Haystack: Tan vs. Court of Appeals (GR 108555, 20 December 1994)

Tan vs. CA
[G.R. No. 108555. December 20, 1994.]
First Division, Kapunan (J): 4 concurring

Facts: Ramon Tan, a trader-businessman and community leader in Puerto Princesa, had maintained since 1976 Current Account 109058068 with Rizal Commercial Banking Corporation (RCBC)'s Binondo branch. On 11 March 1988, to avoid carrying cash while enroute to Manila, he secured a Cashier's Check L 406000126 from the Philippine Commercial Industrial Bank (PCIB), Puerto Princesa branch, in the amount of P30,000, payable to his order. He deposited the check in his account with RCBC Binondo on March 15 (by filing a local check deposit slip). On the same day, RCBC erroneously sent the same cashier's check for clearing to the Central Bank which was returned for having been "missent" or "misrouted." The next day, March 16, RCBC debited the amount covered by the same cashier's check from the account of Tan. RCBC at this time had not informed Tan of its action which the latter claims he learned of only 42 days after, specifically on March 16, when he received the bank's debit memo. Relying on the common knowledge that a cashier's check was as good as cash, that the usual banking practice that local checks are cleared within 3 working days and regional checks within 7 working days, and the fact that the cashier's check was accepted, Tan issued 2 personal checks both dated March 18. Check 040719 in the name of Go Lac for P5,5000 was presented on April 25, more than 30 days from Tan's deposit date of the cashier's check. Check 040718 in the name of MS Development Trading Corporation for P6,053.70 was returned twice on March 24, nine (9) days from his deposits date and again on April 26, 22 days after the day the cashier's check was deposited for insufficiency of funds. 4

Tan, alleging to have suffered humiliation and loss of face in the business sector due to the bounced checks, filed a complaint against RCBC for damages in the RTC Palawan and Puerto Princesa (Branch 47, Civil Case 2101). The trial court rendered a decision on 28 December 1990 in Tan's favor, ordering RCBC Binondo Branch to pay Tan damages and attorney's fees in the total amount of P1,035,000, broken down as follows: P700,000.00 as moral damages, P200,000.00 as exemplary damages; P135,000.00 which is 15% of the sum awarded to Tan, as attorney's fees and to pay costs of suit. The trial court further held that for having failed to prove by any receipt or writing to underpin it, Tan's claim for actual damage is denied for lack of merit.

RCBC appealed to the Court of Appeals (CA-GR CV 31083). The Court of Appeals on 12 January 1993 rendered a decision, reversing the decision of the lower court and dismissing the complaint without pronouncement as to cost.

The Supreme Court reversed the decision of the Court of Appeals and ordered RCBC Binondo Branch to pay Tan the amount of P100,000 pesos as moral damages and the sum of P50,000 pesos as attorney's fees, plus costs.

1. City Trust Corp. vs. IAC in point
In a most recent case decided by the Court, City Trust Corporation v. The Intermediate Appellate Court, involving damages against City Trust Banking Corporation, the depositor, instead of stating her correct account number 29000823 inaccurately wrote 2900823. Because of this error, six postdated checks amounting to P20,209.00 she issued were dishonored for insufficiency of funds. The Regional Trial Court dismissed the complaint for lack of merit. The Court of Appeals, however, found the appeal meritorious and ordered the bank to pay nominal damages of P2,000.00, temperate and moderate damages of P5,000.00 and attorney's fees of P4,000.00.

2. City Trust case: Name and not account number controlling where deposit is made and should be posted
Even if it be true that there was error on the part of the depositor in omitting a zero in her account number, yet, it is a fact that her name, Emma E. Herrero, is clearly written on said deposit slip. This is controlling in determining in whose account the deposit is made or should be posted. This is so because it is not likely to commit an error in one's name that merely relying on numbers which are difficult to remember, especially a number with 8 digits as the account numbers of the bank's depositors. The use of numbers is simply for the convenience of the bank but was never intended to disregard the real name of its depositors.

3. City Trust case: Bank not free from blame, teller negligent
The bank was not free from blame for the fiasco. In the first place, the teller should not have accepted the deposit without correcting the account number on the deposits slip which, obviously, was erroneous because, it contained only 7, digits instead of 8. Second, the complete name of the depositor appears in bold letters on the deposit slip. There could be no mistaking in her name, and that the deposit was made in her name, Emma E. Herrero. In fact, the bank's teller should not have fed her deposit slip to the computer knowing that her account number written thereon was wrong as it contained only 7 digits. As it happened, the deposit had to be consigned to the suspense accounts pending verification. This, indeed, could have been avoided at the first instance had the teller of the bank performed her duties efficiently and well. For then she could have readily detected that the account number in the name of Emma E. Herrero was erroneous and would be rejected by the computer. That is, or should be, part of the training and standard operating procedure of the bank's employees.

