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SUPREMECOURTREPORTSANNOTATEDVOLUME566
PHILIPPINE
NATIONAL
BANK,
petitioner,
vs.
ERLANDO T. RODRIGUEZ and NORMA RODRIGUEZ,
respondents.
Courts Judgments Amendment of decisions is more acceptable
than an erroneous judgment attaining finality to the prejudice of
innocent parties The Court does not sanction careless disposition of
cases by courts of justicethe highest degree of diligence must go
into the study of every controversy submitted for decision by
litigants.
_______________
** Justice Teresita J. Leonardo de Castro was designated to sit as
additional member, replacing Justice Antonio Eduardo B. Nachura per Raffle
dated 23 May 2008.
*THIRD DIV ISION.
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514
514
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515
515
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absolved from liability and the drawer bears the loss. When
faced with a
516
516
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517
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518
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519
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520
520
521
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Check No.
0001110
0000011589
0000011567
0000011565
0000011587
0000011594
0000011593
0000011595
0000011591
0001657
0001655
0000011588
0000011596
0000011597
0000011600
0000011598
0000011599
0000011564
0000011563
0001656
0000011583
0000011566
Date Issued
11.27.98
02.01.99
01.25.99
01.22.99
02.01.99
02.02.99
02.02.99
02.02.99
02.01.99
02.05.99
02.05.99
02.01.99
02.05.99
02.05.99
02.05.99
02.05.99
02.05.99
01.21.99
01.19.99
02.05.99
02.01.99
01.20.99
Total:
Amount
40,934.00
29,877.00
50,350.00
39,995.00
38,000.00
28,500.00
37,715.00
45,002.00
35,373.00
39,900.00
28,595.00
34,819.00
32,851.00
28,785.00
32,509.00
43,691.00
31,498.00
38,000.00
38,000.00
32,006.00
20,093.00
28,844.00
775,337.00
522
522
Check No.
0001944
0001927
0001926
0001924
0001932
0001922
0001928
0001929
0001933
0001923
0001945
0001951
0001955
0001960
Date Issued
01.15.99
01.14.99
01.14.99
01.14.99
01.14.99
01.14.99
01.14.99
01.14.99
01.14.99
01.14.99
01.15.99
01.18.99
01.18.99
01.22.99
Amount
37,449.00
30,020.00
34,884.00
35,502.00
38,323.00
43,852.00
32,414.00
38,361.00
38,285.00
29,982.00
37,449.00
39,995.00
37,221.00
30,923.00
40,679.00
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0001958
0001956
0001969
0001968
0002021
0002023
0002030
0002032
0002020
0001972
0001967
0002022
01.22.99
01.18.99
01/22/99
01/22/99
02/01/99
02/01/99
02/02/99
02/02/99
02/01/99
01/22/99
01/22/99
02/01/99
40,679.00
24,700.00
38,304.00
37,706.00
36,727.00
38,000.00
26,600.00
19,000.00
32,282.00
36,376.00
36,566.00
37,981.00
523
523
_______________
27. Ma. Corazon Salva
28. Jose Bagood
29. Avelino Brion
30. Mickle Algusar
31. Jose Weber
32. Joel V elasco
33. Elma Bacarro
34. Grace Tambis
35. Proceso Mailim
36. Ronnie Aragon
37. Danilo V illarosa
38. Joel Abibuag
39. Danilo V illarosa
40. Reynard Guia
41. Estrella Alunan
42. Eddie Bagood
43. Jose Bagood
44. Nicandro Aguilar
45. Guandencia Banaston
46. Dennis Montemayor
47. Eduardo Buglosa
0002029
0001957
0001965
0001962
0001959
0002028
0002031
0001952
0001980
0001983
0001931
0001954
0001984
0001985
0001925
0001982
0001982
0001964
0001963
0001961
0002027
02/02/99
01/18/99
01/22/99
01/22/99
01/22/99
02/02/99
02/02/99
01/18/99
01/21/99
01/22/99
01/14/99
01/18/99
01/22/99
01/22/99
01/14/99
01/22/99
01/22/99
01/22/99
01/22/99
01/22/99
01/02/99
25,270.00
34,656.00
31,882.00
25,004.00
37,001.00
9,500.00
23,750.00
39,995.00
37,193.00
30,324.00
31,008.00
26,600.00
26,790.00
42,959.00
39,596.00
31,018.00
37,240.00
52,250.00
38,000.00
26,600.00
14,250.00
524
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RTC Disposition
Alarmed over the unexpected turn of events, the spouses
Rodriguez filed a civil complaint for damages against
PEMSLA, the MultiPurpose Cooperative of Philnabankers
(MCP), and petitioner PNB. They sought to recover the
value of their checks that were deposited to the PEMSLA
savings account amounting to P2,345,804.00. The spouses
contended that because PNB credited the checks to the
PEMSLA account even without indorsements, PNB
violated its contractual obligation to them as depositors.
