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ALLIED BANKING CORPORATION v. BANK OF PHILIPPINE ISLANDS

FACTS:

On October 10, 2002, a post-dated check amounting to P1,000,000.00 payable to "Mateo Mgt. Group International" (MMGI) was deposited and accepted by petitioner Allied Banking Corporation. The check was drawn against the account of Marciano Silva, Jr. with respondent Bank of the Philippine Islands (BPI). The check was cleared by respondent and petitioner credited MMGI's account. However, MMGI's account was later closed and all the funds were withdrawn. Respondent credited Silva's account with the same amount after he complained about the debit. On March 21, 2003, respondent returned a photocopy of the check to petitioner as it was found to be postdated. Petitioner refused to accept it and sent it back to respondent. The check was repeatedly sent between the parties until respondent requested the Philippine Clearing House Corporation (PCHC) to take custody of it on May 6, 2003. Petitioner filed a complaint asserting that respondent should solely bear the loss, while respondent charged petitioner with gross negligence. The Arbitration Committee ruled in favor of petitioner, but respondent's motion for reconsideration was denied. Respondent then filed a petition for review in the RTC, arguing against the sole liability for the loss and the 60-40 apportionment ordered by the CA.

ISSUES:

  1. Whether the doctrine of last clear chance applies in this case.

  2. Whether the 60-40 apportionment of loss ordered by the CA was justified.

  3. Whether the plaintiff's own negligence was the immediate and proximate cause of his injury?

  4. Whether the defendant's lack of due care was the immediate and proximate cause of the injury?

  5. Whether the damages should be mitigated due to the plaintiff's contributory negligence?

  6. Whether or not the petitioner's failure to comply with the policy regarding post-dated checks constitutes negligence.

  7. Whether or not the respondent's liability is greater than the petitioner's due to its negligent clearing of the check.

RULING:

  1. The doctrine of last clear chance does not apply in this case. The doctrine of last clear chance states that the negligence of the plaintiff does not preclude recovery for the negligence of the defendant, if the defendant had the last fair chance to prevent the harm by exercising due diligence. However, the doctrine can only be applied if there is negligence on the part of both the plaintiff and the defendant. In this case, the negligence of the plaintiff was the proximate cause of the unwarranted encashment of the check. The defendant, by exercising ordinary care in the clearing process, could have easily noticed the defect in the post-dated check and promptly returned it. Therefore, the defendant cannot be held liable under the doctrine of last clear chance.

  2. The 60-40 apportionment of loss ordered by the CA was justified. The Court agrees with the CA's decision to allocate 60% of the damages to the petitioner and 40% to the respondent. Both parties were negligent in the encashment of the post-dated check. The petitioner's negligence in accepting the check for deposit was the antecedent cause of the loss, but the respondent's negligence in clearing the check without observing its own verification procedure was the proximate cause. It is just and equitable to allocate the majority of the damages to the party whose negligence directly caused the loss.

  3. If the plaintiff's own negligence was the immediate and proximate cause of his injury, he cannot recover damages.

  4. If the defendant's lack of due care was the immediate and proximate cause of the injury, the plaintiff may recover damages.

  5. If the plaintiff's negligence was only contributory and the defendant's lack of due care was the immediate and proximate cause of the injury, the courts shall mitigate the damages to be awarded.

  6. The Court finds no error committed by the Court of Appeals (CA) in allocating the resulting loss from the wrongful encashment of the subject check on a 60-40 ratio. The petitioner's failure to comply with the policy regarding post-dated checks was considered a lack of due diligence in handling checks. While the respondent's liability for its negligent clearing of the check is greater, the petitioner cannot escape responsibility for its omission to exercise extraordinary diligence in scrutinizing checks presented by its depositors.

PRINCIPLES:

  • Doctrine of last clear chance: The doctrine of last clear chance states that the negligence of the plaintiff does not preclude recovery for the negligence of the defendant, if the defendant had the last fair chance to prevent the harm by exercising due diligence. The doctrine applies when there is negligence on the part of both the plaintiff and the defendant, and the defendant's failure to exercise ordinary care, having the last clear chance to avoid loss or injury, was the proximate cause of the occurrence of such loss or injury.

  • Allocation of loss: When multiple parties are negligent and contribute to a loss or injury, the court may apportion the damages based on the degree of fault of each party. The allocation of loss should be just and equitable, taking into consideration the degree of negligence and the proximate cause of the loss or injury.

  • When the plaintiff's own negligence is the immediate and proximate cause of his injury, he cannot recover damages.

  • When the defendant's lack of due care is the immediate and proximate cause of the injury and the plaintiff's negligence is only contributory, the plaintiff may recover damages, but the damages shall be mitigated by the courts.

  • Banks are expected to exercise the highest degree of diligence, surpassing that of a Roman pater familias or a good father of a family.

  • The failure to comply with established banking regulations and practices may be considered negligence.

  • The allocation of liability for a loss resulting from wrongful encashment may be divided between parties based on their respective degrees of negligence.