Banco Filipino v. Court of Appeals
REITERATIONFacts
The Antecedents: Cecilia O. Fernandez mortgaged two parcels of land to Banco Filipino Savings and Mortgage Bank (Banco Filipino). Due to failure to comply with the mortgage terms, the bank initiated extrajudicial foreclosure proceedings, with an auction sale scheduled for June 6, 1983. Prior to the sale, Wilfredo Delos Santos (plaintiff) was informed by Angie Janer, Manager of Banco Filipino Legaspi, about the foreclosure and expressed interest in purchasing the property. Delos Santos visited Fernandez and learned that Fernandez needed P100,000.00 to forestall the auction sale. Delos Santos contacted Domingo F. Claro, Manager of Banco Filipino Naga, who confirmed the arrangement. Delos Santos issued a P100,000.00 check payable to Banco Filipino for the account of Fernandez, which was delivered to Janer as earnest money. Janer and Fernandez delivered the check to Banco Filipino Naga, which issued a receipt. The bank then informed the provincial sheriff of the amicable settlement and withdrew the foreclosure proceedings. Delos Santos later learned that the property was sold to Rita Samarista, who had also tendered a P100,000.00 manager's check to Banco Filipino for Fernandez's account. Delos Santos was informed by Claro that the bank accepted Samarista's check upon advice of its legal counsel and intended to return Delos Santos's check, treating it as an account payable to Delos Santos. Procedural History: The Regional Trial Court (RTC), Legaspi City, ordered defendants Cecilia O. Fernandez and Banco Filipino to pay plaintiffs Wilfredo Delos Santos and Grace Co Delos Santos actual damages, moral damages, exemplary damages, and attorney's fees. The Court of Appeals (CA) affirmed the RTC decision in toto. The Petition: Banco Filipino filed a petition for certiorari with the Supreme Court, arguing that the CA erred in holding its managers, Angie Janer and Domingo Claro, liable for tort, and that their alleged liability was personal as they were not acting within the scope of their assigned tasks. Petitioner also contended that the award for damages was without legal basis and excessive.
Issue(s)
Whether the Court of Appeals erred in affirming the trial court's ruling finding Banco Filipino's managers, Angie Janer and Domingo Claro, liable for tort to the plaintiff-appellee. Whether, assuming arguendo that the acts of Angie Janer and Domingo Claro constitute tort, their liability is personal to them because they were not acting within the scope of their assigned tasks. Whether the award for damages is without legal basis and excessive.
Ruling
The Supreme Court reversed the decision of the Court of Appeals and dismissed the complaint against petitioner Banco Filipino Savings and Mortgage Bank.
Ratio Decidendi
On the alleged tortious acts of Banco Filipino's managers: The Court found that the Court of Appeals erred in holding Angie Janer liable for accepting the check on behalf of the bank. The receipt was on ordinary paper, not official stationery, and Janer could not validly issue a receipt for earnest money for the purchase of property not owned by the bank. Furthermore, the Legaspi branch, where Janer was manager, had no involvement with Fernandez's loan from the Naga branch. The Court also found the denial of assurance to Grace Delos Santos that she would become the owner after assuming the mortgage more credible. The private respondents were aware that the property belonged to Fernandez, not the bank, and it would be naive to believe ownership would transfer merely by assuming the mortgage. The Court concluded that the blame for the breach of contract of sale was misplaced on the bank's managers, as Fernandez was the registered owner and the only one who could decide the sale. There was no evidence that the bank's managers induced Fernandez to sell to Samarista. The private respondents negotiated with open eyes and should have protected their interests by demanding a written commitment from Fernandez before depositing the check. On the scope of authority of bank managers: The Court held that the acts of the bank's branch managers did not constitute tort for which the bank could be held liable under Article 2176 and 2180 of the Civil Code. The managers' involvement was limited to assisting the private respondent in buying the property, which they did by facilitating the remittance of funds and communication. However, they did not act within the scope of their authority to bind the bank to a contract of sale of property it did not own. The private respondents were not clients of the bank in relation to the purchase of Fernandez's property, and the bank's role was solely that of a mortgagee. Therefore, the bank could not be held responsible for the owner's decision to sell the property to another party. On the award of damages: Since the Court found no basis for holding the bank liable for tort or breach of contract, the award for damages, attorney's fees, and costs against petitioner was necessarily dismissed. The Court emphasized that the private respondents' recourse should have been against Cecilia O. Fernandez, the owner of the property, for breach of their contract of sale.
Main Doctrine
A bank is not liable for damages arising from the sale of a mortgaged property by the owner to a third party, even if the bank's branch managers facilitated the transaction, if the bank was merely a mortgagee and not the owner of the property, and there was no evidence that the bank's managers induced the owner to sell to another party after assuring a prospective buyer that the property would be sold to them.