CASE DIGEST: Far East Bank v. Querimit (G.R. No. 148582)

CASE DIGEST: FAR EAST BANK AND TRUST COMPANY, petitioner, vs. ESTRELLA O. QUERIMIT, respondent. [G.R. NO. 148582, JANUARY 16, 2002]

FACTS: Respondent deposited her savings with petitioner-bank. She did not withdraw her deposit even after maturity date of the certificates of deposit (CDs) precisely because she wanted to set it aside for her retirement, relying on the bank’s assurance, as reflected on the face of the instruments themselves, that interest would “accrue” or accumulate annually even after their maturity. Petitioner-bank failed to prove that it had already paid respondent, bearer and lawful holder of subject CDs, i.e., petitioner failed to prove that the CDs had been paid out of its funds, since evidence by respondent stands unrebutted that subject CDs until now remain unindorsed, undelivered, and unwithdrawn by her.

ISSUE: Would it be unjust to allow the doctrine of laches to defeat the right of respondent to recover her savings which she deposited with the petitioner?

HELD: Yes, it would be unjust not to allow respondent to recover her savings which she deposited with petitioner-bank. For one, Petitioner failed to exercise that degree of diligence required by the nature of its business. (Art. 1173). Because the business of banks is impressed with public interest, the degree of diligence required of banks is more than that of a good father of the family or of an ordinary business firm.

The fiduciary nature of their relationship with their depositors requires banks to treat accounts of their clients with the highest degree of care. (Canlas v. CA, 326 SCRA 415 [2000]). A bank is under obligation to treat accounts of its depositors with meticulous care whether such accounts consist only of a few hundred pesos or of millions of pesos. Responsibility arising from negligence in the performance of every kind of obligation is demandable. (Prudential Bank v. CA, 328 SCRA 264 [2000]). Petitioner failed to prove payment of the subject CDs issued to respondent and, therefore, remains liable for the value of the dollar deposits indicated thereon with accrued interest.

A certificate of deposit is defined as a written acknowledgment by a bank or banker of the receipt of a sum of money on deposit which the bank or banker promises to pay to the depositor, to the order of the depositor, or to some other person or his order, whereby the relation of debtor and creditor between the bank and the depositor is created. Principles governing other types of bank deposits are applicable to CDs (10 AM Juri 2d Sec. 455), as are the rules governing promissory notes when they contain an unconditional promise to pay a sum certain of money absolutely. (Ibid., Sec. 457).

The principle that payment, in order to discharge a debt, must be made to someone authorized to receive it is applicable to the payment of CDs. Thus, a bank will be protected in making payment to the holder a certificate indorsed by the payee, unless it has notice of the invalidity of the indorsement or the holder’s want of title. (10 Am Jur 2d Sec. 461). A bank acts at its peril when it pays deposits evidenced by a CD, without its production and surrender after proper indorsement. (Clark v. Young, 21 So. 2d 331 [1994]).

The equitable principle of laches is not sufficient to defeat the rights of respondent over the subject CDs. Laches is the failure or neglect, for an unreasonable length of time, to do that which, by exercising due diligence, could or should have been done earlier. It is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. (Felizardo v. Fernandez, GR 137509, Aug. 15, 2001).

There is no absolute rule as to what constitutes laches or staleness of demand; each case is to be determined according to its particular circumstances. The question of laches is addressed to the sound discretion of the court and, being an equitable doctrine, its application is controlled by equitable considerations. It cannot be used to defeat justice or perpetrate fraud and injustice. Courts will not be guided or bound strictly by the Statute of Limitations or the doctrine of laches when to do so manifest wrong or injustice would result. (Rosales v. CA, GR 137566, Feb. 28, 2001).

Respondent is entitled to moral damages because of the mental anguish and humiliation she suffered as a result of the wrongly refusal of petitioner to pay her even after she had delivered the CDs. (Arts. 2217 and 2219). In addition, petitioner should pay respondent exemplary damages which the trial court imposed by way of example or correction for the public good (Art. 2229). Finally, respondent is entitled to attorney’s fees since petitioner’s act or omission compelled her to incur expenses to protect her interest making such award just and equitable. (Art. 2208).

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