Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 168842 August 11, 2010
VICENTE GO, Petitioner,
vs.
METROPOLITAN BANK AN TRUST CO., Respondent.
D E C I S I O N
NAC!URA, J.:
efore the Court is a petition for revie! on certiorari under Rule "# of the Rules of Court, assailin$ the
Decision
%
dated Ma& '(, '))# and the Resolution
'
dated *u$ust +%, '))# of the Court of *ppeals ,C*-
in C*./.R. CV No. 0+"01.
2he 3acts
2he facts of the case are as follo!s4
Petitioner filed t!o separate cases before the Re$ional 2rial Court ,R2C- of Cebu. Civil Case No.
CE.1(%+ !as filed b& petitioner a$ainst Ma. 2eresa Chua ,Chua- and /l&ndah 2aba5a$ ,2aba5a$- for
a su6 of 6one& !ith preli6inar& attach6ent. Civil Case No. CE.1700 !as filed b& petitioner for a
su6 of 6one& !ith da6a$es a$ainst herein respondent Metropolitan an8 and 2rust Co6pan&
,Metroban8- and Chua.
+

In both cases, petitioner alle$ed that he !as doin$ business under the na6e 9:ope Phar6ac&9 !hich
sells 6edicine and other phar6aceutical products in the Cit& of Cebu. Petitioner had in his e6plo&
Chua as his phar6acist and trustee or careta8er of the business; 2aba5a$, on the other hand, too8 care
of the receipts and invoices and assisted Chua in 6a8in$ deposits for petitioner<s accounts in the
business operations of :ope Phar6ac&.
"

In CE.1(%+, petitioner clai6ed that there !ere unauthori=ed deposits and encash6ents 6ade b& Chua
and 2aba5a$ in the total a6ount of One :undred Nine 2housand 3our :undred 2hirt&.three Pesos and
2hirt& Centavos ,P%)1,"++.+)-. :e >uestioned particularl& the follo!in$4
,%- 3E2C Chec8 No. '#%%%% dated *pril '1, %11) in the a6ount of P'',0+#.)) !hich !as
issued b& plaintiff<s ?petitioner<s@ custo6er Ao& Aibron in pa&6ent of the stoc8s purchased !as
deposited under Metroban8 Savin$s *ccount No. "').1').0 belon$in$ to the defendant Ma.
2eresa Chua;
,'- RCC Chec8s Nos. ++)1#7 and '1"#%#, !hich !ere in blan8 but pre.si$ned b& hi6
,plaintiff ?petitioner@ Vicente /o- for convenience and intended for pa&6ent to plaintiff<s
?petitioner<s@ suppliers, !ere filled up and dated Septe6ber '', %11) and Septe6ber (, %11) in
the a6ount of P+),))).)) and P#),))).)) respectivel&, and !ere deposited !ith defendant
Chua<s aforestated account !ith Metroban8;
,+- PC Chec8 No. ))#7(", dra!n b& Eli=abeth Enri>ue= pa&able to the :ope Phar6ac& in the
a6ount of P0,(17.+) !as encashed b& the defendant /l&ndah 2aba5a$;
,"- 2here !ere unauthori=ed deposits and encash6ents in the total su6 of P%)1,"++.+);
#
In CE.1700, petitioner averred that there !ere thirt&.t!o ,+'- chec8s !ith :ope Phar6ac& as pa&ee,
for var&in$ su6s, a6ountin$ to One Million 3our :undred Ninet&.2!o 2housand 3ive :undred
Ninet&.3ive Pesos and SiB Centavos ,P%,"1',#1#.)0-, that !ere not endorsed b& hi6 but !ere
deposited under the personal account of Chua !ith respondent ban8,
0
and these are the follo!in$4
C:ECC NO. D*2E *MODN2
3E2C '#%%00 #.'+.1) P 0#,'%".77
3E2C '+1+11 #.)7.1) '",1%(.(#
3E2C '#%+#) (.'".1) '%',+'0.#0
PC '(177( 0.'(.1) ',))).))
PC %0'+7( %.'".1) 0,+)).))
PC %0'+%( %'.''.71 +,+)).))
PC '(177% 0.'+.1) (,0#).))
PC ))1))# (.'%.71 +,#7".))
PC '(1((% #.%".1) +,0)).))
PC '(1('0 ".'#.1) ',))).))
PC %07))" +.''.1) ',7)).))
PC %0(10+ +.)(.1) %,()).))
