Gullas v.

PNB, 62 Phil 519 (1935)

Facts:

Petitioner Gullas maintains a current account with herein respondent PNB. He together with one Pedro Lopez signed as
endorsers of a Warrant issued by the US Veterans Bureau payable to the order of one Francisco Bacos. PNB cashed the check
but was subsequently dishonored by the Insular Treasurer. PNB then sent notices to petitioner which could not be delivered
to him at the time because he was in Manila. PNB in the letter informed the petitioner the outstanding balance on his account
was applied to the part payment of the dishonored check. Upon petitioner’s return, he received the notice of dishonor and
immediately paid the unpaid balance of the warrant. As a consequence of these, petitioner was inconvenienced when his
insurance was not paid due to lack of funds and was publicized widely at his area to his mortification.

Issue:

Whether or not PNB has the right to apply petitioner’s deposit to his debt to the bank.

Ruling: NO.

As a general rule, a bank has a right of set off of the deposits in its hands for the payment of any indebtedness to it on the part
of a depositor. The Civil Code contains provisions regarding compensation (set off) and deposit. The portions of Philippine
law provide that compensation shall take place when two persons are reciprocally creditor and debtor of each other. In this
connection, it has been held that the relation existing between a depositor and a bank is that of creditor and debtor. [General
Rule]

Starting, therefore, from the premise that the Philippine National Bank had with respect to the deposit of Gullas a right of set
off, we next consider if that remedy was enforced properly. The fact we believe is undeniable that prior to the mailing of
notice of dishonor, and without waiting for any action by Gullas, the bank made use of the money standing in his account to
make good for the treasury warrant.

Gullas was merely an indorser and had issued in good faith. As to an indorser, the situation is different and notice should
actually have been given him in order that he might protect his interests. We accordingly are of the opinion that the action of
the bank was prejudicial to Gullas.

People v. Puig, 563 SCRA 564 (2008)

Facts

A case of Qualified Theft was filed against the respondents. This was filed by the Iloilo provincial prosecutor, for the private
complainant, Rural Bank of Potoan. It was alleged in the complaint that Puig was the cashier & Porras was the Bookkeeper in
the said bank, and that they took away money amounting to 15k without the consent of the bank owner, to the prejudice of
the bank. However, the RTC dismissed the complaint for insufficiency of the information ruling that the real parties in
interest are the depositors-clients and not the bank because the bank does not acquire ownership of the money deposited in it.
It also denied the MR.

Issue: WON the bank was the owner and thus, the real party in interest?

Held & Rationale

Yes. Under Art 1980 of the CC, "fixed, savings, and current deposits of money in banks shall be governed by the provisions
concerning simple loans." And, Art 1953 provides that "a person who receives a loan of money acquires the ownership
thereof, and is bound to pay to the creditor an equal amount of the same kind and quality." Thus, it posits that the depositors
who place their money with the bank are considered creditors of the bank. The bank acquires ownership of the money
deposited by its clients, making the money taken by respondents as belonging to the bank. Allegations in the Information that
such employees acted with grave abuse of confidence, to the damage and prejudice of the Bank, without particularly referring
to it as owner of the money deposits, as sufficient to make out a case of Qualified Theft.
Guingona v. City Fiscal, 128 SCRA 577 (1984)

Facts:From March 1979 to March 1981, Clement David made several investments with the National Savings and Loan
Association. On March 21, 1981, the bank was placed under receivership by the Bangko Sentral. Upon David’s request,
petitioners Guingona and Martin issued a joint promissory note, absorbing the obligations of the bank. On July 17, 1981, they
divided the indebtedness. David filed a complaint for estafa and violation of Central Bank Circular No. 364 and related
regulations regarding foreign exchange transactions before the Office of the City Fiscal of Manila. Petitioners filed the herein
petition for prohibition and injunction with a prayer for immediate issuance of restraining order and/or writ of preliminary
injunction to enjoin the public respondents to proceed with the preliminary investigation on the ground that the petitioners’
obligation is civil in nature.

