BANK OF THE PHILIPPINE ISLANDS, petitionerVs.

LIFETIME MARKETING CORPORATION, respondentGR# 176434 FACTS: On October 22, 1981, Lifetime Marketing Corporation (LMC) opened a current account withthe Bank of the Philippine Islands (BPI), Greenhills-EDSA said account BPI andLMC made a special agreement that LMC agents will accomplish three (3) copies of the deposit slips,the third copy to be retained and be held by the teller until LMC authorized representatives shallretrieve them on the following banking days. Since LMC have several agents around the Philippines, sometime in 1986, LMC availed of theBPIs inter-branch banking network services in Manila, where the LMC agents could make deposits toany BPI branch in Metro Manila under the same account. Under this system, BPI bank tellers wereno longer obliged to retain the extra copy of the deposit slips and BPI would send LMC a monthlybank statement relating to the gents to present a validated deposit slip andon that basis, LMC would issue to the latter and acknowledgement receipt.The complaint for Damages against BPI 2,675,594.00in favor of LMC account at different branches of BPI where thirteen (13) of which bore no machinevalidation. Upon verification with BPI by LMC showed that LMC sales agent made the 13 checkdeposits and requested to reverse the transaction after it was machine validated upon verbalrequest of the sales agent even after the deposit slips were already received by BPI tellers.The Regional Trial Court ordered defendant bank to pay plaintiff actual damages of 1,000,000.00 plus attorneys fees amounting to 100,000.00 and upon appeal before the Court of appeals, the court increased the amount of damages to2,075,695.50 and deleted the amount of 100,000.00 for attorneys fees. ISSUE :Whether or not BPI is liable for Damages for the loss of LMC? RULING: Yes. BPI is liable for damages for the loss of LMC.The cause of action is based on Tort. Under Article 2176 of the Civil act or omission causes damage to another, there being fault or negligence, is obliged to pay for thedamage done. Such fault or negligence if there is no pre-existing contractual relation between theparties is called a quasiquasi-delict are: a) fault ornegligence of the defendant, or dome other person for whose actsmust respond; b) damagessuffered by the plaintiff; and c) the connection of cause and effect between the fault or negligenceof the defendant and the damages incurred by the plaintiff.The reversal of the transaction was unilaterally undertaken by BPIs tellers withoutfollowing normal banking procedures which requires them to ensure that all copies of the depositslips are surrendered by the depositor. The machine-validated transactions do not show that thetransactions have been cancelled; leading LMC to rely on those slips and consider the account hasalready been paid. The fact that were it not for the wanton reckless negligence of BPIs tellers infailing to require the surrender of the machine-validated deposit slips before reversing the deposittransaction, the cause of loss would have not occurred.