Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 176434 June 25, 2008
BANK OF THE PHILIPPINE ISLANDS, petitioner,
vs.
LIFETIME MARKETING CORPORATION, respondent.
D E C I S I O N
TINGA, J.:
The Bank of the Philippine Islands (BPI) seeks the reversal of the Decision1 of the Court of Appeals dated 31 July 2006 in CA-G.R. CV No. 62769 which ordered it to pay Lifetime Marketing Corporation (LMC) actual damages in the amount of P2,075,695.50 on account of its gross negligence in handling LMC's account.
The following facts, quoted from the decision of the Court of Appeals, are undisputed:
On October 22, 1981, Lifetime Marketing Corporation (LMC, for brevity), opened a current account with the Bank of the Philippine Islands (BPI, for brevity), Greenhills-Edsa branch, denominated as Account No. 3101-0680-63. In this account, the "sales agents" of LMC would have to deposit their collections or payments to the latter. As a result, LMC and BPI, made a special arrangement that the former's agents will accomplish three (3) copies of the deposit slips, the third copy to be retained and held by the teller until LMC's authorized representatives, Mrs. Virginia Mongon and Mrs. Violeta Ancajas, shall retrieve them on the following banking day.
Sometime in 1986, LMC availed of the BPI's inter-branch banking network services in Metro Manila, whereby the former's agents could make [a] deposit to any BPI branch in Metro Manila under the same account. Under this system, BPI's bank tellers were no longer obliged to retain the extra copy of the deposit slips instead, they will rely on the machine-validated deposit slip, to be submitted by LMC's agents. For its part, BPI would send to LMC a monthly bank statement relating to the subject account. This practice was observed and complied with by the parties.
As a business practice, the registered sales agents or the Lifetime Educational Consultants of LMC, can get the books from the latter on consignment basis, then they would go directly to their clients to sell. These agents or Lifetime Educational Consultants would then pay to LMC, seven (7) days after they pick up all the books to be sold. Since LMC have several agents around the Philippines, it required to remit their payments through BPI, where LMC maintained its current account. It has been LMC's practice to require its agents to present a validated deposit slip and, on that basis, LMC would issue to the latter an acknowledgement receipt.
Alice Laurel, is one of LMC's "Educational Consultants" or agents. On various dates covering the period from May, [sic] 1991 up to August, 1992, Alice Laurel deposited checks to LMC's subject account at different branches of BPI, specifically: at the Harrison/Buendia branch-8 checks; at Arrangue branch-4 checks; at Araneta branch-1 check; at Binondo branch-3 checks; at Ermita branch-5 checks; at Cubao Shopping branch-1 check; at Escolta branch-4 checks; at the Malate branch-2 checks; at Taft Avenue branch-2 checks; at Paseo de Roxas branch-1 check; at J. Ruiz, San Juan branch, at West Avenue and Commonwealth Quezon City branch- 2 checks; and at Vito Cruz branch-2 checks.
Each check thus deposited were retrieved by Alice Laurel after the deposit slips were machine-validated, except the following thirteen (13) checks, which bore no machine validation, to wit: CBC Check No. 484004, RCBC Check No. 419818, CBC Check No. 484042, FEBTC Check No. 171857, RCBC Check No. 419847, CBC Check No. 484053, MBTC Check No. 080726, CBC Check No. 484062, PBC Check No. 158076, CBC Check No. 484027, CBC Check No. 484017, CBC Check No. 484023 and CBC Check No. 218190.
A verification with BPI by LMC showed that Alice Laurel made check deposits with the named BPI branches and, after the check deposit slips were machine-validated, requested the teller to reverse the transactions. Based on general banking practices, however, the cancellation of deposit or payment transactions upon request by any depositor or payor, requires that all copies of the deposit slips must be retrieved or surrendered to the bank. This practice, in effect, cancels the deposit or payment transaction, thus, it leaves no evidence for any subsequent claim or misrepresentation made by any innocent third person. Notwithstanding this, the verbal requests of Alice Laurel and her husband to reverse the deposits even after the deposit slips were already received and consummated were accommodated by BPI tellers.
Alice Laurel presented the machine-validated deposit slips to LMC which, on the strength thereof, considered her account paid. LMC even granted her certain privileges or prizes based on the deposits she made.
The total aggregate amount covered by Alice Laurel's deposit slips was Two Million Seven Hundred Sixty Seven Thousand, Five Hundred Ninety Four Pesos (P2,767,594.00) and, for which, LMC paid Laurel the total sum of Five Hundred Sixty Thousand Seven Hundred Twenty Six Pesos (P560,726.00) by way of "sales discount and promo prizes."
