kepub||c of the h|||pp|nes

SUkLML CCUk1
Man||a
Gk No 10S836 March 7 1994
SCUSLS GLCkGL MCkAN and LI8kADA MCkAN pet|t|oners
vs
1nL nCN CCUk1 CI ALALS and CI11kUS1 8ANkING CCkCkA1ICN respondents
6onto/es 8oti//er 8i/oq 4ssociotes SLCCND DIVISICN

for petitioners
4qcoo/i 4ssociotes for privote respondent

8LCALAuC
eLlLloner spouses Ceorge and Llbrada Moran are Lhe owners of Lhe WackWack eLron
gasollne sLaLlon locaLed aL Shaw 8oulevard corner Cld WackWack 8oad Mandaluyong MeLro
Manlla 1hey regularly purchased bulk fuel and oLher relaLed producLs from eLrophll
CorporaLlon on cash on dellvery (CCu) basls Crders for bulk fuel and oLher relaLed producLs
were made by Lelephone and paymenLs were effecLed by personal checks upon dellvery
1

eLlLloners malnLalned Lhree [olnL accounLs namely one currenL accounL (no 37000667) and
Lwo savlngs accounLs (nos 1037002387 and 1037001372) wlLh Lhe Shaw 8oulevard branch of
ClLyLrusL 8anklng CorporaLlon As a speclal prlvllege Lo Lhe Morans whom lL consldered as
valued cllenLs Lhe bank allowed Lhem Lo malnLaln a zero balance ln Lhelr currenL accounL
1ransfers from Savlng AccounL no 1037002387 Lo Lhelr currenL accounL could be made only
wlLh Lhelr prlor auLhorlzaLlon buL Lhey gave wrlLLen auLhorlLy Lo ClLyLrusL Lo auLomaLlcally
Lransfer funds from Lhelr Savlngs AccounL no 1037001372 Lo Lhelr CurrenL AccounL no 37
000667 aL any Llme whenever Lhe funds ln Lhelr currenL accounL were lnsufflclenL Lo meeL
wlLhdrawals from sald currenL accounL Such arrangemenL for auLomaLlc Lransfer of funds was
called a preauLhorlzed Lransfer (A1) agreemenL
2

1he A1 leLLeragreemenL enLered lnLo by Lhe parLles on March 19 1982 conLalned Lhe
followlng provlslons
xxx xxx xxx
1 1he Lransfer may be effecLed on Lhe day followlng Lhe overdrawlng of Lhe
currenL accounL bot tbe cbeck/s woolJ be boooteJ lf tbe sovloqs occooot bos
sofflcleot bolooce to covet tbe ovetJtoft
2 1he regular charges on overdrafL and acLlvlLy fees wlll be lmposed by Lhe
8ank
3 1hls ls merely an accommodaLlon on our parL and we have Lhe rlghL aL all
Llmes and for any reasonwbotsoevet to tefose to effect ttoosfet of fooJs ot oot
sole ooJ obsolote optloo ooJ Jlsctetloo tesetvloq our rlghL Lo LermlnaLe Lhls
arrangemenL aL any Llme wlLhouL wrlLLen noLlce Lo you
4 oo bolJ cl11ku51 ftee ooJ botmless fot ooy ooJ oll omlssloos ot ovetslqbt lo
execotloq tbls ootomotlc ttoosfet of fooJs
3

xxx xxx xxx
Cn uecember 12 1983 peLlLloners Lhrough Llbrada Moran drew a check (ClLyLrusL no
041960) for 3037600 payable Lo eLrophll
CorporaLlon
4
1he nexL day uecember 13 1983 peLlLloners agaln Lhrough Llbrada Moran
lssued anoLher check (ClLyLrusL no 041962) ln Lhe amounL of 3609000 ln favor of Lhe same
corporaLlon
3
1he LoLal sum of Lhe Lwo checks was 10666600
Cn uecember 14 1983 eLrophll CorporaLlon deposlLed Lhe Lwo aforemenLloned checks Lo lLs
accounL wlLh Lhe andacan branch of Lhe hlllpplne naLlonal 8ank (n8) Lhe collecLlng bank ln
Lurn n8 andacan branch presenLed Lhem for clearlng wlLh Lhe hlllpplne Clearlng Pouse
CorporaLlon ln Lhe afLernoon of Lhe same day 1he records show LhaL on uecember 14 1983
CurrenL AccounL no 37000667 had a zero balance whlle Savlngs AccounL no 1037001372
(covered by Lhe A1) had an avallable balance of
2610430
6
and Savlngs AccounL no 1037002387 had an avallable balance of 4326839
7