Issue:(1) Whether the contract between NSLA and David is a contract of depositor a contract of loan, which answer
determines whether the City Fiscal has the jurisdiction to file a case for estafa

(2) Whether there was a violation of Central Bank Circular No. 364

Held:(1) When private respondent David invested his money on nine. and savings deposits with the aforesaid bank, the
contract that was perfected was a contract of simple loan or mutuum and not a contract of deposit. Hence, the relationship
between the private respondent and the Nation Savings and Loan Association is that of creditor and debtor; consequently, the
ownership of the amount deposited was transmitted to the Bank upon the perfection of the contract and it can make use of the
amount deposited for its banking operations, such as to pay interests on deposits and to pay withdrawals. While the Bank has
the obligation to return the amount deposited, it has, however, no obligation to return or deliver the same money that was
deposited. And, the failure of the Bank to return the amount deposited will not constitute estafa through misappropriation
punishable under Article 315, par. l(b) of the Revised Penal Code, but it will only give rise to civil liability over which the
public respondents have no jurisdiction.

But even granting that the failure of the bank to pay the time and savings deposits of private respondent David would
constitute a violation of paragraph 1(b) of Article 315 of the Revised Penal Code, nevertheless any incipient criminal liability
was deemed avoided, because when the aforesaid bank was placed under receivership by the Central Bank, petitioners
Guingona and Martin assumed the obligation of the bank to private respondent David, thereby resulting in the novation of the
original contractual obligation arising from deposit into a contract of loan and converting the original trust relation between
the bank and private respondent David into an ordinary debtor-creditor relation between the petitioners and private
respondent. Consequently, the failure of the bank or petitioners Guingona and Martin to pay the deposits of private
respondent would not constitute a breach of trust but would merely be a failure to pay the obligation as a debtor. Moreover,
while it is true that novation does not extinguish criminal liability, it may however, prevent the rise of criminal liability as
long as it occurs prior to the filing of the criminal information in court. In the case at bar, there is no dispute that petitioners
Guingona and Martin executed a promissory note on June 17, 1981 assuming the obligation of the bank to private respondent
David; while the criminal complaint for estafa was filed on December 23, 1981 with the Office of the City Fiscal. Hence, it is
clear that novation occurred long before the filing of the criminal complaint with the Office of the City Fiscal. Consequently,
as aforestated, any incipient criminal liability would be avoided but there will still be a civil liability on the part of petitioners
Guingona and Martin to pay the assumed obligation.

(2) Petitioner Guingona merely accommodated the request of the Nation Savings and loan Association in order to clear the
bank draft through his dollar account because the bank did not have a dollar account. Immediately after the bank draft was
cleared, petitioner Guingona authorized Nation Savings and Loan Association to withdraw the same in order to be utilized by
the bank for its operations. It is safe to assume that the U.S. dollars were converted first into Philippine pesos before they
were accepted and deposited in Nation Savings and Loan Association, because the bank is presumed to have followed the
ordinary course of the business which is to accept deposits in Philippine currency only, and that the transaction was regular
and fair, in the absence of a clear and convincing evidence to the contrary.

In conclusion, considering that the liability of the petitioners is purely civil in nature and that there is no clear showing that
they engaged in foreign exchange transactions, We hold that the public respondents acted without jurisdiction when they
investigated the charges against the petitioners. Consequently, public respondents should be restrained from further
proceeding with the criminal case for to allow the case to continue, even if the petitioners could have appealed to the Ministry
of Justice, would work great injustice to petitioners and would render meaningless the proper administration of justice.
BPI Family v. Franco, G.R. No. 123498, 11/23/2007

Facts: Franco opened 3 accounts with BPI with the total amount of P2,000,000.00. The said amount used to open these
accounts is traceable to a check issued by Tevesteco. The funding for the P2,000,000.00 check was part of the
P80,000,000.00 debited by BPI from FMIC’s account (with a deposit of P100,000,000.00) and credited to Tevesteco’s
account pursuant to an Authority to Debit which was allegedly forged as claimed by FMIC.