The above fraudulent transactions of Alice Laurel and her husband was made possible through BPI teller's failure to retrieve the duplicate original copies of the deposit slips from the former, every time they ask for cancellation or reversal of the deposit or payment transaction.
Upon discovery of this fraud in early August 1992, LMC made queries from the BPI branches involved. In reply to said queries, BPI branch managers formally admitted that they cancelled, without the permission of or due notice to LMC, the deposit transactions made by Alice and her husband, and based only upon the latter's verbal request or representation.
Thereafter, LMC immediately instituted a criminal action for Estafa against Alice Laurel and her husband Thomas Limoanco, before the Regional Trial Court of Makati, Branch 65, docketed as Criminal Case No. 93-7970 to 71, entitled People of the Philippines v. Thomas Limoanco and Alice Laurel. This case for estafa, however, was archived because summons could not be served upon the spouses as they have absconded. Thus, the BPI's apparent reluctance to admit liability and settle LMC's claim for damages, and a hopeless case of recovery from Alice Laurel and her husband, has left LMC, with no option but to recover damages from BPI.
On July 24, 1995, LMC, through its representative, Miss Consolacion C. Rogacion, the President of the company, filed a Complaint for Damages against BPI, docketed as Civil Case No. 95-1106, and was raffled to Regional Trial Court of Makati City, Branch 141.
After trial on the merits, the court a quo rendered a Decision in favor of LMC. The dispositive portion of which reads, as follows:
WHEREFORE, decision is hereby rendered ordering defendant bank to pay plaintiff actual damages equitably reduced to one (1) million pesos plus attorney's fees of P100,000.00.
No pronouncement as to costs.
SO ORDERED.2
Only BPI filed an appeal. The Court of Appeals affirmed the decision of the trial court but increased the award of actual damages to P2,075,695.50 and deleted the award of P100,000.00 as attorney's fees.3 Citing public interest, the appellate court denied reconsideration in a Resolution4 dated 30 January 2007.
In this Petition for Review5 dated 19 March 2007, BPI insists that LMC should have presented evidence to prove not only the amount of the checks that were deposited and subsequently reversed, but also the actual delivery of the books and the payment of "sales and promo prizes" to Alice Laurel. Failing this, there was allegedly no basis for the award of actual damages. Moreover, the actual damages should not have been increased because the decision of the trial court became conclusive as regards LMC when it did not appeal the said decision.
BPI further avers that LMC's negligence in considering the machine-validated check deposit slips as evidence of Alice Laurel's payment was the proximate cause of its own loss. Allegedly, by allowing its agents to make deposits with other BPI branches, LMC violated its own special arrangement with BPI's Greenhills-EDSA branch for the latter to hold on to an extra copy of the deposit slip for pick up by LMC's authorized representatives. BPI points out that the deposits were in check and not in cash. As such, LMC should have borne in mind that the machine validation in the deposit slips is still subject to the sufficiency of the funds in the drawers' account. Furthermore, LMC allegedly ignored the express notice indicated in its monthly bank statements and consequently failed to check the accuracy of the transactions reflected therein.
In its Manifestation of Compliance by Respondent on the Order Dated 20 June 2007 Received on 29 July 2007 to Submit Comment,6 dated 9 August 2007, LMC insists that it is indeed entitled to the actual damages awarded to it by the appellate court.
BPI filed a Reply7 dated 15 January 2008, in reiteration of its submissions.
We have repeatedly emphasized that the banking industry is impressed with public interest. Of paramount importance thereto is the trust and confidence of the public in general. Accordingly, the highest degree of diligence is expected, and high standards of integrity and performance are required of it. By the nature of its functions, a bank is under obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of its relationship with them.8 The fiduciary nature of banking, previously imposed by case law, is now enshrined in Republic Act No. 8791 or the General Banking Law of 2000. Section 2 thereof specifically says that the state recognizes the fiduciary nature of banking that requires high standards of integrity and performance.9
Whether BPI observed the highest degree of care in handling LMC's account is the subject of the inquiry in this case.
LMC sought recovery from BPI on a cause of action based on tort. Article 2176 of the Civil Code provides, "Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter." There are three elements of quasi-delict: (a) fault or negligence of the defendant, or some other person for whose acts he must respond; (b) damages suffered by the plaintiff; and (c) the connection of cause and effect between the fault or negligence of the defendant and the damages incurred by the plaintiff.10
In this case, both the trial court and the Court of Appeals found that the reversal of the transactions in question was unilaterally undertaken by BPI's tellers without following normal banking procedure which requires them to ensure that all copies of the deposit slips are surrendered by the depositor. The machine-validated deposit slips do not show that the transactions have been cancelled, leading LMC to rely on these slips and to consider Alice Laurel's account as already paid.