AL abouL Len oclock ln Lhe mornlng of Lhe followlng day uecember 13 1983 peLlLloner Ceorge
Moran wenL Lo Lhe bank as was hls regular pracLlce Lo personally oversee Lhelr dally
LransacLlons wlLh Lhe bank Pe deposlLed ln Lhelr Savlngs AccounL no 1037002387 Lhe amounLs
of 1087438 and 673423
8
and he llkewlse deposlLed ln Lhelr Savlngs AccounL no
1037001372 Lhe amounLs of 390000 3310000 and 3000
9
1he amounL of 4000000 was
Lhen Lransferred by hlm from Savlng AccounL no 1037002387 Lo Lhelr currenL accounL by
means of a pto fotmo wlLhdrawal form (a deblL memorandum) whlch was provlded by Lhe
bank auLhorlzlng Lhe laLLer Lo make Lhe necessary Lransfer AL Lhe same Llme Lhe amounL of
6666600 was Lransferred from Savlngs AccounL no 1037001372 Lo Lhe same currenL accounL
Lhrough Lhe preauLhorlzed Lransfer (A1) agreemenL
10

SomeLlme on uecember 13 or 16 1983 Ceorge Moran was lnformed by hls wlfe Llbrada LhaL
eLrophll refused Lo dellver Lhelr orders on a credlL basls because Lhe Lwo checks Lhey had
prevlously lssued were dlshonored upon presenLmenL for paymenL ApparenLly Lhe bank
dlshonored Lhe checks due Lo lnsufflclency of funds
11
1he nondellvery of gasollne forced
peLlLloners Lo Lemporarlly sLop buslness operaLlons allegedly causlng Lhem Lo suffer loss of
earnlngs ln addlLlon eLrophll cancelled Lhelr credlL accommodaLlon forclng Lhem Lo pay for
Lhelr purchases ln cash
12
Ceorge Moran furlous and upseL demanded an explanaLlon from
8aul ulaz Lhe branch manager lalllng Lo geL a sufflclenL explanaLlon he Lalked Lo a cerLaln
vlllareal a bank offlcer who allegedly Lold hlm LhaL Amy 8elen 8agodo Lhe cusLomer servlce
offlcer had commlLLed a grave error
13

Cn uecember 16 or 17 1983 ulaz wenL Lo Lhe Moran resldence Lo geL Lhe slgnaLures of Lhe
peLlLloners on an appllcaLlon for a managers check so LhaL Lhe dlshonored checks could be
redeemed ulaz Lhen wenL Lo eLrophll Lo personally presenL Lhe checks ln paymenL for Lhe Lwo
dlshonored checks
14

ln a chance meeLlng around May or !une 1984 Ceorge Moran learned from one ConsLanclo
Magno credlL manager of eLrophll LhaL Lhe laLLer recelved from ClLyLrusL Lhrough ulaz a
leLLer daLed uecember 16 1983 noLlfylng Lhem LhaL Lhe Lwo aforemenLloned checks were
lnadverLenLly dlshonored due Lo operaLlonal error Sald leLLer was recelved by eLrophll
on !anuary 4 1984
13

Cn !uly 24 1984 or a llLLle over slx monLhs afLer Lhe lncldenL peLlLloners Lhrough counsel
wroLe ClLyLrusL clalmlng LhaL Lhe banks dlshonor of Lhe checks caused Lhem besmlrched
buslness and personal repuLaLlon shame and anxleLy hence Lhey were conLemplaLlng Lhe flllng
of Lhe necessary legal acLlons unless Lhe bank lssued a cerLlflcaLlon clearlng Lhelr name and pald
Lhem 100000000 as moral damages
16

