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11/10/2015 OsmeavsCitibank:141278:March23,2004:J.

CallejoSr:SecondDivision:Decision

SECONDDIVISION

[G.R.No.141278.March23,2004]

MICHAEL A. OSMEA, petitioner, vs. CITIBANK, N.A., ASSOCIATED BANK


andFRANKTAN,respondents.

DECISION
CALLEJO,SR.,J.:

ThisisapetitionforreviewoncertiorariunderRule45oftheRulesofCourt,asamended,
oftheDecision[1]oftheCourtofAppealsinCAG.R.CVNo.49529whichaffirmedintoto the
Decision[2]oftheRegionalTrialCourtofMakatiCity,Branch38,inCivilCaseNo.91538.
As culled from the records, the appeal at bench stemmed from the following factual
backdrop:
OnFebruary22,1991,thepetitionerfiledwiththeRegionalTrialCourtofMakatianaction
for damages against the respondents Citibank, N.A. and Associated Bank.[3] The case was
docketedasCivilCaseNo.91538.Thecomplaintmateriallyallegedthat,onoraboutAugust
25, 1989, the petitioner purchased from the Citibank Managers Check No. 20015301 (the
checkforbrevity)intheamountofP1,545,000payabletorespondentFrankTanthepetitioner
later received information that the aforesaid managers check was deposited with the
respondent Associated Bank, Rosario Branch, to the account of a certain Julius Dizon under
SavingsAccountNo.19877theclearingand/orpaymentbytherespondentsofthechecktoan
improper party and the absence of any indorsement by the payee thereof, respondent Frank
Tan,isaclearviolationoftherespondentsobligationsundertheNegotiableInstrumentsLaw
and standard banking practiceconsidering that the petitioners intended payee for the check,
therespondentFrankTan,didnotreceivethevaluethereof,thepetitionerdemandedfromthe
respondentsCitibankandtheAssociatedBankthepaymentorreimbursementofthevalueof
the check the respondents, however, obstinately refused to heed his repeated demands for
payment and/or reimbursement of the amount of the check hence, the petitioner was
compelled to file this complaint praying for the restitution of the amount of the check, and for
moraldamagesandattorneysfees.
On June 17, 1991, the petitioner, with leave of court, filed an Amended Complaint[4]
impleadingFrankTanasanadditionaldefendant.Thepetitioneraverredthereinthatthecheck
was purchased by him as a demand loan to respondent Frank Tan. Since apparently
respondentFrankTandidnotreceivetheproceedsofthecheck,thepetitionermighthaveno
righttocollectfromrespondentFrankTanandisconsequentlyleftwithnorecoursebuttoseek
paymentorreimbursementfromeitherorbothrespondentsCitibankand/orAssociatedBank.
Initsanswertotheamendedcomplaint,[5]therespondentAssociatedBankallegedthatthe
petitionerwasnottherealpartyininterestbutrespondentFrankTanwhowasthepayeeofthe
check. The respondent also maintained that the check was deposited to the account of
respondentFrankTan,a.k.a.JuliusDizon,throughitsAyalaHeadOfficeandwascreditedto
thesavingsaccountofJuliusDizontheAyalaofficeconfirmedwiththeRosarioBranchthatthe
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accountofJuliusDizonisalsoinrealitythatofrespondentFrankTanitnevercommittedany
violationofitsdutiesandresponsibilitiesastheproceedsofthecheckwentandwascreditedto
respondentFrankTan,a.k.a.JuliusDizonthepetitionersaffirmativeallegationofnonpayment
tothepayeeisselfservingassuch,thepetitionersclaimfordamagesisbaseless,unfounded
andwithoutlegalbasis.
Ontheotherhand,therespondentCitibank,inanswertotheamendedcomplaint,[6]alleged
thatthepaymentofthecheckwasmadebyitinduecourseandintheexerciseofitsregular
bankingfunction.Sinceamanagerscheckisnormallypurchasedinfavorofathirdparty,the
identity of whom in most cases is unknown to the issuing bank, its only responsibility when
payingthecheckwastoexaminethegenuinenessofthecheck.Ithadnowayofascertaining
thegenuinenessofthesignatureofthepayeerespondentFrankTanwhowasatotalstranger
toit.Ifatall,thepetitionerhadacauseofactiononlyagainsttherespondentAssociatedBank
which, as depository or collecting bank, was obliged to make sure that the check in question
wasproperlyendorsedbythepayee.ItisnotexpectedoftherespondentCitibanktoascertain
thegenuinenessoftheindorsementofthepayeeoreventhelackofindorsementbyhim,most
especiallywhenthecheckwaspresentedforpaymentwiththerespondentAssociatedBanks
guaranteeingallpriorindorsementsorlackthereof.
On March 16, 1992, the trial court declared Frank Tan in default for failure to file his
answer.[7] On June 10, 1992, the pretrial conference was concluded without the parties
reachinganamicablesettlement.[8]Hence,trialonthemeritsensued.
After evaluating the evidence adduced by the parties, the trial court resolved that the
preponderance of evidence supports the claim of the petitioner as against respondent Frank
Tan only but not against respondents Banks. Hence, on February 21, 1995, the trial court
renderedjudgmentinfavorofthepetitionerandagainstrespondentFrankTan.Thecomplaints
againsttherespondentsBanksweredismissed.Thedispositiveportionofthedecisionreads:

WHEREFORE,judgmentisherebyrenderedasfollows:

1.OrderingdefendantFrankTantopayplaintiffMichaelOsmeatheamountofOneMillionFive
HundredFortyFiveThousand(P1,545,000.00)Pesos,PhilippineCurrency,withinterestthereonat12%
perannumfromJanuary1990,dateofextrajudicialdemanduntilthefullamountispaid

2.DismissingthecomplaintagainstdefendantsCitibankandAssociatedBank

3.DismissingthecounterclaimsandthecrossclaimofCitibankagainstAssociatedBankforlackof
merit.

WithcostsagainstdefendantFrankTan.[9]

Thepetitionerappealedthedecision,[10]whilerespondentFrankTandidnot.OnNovember
26,1999,theappellatecourtrenderedjudgmentaffirmingintotothedecisionofthetrialcourt.
Aggrieved,thepetitionerassailedthedecisioninhispetitionatbar.
Thepetitionercontendsthat:
I.RESPONDENTCOURTERREDINNOTHOLDINGCITIBANKANDASSOCIATEDBANK
LIABLETOPETITIONERFORTHEENCASHMENTOFCITIBANKMANAGERSCHECK
NO.20015301BYJULIUSDIZON.
II. RESPONDENT COURT ERRED IN HOLDING THAT FRANK TAN AND JULIUS DIZON
AREONEANDTHESAMEPERSON.
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III. THE IDENTITY OF FRANK TAN AS JULIUS DIZON WAS KNOWN ONLY TO
ASSOCIATEDBANKANDWASNOTBINDINGONPETITIONER.[11]
Thepetitionisdenied.
The petitioner asserts that the check was payable to the order of respondent Tan.
However,therespondentAssociatedBankorderedthechecktobedepositedtotheaccountof
one Julius Dizon, although the check was not endorsed by respondent Tan. As Julius Dizon
wasnotaholderofthecheckinduecourse,hecouldnotvalidlynegotiatethecheck.Thelatter
wasnotevenatransfereeinduecoursebecauserespondentTan,thepayee,didnotendorse
thesaidcheck.ThepositionoftherespondentBankisakintothatofabankacceptingacheck
fordepositwhereinthesignatureofthepayeeorendorseehasbeenforged.
Thecontentionofthepetitionerdoesnotholdwater.
ThefactofthematteristhatthecheckwasendorsedbyJuliusDizonandwasdeposited
and credited to Savings Account No. 19877 with the respondent Associated Bank. But the
evidence on record shows that the said account was in the name of Frank Tan Guan Leng,
whichistheChinesenameoftherespondentFrankTan,whoalsousesthealiasJuliusDizon.
AscorrectlyruledbytheCourtofAppeals:

Ontheotherhand,AssociatedsatisfactorilyprovedthatTanisusingandisalsoknownbyhisaliasof
JuliusDizon.HesignedtheAgreementOnBillsPurchased(Exh.1)andContinuingSuretyship
Agreement(Exh.2)bothacknowledgedonJanuary16,1989,wherehisfullnameisstatedtobeFRANK
TanGuanLeng(akaJULIUSDIZON).Exh.1alsoreferstohisAccountNo.SA#19877,theverysame
accounttowhichtheP1,545,000.00fromthemanagerscheckwasdeposited.Osmeacounteredthatsuch
useofanaliasisillegal.Thatisbutanirrelevantcasuistrythatdoesnotdetractfromthefactthatthe
payeeTanasJuliusDizonhasencashedanddepositedtheP1,545,000.00.[12]