Tevesteco effected several withdrawals already from its account amounting to P37,455,410.54 including the P2,000,000.00
paid to Franco. Franco issued two checks which were dishonoured upon presentment for payment due to garnishment of his
account filed by BPI. BPI claimed that it had a better right to the amounts which consisted of part of the money allegedly
fraudulently withdrawn from it by Tevesteco and ending up in Franco’s account. BPI urges us that the legal consequence of
FMIC’s forgery claim is that the money transferred by BPI to Tevesteco is its own, and considering that it was able to
recover possession of the same when the money was redeposited by Franco, it had the right to set up its ownership thereon
and freeze Franco’s accounts.

Issue: WON the bank has a better right to the deposits in Franco’s account.

Held: No. Significantly, while Article 559 permits an owner who has lost or has been unlawfully deprived of a movable to
recover the exact same thing from the current possessor, BPI simply claims ownership of the equivalent amount of money,
i.e., the value thereof, which it had mistakenly debited from FMIC’s account and credited to Tevesteco’s, and subsequently
traced to Franco’s account. Money bears no earmarks of peculiar ownership, and this characteristic is all the more manifest in
the instant case which involves money in a banking transaction gone awry. Its primary function is to pass from hand to hand
as a medium of exchange, without other evidence of its title. Money, which had been passed through various transactions in
the general course of banking business, even if of traceable origin, is no exception.

Vitug v. CA, G.R. No. 82027, 3/29/1990

Spouses Dolores and Romarico Vitug entered into a survivorship agreement with the Bank of American National Trust and
Savings Association. The said agreement contained the following stipulations:

(1) All money deposited and to be deposited with the Bank in their joint savings current account shall be both their property
and shall be payable to and collectible or withdrawable by either or any of them during their lifetime; and
(2) After the death of one of them, the same shall belong to and be the sole property of the surviving spouse and payable to
and collectible or withdrawable by such survivor
Dolores died naming Rowena Corona in her wills as executrix. Romarico later filed a motion asking authority to sell certain
shares of stock and real property belonging to the estate to cover his advances to the estate which he claimed were personal
funds withdrawn from their savings account. Rowena opposed on the ground that the samefunds withdrawn from the
savings account were conjugal partnership properties and part of the estate. Hence, there should be no reimbursement. On the
other hand, Romarico insists that the same are his exclusive property acquired through the survivorship agreement.

ISSUE: Whether or not the funds of the savings account subject of the survivorship agreement were conjugal partnership
properties and part of the estate

No. The Court ruled that a Survivorship Agreement is neither a donation mortis causanor a donation inter vivos. It is in the
nature of an aleatory contract whereby one or both of the parties reciprocally bind themselves to give or to do something in
consideration of what the other shall give or do upon the happening of an event which is to occur at an indeterminate time or
is uncertain, such as death. The Court further ruled that a survivorship agreement is per se not contrary to law and thus is
valid unless its operation or effect may be violative of a law such as in the following instances: (1) it is used as a mere cloak
to hide an inofficious donation; (2) it is used to transfer property in fraud of creditors; or (3) it is used to defeat the legitime of
a compulsory heir. In the instant case, none of the foregoing instances were present. Consequently, the Court upheld the
validity of the survivorship agreement entered into by the spouses Vitug. As such, Romarico, being the surviving spouse,
acquired a vested right over the amounts under the savings account, which became his exclusive property upon the death of
his wife pursuant to the survivorship agreement. Thus, the funds of the savings account are not conjugal partnership
properties and not part of the estate of the deceased Dolores.
BPI v. IAC, 206 SCRA 408 (1992)

Facts: When the respondent spouses opened their joint current account, the “new accounts” teller of the bank by mistake,
placed the old existing separate personal account number of Arthur Canlas on the deposit slip for the new joint checking
account of the spouses so that the initial deposit for the joint checking account was miscredited to Arthur’s personal account .

