on June 26, 1986, the respondents purchased three manager’s checks from TRB, intended for payment to the BIR. However, these checks were never delivered to the BIR by Mrs. Lourdes C. Vera, the respondents' comptroller. Instead, they were presented for payment by unidentified individuals to SBTC, which led to the failure of the respondents to settle their tax obligations and subsequent penalties levied against them.
Trial Court Decision
The trial court found in favor of the respondents and held TRB liable for actual damages amounting to P9,790,716.87, comprising the amounts of the three manager’s checks plus interest, exemplary damages, and attorney’s fees. SBTC was ordered to reimburse TRB for any payments made to the respondents and the defendants were to bear the costs of the suit.
Appellate Court Ruling
On appeal, the Court of Appeals modified the trial court's decision by absolving SBTC from liability and affirming TRB's sole liability to the respondents for damages and costs of suit. It reasoned that negligence from RPN, IBC, and BBC should not bar their recovery and emphasized that TRB failed to exercise due diligence in knowing the indorsers of the checks it cashed.
Issues Raised by TRB
TRB contested the decision, claiming that the appellate court overlooked factual considerations that would bar the respondents from recovering due to their negligence, misapprehended facts regarding SBTC's endorsement of the checks, and misapplied the law by awarding exemplary damages.
Respondents’ Argument
The respondents argued that TRB's petition merely raised questions of fact that were already resolved by both lower courts. They also contended that SBTC's lack of involvement as a collecting bank in the negotiation of the checks should preclude any liability on its part.
Determination of Liability
The key legal issue centered on whether TRB should be held liable since it cashed checks payable to the BIR but were presented by parties who forged necessary indorsements. The law states that a signature made without authority is inoperative and any payment made through such a signature cannot be reclaimed from the payee. TRB, by paying the forged checks, was considered to have acted negligently and bore the loss incurred.
Duty of Care
It was determined that TRB breached its duty of care customary in banking practices by cashing checks that were intended for a government agency and by failing to verify the authenticity of the indorsers.
Appellate Court's Find
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Case Overview
- Case Citation: 439 Phil. 475; 100 OG No. 48, 8053 (November 29, 2004)
- Court: Supreme Court of the Philippines
- Date of Decision: October 10, 2002
- Petitioner: Traders Royal Bank (TRB)
- Respondents: Radio Philippines Network, Inc. (RPN), Intercontinental Broadcasting Corporation (IBC), Banahaw Broadcasting Corporation (BBC), and Security Bank and Trust Company (SBTC)
Procedural History
- TRB seeks a review of the Court of Appeals' decision dated April 30, 1999, which modified the trial court’s ruling by absolving SBTC from liability and holding TRB solely liable for damages.
Facts of the Case
- In April 1985, the Bureau of Internal Revenue (BIR) assessed tax obligations for RPN, IBC, and BBC for the years 1978-1983.
- On June 26, 1986, the plaintiffs purchased manager's checks from TRB to settle their tax liabilities.
- The checks were intended for BIR but were never delivered by the plaintiffs’ comptroller, Mrs. Lourdes C. Vera.
- By September 1988, the plaintiffs were reassessed by the BIR for unpaid taxes, discovering the checks had been cashed by unknown individuals at SBTC, with forged endorsements.
- Plaintiffs settled their tax deficiency with the BIR, leading to demands for reimbursement from TRB and SBTC, which were refused, prompting the lawsuit.
Trial Court Decision
- The trial court ruled in favor of the plaintiffs, condemning TRB to pay actual damages totaling P9,790,716.87, exemplary damages of P300,000, and attorney's fees equivalent to 25% of th