[G.R.
No. 150848. March 18, 2002]
DOMINGUEZ
vs. COSALAN, et al.
FIRST DIVISION
Gentlemen:
Quoted hereunder, for your information, is a
resolution of this Court dated 18 MAR 2002.
G.R. No. 150848 (Harry D.
Dominguez vs. Eladio M. Cosalan, et al.)
This is a petition for review of the decision, promulgated on 20
November 2001, of the Court of Appeals.
Culled from the decision of the appellate court, the facts of the case
are as follows:
In 1992, the Department of Public Works and Highways (DPWH) Cordillera Administrative
Region awarded Eladio M. Cosalan a road contract on the Halsema Highway.
Cosalan engaged the services of Harry D. Dominguez as a sub-contractor with the
agreement that the latter would be paid the amount of P5 million after the
completion of the work. In the meanwhile, the money would be used to purchase
treasury bills under their joint account.
Hence, on 26 February 1992, Cosalan and Dominguez jointly purchased
treasury bills from the Land Bank of the Philippines (LandBank) with face value
of P1.5 million, to mature on 29 April 1992. The bills were issued under a
joint account (“and” account) in their names. On 18 March 1992, they again
purchased treasury bills amounting to P1.5
million, again under an “and” account in their names. A third purchase, for
P2 million, was made on 21 May 1992, also for an “and” account in the names of
Cosalan and Dominguez.
On 04 May 1992, the first placement was
renewed and converted into an “and/or”
account. The conversion was with the
“conforme” of both Cosalan and Dominguez. Later, however, LandBank likewise
converted the two other placements to an “and/or” account without the
conformity of Cosalan.
Dominguez used the accounts as collaterals for his loans with LandBank.
He failed to pay his obligations and the bank foreclosed the accounts.
Dominguez thereafter abandoned the roadwork project.
On 01 January 1993, Cosalan filed a complaint for “Sum of Money and
Damages” against LandBank, alleging that through its gross negligence and bad
faith, Dominguez was able to abscond with the P5 million worth of treasury
bills and the interests thereon. LandBank denied negligence on its part. It
likewise filed a third party complaint against Dominguez.
In a decision, dated 22 August 1996, the Regional Trial Court of Baguio City, Branch 6, dismissed the complaint, the third party complaint, and the counterclaims of LandBank and Dominguez.
Cosalan appealed to the Court of Appeals. In the now questioned
decision, the appellate court reversed and set aside the trial court’s decision
and held, as follows:
WHEREFORE, premises considered, the judgment appealed from is hereby
REVERSED and SET ASIDE and a new one is hereby rendered:
(1) Directing Land Bank of the Philippines to pay Eladio M. Cosalan the following:
a. The amounts of P1.5 Million and P2.0
Million representing the 2nd and 3rd placements, respectively;
b. Interests on the above placements on the
agreed rate starting from the date of the supposed renewal until fully paid;
c. Moral damages in the amount of P50,000.00;
and
d. Attorney’s.fees in the amount of
P50,000.00.
(2) Holding Harry Dominguez liable to reimburse
or indemnify Land Bank of the Philippines for the above payments made to Eladio
M. Cosalan.
SO
ORDERED.
Hence, the present recourse by
Dominguez, raising the following issues:
The respondent Court of Appeals
erred in its appreciation of the facts of the case.
The respondent Court of Appeals
erred in holding Harry Dominguez liable to reimburse the payments made by the
Land Bank of the Philippines to Eladio Cosalan.
The petition lacks merit.
The Court of Appeals did not err in its appreciation of the facts of the
case. It correctly stated that LandBank failed to observe the precautions and
measures required of it as a banking institution. While it may be true that the
first placement was converted to an “and account” with the conformity of
Cosalan, it does not necessarily follow that Cosalan likewise agreed to
conversion of the other accounts. LandBank should have made inquiries from
Cosalan considering that the amounts involved were substantial and further
considering that Dominguez used the accounts as collaterals for his personal
loans to the bank. The testimonies of bank officials Erlinda Velasquez and
Jaime Cruz, Jr., both quoted in the appellate court’s decision,[1]
would also disclose that LandBank did not follow the usual bank procedures with
respect to the conversion of the two other accounts. Instead, it relied on the
representations of Dominguez that he really was the only owner of the money. It
bears stressing that banks, being greatly affected with public interest, are
expected to exercise a degree of diligence in the handling of its affairs
higher than that expected of an
ordinary business firm.[2] It is under obligation to treat the accounts
of its depositors with meticulous care, whether such accounts consist only of a
few hundred or millions of pesos.[3] Land Bank failed to exercise the diligence
required of it under the circumstances.
Anent the second issue, petitioner argues that if LandBank was indeed
negligent, it only has itself to blame and it must suffer for the consequences
of its own negligence. To sustain the contention would result to undue
enrichment on the part of Dominguez who appeared to have acted in bad faith in
the two transactions. LandBank acted on the basis of the misrepresentations of
Dominguez who greatly benefited by the conversion of the two other placements
to “and/or” accounts. The Court of Appeals correctly stated that Dominguez
should return what he unduly and inappropriately received from the bank and
that he should be held liable and responsible for the consequences of his
fraudulent and wanton acts.[4]
The petition is hereby DENIED, no reversible error having been committed
by the Court of Appeals in its decision sought to be reversed. PUNO, J., is on official leave.
Very
truly yours,
(Sgd.)
VIRGINIA ANCHETA-SORIANO
Clerk of Court