Because of this, one of the checks issued by one of the spouse was dishonoured for insufficient funds prompting private
respondents to file a complaint for damages against petitioner bank. Petitioner bank argues that it is not considered negligent
and liable for damages on account of the inadvertence of its bank employee considered that it was an honest mistake and not
tainted with malice and bad faith.

Issue: WON the petitioner bank was guilty of gross negligence in the handling of private respondents’ bank account.

Held: There is no merit in petitioner’s argument that it should not be considered negligent, much less held liable for damages
on account of the inadvertence of its bank employee for Article 1173 of the Civil Code only requires it to exercise the
diligence of a good father of a family.

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 (Simex vs
CA, 183 SCRA 360).

Go v. IAC 197 SCRA 22 (1991)

FERNAN, C.J.:

The instant petition for review on certiorari questions the propriety of the respondent appellate court's award of nominal
damages and attorney's fees to private respondent whose name was used by a syndicate in encashing two U.S. treasury
checks at petitioner bank.

Floverto Jazmin is an American citizen and retired employee of the United States Federal Government. He had been a visitor
in the Philippines since 1972 residing at 34 Maravilla Street, Mangatarem, Pangasinan. As pensionado of the U.S.
government, he received annuity checks in the amounts of $ 67.00 for disability and $ 620.00 for retirement through the
Mangatarem post office. He used to encash the checks at the Prudential Bank branch at Clark Air Base, Pampanga.

In January, 1975, Jazmin failed to receive one of the checks on time thus prompting him to inquire from the post offices at
Mangatarem and Dagupan City. As the result of his inquiries proved unsatisfactory, on March 4, 1975, Jazmin wrote the U.S.
Civil Service Commission, Bureau of Retirement at Washington, D.C. complaining about the delay in receiving his check.
Thereafter, he received a substitute check which he encashed at the Prudential Bank at Clark Air Base.

Meanwhile, on April 22, 1975, Agustin Go, in his capacity as branch manager of the then Solidbank (which later became the
Consolidated Bank and Trust Corporation) in Baguio City, allowed a person named "Floverto Jazmin" to open Savings
Account No. BG 5206 by depositing two (2) U. S. treasury checks Nos. 5-449-076 and 5-448-890 in the respective amounts
of $1810.00 and $913.401 equivalent to the total amount of P 20,565.69, both payable to the order of Floverto Jasmin
of Maranilla St., Mangatarem, Pangasinan and drawn on the First National City Bank, Manila.

The savings account was opened in the ordinary course of business. Thus, the bank, through its manager Go, required the
depositor to fill up the information sheet for new accounts to reflect his personal circumstances. The depositor indicated
therein that he was Floverto Jazmin with mailing address at Mangatarem, Pangasinan and home address at Maravilla St.,
Mangatarem, Pangasinan; that he was a Filipino citizen and a security officer of the US Army with the rank of a sergeant
bearing AFUS Car No. H-2711659; that he was married to Milagros Bautista; and that his initial deposit was P3,565.35. He
wrote CSA No. 138134 under remarks or instructions and left blank the spaces under telephone number, residence
certificate/alien certificate of registration/passport, bank and trade performance and as to who introduced him to the
bank.2 The depositor's signature specimens were also taken.
Thereafter, the deposited checks were sent to the drawee bank for clearance. Inasmuch as Solidbank did not receive any word
from the drawee bank, after three (3) weeks, it allowed the depositor to withdraw the amount indicated in the checks.

On June 29, 1976 or more than a year later, the two dollar cheeks were returned to Solidbank with the notation that the
amounts were altered.3 Consequently, Go reported the matter to the Philippine Constabulary in Baguio City.

