ALLIED BANKING CORP. VS.

LIM SIO WAN

G.R 133179 | March 27, 2008

Art. 22. Every person who through an act or performance by another,

or any other means, acquires or comes into possession of something at
the expense of the latter without just or legal ground shall return the
same to him.
Art. 23. Even an act or even causing damage to another’s property was
not due to the fault or negligence of the defendant, the latter shall be
reliable for indemnity if through the act or event he was benefited.

Facts:
1. Sometime on November 14, 1983, respondent Lim Sio Wan deposited with petitioner
Allied Banking Corporation (Allied) at its Quintin Paredes Branch in Manila a money
market placement of Php 1, 152, 597.35 or roughly Php 1.1 million for a term of 31 days
to mature.

2. A few days after, a person claiming to be Lim Sio Wan called the bank (through Allied
officer Cristina So) to pre-terminate the money market placement, to issue a manager’s
check representing the proceeds of the placement and give the check (manager’s check)
to a certain Deborah Dee Santos. Allied Bank did oblige.

3. Deborah Santos signed the application form to have the manager’s check issue. She
then got the manager’s check which represent the proceeds of Lim Sio Wan’s money
market placement of Php 1.1 million in the name of Lim Sio Wan as payee.

4. Afterwards, the manager’s check was deposited in the account of Filipinas Cement
Corporation (FCC) at Metrobank with the forged signature of Lim Sio Wan as endorser.

5. Earlier, FCC had deposited Php 2.2 million money market placement with respondent
Producer’s Bank with Deborah Santos as the money market trader assigned to handle
FCC’s account.

6. However, come December 5, 1983 when Cristina So received the phone call instructing
her to pre-terminate Lim Sio Wan’s placement, the manager’s check (Php 1.1 million) was
deposited in the account of FCC, purportedly representing the proceeds of FCC’s money
market placement with Producer’s Bank.

Meaning, the Allied check was deposited with Metrobank in the account of FCC as
Producers Bank payment of its obligation to FCC. To which, Metrobank stamped a
guaranty on the check which reads: “All prior endorsements and/or lack of endorsement
guaranteed.” The check was sent to Allied and upon the presentment of the check, Allied
funded it without checking the authenticity of Lim Sio Wan’s purported indorsement.

7. Sometime, Lim Sio Wan deposited a second money market placement with Allied Bank.
Upon the maturity date of the first money market placement, Lim Sio Wan went to Allied
to withdraw it but to no avail since she was informed that she had pre-termination of the
placement instructions but she denied giving any. She was assured by the bank’s
manager that it’ll be returned to her.
8. When the second placement matured, Lim Sio Wan instructed So to roll-over the
placement for the next 30 days. For the first placement (which still wasn’t given to her),
Lim Sio Wan demanded through a letter asking the first placement payment. Allied
refused to pay Lim Sio Wan since the latter had authorized the pre-termination of the
placement and its subsequent release to Santos.

Here goes the lawsuit series:

- Lim Sio Wan filed with the RTC against Allied to recover the proceeds of her 1st
money market placement.
- Allied filed a third party complaint against Metrobank and Santos.
- Metrobank filed a fourth party complaint against FCC.
- FCC filed a fifth party complaint against Producers Bank.

9. Summonses were duly served for all except for Santos, who was no longer connected
with Producer’s Bank.

10. RTC ordered Allied to pay Lim Sio Wan the amount of Php 1, 158, 648.49 plus 12%
interest per annum, Php 100,000 by way of moral damages, Php 173, 792.20 for
attorney’s fees and costs of suit.

ALL DISMISSED – Allied Bank’s cross-claim against Metrobank, Metrobank’s 3rd party
complaint against FCC, and FCC’s 4th party complaint against Producer’s Bank.

11. Allied appealed to CA, modifying the RTC decision. Allied to pay sixty (60%) percent
and Metrobank to pay forty (40%) on the amount of Php 1,158,648.49 plus 12% interest
per annum from March 16, 1984 until fully paid.

ISSUE:

W/N Allied Bank should be solely liable for the damages to Lim Sio Wan?

RULING:

In the instant case, the trial court correctly found Allied negligent in issuing the
manager’s check and in transmitting it to Santos without a written authorization nor call
up Lim Sio Wan to confirm her instructions. Allied’s negligence must be considered the
proximate cause of the resulting loss.

No. The liability of Allied is concurrent with that of Metrobank as the last indorser
of the check. When Metrobank indorsed the check without verifying the authenticity of
Lim Sio Wan’s indorsement and accepted the check despite the fact that it was cross-
checked payable to payee’s account only.

Given the relative participation of Allied and Metrobank to the instant case, both
banks cannot be adjudged as equally liable. Hence, the 60:40 ration of the liabilities of
Allied and Metrobank as ruled by the CA.

As to the claim of unjust enrichment of the part of Producer’s Bank --- Allied
correctly claims in its petition that Producer’s Bank should reimburse Allied for whatever
judgment that may be rendered against it pursuant to Art. 22 of the Civil Code, which
provides, “Every person who through an act of performance by another, or any other
means, acquires or comes into possession of something at the expense of the latter
without just cause or legal ground.”
 [[In the instant case, Lim Sio Wan’s money market placement in Allied Bank was
pre-terminated and withdrawn without her consent. Moreover, the proceeds of the
placement were deposited in Producers Bank’s account in Metrobank without any
justification. In other words, there is no reason that the proceeds of Lim Sio Wans’
placement should be deposited in FCC’s account purportedly as payment for FCC’s money
market placement and interest in Producers Bank. With such payment, Producers Bank’s
lavvphil

indebtedness to FCC was extinguished, thereby benefitting the former. Clearly, Producers
Bank was unjustly enriched at the expense of Lim Sio Wan. Based on the facts and
circumstances of the case, Producers Bank should reimburse Allied and Metrobank for the
amounts the two latter banks are ordered to pay Lim Sio Wan.]]

There is unjust enrichment when (1) a person is unjustly benefited, and (2) such
benefit is derived at the expense of or with damages to another.