1he bank dld noL acL favorably on Lhelr demands hence peLlLloners flled a complalnL for
damages on SepLember 8 1984 wlLh Lhe 8eglonal 1rlal CourL 8ranch 139 aL aslg MeLro
Manlla whlch was dockeLed Lhereln as Clvll Case no 31349 ln Lurn ClLyLrusL flled a
counLerclalm for damages alleglng LhaL Lhe case flled agalnsL lL was unfounded and un[usL
AfLer Lrlal a declslon daLed CcLober 9 1989 was rendered by Lhe Lrlal courL dlsmlsslng boLh Lhe
complalnL and Lhe counLerclalm
17
Cn appeal Lhe CourL of Appeals rendered [udgmenL ln CA
C8 Cv no 23009 on CcLober 9 1989 afflrmlng Lhe declslon of Lhe Lrlal courL
18

We sLarL some baslc and accepLed rules sLaLuLory and docLrlnal A check ls a blll of exchange
drawn on a bank payable on demand
19
1hus a check ls a wrlLLen order addressed Lo a bank or
persons carrylng on Lhe buslness of banklng by a parLy havlng money ln Lhelr hands requesLlng
Lhem Lo pay on presenLmenL Lo a person named Lhereln or Lo bearer or order a named sum of
money
20

llxed savlngs and currenL deposlLs of money ln banks and slmllar lnsLlLuLlons shall be governed
by Lhe provlslons concernlng slmple loan
21
ln oLher words Lhe relaLlonshlp beLween Lhe bank
and Lhe deposlLor ls LhaL of a debLor and credlLor
22
8y vlrLue of Lhe conLracL of deposlL
beLween Lhe banker and lLs deposlLor Lhe banker agrees Lo pay checks drawn by Lhe deposlLor
provlded LhaL sald deposlLor has money ln Lhe hands of Lhe bank
23

Pence where Lhe bank possesses funds of a deposlLor lL ls bound Lo honor hls checks Lo Lhe
exLenL of Lhe amounL of hls deposlLs 1he fallure of a bank Lo pay Lhe check of a merchanL or a
Lrader when Lhe deposlL ls sufflclenL enLlLles Lhe drawer Lo subsLanLlal damages wlLhouL any
proof of acLual
damages
24

Conversely a bank ls noL llable for lLs refusal Lo pay a check on accounL of lnsufflclenL funds
noLwlLhsLandlng Lhe facL LhaL a deposlL may be made laLer ln Lhe day
23
8efore a bank
deposlLor may malnLaln a sulL Lo recover a speclflc amounL from hls bank he musL flrsL show
LhaL he had on deposlL sufflclenL funds Lo meeL hls demand
26