On August 3, 1976, Jazmin received radio messages requiring him to appear before the Philippine Constabulary headquarters
in Benguet on September 7, 1976 for investigation regarding the complaint filed by Go against him for estafa by passing
altered dollar checks. Initially, Jazmin was investigated by constabulary officers in Lingayen, Pangasinan and later, at Camp
Holmes, La Trinidad, Benguet. He was shown xerox copies of U.S. Government checks Nos. 5-449-076 and 5-448-890
payable to the order of Floverto Jasmin in the respective amounts of $1,810.00 and $913.40. The latter amount was actually
for only $13.40; while the records do not show the unaltered amount of the other treasury check.

Jazmin denied that he was the person whose name appeared on the checks; that he received the same and that the signature on
the indorsement was his. He likewise denied that he opened an account with Solidbank or that he deposited and encashed
therein the said checks. Eventually, the investigators found that the person named "Floverto Jazmin" who made the deposit
and withdrawal with Solidbank was an impostor.

On September 24, 1976, Jazmin filed with the then Court of First Instance of Pangasinan, Branch II at Lingayen a complaint
against Agustin Y. Go and the Consolidated Bank and Trust Corporation for moral and exemplary damages in the total
amount of P90,000 plus attorney's fees of P5,000. He alleged therein that Go allowed the deposit of the dollar checks and the
withdrawal of their peso equivalent "without ascertaining the identity of the depositor considering the highly suspicious
circumstances under which said deposit was made; that instead of taking steps to establish the correct identity of the
depositor, Go "immediately and recklessly filed (the) complaint for estafa through alteration of dollar check" against him;
that Go's complaint was "an act of vicious and wanton recklessness and clearly intended for no other purpose than to harass
and coerce the plaintiff into paying the peso equivalent of said dollar checks to the CBTC branch office in Baguio City" so
that Go would not be "disciplined by his employer;" that by reason of said complaint, he was "compelled to present and
submit himself" to investigations by the constabulary authorities; and that he suffered humiliation and embarrassment as a
result of the filing of the complaint against him as well as "great inconvenience" on account of his age (he was a
septuagenarian) and the distance between his residence and the constabulary headquarters. He averred that his peace of mind
and mental and emotional tranquility as a respected citizen of the community would not have suffered had Go exercised "a
little prudence" in ascertaining the identity of the depositor and, for the "grossly negligent and reckless act" of its employee,
the defendant CBTC should also be held responsible.4

In their answer, the defendants contended that the plaintiff had no cause of action against them because they acted in good
faith in seeking the "investigative assistance" of the Philippine Constabulary on the swindling operations against banks by a
syndicate which specialized in the theft, alteration and encashment of dollar checks. They contended that contrary to plaintiff
s allegations, they verified the signature of the depositor and their tellers conducted an Identity check. As counterclaim, they
prayed for the award of P100,000 as compensatory and moral damages; P20,000 as exemplary damages; P20,000 as
attorney's fees and P5,000 as litigation, incidental expenses and costs.5

In its decision of March 27, 19786 the lower court found that Go was negligent in failing to exercise "more care, caution and
vigilance" in accepting the checks for deposit and encashment. It noted that the checks were payable to the order of
Floverto Jasmin, Maranilla St., Mangatarem, Pangasinan and not to Floverto Jazmin, Maravilla St., Mangatarem, Pangasinan
and that the differences in name and address should have put Go on guard. It held that more care should have been exercised
by Go in the encashment of the U.S. treasury checks as there was no time limit for returning them for clearing unlike in
ordinary checks wherein a two to three-week limit is allowed.

