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CHINATRUST COMMERCIAL BANK v. PHILIP TURNER

FACTS:

Philip Turner entered into a telegraphic transfer agreement with Chinatrust (Philippines) Commercial Bank. He intended to send money to his beneficiary's account with Citibank-Cairo. However, there was a discrepancy in the beneficiary's name, which caused the transfer to be unsuccessful. Turner demanded the return of his money, but Chinatrust did not immediately refund the telexed funds. Turner filed a complaint against Chinatrust for negligence and sought the refund of his money, as well as damages.

The Metropolitan Trial Court ruled in favor of Turner, finding Chinatrust liable for the monetary loss suffered by Turner and ordered the bank to pay him the transferred amounts plus damages. Chinatrust filed a motion for reconsideration, which was denied by the Regional Trial Court. It then filed a Petition for Review before the Court of Appeals, but the petition was dismissed, with the decision of the Regional Trial Court being upheld. Chinatrust filed a Petition with the Supreme Court, arguing that the Court of Appeals erred in finding the bank negligent and awarding damages.

The case involves a dispute between the petitioner and respondent regarding the remittance of funds through a telegraphic transfer. The respondent originally filed a complaint against the petitioner for breach of contract, alleging that the funds were not remitted to his travel agency's account in Cairo, Egypt. The respondent claimed that he verified with the petitioner whether the transfer was sent and was informed that it was not applied to the intended account due to a mismatch with the beneficiary's name. The respondent further alleged that he suffered sleepless nights, worry, and anxiety due to the defendant's refusal to return the amounts given for the transfer, and thus sought for refund and damages. The respondent did not raise any claim of the petitioner's negligence in handling his concerns. The Metropolitan Trial Court only considered the breach of contract claim and awarded the respondent the refund and damages he sought.

ISSUES:

  1. Whether petitioner complied with its obligation to remit the funds to the respondent’s intended beneficiary’s account.

  2. Whether respondent is entitled to rescind the contract.

  3. Whether the alleged negligence of the bank personnel in attending to the concerns of the respondent is a valid issue in the case.

  4. Whether the damages awarded to the respondent by the lower courts are justified.

  5. Whether petitioner, Citibank, can be held liable for the refusal to return the remittance made by respondent.

  6. Whether respondent's claim for refund should be addressed to petitioner or to Min Travel.

RULING:

  1. The Metropolitan Trial Court absolved petitioner from liability and dismissed the complaint upon finding that the bank had duly proven that it had complied with its obligation under the telegraphic transfer. The court found that the funds were credited to the intended beneficiary’s account. However, on appeal, the Regional Trial Court reversed the dismissal of the complaint. The Regional Trial Court held petitioner liable for negligence in attending to respondent’s queries and demands with regard to the telegraphic funds transfer, despite affirming that the funds were credited to the intended beneficiary’s account.

  2. The alleged negligence of the bank personnel in attending to the concerns of the respondent is not a valid issue in the case. The issue was neither raised by the respondent nor asserted as an issue in the preliminary conference. It was improper for the Regional Trial Court to consider this issue on negligence in determining the respective claims of the parties. Basic rules of fair play, justice, and due process require that arguments or issues not raised in the trial court may not be raised for the first time on appeal.

  3. The Regional Trial Court and the Court of Appeals erred in awarding damages to the respondent. There is insufficient evidence to show negligence on the part of the petitioner. The one-month delay in receiving the telex reply from Citibank-Cairo does not sufficiently prove petitioner's fault or negligence, especially since petitioner's communications were coursed through a third-party-correspondent bank. Furthermore, the respondent knew that his funds were already received by his beneficiary since September 22, 2004, but he still insisted on demanding a refund.

  4. Petitioner cannot be held liable for the refusal to return the remittance made by respondent. The beneficiary account name indicated in the telegraphic transfer form did not match the account name in petitioner's books. Petitioner asked for clarifications and later confirmed that the remittance was duly credited to the account of Min Travel. Petitioner had nothing to do with the mismatch of the beneficiary name and could not be made liable for it.

  5. Respondent's claim for refund should be addressed to Min Travel, which already had possession of the funds. The tour travel arrangement, which brought about the remittance of the funds, is a separate and private arrangement between respondent and Min Travel. Petitioner is not privy to the arrangement and should not be held responsible for the refund.

PRINCIPLES:

  • The determination of issues at the preliminary conference bars the consideration of other questions on appeal.

  • A party cannot raise a new factual issue on appeal if it was not included in the preliminary conference order as it would be unfair to the adverse party who had no opportunity to present evidence against it.

  • The court will not consider arguments or issues that were not raised in the trial court, as it would be unfair to the adverse party and offend the principles of fair play, justice, and due process.

  • A judgment that goes outside the issues and purports to adjudicate something upon which the parties were not heard is extrajudicial and invalid.

  • Factual findings of the Court of Appeals are generally not reviewable by the Supreme Court, except when there is a misapprehension of facts or when the conclusions are contradicted by the evidence on record.

  • The refusal of a bank's personnel to accede to a demand for a refund cannot be considered an actionable wrong if it is due to lack of information or knowledge of the effective cancellation of the remittance and not from a deliberate intent to ignore or disregard the client's rights.

  • Once the amount represented by the telegraphic transfer order is credited to the account of the payee or appears in the name of the payee in the books of the receiving bank, the ownership of the telegraphic transfer order is deemed to have been transmitted to the receiving bank.

  • The receiving bank is deemed to have fully executed the telegraphic transfer and is no longer the owner of the telegraphic transfer order.

  • A bank cannot be made liable for the refusal to return a remittance if the beneficiary account name indicated in the telegraphic transfer form does not match the account name in the bank's books.

  • Claims for refund should be properly addressed to the party who has possession of the funds and is responsible for the arrangement that brought about the remittance.