1he presenL acLlon for damages accordlngly hlnges on Lhe resoluLlon of Lhe lnqulry as Lo
wheLher or noL peLlLloners had sufflclenL funds ln Lhelr accounLs when Lhe bank dlshonored Lhe
checks ln quesLlon ln vlew of Lhe facLual flndlngs of Lhe Lwo lower courLs Lhe correcLness of
whlch are challenged by whaL appear Lo be plauslble argumenLs we feel LhaL Lhe same should
properly be resolved by us 1hls would necessarlly requlre us Lo lnqulre lnLo boLh Lhe savlngs
and currenL accounLs of peLlLloners ln relaLlon Lo Lhe A1 arrangemenL
Cn uecember 14 1983 when n8 andacan branch presenLed Lhe checks for collecLlon Lhe
avallable balance for Savlngs AccounL no 1037001372 was 2610430 whlle CurrenL AccounL
no 37000667 expecLedly had a zero balance Cn uecember 13 1983 aL approxlmaLely Len
oclock ln Lhe mornlng peLlLloners Lhrough Ceorge Moran learned LhaL 6666600 from
Savlng AccounL no 1037001372 was Lransferred Lo Lhelr currenL accounL AnoLher 4000000
was Lransferred from Savlng AccounLs no 1037002387 Lo Lhe currenL accounL Conslderlng LhaL
Lhe Lransfers were by Lhen sufflclenL Lo cover Lhe Lwo checks lL ls asserLed by peLlLloners LhaL
such facL should have prevenLed Lhe dlshonor of Lhe checks lL appears however LhaL lL was
noL so
As explalned by respondenL courL ln lLs declslon Cerard L 8lonlsLo head of Lhe cenLrallzed
clearlng unlL of ClLyLrusL deLalled on Lhe wlLness sLand Lhe sLandard clearlng procedure
adopLed by respondenL bank and Lhe hlllpplne Clearlng Pouse CorporaLlon Lo wlL
C LeL me agaln rephase Lhe quesLlon MosL of (slc) Lhese Lwo
checks lssued by Mrs Llbrada Moran under Lhe accounLs of Lhe
plalnLlffs wlLh ClLyLrusL 8anklng CorporaLlon were drawn daLed
uecember 12 1983 and uecember 13 1983(and) Lhese Lwo (2)
checks were made payable Lo eLrophll CorporaLlon Cn record
eLrophll CorporaLlon presenLed Lhese Lwo (2) checks for clearlng
wlLh n8 andacan 8ranch on uecember 14 1983 now ln
accordance wlLh Lhe bank whaL would happen wlLh Lhese checks
drawn wlLh (slc) n8 on uecember 14 1983?
A 5o tbese cbecks wlll oow be pteseoteJ by lN8 wltb tbe
lblllpploe cleotloq noose oo uecembet 14 ooJ tbeo tbe lblllpploe
cleotloq noose wlll ptocess lt ootll mlJolqbt of uecembet 14
cltyttost wlll seoJ o cleotloq tepteseototlve to tbe lblllpploe
cleotloq noose ot otoooJ 2 oclock lo tbe motoloq of uecembet
15 ooJ tbeo qet tbe cbecks 1be cbecks wlll oow be ptocesseJ ot
tbe cltyttost compotet ot otoooJ J oclock lo tbe motoloq of
uecembet 14 (slc)bot lt wlll be ptocesseJ fot bolooce of cltyttost
os of uecembet 14 becoose fot ooe we bove oot opeoeJ oo
uecembet 15 ot J oclock uoJet tbe cleotloq boose toles we
ote sopposeJ to ptocess lt oo tbe Jote lt wos pteseoteJ fot
cleotloq (Lsn SepLember 9 1988 pp 910)
27