Emphasizing that the main thrust of the complaint was "the failure of the defendants to take steps to ascertain the identity of
the depositor," the court noted that the depositor was allegedly a security officer while the plaintiff was a retiree-pensioner. It
considered as "reckless" the defendants' filing of the complaint with the Philippine Constabulary noting that since the article
on a fake dollar check ring appeared on July 18, 1976 in the Baguio Midland Courier, it was only on August 24, 1976 or
more than a month after the bank had learned of the altered checks that it filed the complaint and therefore, it had sufficient
time to ascertain the identity of the depositor.
The court also noted that instead of complying with the Central Bank Circular Letter of January 17, 1973 requesting all
banking institutions to report to the Central Bank all crimes involving their property within 48 hours from knowledge of the
crime, the bank reported the matter to the Philippine Constabulary.

Finding that the plaintiff had sufficiently shown that prejudice had been caused to him in the form of mental anguish, moral
shock and social humiliation on account of the defendants' gross negligence, the court, invoking Articles 2176, 2217 and
2219 (10) in conjunction with Article 21 of the Civil Code, ruled in favor of the plaintiff. The dispositive portion of the
decision states:

WHEREFORE, this Court finds for plaintiff and that he is entitled to the reliefs prayed for in the following manner:
Defendant Agustin Y. Co and the CONSOLIDATED BANK AND TRUST CORPORATION are hereby ordered to pay,
jointly and severally, to the plaintiff the amount of SIX THOUSAND PESOS (P6,000.00) as moral damages; ONE
THOUSAND PESOS (P1,000.00) as attorney's fees and costs of litigation and to pay the costs and defendant AGUSTIN Y.
Go in addition thereto in his sole and personal capacity to pay the plaintiff the amount of THREE THOUSAND PESOS
(P3,000.00) as exemplary damages, all with interest at six (6) percent per annum until fully paid.

SO ORDERED.

The defendants appealed to the Court of Appeals. On January 24, 1984, said court (then named Intermediate Appellate Court)
rendered a decision7 finding as evident negligence Go's failure to notice the substantial difference in the identity of the
depositor and the payee in the check, concluded that Go's negligence in the performance of his duties was "the proximate
cause why appellant bank was swindled" and that denouncing the crime to the constabulary authorities "merely aggravated
the situation." It ruled that there was a cause of action against the defendants although Jazmin had nothing to do with the
alteration of the checks, because he suffered damages due to the negligence of Go. Hence, under Article 2180 of the Civil
Code, the bank shall be held liable for its manager's negligence.

The appellate court, however, disallowed the award of moral and exemplary damages and granted nominal damages instead.
It explained thus:

While it is true that denouncing a crime is not negligence under which a claim for moral damages is available, still appellants
are liable under the law for nominal damages. The fact that appellee did not suffer from any loss is of no moment for nominal
damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, maybe
vindicated or recognized and not for the purpose of indemnifying the plaintiff for any loss suffered by him (Article 2221,
New Civil Code). These are damages recoverable where a legal right is technically violated and must be vindicated against an
invasion that has produced no actual present loss of any kind, or where there has been a breach of contract and no substantial
injury or actual damages whatsoever have been or can be shown (Elgara vs. Sandijas, 27 Phil. 284). They are not intended for
indemnification of loss suffered but for the vindication or recognition of a right violated or invaded (Ventanilla vs. Centeno,
L-14333, January 28, 1961). And, where the plaintiff as in the case at bar, the herein appellee has established a cause of
action, but was not able to adduce evidence showing actual damages then nominal damages may be recovered (Sia vs.
Espenilla CA-G.R. Nos. 45200-45201-R, April 21, 1975). Consequently, since appellee has no right to claim for moral
damages, then he may not likewise be entitled to exemplary damages (Estopa vs. Piansay, No. L-14503, September 30,
1960). Considering that he had to defend himself in the criminal charges filed against him, and that he was constrained to file
the instant case, the attorney's fees to be amended (sic) to plaintiff should be increased to P3,000.00.

Accordingly, the appellate court ordered Go and Consolidated Bank and Trust Corporation to pay jointly and severally
Floverto Jazmin only NOMINAL DAMAGES in the sum of Three Thousand Pesos (P 3,000.00) with interest at six (6%)
percent per annum until fully paid and One Thousand Pesos (P 1,000.00) as attorney's fees and costs of litigation.

