G.R. No. 225538 , October 14, 2020
YON MITORI INTERNATIONAL INDUSTRIES, PETITIONER, VS. UNION BANK OF THE PHILIPPINES, RESPONDENT.

FACTS

Rodriguez Ong Tan, doing business as Yon Mitori International Industries, maintained a current account with Union Bank. On November 12, 2007, Tan deposited a BPI check worth P420,000.00 from Angli Lumber & Hardware, Inc. into his account. Union Bank provisionally credited the amount, increasing his balance. On November 14, 2007, Tan withdrew P480,000.00. Later that same day, the deposited check was dishonored by BPI for being drawn against a closed account. Union Bank demanded reimbursement from Tan for the amount mistakenly released, but Tan refused, claiming the check was from a valid transaction. Union Bank then debited Tan’s remaining account balance of P34,700.60 and filed a Complaint for Sum of Money to recover the deficiency of P385,299.40.
The Regional Trial Court (RTC) ruled in favor of Union Bank, applying the principle of solutio indebiti and ordering Tan to return the mistakenly released funds. The RTC also upheld the bank’s right to set-off the erroneous payment against Tan’s remaining deposit. The Court of Appeals (CA) affirmed the RTC’s decision but deleted the award of attorney’s fees and reduced the interest rate. Tan, through Yon Mitori, elevated the case via a Petition for Review on Certiorari.

ISSUE

Whether Tan is obligated to return the funds mistakenly credited and subsequently withdrawn from his account, despite Union Bank’s alleged negligence.

RULING

Yes. The Supreme Court denied the petition and affirmed the CA decision. The legal logic rests on the principle of solutio indebiti under Article 2154 of the Civil Code, which obligates the return of what has been paid by mistake when there was no duty to pay. The fact that the check was dishonored for “Account Closed” is undisputed. Consequently, Union Bank had no obligation to release the funds represented by the worthless check to Tan. His withdrawal of those funds constituted payment by mistake, creating an obligation to return.
The Court rejected Tan’s defense that Union Bank’s negligence was the proximate cause of the loss, thereby absolving him of liability. The bank’s negligence does not negate the application of solutio indebiti; it merely prevents the bank from recovering if such negligence amounts to gross negligence that is the proximate cause of the loss. Here, the Court found the bank’s error was a simple mistake in its clearing system, not gross negligence. The proximate and immediate cause of the bank’s loss was Tan’s withdrawal and unjust retention of funds to which he was not entitled. His refusal to return the amount upon demand constituted unjust enrichment at the bank’s expense. Therefore, he is legally compelled to restitute the mistakenly paid sum.