Conslderlng Lhe clearlng process adopLed as explalned ln Lhe aforequoLed LesLlmony lL ls clear
LhaL Lhe avallable balance on uecember 14 1983 was used by Lhe bank ln deLermlnlng wheLher
or noL Lhere was sufflclenL cash deposlLed Lo fund Lhe Lwo checks alLhough whaL was sLamped
on Lhe dorsal slde of Lhe Lwo checks ln quesLlon was uAll/121383 slnce uecember 13 1983
was Lhe acLual daLe when Lhe checks were processed As earller sLaLed when peLlLloners
checks were dlshonored due Lo lnsufflclency of funds Lhe avallable balance of Savlngs AccounL
no 1037001372 whlch was Lhe sub[ecL of Lhe A1 agreemenL was noL enough Lo cover elLher
of Lhe Lwo checks Cn uecember 14 1983 when n8 andacan branch presenLed Lhe checks
for collecLlon Lhe avallable balance for Savlngs AccounL no 1037001372 Lo repeaL was only
2610430 whlle CurrenL AccounL no 3700067 had no avallable balance lL was only on
uecember 13 1983 aL around Len oclock ln Lhe mornlng LhaL Lhe necessary funds were
deposlLed whlch unforLunaLely was Loo laLe Lo prevenL Lhe dlshonor of Lhe checks
eLlLloners argue LhaL publlc respondenL by relylng heavlly on 8lonlsLos LesLlmony falled Lo
conslder Lhe facL LhaL Lhe wlLness hlmself admlLLed LhaL he had no personal knowledge
surroundlng Lhe dlshonor of Lhe Lwo checks ln quesLlon 1hus alLhough he knew Lhe sLandard
clearlng procedure lL does noL necessarlly mean LhaL Lhe same procedure was adopLed wlLh
regard Lo Lhe Lwo checks
We do noL agree SecLlon 3(q) 8ule 131 of Lhe 8ules of CourL provldes a dlspuLable
presumpLlon ln law LhaL Lhe ordlnary course of buslness has been followed ln Lhe absence of a
conLrary showlng lL ls presumed LhaL Lhe acLs ln quesLlon were ln conformlLy wlLh Lhe usual
conducL of buslness ln Lhe case aL bar peLlLloners falled Lo presenL counLervalllng evldence Lo
rebuL Lhe presumpLlon LhaL Lhe checks lnvolved underwenL Lhe same regular process for
clearlng of checks followed by Lhe bank slnce 1983
eLlLloner had no reason Lo complaln for Lhey alone were aL faulL A drawer musL remember
hls responslblllLles every Llme he lssues a check Pe musL personally keep Lrack of hls avallable
balance ln Lhe bank and noL rely on Lhe bank Lo noLlfy hlm of Lhe necesslLy Lo fund cerLaln
check she prevlously lssued A check as dlsLlngulshed from an ordlnary blll of exchange ls
supposed Lo be drawn agalnsL a ptevloos Jeposlt of fooJs for lL ls ordlnarlly lnLended for
lmmedlaLely paymenL
28

Moreover beLween Lhe Llme of Lhe lssuance of sald checks on uecember 12 and 13 and Lhe
Llme of Lhelr presenLmenL on uecember 14 peLlLloners had aL Lhe very leasL LwenLyfour
hours Lo replenlsh Lhelr balance ln Lhe bank
As prevlously noLed lL was only durlng buslness hours ln Lhe mornlng of uecember 13 1983
LhaL 6666600 was auLomaLlcally Lransferred from Savlngs AccounL no 1037001372 Lo
CurrenL AccounL no 37000667 and anoLher 4000000 was Lransferred from Savlngs
AccounL no 1037002387 Lo Lhe same currenL by a deblL memorandum eLlLloners argue LhaL lf
lndeed Lhe checks were dlshonored ln Lhe early mornlng of uecember 13 1983 Lhe bank would
noL have auLomaLlcally Lransferred 6666600 Lo sald currenL accounL 1hey Lheorlze LhaL Lhe
checks havlng already been dlshonored Lhere was no necesslLy Lo puL lnLo effecL Lhe pre
auLhorlzed Lransfer agreemenL
1haL Lheory ls lncorrecL When Lhe Lransfer from boLh savlngs accounLs Lo Lhe currenL accounL
were made Lhey were done ln Lhe hope LhaL Lhe checks may be reLrleved Lhus prevenLlng Lhelr
dlshonor unforLunaLely respondenL bank dld noL succeed ln effecLuaLlng lLs good lnLenLlons
1he Lransfers were made Lo preserve lLs relaLlons wlLh peLlLloners whom lL knew were valued
cllenLs hence lL wanLed Lo prevenL Lhe dlshonor of Lhelr checks lf Lhe same was aL all posslble
AlLhough noL admlLLlng faulL lL Lrled lLs besL Lo make sure LhaL Lhe checks would noL bounce
under slmllar clrcumsLances lL was held ln wbltmoo vs lltst Notloool 8ook
29
LhaL a bank
performs lLs full duLy where upon Lhe recelpL of a check drawn agalnsL an accounL ln whlch
Lhere are lnsufflclenL funds Lo pay lL ln full lL endeavors Lo lnduce Lhe drawer Lo make good hls
accounL so LhaL Lhe check can be pald and falllng ln Lhls lL proLesLs Lhe check on Lhe followlng
mornlng and noLlfles lLs correspondenL bank by Lhe Lelegraph of Lhe proLesL lL cannoL
Lherefore be held llable Lo Lhe payee and holder of Lhe check for noL proLesLlng lL upon Lhe day
when lL was recelved ln facL Lhe courL added LhaL Lhe bank dld more LhaL lL was requlred Lo do
by maklng an efforL Lo lnduce Lhe drawer Lo deposlL sufflclenL money Lo make Lhe check good
and by noLlfylng lLs correspondenL of Lhe dlshonor of Lhe check by Lelegram
eLlLloners malnLaln LhaL aL Lhe Llme Lhe checks were dlshonored Lhey had already deposlLed
sufflclenL funds Lo cover sald checks 1o prove Lhelr polnL peLlLloners quoLed ln Lhelr peLlLlon
Lhe followlng LesLlmony of sald wlLness 8lonlsLo Lo wlL
C now accordlng Lo you you would recelve Lhe checks from
(belng deposlLed Lo) Lhe collecLlng bank whlch ln Lhls parLlcular
example was Lhe andacan 8ranch of n8 whlch ln Lurn wlll
dellver lL Lo Lhe hlllpplne Clearlng Pouse and Lhe hlllpplne
Clearlng Pouse wlll dellver lL Lo your offlce around 1200 oclock of
uecember ?
A Around 200 oclock of uecember 13 We senL a clearlng
represenLaLlve
C And Lhe checks wlll be processed ln accordance wlLh Lhe
balance avallable as of uecember 14?
A ?es slr
C And naLurally you wlll place Lhere drawn agalnsL lnsufflclenL
funds uecember 14 1983?
A ?es slr
C Are you sure abouL LhaL?
A ?es slr (Lsn SepLember 9 1988 p 14)
30