Negligence is the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would not do.11 Negligence in this case lies in the tellers' disregard of the validation procedures in place and BPI's utter failure to supervise its employees. Notably, BPI's managers admitted in several correspondences with LMC that the deposit transactions were cancelled without LMC's knowledge and consent and based only upon the request of Alice Laurel and her husband.12
It is well to reiterate that the degree of diligence required of banks is more than that of a reasonable man or a good father of a family. In view of the fiduciary nature of their relationship with their depositors, banks are duty-bound to treat the accounts of their clients with the highest degree of care.13
BPI cannot escape liability because of LMC's failure to scrutinize the monthly statements sent to it by the bank. This omission does not change the fact that were it not for the wanton and reckless negligence of BPI's tellers in failing to require the surrender of the machine-validated deposit slips before reversing the deposit transactions, the loss would not have occurred. BPI's negligence is undoubtedly the proximate cause of the loss. Proximate cause is that cause which, in a natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred.14
It is also true, however, that LMC should have been more vigilant in managing and overseeing its own financial affairs. The damages awarded to it were correctly reduced on account of its own contributory negligence in accordance with Article 1172 of the Civil Code.15
Parenthetically, we find no merit in BPI's allegation that LMC should have presented evidence of delivery of the books and payment of sales and promo prizes to Alice Laurel. The evidence presented by LMC in the form of BPI's own admission that the deposit transactions were
reversed at the instance of Alice Laurel and her husband, coupled with the machine-validated deposit slips16 which were supposed to have been deposited to LMC's account but were cancelled without its knowledge and consent, sufficiently form the bases for the actual damages claimed because they are the very same documents relied upon by LMC in considering Alice Laurel's account paid and in granting her monetary privileges and prizes.
Be that as it may, we find the appellate court's decision increasing the award of actual damages in favor of LMC improper since the latter did not appeal from the decision of the trial court. It is well-settled that a party who does not appeal from the decision may not obtain any affirmative relief from the appellate court other than what he has obtained from the lower court whose decision is brought up on appeal. The exceptions to this rule, such as where there are (1) errors affecting the lower court's jurisdiction over the subject matter, (2) plain errors not specified, and (3) clerical errors, do not apply in this case.17
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 62769 dated 31 July 2006 and its Resolution dated January 30, 2007 are AFFIRMED with the MODIFICATION that the Bank of the Philippine Islands is ordered to pay actual damages to Lifetime
Marketing Corporation in the amount of One Million Pesos (P1,000,000.00). No pronouncement as to costs.
SO ORDERED.
DANTE O. TINGA
Associate Justice
WE CONCUR:
LEONARDO A. QUISUMBING
Associate Justice
Chairperson |
CONCHITA CARPIO MORALES
Associate Justice |
PRESBITERO J. VELASCO, JR.
Associate Justice |
ARTURO D. BRION
Associate Justice |
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.
REYNATO S. PUNO
Chief Justice
Footnotes
1 Rollo, pp. 7-21; penned by Associate Justice Normandie B. Pizarro and concurred in by Associate Justices Josefina Guevara-Salonga and Aurora Santiago-Lagman.
2 Id. at 8-13.
3 Id. at 20-21.
4 Id. at 22-23.
5 Id. at 28-49.
6 Id. at 84-88.
7 Temporary Rollo.
8 Citibank, N.A. v. Cabamongan, G.R. No. 146918, 2 May 2006, 488 SCRA 517, 531; Prudential Bank v. Lim, G.R. No. 136371, 11 November 2005, 474 SCRA 485, 495.
9 Associated Bank v. Tan, G.R. No. 156940, 14 December 2004, 446 SCRA 282, 292.
10 Philippine Bank of Commerce v. CA, 336 Phil. 667, 675 (1997).
11 Philippine Bank of Commerce v. CA, 336 Phil. 667, 676 (1997).
12 Records, pp. 28-36.
13 Supra, note 10.
14 Bank of the Philippine Islands v. Casa Montessori Internationale, G.R. No. 149507, 28 May 2004, 430 SCRA 261, 287.
15 The Consolidated Bank & Trust Corporation v. Court of Appeals, 457 Phil. 688, 713 (2003).
16 Records, pp. 15-27.
17 Real v. Belo, G.R. No. 146224, 26 January 2007, 513 SCRA 111, 126-127; Santos v. Court of Appeals, G.R. No. 100963, 6 April 1993, 221 SCRA 42, 46.
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