Far East Bank and Trust Company v. Querimit
REITERATIONFacts
The Antecedents: Respondent Estrella O. Querimit opened a dollar savings account with petitioner Far East Bank and Trust Company (FEBTC) in 1986, evidenced by four Certificates of Deposit (CDs) totaling $60,000.00, maturing in 60 days and payable to bearer. The CDs had an 'accrued' clause for automatic rollover of principal and interest. Respondent kept the deposit for her retirement. In 1993, after her husband's death, respondent attempted to withdraw her deposit but was informed by FEBTC that her husband had already withdrawn the money. Respondent demanded payment, but FEBTC refused. Procedural History: The Regional Trial Court (RTC) ruled in favor of respondent, ordering FEBTC to allow withdrawal of the deposit with accrued interest, and awarding moral damages, exemplary damages, and attorney's fees. The Court of Appeals (CA) affirmed the RTC decision with modification, holding FEBTC solely liable and absolving individual officers. The CA found that FEBTC failed to prove payment as the CDs remained unindorsed, undelivered, and unwithdrawn by respondent. The Petition: FEBTC filed a petition for review on certiorari, arguing it was not liable, that the CDs were paid to respondent's husband, and that respondent was guilty of laches.
Issue(s)
Whether petitioner FEBTC proved that the certificates of deposit were already paid. Whether the equitable principle of laches bars respondent's claim. Whether respondent is entitled to moral and exemplary damages, and attorney's fees.
Ruling
The Supreme Court denied the petition, affirming the Court of Appeals' decision with a modification reducing the attorney's fees. FEBTC failed to prove payment of the certificates of deposit and remains liable for the value thereof with accrued interest. Respondent is entitled to moral and exemplary damages, and attorney's fees, albeit reduced.
Ratio Decidendi
On the issue of payment: The Court held that petitioner FEBTC failed to prove it had paid the respondent or her husband the amounts evidenced by the certificates of deposit. The certificates were payable to bearer, and FEBTC should not have paid without requiring their surrender and proper indorsement. The fact that the certificates remained in respondent's possession, unindorsed and undelivered, strongly indicated non-payment. The bank's claim that it accommodated respondent's husband, a senior manager, by allowing withdrawal without surrender of the CDs was insufficient to discharge its burden of proving payment, especially since this violated bank policies. The Court reiterated that payment must be made to someone authorized to receive it, and a bank acts at its peril when paying without production and surrender of the certificate of deposit after proper indorsement. The burden of proving payment rests on the debtor, which FEBTC failed to discharge with legal certainty. On the issue of laches: The Court ruled that the equitable principle of laches was not sufficient to defeat respondent's rights. Laches requires unreasonable delay in asserting a right, leading to a presumption of abandonment. However, the Court found that respondent did not withdraw her deposit even after maturity because she intended it for retirement and relied on the bank's assurance of accrued interest. It would be unjust to allow laches to defeat her right to recover her savings, as applying it would result in manifest wrong or injustice. The Court emphasized that laches is an equitable doctrine controlled by equitable considerations and cannot be used to perpetrate fraud or injustice. On the issue of damages and attorney's fees: The Court affirmed the award of moral damages due to the mental anguish and humiliation suffered by respondent from FEBTC's wrongful refusal to pay. Exemplary damages were also affirmed as a measure for public good. However, the award for attorney's fees was found to be excessive and was reduced to ₱20,000.00, as respondent was compelled to incur expenses to protect her interests.
Main Doctrine
A bank fails to prove payment of certificates of deposit if it cannot show surrender and proper indorsement of the instruments, especially when the certificates are payable to bearer. Banks are held to a higher degree of diligence due to the fiduciary nature of their relationship with depositors.