Cbvlously wlLness 8lonlsLo was merely confused as Lo Lhe daLes (uecember 14 and 13) because
lL dld noL [lbe wlLh hls prevlous LesLlmony whereln he caLegorlcally sLaLed LhaL Lhe checks wlll
now be processed as Lhe ClLyLrusL CompuLer aL around 300 ln Lhe mornlng of uecember 14
(slc) buL lL wlll be processed for balance of ClLyLrusL as of uecember 14 because for one we
have noL opened on uecember 13 aL 300 oclock under Lhe clearlng house rules we are
supposed Lo process lL on Lhe daLe lL was presenLed for
clearlng
31
Analyzlng Lhe procedure he had prevlously explalned and analyzlng hls LesLlmony
ln lLs enLlreLy and noL ln LruncaLed porLlons lL would loglcally and lnelucLably appear LhaL he
acLually meanL uecember 13 and noL uecember 14
ln Lhe early mornlng of every buslness day prlor Lo banklng hours Lhe varlous branches of
ClLyLrusL would recelve a compuLer prlnLouL called Lhe re[ecLed LransacLlons reporL from Lhe
head offlce 1he reporL conLalns among oLhers a llsLlng of checks Lo be funded When
ClLyLrusL Shaw 8oulevard branch recelved sald reporL ln Lhe early mornlng of uecember 13
1983 Lhe Lwo checks lnvolved were lncluded ln Lhe checks Lo be funded 1haL reporL was
used by Lhe bank as lLs basls ln dlshonorlng Lhe Lwo checks ln quesLlon eLlLloner conLends LhaL
Lhe bank erred when lL dld so because on prevlous occaslons Lhe reporL was merely used by
Lhe bank as a basls for deLermlnlng wheLher or noL lL was necessary Lo noLlfy Lhem of Lhe need
Lo deposlL cerLaln amounLs ln Lhelr accounLs
Amy 8elen 8ogado a bank employee LesLlfled LhaL she would normally copy Lhe deLalls sLaLed
ln Lhe reporL and Lransfer ln on a plnk sllp 1hese plnk sllps were Lhen glven Lo Ceorge Moran
ln Lurn Ceorge Moran LesLlfled LhaL he would deposlL Lhe necessary funds sLaLed ln Lhe plnk
sllps As a maLLer of facL so peLlLloner asseveraLed noL a slngle check wrlLLen on Lhe noLlces
was ever dlshonored afLer he had funded sald checks wlLh Lhe bank 1hus peLlLloner argues
Lhe checks were noL yeL dlshonored afLer Lhe bank recelved Lhe reporL ln Lhe early mornlng of
uecember 13 1983
Sald argumenL does noL persuade lf ever peLlLloners on prevlous occaslons were glven noLlces
every Llme a check was presenLed for clearlng and paymenL and Lhere were no adequaLe funds
ln Lhelr accounLs Lhese were aL mosL mere accommodaLlons on Lhe parL of respondenL bank
lL was noL a requlremenL or a general banklng pracLlce hence noncompllance LherewlLh could
noL lay Lhe bank open Lo blame or rebuke Legally Lhe bank had all Lhe rlghL Lo dlshonor Lhe
checks because Lhere were no sufflclenL funds Lo speak of ln Lhe flrsL place lf Lhe demand ls by
check a drawer musL have Lo hls credlL enough Lo cover Lhe demand lf hls credlL wlLh Lhe bank
ls less Lhan Lhe amounL on Lhe face of Lhe check Lhe bank may lawfully refuse paymenL
32