3E2C '0((1+ 7.').1) 7),)7#.00
3E2C '0((0% (.'%.1) "#,+)".0+
3E2C '#%'#' 0.)+.1) 0",))).))
3E2C '0((17 7.%#.1) "),)(7.0(
PC +0('1' 7.)0.1) ',%)).))
PC +(0""# 1.'0.1) %,%'#.))
PC ))1)#0 7.)(.71 ',#)).))
PC +(0")' 1.%'.1) %',%)#.")
PI %1()(" (.%(.1) #,'").))
PI %1()#% (.)0.1) %,+#).))
PI ')"+#7 1.%1.1) #,")'.0)
PI ')"'#' (.+%.1) 0,(%#.0)
3E2C '#%%(% 0.'(.1) 7+,%(#.#"
3E2C '#%%0# 0.'7.1) '+%,1+0.%)
3E2C '#%'#% 0.+).1) "(,)7(.'#
3E2C '#%%0+ 0.'%.1) %(),0)).7#
3E2C '#%%() #.'+.1) %0,"").))
3E2C '#%%%' #.+%.1) '%%,#1'.01
3E2C '+1")) 0.%#.1) "(,00".)+
3E2C '#%%0' 0.''.1) 7',01(.7#
P%,"1',#1#.)0
(
Petitioner clai6ed that the said chec8s !ere crossed chec8s pa&able to :ope Phar6ac& onl&; and that
!ithout the participation and connivance of respondent ban8, the chec8s could not have been accepted
for deposit to an& other account, eBcept petitioner<s account.
7

2hus, in CE.1700, petitioner pra&ed that Chua and respondent ban8 be ordered, Eointl& and severall&,
to pa& the principal a6ount of P%,"1',#1#.)0, plus interest at %'F fro6 the dates of the chec8s, until
the obli$ation shall have been full& paid; 6oral da6a$es of 3ive :undred 2housand Pesos
,P#)),))).))-; eBe6plar& da6a$es of P#)),))).)); and attorne&<s fees and costs in the a6ount of
P#)),))).)).
1

On 3ebruar& '+, %11#, the R2C rendered a Goint Decision,
%)
the dispositive portion of !hich reads4
H:ERE3ORE, pre6ises considered, the Court hereb& renders Eud$6ent dis6issin$ plaintiff Vicente
/o<s co6plaint a$ainst the defendant Ma. 2eresa Chua and /l&ndah 2aba5a$ in Civil Case No. CE.
1(%+, as !ell as plaintiff<s co6plaint a$ainst the sa6e defendant Ma. 2eresa Chua in Civil Case No.
CE.1700.
Plaintiff Vicente /o is 6oreover sentenced to pa& P#),))).)) in attorne&<s fees and liti$ation eBpenses
to the defendants Ma. 2eresa Chua and /l&ndah 2aba5a$ in Civil Case No. CE.1(%+.
Defendant Metroban8 in Civil Case No. CE.1700 is hereb& conde6ned to pa& unto plaintiff Vicente
/oI:ope Phar6ac& the a6ount of P#),))).)) as 6oral da6a$es, and attorne&<s fees and liti$ation
eBpenses in the a$$re$ate su6 of P'#,))).)).
2he defendant Metroban8<s crossclai6 a$ainst its co.defendant Ma. 2eresa Chua in Civil Case No.
CE.1700 is dis6issed for lac8 of 6erit.
No special pronounce6ent as to costs in both instances.
SO ORDERED.
%%
In stri8in$ do!n the co6plaint of the petitioner a$ainst Chua and 2aba5a$ in CE.1(%+, the R2C
6ade the follo!in$ findin$s4
,%- 3E2C Chec8 No. '#%%%%, dated *pril '1, %11), in the a6ount of P'',0+#.)) pa&able to
cash, !as dra!n b& Ao& Aibron in pa&6ent of her purchases of 6edicines and other dru$s
!hich Ma. 2eresa Chua !as sellin$ side b& side !ith the 6edicines and dru$s of the :ope
Phar6ac&, for !hich she ,Maritess- !as $ranted per6ission b& its o!ner, Mr. Vicente Chua.
2hese 6edicines and dru$s fro6 2hailand !ere Maritess< sideline, and !ere se$re$ated fro6
the stoc8s of :ope Phar6ac&; B B B.
,'- RCC Chec8 Nos. '1"#%1 and ++)1#7 !ere chec8s belon$in$ to plaintiff Vicente /o
pa&able to cash B B B; these chec8s !ere replace6ents of the su6s earlier advanced b& Ma.
