Busuego vs.

CA [304 SCRA 473 (March 11 1999)]

Power of Monetory Board

Facts: The 16th regular examination of the books and records of PAL Employees Savings and Loan Association (PESALA) was conducted by a team of CB Examiners. Several irregularities were found to have been committed by the PESALA officers. Hence, CB sent a letter to petitioners for them to be present at a meeting specifically for the purpose of investigating said anomalies. Petitioners did not respond. Hence, the Monetary Board adopted a resolution including the names of the officers of PESALA in the watchlist to prevent them from holding responsible positions in any institution under CB supervision. Petitioners filed a petition for injunction against the MB in order to prevent their names from being added in the said watchlist. RTC issued the TRO. The MB appealed to the CA which reversed RTC. Hence, this petition for certiorari with the SC. Petitioners contend that the MB resolution was null and void for being violative of their right to due process by imposing administrative sanctions where the MB is not vested with authority to disqualify persons from occupying positions in institutions under the supervision of CB.

Issue: Whether or not the MB resolution was null and void.

Held: NO. The CB, through the MB, is the government agency charged with the responsibility of administering the monetary, banking and credit system of the country and is granted the power of supervision and examination over banks and non-bank financial institutions performing quasi-banking functions of which savings and loan associations, such as PESALA, form part of. The special law governing savings and loan associations is R.A. 3779, the Savings and Loan Association Act. Said law authorizes the MB to conduct regular yearly examinations of the books and records of savings and loan associations, to suspend a savings and loan association for violation of law, to decide any controversy over the obligations and duties of directors and officers, and to take remedial measures. Hence, the CB, through the MB, is empowered to conduct investigations and examine the records of savings and loan associations. If any irregularity is discovered in the process, the MB may impose appropriate sanctions, such as suspending the offender from holding office or from being employed with the CB, or placing the names of the offenders in a watchlist. PCIB V. CA 350 SCRA 446

FACTS: Ford Philippines filed actions to recover from the drawee bank Citibank and collecting bank PCIB the value of several checks payable to the Commissioner of Internal Revenue which were embezzled allegedly by an organized syndicate. What prompted this action was the drawing of a check by Ford, which it deposited to Meanwhile, according to PCIB as payment and was debited from their Citibank account. It later on found out that the payment wasnt received by the Commissioner.

the NBI report, one of the checks issued by petitioner was withdrawn from PCIB for alleged mistake in the amount to be paid. This was replaced with managers check by PCIB, which were allegedly stolen by the syndicate and deposited in their own account.

The trial court decided in favor of Ford. ISSUE: Has Ford the right to recover the value of the checks intended as payment to CIR? HELD: The checks were drawn against the drawee bank but the title of the person negotiating the same was allegedly defective because the instrument was obtained by fraud and unlawful means, and the proceeds of the checks were not remitted to the payee. It was established that instead paying the Commissioner, the checks were diverted and encashed for the eventual distribution among members of the syndicate.

Pursuant to this, it is vital to show that the negotiation is made by the perpetrator in breach of faith amounting to fraud. The person negotiating the checks must have gone beyond the authority given by his principal. If the principal could prove that there was no negligence in the performance of his duties, he may set up the personal defense to escape liability and recover from other parties who, through their own negligence, allowed the commission of the crime.

It should be resolved if Ford is guilty of the imputed contributory negligence that would defeat its claim for reimbursement, bearing in mind that its employees were among the members of the syndicate. It appears although the employees of Ford initiated the transactions attributable to the organized syndicate, their actions were not the proximate cause of encashing the checks payable to CIR. parties. The degree of Fords negligence couldnt be characterized as the proximate cause of the injury to

The mere fact that the forgery was committed by a drawer-payors confidential employee or agent, who by virtue of his position had unusual facilities for

perpetrating the fraud and imposing the forged paper upon the bank, doesnt entitle the bank to shift the loss to the drawer -payor, in the absence of some circumstance raising estoppel against the drawer. Note: not only PCIB but also Citibank is responsible for negligence. Citibank was negligent in the performance of its duties as a drawee bank. It failed to establish its payments of Fords checks were made in due course and legally in order.

Mayer Steel Pipe vs. CA

273 SCRA 432 (1997)
INSURANCE LAW: Contract of Insurance

FACTS: Hong Kong Government Supplies Department contracted Mayer Steel Pipe Corporation to manufacture and supply varioussteel pipes and fittings. Prior to the shipping, Mayer insured these pipes and fittings against all risks with South Sea Surety and Insurance Co., Inc. and Charter Insurance Corp., with Industrial Inspection Inc. appointed as third-party inspector. After examining the pipes and fittings, Industrial Inspection certified that they are in good order condition. However, when the goods reached Hong Kong, it was discovered that a substantial portion thereof was damaged. The trial court found in favor of the insured. However, when the case was elevated to the CA, it set aside the decision of the trial court and dismissed the complaint on the ground of prescription. It held that the action was barred under Sec. 3(6) of the Carriage of Goods by Sea Act (COGSA) since it was filed only on April 17, 1986, more than two years from the time the goods were unloaded from the vessel. ISSUE: Whether or not the action is barred by prescription

HELD: Sec. 3(6) of the COGSA states that the carrier and the ship shall be discharged from all liability for loss or damage to the goods if no suit is filed within one year after delivery of the goods or the date when they should have been delivered. Under this provision, only the carriers liability is extinguished if no suit is brought within one year. But the liability of theinsurer is not extinguished because the insurers liability is based not on the contract of carriage but on the contract of insurance. An insurance contract is a contract whereby one party, for a consideration known as the premium, agrees to indemnify another for loss or damage which he may suffer from a specified peril. An all risks insurance policy covers all kinds of loss other than those due to willful and fraudulent act of the insured. Thus, when private respondents issued the all risks policies to Mayer, they bound themselves to indemnify the latter in case of loss or damage to the goods insured. Such obligation prescribes in ten years, in accordance with Article 1144 of the New Civil Code.