FACTS:
Catalan filed before the RTC, a complaint for sum of money with damages against petitioner praying that HSBANK and HSBC TRUSTEE be ordered to pay P20,864,000.00 representing the value of the five checks issued by Thomson to respondent.
The checks when deposited were returned by HSBANK purportedly for reason of “payment stopped” pending confirmation, despite the fact that the checks were duly funded, and that Thomson has demanded the bank to pay the same. Catalan alleged in the complaint the gross inaction of HSBANK on Thomson’s instructions, as well as its evident failure to inform Catalan of the reason for its continued inaction and non-payment of the checks. Catalan invoked Article 19 of the Civil Code as basis for her cause of action.
HSBANK & HSBC TRUSTEE filed Motions to Dismiss.
The RTC denied the two motions to dismiss.
HSBANK and HSBC TRUSTEE filed separate petitions for certiorari and/or prohibition with the CA.
The CA dismissed the two petitions for certiorari.
Hence, the present petitions.
ISSUE:
Whether or not the payee may sue the drawee bank based on tort under Art. 19 of the New Civil Code.
RULING:
Yes, the payee may sue the bank under Art. 19.
In order to be liable under the abuse of rights principle, three elements must concur, to wit: (a) that there is a legal right or duty; (b) which is exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another.
It is evident that Catalan is suing HSBANK and HSBC TRUSTEE for unjustified and willful refusal to pay the value of the checks.
HSBANK claims that Catalan has no cause of action because under Section 189 of the Negotiable Instruments Law, “a check of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank, and the bank is not liable to the holder unless and until it accepts or certifies it.”
However, HSBANK is not being sued on the value of the check itself but for how it acted in relation to Catalan’s claim for payment despite the repeated directives of the drawer Thomson to recognize the check the latter issued.
Anent HSBC TRUSTEE, it is being sued for the baseless rejection of Catalan’s claim. When Catalan went to the extent of traveling to Hongkong to deliver personally the checks, HSBC TRUSTEE summarily disapproved her claim with nary a reason.