2eresa Chua, but !hich !ere deposited in the account of Vicente /o !ith RCC, as sho!n b&
the deposit slips B B B, and confir6ed b& the state6ent of account of Vicente /o !ith RCC.
,+- Chec8 No. PCI ))#+(" dra!n b& Eli=abeth Enri>ue= pa&able to :ope Phar6ac&ICash in
the a6ount of P0,(17.+) dated Septe6ber 0, %11), !as ad6ittedl& encashed b& the defendant,
/l&ndah 2aba5a$. *s per instruction b& Vicente /o, /l&ndah re>uested the dra!er to insert the
!ord 9Cash,9 so that she could encash the sa6e !ith PCI, to 6eet the :ope Phar6ac&<s
overdraft.
2he listin$s B B B, 6ade b& /l&ndah 2aba5a$ and 3lor Ouano !ill sho! that the correspondin$
a6ounts covered thereb& !ere in fact deposited to the account of Mr. Vicente /o !ith RCC; the
an8 State6ent of Mr. /o B B B, confir6s defendants< clai6 independentl& of the deposit slip?s@ B B
B.
%'
2he trial court absolved Chua in CE.1700 because of the findin$ that the subEect chec8s in CE.1700
!ere pa&6ents of petitioner for his loans or borro!in$s fro6 the parents of Ma. 2eresa Chua, throu$h
Ma. 2eresa, !ho !as $iven the total discretion b& petitioner to transfer 6one& fro6 the offices of :ope
Phar6ac& to pa& the advances and other obli$ations of the dru$store; she !as also $iven the full
discretion !here to source the funds to cover the dail& overdrafts, even to the eBtent of borro!in$
6one& !ith interest fro6 other persons.
%+
Hhile the trial court eBonerated Chua in CE.1700, it ho!ever declared respondent ban8 liable for
bein$ ne$li$ent in allo!in$ the deposit of crossed chec8s !ithout the proper indorse6ent.
Petitioner filed an appeal before the C*. On Ma& '(, '))#, the C* rendered a Decision,
%"
the fallo of
!hich reads4
H:ERE3ORE, eBcept for the a!ard of attorne&<s fees and liti$ation eBpenses in favor of defendants
Chua and 2aba5a$ !hich is hereb& deleted, the decision of the lo!er court is hereb& *33IRMED.
SO ORDERED.
%#
:ence, this petition.
2he Issue
Petitioner presented this sole issue for resolution4
2he Court of *ppeals Erred In Not :oldin$ Metroban8 Aiable 3or *llo!in$ 2he Deposit, Of Crossed
Chec8s Hhich Here Issued In 3avor Of *nd Pa&able 2o Petitioner *nd Hithout ein$ Indorsed &
2he Petitioner, 2o 2he *ccount Of Maria 2eresa Chua.
%0

2he Rulin$ of the Court
* chec8 is a bill of eBchan$e dra!n on a ban8 pa&able on de6and.
%(
2here are different 8inds of
chec8s. In this case, crossed chec8s are the subEect of the controvers&. * crossed chec8 is one !here
t!o parallel lines are dra!n across its face or across the corner thereof. It 6a& be crossed $enerall& or
speciall&.
%7

* chec8 is crossed speciall& !hen the na6e of a particular ban8er or a co6pan& is !ritten bet!een the
parallel lines dra!n. It is crossed $enerall& !hen onl& the !ords 9and co6pan&9 are !ritten or nothin$
is !ritten at all bet!een the parallel lines, as in this case. It 6a& be issued so that present6ent can be
6ade onl& b& a ban8.
%1
In order to preserve the credit !orthiness of chec8s, Eurisprudence has pronounced that crossin$ of a
chec8 has the follo!in$ effects4 ,a- the chec8 6a& not be encashed but onl& deposited in the ban8; ,b-
the chec8 6a& be
ne$otiated onl& once J to one !ho has an account !ith a ban8; and ,c- the act of crossin$ the chec8
serves as !arnin$ to the holder that the chec8 has been issued for a definite purpose so that he 6ust
in>uire if he has received the chec8 pursuant to that purpose, other!ise, he is not a holder in due
course.
')
2he Court has ta8en Eudicial co$ni=ance of the practice that a chec8 !ith t!o parallel lines in the upper
left hand corner 6eans that it could onl& be deposited and not converted into cash. 2he effect of
crossin$ a chec8,
thus, relates to the 6ode of pa&6ent, 6eanin$ that the dra!er had intended the chec8 for deposit onl&
b& the ri$htful person, i.e., the pa&ee na6ed therein.