ursulng Lhls maLLer furLher Lhe bank could also noL be faulLed for noL accepLlng elLher of Lhe
Lwo checks 1he flrsL check lssued was ln Lhe amounL of 3037600 whlle Lhe second one was
for 3609000 Savlngs AccounL no 1307001372 Lhen had a balance of only 2610430 1hls
belng Lhe case ClLyLrusL could noL be expecLed Lo accepL for paymenL elLher one of Lhe Lwo
checks nor parLlally honor one check
A bank ls under no obllgaLlon Lo make parL paymenL on a check up Lo only Lhe amounL of Lhe
drawers funds where Lhe check ls drawn for an amounL larger Lhan whaL Lhe drawer has on
deposlL Such a pracLlce of paylng checks ln parL has never exlsLed upon parLlal paymenL Lhe
check holder could noL be called upon Lo surrender Lhe check and Lhe bank would be wlLhouL a
voucher affordlng a cerLaln means of showlng Lhe paymenL 1he rule ls based on commerclal
convenlence and any rule LhaL would work such manlfesL lnconvenlence should noL be
recognlzed A check ls lnLended noL only Lo Lransfer a rlghL Lo Lhe amounL named ln lL buL Lo
serve Lhe furLher purpose of affordlng evldence for Lhe bank of Lhe paymenL of such amounL
when Lhe check ls Laken up
33

Cn Lhe oLher hand assumlng otqoeoJo LhaL Savlngs AccounL no 1037002387 whlch ls noL
covered by a prearranged auLomaLlc Lransfer agreemenL had enough amounL deposlLed Lo
cover boLh checks (whlch ls noL so ln Lhls case) Lhe bank sLlll had no obllgaLlon Lo honor sald
checks as Lhere was Lhen no auLhorlLy glven Lo lL Lo make Lhe Lransfer of funds Where a
deposlLor has Lwo accounLs wlLh a bank an open accounL and a savlngs accounL and draws a
check upon Lhe open accounL for more money Lhan Lhe accounL conLalns Lhe bank may
rlghLfully refuse Lo pay Lhe check and ls under no duLy Lo make up Lhe deflclency from Lhe
savlngs accounL
34

We are agree wlLh respondenL CourL of Appeals ln lLs assessmenL and lnLerpreLaLlon of Lhe
naLure of Lhe leLLer of ClLyLrusL Lo eLrophll daLed uecember 16 1983 As apLly and correcLly
sLaLed by sald courL Lhe leLLer ls noL an admlsslon of llablllLy as lL was wrlLLen merely Lo
malnLaln Lhe goodwlll and conLlnued paLronage of plalnLlffappellanLs (1hls) cannoL be
characLerlzed as baseless conslderlng Lhe LoLallLy of Lhe clrcumsLances surroundlng lLs
wrlLlng
33