4. City Trust case: Depositors not concerned with banking procedures
Depositors are not concerned with banking procedure. That is the responsibility of the bank and its employees. Depositors are only concerned with the facility of depositing their money, earning interest thereon, if any, and withdrawing therefrom, particularly businessmen, who are supposed to be always on-the-go. The depositor's account is a current account which should immediately be posted. After all, it does not earn interest. At least, the forbearance should be commensurated with prompt, efficient and satisfactory service.

5. City Trust case: Duty of banks
Bank clients are supposed to rely on the services extended by the bank, including the assurance that their deposits will be duly credited them as soon as they are made. For, any delay in crediting their account can be embarrassing to them. The bank is engaged in business impressed with public interests, and it is its duty to protect in return its many clients and depositors who transact business with it. It should not be a matter of the bank alone receiving deposits, lending out money and collecting interests. It is also its obligation to see to it that all funds invested with it are properly accounted for and duly posted in its ledgers. Thus, as a business affected with public interest and because of the nature of its functions, the bank is under obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship.

6. Bank cannot exculpate itself from liability
RCBC cannot exculpate itself from liability by claiming that its depositor "impliedly instructed" the bank to clear his check with the Central Bank by filling a local check deposit slip. First, why would RCBC follow a patently erroneous act born of ignorance or inattention or both. Second, bank transactions pass through a succession of bank personnel whose duty is to check and countercheck transactions for possible errors. In the instant case, the teller should not have accepted the local deposit slip with the cashier's check that on its face was clearly a regional check without calling the depositor's attention to the mistake at the very moment this was presented to her. Neither should everyone else down the line who processed the same check for clearing have allowed the check to be sent to Central Bank. Depositors do not pretend to be past master of banking technicalities, much more of clearing procedures. As soon as their deposits are accepted by the bank teller, they wholly repose trust in the bank personnel's mastery of banking, their and the bank's sworn profession of diligence and meticulousness in giving irreproachable service.

7. Pilipinas Bank case: Use of wrong deposit slip not proximate cause of clearing fiasco
The bank is not expected to be infallible but, still, it must bear the blame for not discovering the mistake of its teller despite the established procedure requiring the papers and bank books to pass through a battery of bank personnel whose duty it is to check and countercheck them for possible errors. Apparently, the officials and employees tasked to do that did not perform their duties with due care. Where the conclusion is inevitable that the bank had been remiss in the performance of its duty and obligation to its client, as well as to itself.

8. Bank had ample time to correct the cashier’s check “missending”
The two dishonored checks issued by Tan, Check 040719 and Check 040718 were presented for payment more than 45 days from the day the cashier's check was deposited. This gave RCBC more than ample time to have cleared the cashier's check had it corrected its "missending" the same upon return from Central Bank using the correct slip this time so it can be cleared properly. Instead, RCBC promptly debited the amount of P30,000.00 against Tan's account and left it at that.

9. Assurance of payment in ordinary check
An ordinary check is not a mere undertaking to pay an amount of money. There is an element of certainty or assurance that it will be paid upon presentation that is why it is perceived as a convenient substitute for currency in commercial and financial transactions. The basis of the perception being confidence. Any practice that destroys that confidence will impair the usefulness of the check as a currency substitute and create havoc in trade circles and the banking community.

10. Nature of Cashier’s check
A cashier's check is a primary obligation of the issuing bank and accepted in advance by its mere issuance. By its very nature, a cashier's check is the bank's order to pay drawn upon itself, committing in effect its total resources, integrity and honor behind the check. A cashier's check by its peculiar character and general use in the commercial world is regarded substantially to be as good as the money which it represents. In the present case, what was presented for deposit was not just an ordinary check but a cashier's check payable to the account of the depositor himself. Therefore, PCIB by issuing the check created an unconditional credit in favor of any collecting bank.

11. Layman’s perception that a cashier’s check is good as cash
Reliance on the layman's perception that a cashier's check is as good as cash is not entirely misplaced, as it is rooted in practice, tradition, and principle.

12. Article 2220 Civil Code, on moral damages
Article 2220 of the New Civil Code provides that “Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith.”

13. Article 2225 Civil Code, on exemplary or corrective damages
Article 2225 of the New Civil Code states that “Exemplary damages or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages.”

14. Right to recover damages even if negligence not attended by malice and bad faith; American Express International vs. IAC
Tan has the right to recover moral damages even if the bank's negligence may not have been attended with malice and bad faith. In American Express International, Inc. v. IAC, it was held that “while petitioner was not in bad faith, its negligence caused the private respondent to suffer mental anguish, serious anxiety, embarrassment and humiliation, for which he is entitled to recover, reasonable moral damages (Art. 2217, Civil Code).

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