'%
2he crossin$ of a chec8 is a !arnin$ that the
chec8 should be deposited onl& in the account of the pa&ee. 2hus, it is the dut& of the collectin$ ban8
to ascertain that the chec8 be deposited to the pa&ee<s account onl&.
''
In the instant case, there is no dispute that the subEect +' chec8s !ith the total a6ount of
P%,"1',#1#.)0 !ere crossed chec8s !ith petitioner as the na6ed pa&ee. It is the sub6ission of
petitioner that respondent ban8 should be held accountable for the entire a6ount of the chec8s because
it accepted the chec8s for deposit under Chua<s account despite the fact that the chec8s !ere crossed
and that the pa&ee na6ed therein !as not Chua.
In its defense, respondent ban8 countered that petitioner is not entitled to rei6burse6ent of the total
su6 of P%,"1',#1#.)0 fro6 either Maria 2eresa Chua or respondent ban8 because petitioner !as not
da6a$ed thereb&.
'+
Respondent ban8<s contention is 6eritorious. Respondent ban8 should not be held liable for the entire
a6ount of the chec8s considerin$ that, as found b& the R2C and affir6ed b& the C*, the chec8s !ere
actuall& $iven to Chua as pa&6ents b& petitioner for loans obtained fro6 the parents of Chua.
3urther6ore, petitioner<s non.inclusion of Chua and 2aba5a$ in the petition before this Court is, in
effect, an ad6ission b& the petitioner that Chua, in representation of her parents, had ri$htful clai6 to
the proceeds of the chec8s, as pa&6ents b& petitioner for 6one& he borro!ed fro6 the parents of
Chua. 2herefore, petitioner suffered no pecuniar& loss in the deposit of the chec8s to the account of
Chua.ten.lihpwal
:o!ever, !e affir6 the findin$ of the R2C that respondent ban8 !as ne$li$ent in per6ittin$ the
deposit and encash6ent of the crossed chec8s !ithout the proper indorse6ent. *n indorse6ent is
necessar& for the proper ne$otiation of chec8s speciall& if the pa&ee na6ed therein or holder thereof is
not the one depositin$ or encashin$ it. Cno!in$ full& !ell that the subEect chec8s !ere crossed, that
the pa&ee !as not the holder and that the chec8s contained no indorse6ent, respondent ban8 should
have ta8en reasonable steps in order to deter6ine the validit& of the representations 6ade b& Chua.
Respondent ban8 !as a6iss in its dut& as an a$ent of the pa&ee. Prudence dictates that respondent
ban8 should not have 6erel& relied on the assurances $iven b& Chua.1avvphi1
Respondent presented Gonathan Davis as its !itness in the trial before the R2C. :e !as the officer.in.
char$e and ran8ed second to the assistant vice president of the ban8 at the ti6e 6aterial to this case.
Davis< testi6on& !as su66ari=ed b& the R2C as follo!s4
Davis also testified that he allo!ed Ma. 2eresa Chua to deposit the chec8s subEect of this liti$ation
!hich !ere pa&able to :ope Phar6ac&. *ccordin$ to hi6, it !as a privile$e $iven to valued custo6ers
on a hi$hl& selective case to case basis, for 6ar8etin$ purposes, based on trust and confidence, because
Ma. 2eresa ?Chua@ told hi6 that those chec8s belon$ed to her as pa&6ent for the advances she
eBtended to Mr. /oI:ope Phar6ac&. B B B
Davis stressed that Metroban8 $ranted the privile$e to Ma. 2eresa Chua that for ever& chec8 she
deposited !ith Metroban8, the sa6e !ould be credited outri$ht to her account, 6eanin$ that she could
i66ediatel& 6a8e use of the a6ount credited; this arran$e6ent !ent on for about three &ears, !ithout
an& co6plaint fro6 Mr. /oI:ope Phar6ac&, and Ma. 2eresa Chua 6ade !arrant& that she !ould
rei6burse Metroban8 if Mr. /o co6plained. :e did not ho!ever call or infor6 Mr. /o about this
arran$e6ent, because their ban8 bein$ a Chinese ban8, transactions are based on trust and confidence,
and for hi6 to infor6 Mr. Vicente /o about it, !as tanta6ount to >uestionin$ the inte$rit& of their
client, Ma. 2eresa Chua. esides, this special privile$e or arran$e6ent !ould not brin$ an& 6onetar&
$ain to the ban8.
