Yon Mitori International Industries v. Union Bank of the Philippines G.R. No. 225538 14 October 2020 Caguioa, J.

Yon Mitori International Industries v. Union Bank of the Philippines

G.R. No. 225538 14 October 2020

Caguioa, J.:

First Division

Nature of the Action: This is a petition for Review on Certiorari assailing the decision of and the Resolution rendered by the Court of Appeals.

Facts:

Tan, doing business under the name and style of Yon Mitori, is a depositor of Union Bank, Commonwealth Quezon City Branch. Then he deposited a BPI check amounting P420,000.00. The said check was withdrawn against the account of Angli Lumber & Hardware Inc., one of Tan's alleged clients.

Tan's bank record was thereby increased his balance to P513,700.60 from his previous deposit P93,700.60. Then he withdrew P480,000. However, the BPI check was returned to Union Bank as the account against it was drawn has been closed. It was then that Union Bank discovered that Tan's account had been mistakenly credited. It contacted Tan for the return of the said amount but he refused claiming that the BPI check proceeded from a valid transaction between Angli Lumber and Yon Mitori.

Then, Union Bank debited the available balance reflected on Tan's account and instituted a complaint for sum of money before the RTC. It ruled in favor of Union Bank and ordered Yon Mitori and Tan to pay Union Bank. RTC found all the requisites for the application of solutio indebiti under Rule 2154 of the Civil Code. Thus, Tan appealed to Court of Appeals. But it affirmed RTC's decision with modification.

Tan moved for reconsideration but the same was denied.

Issue:

Whether Tan should return the value of the check credited to his account.

Ruling:

Tan is bound to return the proceeds of the dishonored BPI Check based on the principle of unjust enrichment.

Jurisprudence defines a collecting bank as "any bank handling an item for collection except the bank on which the check is drawn." Upon receipt of a check for deposit, the collecting bank binds itself to "credit the amount in [the depositor's] account or infuse value thereon only after the drawee bank shall have paid the amount of the check or [after] the check [is] cleared for deposit."

In this case, Tan deposited the BPI Check in his account with Union Bank for collection. Clearly, Union Bank stands as the collecting bank in this case. By receiving the BPI Check from Tan, Union Bank obliged itself, as collecting bank, to credit Tan's account only after BPI, as drawee, shall have paid the amount of the said check or after the check is cleared for deposit.

As correctly observed by the CA, the dishonor of the BPI Check is not disputed. Evidently, Union Bank was under no obligation to effect payment in favor of Tan precisely because the BPI Check which Tan deposited for collection had been dishonored. Allowing Tan to retain the proceeds of the dishonored BPI Check despite not being entitled thereto would therefore permit unjust enrichment at Union Bank's expense.

The principle of unjust enrichment is codified under Article 22 of the Civil Code. It states:

ART. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.

There is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity, and good conscience.

For the principle to apply, the following requisites must concur: (i) a person is unjustly benefited; and (ii) such benefit is derived at the expense of or with damages to another.60 Expounding on these requisites, the Court, in University of the Philippines v. Philab Industries, Inc., held:

 

Unjust enrichment claims do not lie simply because one party benefits from the efforts or obligations of others, but instead it must be shown that a party was unjustly enriched in the sense that the term unjustly could mean illegally or unlawfully.

Moreover, to substantiate a claim for unjust enrichment, the claimant must unequivocally prove that another party knowingly received something of value to which he was not entitled and that the state of affairs is such that it would be unjust for the person to keep the benefit. Unjust enrichment is a term used to depict result or effect of failure to make remuneration of or for property or benefits received under circumstances that give rise to legal or equitable obligation to account for them; to be entitled to remuneration, one must confer benefit by mistake, fraud, coercion, or request. Unjust enrichment is not itself a theory of reconvey. Rather, it is a prerequisite for the enforcement of the doctrine of restitution.

The requisites for the application of the principle of unjust enrichment are clearly present in this case. Here, it was unequivocally established that Tan withdrew and utilized the proceeds of the BPI Check fully knowing that he was not entitled thereto.

Union Bank's obligation to credit Tan's account is contingent upon actual receipt of the value of the BPI Check or notice of its clearance. Due to the dishonor of the BPI Check, Union Bank's obligation to credit Tan's account with its proceeds did not attach. Conversely, Tan's right to receive the proceeds of said check did not arise. Nevertheless, Tan withdrew the proceeds of the BPI Check with full and established knowledge that the account against which it was drawn had been closed. As in Equitable Banking, Tan, the depositor herein, was unjustly benefited by reason of the erroneous credit made in his favor. Such benefit, in turn, was derived at the expense of Union Bank as the collecting bank.

Thus, based on the principle of unjust enrichment, Tan is bound to return the proceeds of the BPI Check which he had no right to receive.