ln Lhe presenL case Lhe acLlons Laken by Lhe bank afLer Lhe lncldenL clearly show LhaL Lhere was
nelLher mallce nor bad falLh buL raLher a clear lnLenL Lo molllfy an obvlously aglLaLed cllenL
8aul ulaz Lhe branch manager even wenL for Lhls purpose Lo Lhe Moran resldence Lo faclllLaLe
Lhelr appllcaLlon for a managers check LaLer he wenL Lo Lhe eLrophll CorporaLlon Lo
personally redeem Lhe checks SLlll laLer Lhe leLLer was senL by respondenL bank Lo eLrophll
explalnlng LhaL Lhe dlshonor of Lhe checks was due Lo operaLlonal error Powever we
relLeraLe lL would be a mlsLake Lo consLrue LhaL leLLer as an admlsslon of gullL on Lhe parL of
Lhe bank lL knew LhaL lL was confronLed wlLh a cllenL who obvlously was noL wllllng Lo admlL
any faulL on hls parL alLhough Lhe facLs show oLherwlse 1hus respondenL bank ran Lhe rlsk of
loslng Lhe buslness of an lmporLanL and lnfluenLlal member of Lhe flnanclal communlLy lf lL dld
noL do anyLhlng Lo assuage Lhe feellngs of peLlLloners
lL wlll be recalled LhaL Lhe credlL sLandlng of Lhe Morans wlLh eLrophll CorporaLlon was
lnvolved whlch facL more Lhan anyLhlng dlspleased Lhem Lo say Lhe leasL Cn demand of
peLlLloners LhaL Lhelr names be cleared Lhe bank consldered lL more prudenL Lo send Lhe leLLer
lL never reallzed LhaL lL would LhereafLer be used by peLlLloners as one of Lhe bases of Lhelr
legal acLlon lL wlll be noLed LhaL Lhere was no reason for Lhe bank Lo send Lhe leLLer Lo
eLrophll CorporaLlon slnce Lhe laLLer was noL a cllenL nor was lL demandlng any explanaLlon
Clearly Lherefore Lhe leLLer was merely lnLended Lo accommodaLe Lhe requesL of Lhe Morans
and was parL of Lhe serles of damageconLrol measures Laken by Lhe bank Lo placaLe
peLlLloners
8espondenL CourL of Appeals percepLlvely observed LhaL all Lhese somehow paclfled plalnLlffs
appellanLs (hereln peLlLloners) for Lhey dld noL LhereafLer Lake lmmedlaLe punlLlve acLlon
agalnsL Lhe defendanLappellee (hereln prlvaLe respondenL) As polnLed ouL by Lhe courL o poo
lL Look plalnLlffsappellanLs abouL slx (6) monLhs afLer Lhe dlshonor of Lhe checks Lo demand
LhaL defendanLappellee pay Lhem 100000000 as damages AL LhaL Llme plalnLlffsappellanLs
had dlscovered Lhe leLLer of Mr ulaz aLLrlbuLlng Lhe dlshonor of Lhelr checks Lo operaLlonal
error 1he aLLempL Lo unduly rlde on Lhe leLLer of Mr ulaz speaks for lLself
36

Cn Lhe above premlses whlch lrreslsLlbly commend Lhemselves Lo our accepLance we flnd no
cogenL and sufflclenL Lo award acLual moral or exemplary damages Lo peLlLloners AlLhough
we Lake [udlclal noLlce of Lhe facL LhaL Lhere ls a flduclary relaLlonshlp beLween a bank and lLs
deposlLors as well as Lhe exLenL of dlllgence expecLed of lL ln handllng Lhe accounLs enLrusLed
Lo lLs care
37
Lhe bank may noL be held responslble for such damages ln Lhe absence of fraud
bad falLh mallce or wanLon aLLlLude
38

WPL8LlC8L flndlng no reverslble error ln Lhe [udgmenL appealed from Lhe same ls hereby
Alll8MLu wlLh cosLs agalnsL peLlLloners
SC C8uL8Lu
Notvoso c loJlllo Nocoo ooJ looo coocot