'"

Ne$li$ence !as co66itted b& respondent ban8 in acceptin$ for deposit the crossed chec8s !ithout
indorse6ent and in not verif&in$ the authenticit& of the ne$otiation of the chec8s. 2he la! i6poses a
dut& of eBtraordinar& dili$ence on the collectin$ ban8 to scrutini=e chec8s deposited !ith it, for the
purpose of deter6inin$ their $enuineness and re$ularit&.
'#
*s a business affected !ith public interest
and because of the nature of its functions, the ban8s are under obli$ation to treat the accounts of its
depositors !ith 6eticulous care, al!a&s havin$ in 6ind the fiduciar& nature of the relationship.
'0
2he
fact that this arran$e6ent had been practiced for three &ears !ithout Mr. /oI:ope Phar6ac& raisin$
an& obEection does not detract fro6 the dut& of the ban8 to eBercise eBtraordinar& dili$ence. 2hus, the
Decision of the R2C, as affir6ed b& the C*, holdin$ respondent ban8 liable for 6oral da6a$es is
sufficient to re6ind it of its responsibilit& to eBercise eBtraordinar& dili$ence in the course of its
business !hich is i6bued !ith public interest.
H:ERE3ORE, the Decision dated Ma& '(, '))# and the Resolution dated *u$ust +%, '))# of the
Court of *ppeals in C*./.R. CV No. 0+"01 are hereb& *33IRMED.
SO ORDERED.
ANTONIO EUARO B. NAC!URA
*ssociate Gustice
HE CONCDR4
ANTONIO T. CARPIO
*ssociate Gustice
Chairperson
IOSAO M. PERALTA
*ssociate Gustice
ROBERTO A. ABA
*ssociate Gustice
"OSE CATRAL MENO#A
*ssociate Gustice
* 2 2 E S 2 * 2 I O N
I attest that the conclusions in the above Decision had been reached in consultation before the case !as
assi$ned to the !riter of the opinion of the Court<s Division.
ANTONIO T. CARPIO
*ssociate Gustice
Chairperson, Second Division
C E R 2 I 3 I C * 2 I O N
Pursuant to Section %+, *rticle VIII of the Constitution and the Division ChairpersonKs *ttestation, I
certif& that the conclusions in the above Decision had been reached in consultation before the case !as
assi$ned to the !riter of the opinion of the Court<s Division.
RENATO C. CORONA
Chief Gustice
$oot%ot&s
%
Penned b& *ssociate Gustice Vicente A. Lap, !ith *ssociate Gustices Isaias P. Dicdican and
Enrico *. Aan=anas, concurrin$; C* rollo, pp. %7".%1#.
'
Id. at ''0.''7.
+
Id. at #'.
"
Id.
#
Id. at #'.#+.
0
Id. at #+.
(
Id.
7
Id.
1
Id. at #".
%)
Penned b& Gud$e Renato C. Dacudao; id. at 07.
%%
Id.
%'
Id. at 0".0#.
%+
Id. at 00.
%"
Supra note %, at %1#.
%#
Id.
%0
Rollo, p. %).
%(
Sec. %7#, Ne$otiable Instru6ents Aa!.
%7
ataan Ci$ar and Ci$arette 3actor&, Inc. v. Court of *ppeals, /.R. No. 1+)"7, March +,
%11", '+) SCR* 0"+, 0"(; citin$ *ssociated an8 v. Court of *ppeals, /.R. No. 717)', Ma&
(, %11', ')7 SCR* "0#; State Invest6ent :ouse v. Inter6ediate *ppellate Court, /.R. No.
('(0", %(# SCR* +%); and Vicente . de Oca6po M Co. v. /atchalian, %%+ Phil. #(" ,%10%-.
%1
Id.
')
ataan Ci$ar and Ci$arette 3actor&, Inc. v. Court of *ppeals, supra note %7, at 0"7.
'%
Lan$ v. Court of *ppeals, "#0 Phil. +(7, +7%.+7' ,'))+-.
''
Philippine Co66ercial International an8 v. Court of *ppeals, ")+ Phil. +0%, +0" ,'))%-.
'+
Rollo, p. "0.
'"
C* rollo, p. 0".
'#
Philippine National an8 v. Rodri$ue=, /.R. No. %()+'#, Septe6ber '0, '))7, #00 SCR*
#%+, #%7; *ssociated an8 v. Court of *ppeals, supra note %7.
'0
Philippine Co66ercial International an8 v. Court of *ppeals, supra note ''.