Banking Case Digests

Banking Laws - Prof. Cabaneiro

San Beda College of Law, Manila

2012

BANK OF THE PHILIPPINE ISLANDS VS. COURT OF APPEALS

232 SCRA302

G.R. NO. 104612

MAY 10, 1994

FACTS:

Private respondents Eastern Plywood Corporation and Benigno Lim as

officer of the corporation, had an “AND/OR” joint account with Commercial Bank

and Trust Co (CBTC), the predecessor-in-interest of petitioner Bank of the

Philippine Islands. Lim withdraw funds from such account and used it to open a

joint checking account (an “AND” account) with Mariano Velasco. When Velasco

died in 1977, said joint checking account had P662,522.87. By virtue of an

Indemnity Undertaking executed by Lim and as President and General Manager

of Eastern withdrew one half of this amount and deposited it to one of the

accounts of Eastern with CBTC.

Eastern obtained a loan of P73,000.00 from CBTC which was not secured.

However, Eastern and CBTC executed a Holdout Agreement providing that the

loan was secured by the “Holdout of the C/A No. 2310-001-42” referring to the

joint checking account of Velasco and Lim.

Meanwhile, a judicial settlement of the estate of Velasco ordered the

withdrawal of the balance of the account of Velasco and Lim.

Asserting that the Holdout Agreement provides for the security of the loan

obtained by Eastern and that it is the duty of CBTC to debit the account of

respondents to set off the amount of P73,000 covered by the promissory note,

BPI filed the instant petition for recovery. Private respondents Eastern and Lim,

however, assert that the amount deposited in the joint account of Velasco and

Lim came from Eastern and therefore rightfully belong to Eastern and/or Lim.

Since the Holdout Agreement covers the loan of P73,000, then petitioner can

only hold that amount against the joint checking account and must return the

rest.

ISSUE:

Whether BPI can demand the payment of the loan despite the existence of

the Holdout Agreement and whether BPI is still liable to the private respondents

on the account subject of the withdrawal by the heirs of Velasco.

RULING:

Yes, for both issues. Regarding the first, the Holdout Agreement

conferred on CBTC the power, not the duty, to set off the loan from the account

subject of the Agreement. When BPI demanded payment of the loan from

Eastern, it exercised its right to collect payment based on the promissory note,

and disregarded its option under the Holdout Agreement. Therefore, its demand

was in the correct order.

Regarding the second issue, BPI was the debtor and Eastern was the

creditor with respect to the joint checking account. Therefore, BPI was obliged

to return the amount of the said account only to the creditor. When it allowed

the withdrawal of the balance of the account by the heirs of Velasco, it made the

payment to the wrong party. The law provides that payment made by the

debtor to the wrong party does not extinguish its obligation to the creditor who

is without fault or negligence. Therefore, BPI was still liable to the true creditor,

Eastern.

G.R. No. 84281 May 27, 1994

CITYTRUST BANKING CORPORATION, Petitioner, vs. THE INTERMEDIATE

APPELLATE COURT and EMME HERRERO, Respondents.

FACTS: Private respondent Emme Herrero filed a complaint for damages against

petitioner Citytrust Banking Corporation. In her complaint, private respondent averred

that she, a businesswoman, made regular deposits, starting September of 1979, with

petitioner Citytrust Banking Corporation. She deposited with petitioner the amount of

Thirty One Thousand Five Hundred Pesos (P31,500.00), in cash, in order to amply cover

six (6) postdated checks she issued. When presented for encashment upon maturity, all

the checks were dishonored due to "insufficient funds." The last check No. 007400,

however, was personally redeemed by private respondent in cash before it could be

redeposited. Petitioner, in its answer, asserted that it was due to private respondent's

fault that her checks were dishonored. It averred that instead of stating her correct

account number, i.e., 29000823, in her deposit slip, she inaccurately wrote 2900823. The

Regional Trial Court dismissed the complaint for lack of merit. Private respondent went to

the Court of Appeals, which found the appeal meritorious. Hence, it rendered judgment

reversing the trial court's decision.

ISSUE: Whether or not the bank is liable for damages.

