Professional Documents
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CESAR V. AREZA and LOLITA B. AREZA, petitioners,
vs. EXPRESS SAVINGS BANK, INC. and MICHAEL
POTENCIANO, respondents.
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* FIRST DIVISION.
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PEREZ, J.:
Before this Court is a Petition for Review on Certiorari
under Rule 45 of the Rules of Court, which seeks to
reverse the Decision1 and Resolution2 dated 29 June
2006 and 12 February 2007 of the Court of Appeals in
C.A.-G.R. CV No. 83192. The Court of Appeals affirmed
with modification the 22 April 2004 Resolution3 of the
Regional Trial Court (RTC) of Calamba, Laguna, Branch
92, in Civil Case No. B-5886.
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4 Records, p. 2.
5 Rollo, p. 68.
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8 Records, p. 178.
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598 SUPREME COURT REPORTS ANNOTATED
Areza vs. Express Savings Bank, Inc.
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19 Id.
20 Villanueva, Cesar, Commercial Law Review, p. 447 (2003).
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21 Metropolitan Bank and Trust Co. v. Cabilzo, 539 Phil. 316, 327-
328; 510 SCRA 259, 272 (2006).
22 U.C.C. Article 4 Bank Deposits and Collections (2002), Part 1.
General Provisions and Definitions, 4-105.
23 12 USCS 5002 (3) (B), Title 12. Banks and Banking; Chapter
50. Check Truncation.
24 Id.
25 BPI v. Court of Appeals, 383 Phil. 538, 553; 326 SCRA 641, 655-
656 (2000).
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VOL. 734, SEPTEMBER 10, 2014 607
Areza vs. Express Savings Bank, Inc.
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drawee and the holder of the check or his agent are concerned,
converted the check into a mere voucher, and, as already
discussed, foreclosed the recovery by the drawee of the amount
paid. This closure of the transaction is a matter of course;
otherwise, uncertainty in commercial transactions, delay and
annoyance will arise if a bank at some future time will call on
the payee for the return of the money paid to him on the check.
As the transaction in this case had been closed and the
principal-agent relationship between the payee and the
collecting bank had already ceased, the latter in returning the
amount to the drawee bank was already acting on its own and
should now be responsible for its own actions. x x x Likewise,
Far East cannot invoke the warranty of the payee/depositor
who indorsed the instrument for collection to shift the burden it
brought upon itself. This is precisely because the said
indorsement is only for purposes of collection which, under
Section 36 of the NIL, is a restrictive indorsement. It did not in
any way transfer the title of the instrument to the collecting
bank. Far East did not own the draft, it merely presented it for
payment. Considering that the warranties of a general indorser
as provided in Section 66 of the NIL are based upon a transfer
of title and are available only to holders in due course, these
warranties did not attach to the indorsement for deposit and
collection made by Gold Palace to Far East. Without any legal
right to do so, the collecting bank, therefore, could not debit
respondents account for the amount it refunded to the drawee
bank.
The foregoing considered, we affirm the ruling of the
appellate court to the extent that Far East could not debit the
account of Gold Palace, and for doing so, it must return what it
had erroneously taken.32
Applying the foregoing ratiocination, the Bank cannot
debit the savings account of petitioners. A
depositary/collecting bank may resist or defend against a
claim for breach of war-
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