TherespondentAssociatedBankpresentedpreponderantevidencetosupportitsassertion
thatrespondentTan,thepayeeofthecheck,didreceivetheproceedsofthecheck.Itadduced
evidencethatJuliusDizonandFrankTanareoneandthesameperson.RespondentTanwas
a regular and trusted client or depositor of the respondent Associated Bank in its branch at
Rosario,Binondo,Manila. As such, respondent Tan was allowed to maintain two (2) savings
accounts therein.[13] The first is Savings Account No. 201613 under his name Frank Tan.[14]
TheotherisSavingsAccountNo.19877underhisassumedFilipinonameJuliusDizon,[15] to
whichaccountthecheckwasdepositedintheinstantcase.Bothwitnessesfortherespondent
Associated Bank, Oscar Luna (signature verifier) and Luz Lagrimas (new accounts clerk),
testifiedthatrespondentTanwasusingthealiasJuliusDizon,andthatbothnamesreferredto
one and the same person, as Frank Tan himself regularly transacted business at the bank
underbothnames.[16]ThisisalsoevidencedbytheAgreementonBillsPurchased[17]andthe
Continuing Suretyship Agreement[18] executed between Frank Tan and the respondent
AssociatedBankonJanuary16,1989.FrankTansnameappearsinsaiddocumentasFRANK
TAN GUAN LENG (a.k.a. JULIUS DIZON).[19] The same documentary evidence also made
reference to Savings Account No. 19877,[20] the very same account to which the check was
depositedandtheentireP1,545,000wascredited.Additionally,CitibankCheckNo.075713[21]
which was presented by the petitioner to prove one of the loans previously extended to
respondentTanshowedthattheendorsementofrespondentTanatthedorsalsidethereof[22]is
strikinglysimilartothesignaturesofFrankTanappearinginsaidagreements.
By seeking to recover the loan from respondent Tan, the petitioner admitted that
respondent Tan received the amount of the check. This apprehension was not without any
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basisatall,forafterthepetitionerattemptedtocommunicatewithrespondentTanonJanuary
or February 1990, demanding payment for the loan, respondent Tan became elusive of the
petitioner.[23] As a matter of fact, respondent Tan did not file his answer to the amended
complaintandwasneverseenorheardofbythepetitioner.[24]Besides,ifitwerereallyafact
thatrespondentTandidnotreceivetheproceedsofthecheck,hecouldhimselfhaveinitiated
the instant complaint against respondents Banks, or in the remotest possibility, joined the
petitionerinpursuingtheinstantclaim.
The petitioner initially sought to recover from the respondents Banks the amount of
P1,545,000 corresponding to the loan obtained by respondent Tan from him, obviously
because respondent Tan had no intent to pay the amount. The petitioner alleges that the
respondentsBankswerenegligentinpayingtheamounttoacertainJuliusDizon,inrelationto
thepertinentprovisionsoftheNegotiableInstrumentsLaw,withouttheproperindorsementof
thepayee,FrankTan.ThepetitionercitestherulingoftheCourtinAssociatedBankv.Courtof
Appeals,[25]inwhichweoutlinedtherespectiveresponsibilitiesandliabilitiesofadraweebank,
such as the respondent Citibank, and a collecting bank, such as the defendant Associated
Bank,intheeventthatpaymentofachecktoapersonnotdesignatedasthepayee,orwhois
notaholderinduecourse,hadbeenmade.However,therulingoftheCourtthereindoesnot
applytothepresentcasefor,ashasbeenamplydemonstrated,thepetitionerfailedtoestablish
that the proceeds of the check was indeed wrongfully paid by the respondents Banks to a
personotherthantheintendedpayee.Inaddition,theNegotiableInstrumentsLawwasenacted
for the purpose of facilitating, not hindering or hampering transactions in commercial paper.
Thus, the said statute should not be tampered with haphazardly or lightly. Nor should it be
brushedasideinordertomeetthenecessitiesinasinglecase.[26]
Moreover,thechainofeventsfollowingthepurporteddeliveryofthechecktorespondent
TanrendersevenmoredubiousthepetitionersclaimthatrespondentTanhadnotreceivedthe
proceedsofthecheck.Thus,thepetitionerneverbotheredtofindoutfromthesaidrespondent
whetherthelatterreceivedthecheckfromhismessenger.Andifitweretobesupposedthat
respondent Tan did not receive the check, given that his need for the money was urgent, it
strains credulity that respondent Tan never even made an effort to get in touch with the
petitionertoinformthelatterthathedidnotreceivethecheckasagreedupon,andtoinquire
why the check had not been delivered to him. The petitioner and respondent Tan saw each
otherduringsocialgatheringsbuttheynevertookthechancetodiscussdetailsontheloanor
thecheck.[27]Theiractuationsarenotthosetobeusuallyexpectedoffriendsof15yearswho,
asthepetitionerwouldwanttoimpressuponthisCourt,weretransactingbusinessonthebasis
of confidence.[28] In fact, the first time that the petitioner attempted to communicate with
respondentTanwasonJanuaryorFebruary1990,almostfiveorsixmonthsaftertheexpected
deliveryofthecheck,forthepurposeofdemandingpaymentfortheloan.Anditwasonlyon
that occasion that respondent Tan, as the petitioner insinuates, informed him that he (Frank
Tan) had not received the proceeds of the check and refused to pay his loan.[29] All told, the
petitionersallegationthatrespondentTandidnotreceivetheproceedsofthecheck[30]isbelied
bytheevidenceonrecordandattendantcircumstances.
Conversely, the records would disclose that even the petitioner himself had misgivings
aboutthetruthfulnessofhisallegationthatrespondentTandidnotreceivetheamountofthe
check. This is made implicit by respondent Tans being made a partydefendant to the case
when the petitioner filed his amended complaint. In his memorandum in the case below, the
petitioneraverredinteraliathat:

TheamountofP1,545,000.00issoughttoberecoveredfrom:
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1.FrankTanforhisfailuretopaytheloanextendedbyplaintiffand

2.AssociatedBankandCitibankforhavingacceptedfordepositand/orpaidtheCitibankmanagers
checkdespitetheabsenceofanysignature/endorsementbythenamedpayee,FrankTan.

TheclaimofthepetitionerthatrespondentTansuseofanaliasisillegaldoesnotdetracta
whitfromthefactthatrespondentTanhadbeencreditedbytherespondentAssociatedBank
fortheamountofthecheck.RespondentTandidnotappealthedecisionoftheRTC.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The Decision dated
November26,1999oftheCourtofAppealsinCAG.R.CVNo.49529isherebyAFFIRMED.
Costsagainstthepetitioner.
SOORDERED.
Quisumbing,(ActingChairman),AustriaMartinez,andTinga,JJ.,concur.
Puno,(Chairman),J.,onleave.

[1] Penned by Associate Justice Roberto A. Barrios with Associate Justices Godardo A. Jacinto and Eriberto U.
Rosario,Jr.concurring.
[2]PennedbyJudgeRomuloT.Arellano.Records,pp.428436.

[3]AnnexBofthepetitionId.at14.

[4]AnnexCofthepetitionId.at8188.

[5]AnnexEofthepetitionId.at1722.

[6]AnnexDofthepetitionId.at2733.

[7]AnnexFofthepetitionId.at122.

[8]Records,p.132.

[9]Id.at436.

[10]TheappealwasdocketedasCAG.R.CVNo.49529.

[11]Rollo,p.17.

[12]Id.at44.

[13]TSN,16April1993,pp.1718,2122.

[14]SeethespecimensignaturecardofFrankTandatedDecember15,1987pertainingtohisSavingsAccountNo.
201613attheRosarioBranchofAssociatedBankExhibit3,Records,p.188.
[15] See the specimen signature card of Julius Dizon dated April 8, 1986 pertaining to his Savings Account No.
19877attheRosarioBranchofAssociatedBankExhibit4,Records,p.188.
[16]TSN,26February1993,pp.11,31TSN,25March1993,p.5TSN,16April1993,p.17.

[17]Exhibit1(AssociatedBank)Records,p.185.

[18]Exhibit2(AssociatedBank)Id.at186.

[19]Exhibits1a,2a&2b,Id.at185186.

[20]Records,p.185.

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[21]ExhibitB.

[22]ExhibitsB1&3b.

[23]TSN,14August1992,pp.12,30,31.

[24]Id.at15.

[25]252SCRA620(1996).

[26]StateInvestmentHouse,Inc.v.CourtofAppeals,217SCRA32(1993).

[27]TSN,14August1992,p.39.

[28]Id.at6,38.

[29]Id.at10.

[30]Id.at10,3335.

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