Busuego vs. CA [304 SCRA 473 (March 11 1999)]

Power of Monetory Board

Facts:  The 16th regular examination of the books and records of PAL Employees Savings and Loan Association (PESALA) was conducted by a team of CB Examiners.  Several irregularities were found

to have been committed by the PESALA officers.  Hence, CB sent a letter to petitioners for them to be present at a meeting specifically for the purpose of investigating said anomalies.  Petitioners did not

respond.  Hence, the Monetary Board adopted a resolution including the names of the officers of PESALA in the watchlist to prevent them from holding responsible positions in any institution under CB

supervision.

Petitioners filed a petition for injunction against the MB in order to prevent their names from being added in the said watchlist.  RTC issued the TRO.  The MB appealed to the CA which reversed RTC. 

Hence, this petition for certiorari with the SC.

Petitioners contend that the MB resolution was null and void for being violative of their right to due process by imposing administrative sanctions where the MB is not vested with authority to disqualify

persons from occupying positions in institutions under the supervision of CB.

Issue:  Whether or not the MB resolution was null and void.

Held:  NO.  The CB, through the MB, is the government agency charged with the responsibility of administering the monetary, banking and credit system of the country and is granted the power of

supervision and examination over banks and non-bank financial institutions performing quasi-banking functions of which savings and loan associations, such as PESALA, form part of.

The special law governing savings and loan associations is R.A. 3779, the Savings and Loan Association Act.  Said law authorizes the MB to conduct regular yearly examinations of the books and records

of savings and loan associations, to suspend a savings and loan association for violation of law, to decide any controversy over the obligations and duties of directors and officers, and to take remedial

measures.  Hence, the CB, through the MB, is empowered to conduct investigations and examine the records of savings and loan associations.  If any irregularity is discovered in the process, the MB may

impose appropriate sanctions, such as suspending the offender from holding office or from being employed with the CB, or placing the names of the offenders in a watchlist.

PCIB V. CA 350 SCRA 446

 FACTS:

Ford Philippines filed actions to recover from the drawee bank Citibank and collecting   bank   PCIB   the   value   of   several   checks   payable   to   the Commissioner of Internal Revenue which were

embezzled  allegedly by an organized  syndicate.    What  prompted  this  action  was  the  drawing  of  a check  by  Ford,  which  it  deposited  to  PCIB  as  payment  and  was  debited from their Citibank

account.  It later on found out that the payment wasn’t received  by  the  Commissioner.    Meanwhile,  according  to  the  NBI  report, one of the checks issued by petitioner was withdrawn from PCIB for

alleged mistake in the amount to be paid.  This was replaced with manager’s check by  PCIB,  which  were  allegedly  stolen  by  the  syndicate  and  deposited  in their own account.   

 

The trial court decided in favor of Ford. 

 ISSUE:

Has Ford the right to recover the value of the checks intended as payment to CIR? 

 HELD:

The checks were drawn against the drawee bank but the title of the person negotiating the same was allegedly defective because the instrument was obtained  by  fraud  and  unlawful  means,  and  the 

proceeds  of  the  checks were not remitted to the payee.  It was established that instead paying the 

Commissioner,  the  checks  were  diverted  and  encashed  for  the  eventual distribution among members of the syndicate. 

 

Pursuant  to  this,  it  is  vital  to  show  that  the  negotiation  is  made  by  the perpetrator in breach of faith amounting to fraud.  The person negotiating the checks must have gone beyond the authority

given by his principal.  If the principal could prove that there was no negligence in the performance of  his  duties,  he  may  set  up  the  personal  defense  to  escape  liability  and recover from other

parties who, through their own negligence, allowed the commission of the crime. 

 

It  should  be  resolved  if  Ford  is  guilty  of  the  imputed  contributory negligence that would defeat its claim for reimbursement, bearing in mind that its employees were among the members of the

syndicate.  It appears although  the  employees  of  Ford  initiated  the  transactions  attributable  to the  organized  syndicate,  their  actions  were  not  the  proximate  cause  of encashing  the  checks 

payable  to  CIR.    The  degree  of  Ford’s  negligence couldn’t  be  characterized  as  the proximate  cause  of  the  injury  to  parties.    The  mere  fact  that  the  forgery  was  committed  by  a  drawer-

payor’s confidential employee or agent, who by virtue of his position had unusual facilities for perpetrating the fraud and imposing the forged paper upon the bank, doesn’t entitle the bank to shift the loss

to the drawer-payor, in the absence of some circumstance raising estoppel against the drawer.   

 Note:  not  only  PCIB  but  also  Citibank  is  responsible  for  negligence.  Citibank was negligent in the performance of its duties as a drawee bank.  It  failed  to  establish  its  payments  of  Ford’s 

checks  were  made  in  due course and legally in order.   

Mayer Steel Pipe vs. CA273 SCRA 432 (1997)

INSURANCE LAW: Contract of Insurance

FACTS:

Hong Kong Government Supplies Department contracted Mayer Steel Pipe Corporation to manufacture and supply varioussteel pipes and fittings. Prior to the shipping, Mayer insured these pipes and fittings against all risks with South Sea Surety and Insurance Co., Inc. and Charter Insurance Corp., with Industrial Inspection Inc. appointed as third-party inspector.

After examining the pipes and fittings, Industrial Inspection certified that they are in good order condition. However, when the goods reached Hong Kong, it was discovered that a substantial portion thereof was damaged.

The trial court found in favor of the insured. However, when the case was elevated to the CA, it set aside the decision of the trial court and dismissed the complaint on the ground of prescription. It held that the action was barred under Sec. 3(6) of the Carriage of Goods by Sea Act (COGSA) since it was filed only on April 17, 1986, more than two years from the time the goods were unloaded from the vessel.

ISSUE:

Whether or not the action is barred by prescription

HELD:

Sec. 3(6) of the COGSA states that the carrier and the ship shall be discharged from all liability for loss or damage to the goods if no suit is filed within one year after delivery of the goods or the date when they should have been delivered. Under this provision, only the carrier’s liability is extinguished if no suit is brought within one year. But the liability of theinsurer is not extinguished because the insurer’s liability is based not on the contract of carriage but on the contract of insurance.

An insurance contract is a contract whereby one party, for a consideration known as the premium, agrees to indemnify another for loss or damage which he may suffer from a specified peril. An “all risks” insurance policy covers all kinds of loss other than those due to willful and fraudulent act of the insured. Thus, when private respondents issued the “all risks” policies to Mayer, they bound themselves to indemnify the latter in case of loss or damage to the goods insured. Such obligation prescribes in ten years, in accordance with Article 1144 of the New Civil Code.