RULING: Yes. Private respondent is entitled to nominal damages. In Simex International

(Manila), Inc. vs. Court of Appeals, 183 SCRA 360, reiterated in Bank of Philippine Islands

vs. Intermediate Appellate Court, 206 SCRA 408, we similarly said, in cautioning

depository banks on their fiduciary responsibility, that -

In every case, the depositor expects the bank to treat his account with utmost fidelity,

whether such account consists only of a few hundred pesos or of millions. The bank must

record every single transaction accurately, down to the last centavo, and as promptly as

possible. This has to be done if the account is to reflect at any given time the amount of

money the depositor can dispose of as he sees fit, confident that the bank will deliver it as

and to whomever he directs. A blunder on the part of the bank, such as the dishonor of a

check without good reason, can cause the depositor not a little embarrassment if not also

financial loss and perhaps even civil and criminal litigation.

The point is that as a business affected with public interest and because of the nature of

its functions, the bank is under obligation to treat the accounts of its depositors with

meticulous care, always having in mind the fiduciary nature of their relationship.

We agree with petitioner, however, that it is wrong to award, along with nominal

damages, temperate or moderate damages. The two awards are incompatible and cannot

be granted concurrently. Nominal damages are given in order that a right of the plaintiff,

which has been violated or invaded by the defendant, may be vindicated or recognized,

and not for the purpose of indemnifying the plaintiff for any loss suffered by him (Art.

2221, New Civil Code; Manila Banking Corp. vs. Intermediate Appellate Court, 131 SCRA

271). Temperate or moderate damages, which are more than nominal but less than

compensatory damages, on the other hand, may be recovered when the court finds that

some pecuniary loss has been suffered but its amount cannot, from the nature of the

case, be proved with reasonable certainty (Art. 2224, New Civil Code).

BPI vs. CA 326 SCRA 641 (2000)

Facts: Private respondent Benjamin Napiza deposited in his foreign current deposit with BPI a dollar check owned by Henry Chan in which he affixed his

signature at the dorsal side thereof. For this purpose, Napiza gave Chan a signed blank withdrawal slip. However, Gayon Jr. got hold of the withdrawal

slip and used it to withdraw the proceeds of the dollar check, even before the check was cleared and without the presentation of the bank passbook.

Issues:

(1) Whether or not petitioner can hold private respondent liable for the proceeds of the check for having affixed his signature at the dorsal side as

indorser; and

(2) Whether or not the bank was negligent as the proximate cause of the loss and should be held liable.

Held:

(1) No. Ordinarily, private respondent may be held liable as an indorser of the check or even as an accommodation party. However, to hold him liable

would result in an injustice. The interest of justice thus demands looking into the events that led to the encashment of the check.

Under the rules appearing in the passbook that BPI issued to private respondent, to be able to withdraw under the Philippine foreign currency deposit

system, two requisites must be presented to petitioner BPI by the person withdrawing an amount:

1) A duly filled-up withdrawal slip; and

2) The depositor’s passbook.

Petitioner bank alleged that had private respondent indicated therein the person authorized to receive the money, then Gayon could not have withdrawn

any amount. However, the withdrawal slip itself indicates a special instruction that the amount is payable to “Ramon de Guzman and/or Agnes de

Guzman”. Such being the case, petitioner’s personnel should have been duly warned that Gayon was not the proper payee of the proceeds of the

check. Moreover, the fact that private respondent’s passbook was not presented during the withdrawal is evidenced by the entries therein showing that

the last transaction that he made was when he deposited the subject check.

(2) Yes. A bank is under obligation to treat the accounts of its depositors “with meticulous care, always having in mind the fiduciary nature of their

relationship”. Petitioner failed to exercise the diligence of a good father of a family. In total disregard of its own rules, petitioner’s personnel negligently

handled private respondent’s account to petitioner’s detriment.

The proximate cause of the withdrawal and eventual loss of the amount of $2,500.00 on petitioner’s part was its personnel’s negligence in allowing such

withdrawal in disregard of its own rules and the clearing requirement in the banking system. In so doing, petitioner assumed the risk of incurring a loss

on account of a forged or counterfeit foreign check and hence, it should suffer the resulting damage.