PNB paid the wrong payees, hence, it should bear the loss.
PNB moved to dismiss the complaint on the ground of
lack of cause of action. PNB argued that the claim for
damages should come from the payees of the checks, and not
from spouses Rodriguez. Since there was no demand from
the said payees, the obligation should be considered as
discharged.
In an Order dated January 12, 2000, the RTC denied
PNBs motion to dismiss.
In its Answer,5 PNB claimed it is not liable for the checks
which it paid to the PEMSLA account without any
indorsement from the payees. The bank contended that
spouses Rodriguez, the makers, actually did not intend
for the named payees to receive the proceeds of the
checks. Consequently, the payees were considered as
fictitious payees as defined under the Negotiable
Instruments Law (NIL). Being checks made to fictitious
payees which are bearer instruments, the checks were
negotiable by mere delivery. PNBs Answer included its
crossclaim against its codefendants PEMSLA and the
MCP, praying that in the event that judgment is rendered
against the bank, the crossdefendants should be ordered to
reimburse PNB the amount it shall pay.
_______________
5Rollo, pp. 6469.
525
525
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526
CA Disposition
PNB appealed the decision of the trial court to the CA on
the principal ground that the disputed checks should be
considered as payable to bearer and not to order.
In a Decision7 dated July 22, 2004, the CA reversed and
set aside the RTC disposition. The CA concluded that the
checks were obviously meant by the spouses to be really
paid to PEMSLA. The court a quo declared:
We are not swayed by the contention of the plaintiffsappellees
(Spouses Rodriguez) that their cause of action arose from the
alleged breach of contract by the defendantappellant (PNB) when
it paid the value of the checks to PEMSLA despite the checks being
payable to order. Rather, we are more convinced by the strong and
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527
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528
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Issues
The issues may be compressed to whether the subject
checks are payable to order or to bearer and who bears the
loss?
PNB argues anew that when the spouses Rodriguez
issued the disputed checks, they did not intend for the
named payees to receive the proceeds. Thus, they are bearer
instruments that could be validly negotiated by mere
delivery. Further, testimonial and documentary evidence
presented during trial amply proved that spouses Rodriguez
and the officers of PEMSLA conspired with each other to
defraud the bank.
_______________
9Id., at p. 41.
529
529
Our Ruling
Prefatorily, amendment of decisions is more acceptable
than an erroneous judgment attaining finality to the
prejudice of innocent parties. A court discovering an
erroneous judgment before it becomes final may, motu
proprio or upon motion of the parties, correct its judgment
with the singular objective of achieving justice for the
litigants.10
However, a word of caution to lower courts, the CA in
Cebu in this particular case, is in order. The Court does not
sanction careless disposition of cases by courts of justice.
The highest degree of diligence must go into the study of
every controversy submitted for decision by litigants. Every
issue and factual detail must be closely scrutinized and
analyzed, and all the applicable laws judiciously studied,
before the promulgation of every judgment by the court.
Only in this manner will errors in judgments be avoided.
Now to the core of the petition.
As a rule, when the payee is fictitious or not
intended to be the true recipient of the proceeds,
the check is considered as a bearer instrument. A
check is a bill of exchange drawn on a bank payable on
demand.11 It is either an order or a bearer instrument.
Sections 8 and 9 of the NIL states:
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_______________
10Veluz v. Justice of the Peace of Sariaga, 42 Phil. 557 (1921).
11Negotiable Instruments Law, Sec. 185. Check defined.A check is
a bill of exchange drawn on a bank payable on demand. Except as herein
otherwise provided, the provisions of this Act applicable to a bill of
exchange payable on demand apply to a check.
Section 126.
530
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532
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15 Mueller & Martin v. Liberty Insurance Bank, 187 Ky. 44, 218 SW
465 (1920).
16Id.
533
533
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535
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535
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