Chartered Bank v. National Government Auditing Office
REITERATIONFacts
The Antecedents: Petitioner Chartered Bank, through its Iloilo City Branch, accepted postal money orders from the public and presented them to the Iloilo City Post Office for payment. When available cash was insufficient, the Post Office issued receipts for the remaining balance. Procedural History: On May 8, 1968, the Bureau of Posts issued a circular and a Memorandum of Understanding implementing a new postal money order system requiring commercial banks to clear all postal money orders with the Central Bank in Manila, effective October 1, 1968. Petitioner continued the old practice with the Acting Cashier of the Iloilo Post Office beyond the effective date. On July 6, 1970, the bank discovered it had not received payment for money orders totaling P161,221.47. Subsequent correspondence with postal officials indicated that the Iloilo Post Office did not acknowledge the obligation, citing the new circular which stated that commercial banks should no longer present postal money orders to post offices for payment. Officials stated the bank was dealing directly with the cashier without their knowledge or consent and that any claim should be directed against the cashier personally as the arrangement was a private one not sanctioned by the Post Office. Petitioner filed a claim with the Auditor General. The Petition: The Acting Postmaster General and the Acting Chairman of the Commission on Audit denied the claim, finding no legal basis for payment. Petitioner then filed a petition for review on certiorari with the Supreme Court.
Issue(s)
Whether the unnumbered circular of May 8, 1968, and the undated Memorandum of Understanding are directory and permissive in nature. Whether the bank can collect the balance of the postal money orders it endorsed to the Iloilo City Post Office.
Ruling
The Supreme Court affirmed the decision of the Government Auditing Office and dismissed the petition.
Ratio Decidendi
On the nature of the circular and memorandum: The Court held that the unnumbered circular and the Memorandum of Understanding were mandatory and not merely directory or permissive. The language of both documents, when viewed in its total context, indicated the installation of a new system intended to completely supplant the old one, which had reportedly spawned corruption and financial loss. The memorandum explicitly stated that no old-style money orders would be issued after September 30, 1968, and all uncashed old-style money orders would be referred for validation. The circular also emphasized the need for training to ensure thorough knowledge and understanding of the new procedures for effective implementation. Nowhere in the provisions could exceptions or options for commercial banks to revert to the old system be gleaned. On the bank's claim for collection: The Court ruled that the bank could not collect the balance from the government. Both the petitioner bank and Cashier Eulogio Primalion violated the provisions of the new circular and memorandum. The Court reiterated the generally accepted principle that the State cannot be bound nor estopped by the mistake, error, or unlawful act of its agents. Public officials may be liable in their personal capacity for acts done beyond the scope of their authority or jurisdiction. Cashier Primalion, as a mere employee, acted beyond the scope of his authority and potentially in bad faith by engaging in the old procedure. The petitioner bank's recourse was to pursue the cashier personally. The Court noted that the reduction of the claim amount and the acceptance of payments from Primalion constituted an admission that his liability was personal, not official, estopping the bank from proceeding against the respondents.
Main Doctrine
The State cannot be bound nor estopped by the mistake, error, or unlawful act of its agents. A public official may be liable in their personal capacity for acts done beyond the scope of their authority or jurisdiction.