Estrada vs Desierto

(GR No 159160, Dec 9, 2001)

FACTS:

In this case, the petitioners foreign currency deposits with Citibank are placed in a constructive restraint by the BIR. Petitoners claim that the restraint is

in violation of the FCDA.

ISSUE:

W/N the reliance of public respondent on such law is grave abuse of discretion on petitioner's part.

HELD:

The SC held that it is not sound practice to depart from the policy of non-interference in the Ombudsman’s exercise of discretion to determine whether or

not to le information against an accused. But it was also quick to add that a declaration by the Court that the public respondents did not gravely abusefi

their discretion in issuing the resolutions dismissing petitioner's complaint does not necessarily translate to a declaration of assent in the findings of fact

and conclusions of law contained therein. With respect specifically to the resolution for violation of Section 8 of Rep. Act. No. 6426, public respondents

relied on the "whereas" clause of P.D. No. 1246 which amended Rep. Act No. 6426 and on the Salvacion case to conclude that only non-residents who

are not engaged in trade and business are under the mantle of protection of Section 8 of Rep. Act. No. 6426. Assuming that such reliance is erroneous

as contended by petitioner, the Court, on petition for certiorari, cannot correct the sameas the error is not of a degree that would amount to a clear case

of abuse of discretion of the grave and malevolent kind. It is axiomatic that not every erroneous conclusion of law or fact is abuse of discretion.As

adverted to earlier, the Court will interfere in the Ombudsman's findings of fact and conclusions of law only in clear cases of grave abuse of discretion.

BPI Family Savings Bank vs First Metro Investment

(GR No 132390, May 21, 2004, Sandoval-Gutierrez)

Facts:

On August 25, 1989, FMIC, through its Executive Vice President Antonio Ong, opened current account number and deposited METROBANK a check of

P100 million with BPI Family Bank San Francisco del Monte Branch. Ong made the deposit upon request of his friend, Ador de Asis, a close

acquaintance of Jaime Sebastian, then Branch Manager of BPI FB San Francisco del Monte Branch. Sebastian’s aim was to increase the deposit level

in his Branch.

BPI FB, through Sebastian, guaranteed the payment of P14,667,687.01 representing 17% per annum interest of P100 million deposited by FMIC. The

latter, in turn, assured BPI FB that it will maintain its deposit of P100 million for a period of one year on condition that the interest of 17% per annum is

paid in advance. This agreement between the parties was reached through their communications in writing.

Subsequently, BPI FB paid FMIC 17% interest or P14,667,687.01 upon clearance of the latter’s check deposit. However on the basis of an Authority to

Debit signed by Ong and Ma. Theresa David, Senior Manager of FMIC, BPI FB transferred P80 million from FMIC’s current account to the savings

account of Tevesteco.

FMIC denied having authorized the transfer of its funds to Tevesteco, claiming that the signatures of Ong and David were falsified. Thereupon, to

recover immediately its deposit, FMIC issued BPI FB a check for P86,057,646.72 payable to itself and drawn on its deposit with BPI FB SFDM branch.

But upon presentation for payment on September 13, 1989, BPI FB dishonored the check as it was "drawn against insufficient funds" (DAIF).

Issues:

Whether or not the deposit in question may be treated as demand deposit or time deposit. If it is to be considered a demand deposit, is it legally

proscribed from earning interest?

Held:

The deposit in question is a time deposit because the deposit of Php 100 million is not withdrawable for one year provided that an advance interest of

17% is paid. Ordinarily, a time deposit is defined as one where the payment of which cannot be legally required within a specified number of days. In

contrast, a demand deposit is one where the liability of the bank is denominated in Philippine currency subject to payment in legal tender upon

presentation of the depositor’s check. This is quite obvious from the communications between Jaime Sebastian, petitioner’s Branch Manager, and

Antonio Ong, respondent’s Executive Vice President. Both agreed that the deposit of P100 million was non-withdrawable for one year upon payment in

advance of the 17% per annum interest.

In addition, demand deposits are not legally proscribed from earning interest. Under CB Circular No. 22, series of 1994, demand deposits shall not be

subject to any rate ceiling. This, according to the SC is an open authority to pay interest even on demand deposit and with more reason because interest

is not even subject to any ceiling.

Petition is denied and the CA decision is affirmed.