Go and the bank filed a motion for the reconsideration of said decision contending that in view of the finding of the appellate
court that "denouncing a crime is not negligence under which a claim for moral damages is available," the award of nominal
damages is unjustified as they did not violate or invade Jazmin's rights. Corollarily, there being no negligence on the part of
Go, his employer may not be held liable for nominal damages.

The motion for reconsideration having been denied, Go and the bank interposed the instant petition for review
on certiorari arguing primarily that the employer bank may not be held "co-equally liable" to pay nominal damages in the
absence of proof that it was negligent in the selection of and supervision over its employee. 8
The facts of this case reveal that damages in the form of mental anguish, moral shock and social humiliation were suffered by
private respondent only after the filing of the petitioners' complaint with the Philippine Constabulary. It was only then that he
had to bear the inconvenience of travelling to Benguet and Lingayen for the investigations as it was only then that he was
subjected to embarrassment for being a suspect in the unauthorized alteration of the treasury checks. Hence, it is
understandable why petitioners appear to have overlooked the facts antecedent to the filing of the complaint to the
constabulary authorities and to have put undue emphasis on the appellate court's statement that "denouncing a crime is not
negligence."

Although this Court has consistently held that there should be no penalty on the right to litigate and that error alone in the
filing of a case be it before the courts or the proper police authorities, is not a ground for moral damages,9 we hold that under
the peculiar circumstances of this case, private respondent is entitled to an award of damages.

Indeed, it would be unjust to overlook the fact that petitioners' negligence was the root of all the inconvenience and
embarrassment experienced by the private respondent albeit they happened after the filing of the complaint with the
constabulary authorities. Petitioner Go's negligence in fact led to the swindling of his employer. Had Go exercised the
diligence expected of him as a bank officer and employee, he would have noticed the glaring disparity between the payee's
name and address on the treasury checks involved and the name and address of the depositor appearing in the bank's records.
The situation would have been different if the treasury checks were tampered with only as to their amounts because the
alteration would have been unnoticeable and hard to detect as the herein altered check bearing the amount of $ 913.40 shows.
But the error in the name and address of the payee was very patent and could not have escaped the trained eyes of bank
officers and employees. There is therefore, no other conclusion than that the bank through its employees (including the tellers
who allegedly conducted an identification check on the depositor) was grossly negligent in handling the business transaction
herein involved.1âwphi1

While at that stage of events private respondent was still out of the picture, it definitely was the start of his consequent
involvement as his name was illegally used in the illicit transaction. Again, knowing that its viability depended on the
confidence reposed upon it by the public, the bank through its employees should have exercised the caution expected of it.

In crimes and quasi-delicts, the defendant shall be liable for all damages which are the natural and probable consequences of
the act or omission complained of. It is not necessary that such damages have been foreseen or could have reasonably been
foreseen by the defendant.10 As Go's negligence was the root cause of the complained inconvenience, humiliation and
embarrassment, Go is liable to private respondents for damages.

Anent petitioner bank's claim that it is not "co-equally liable" with Go for damages, under the fifth paragraph of Article 2180
of the Civil Code, "(E)mployers shall be liable for the damages caused by their employees . . . acting within the scope of their
assigned tasks." Pursuant to this provision, the bank is responsible for the acts of its employee unless there is proof that it
exercised the diligence of a good father of a family to prevent the damage. 11Hence, the burden of proof lies upon the bank
and it cannot now disclaim liability in view of its own failure to prove not only that it exercised due diligence to prevent
damage but that it was not negligent in the selection and supervision of its employees.

WHEREFORE, the decision of the respondent appellate court is hereby affirmed. Costs against the petitioners.

SO ORDERED.
Firestone v. CA, G.R. No. 113236, 3/5/2001

FACTS: Fojas Arca and Firestone Tire entered into a franchising agreement wherein the former had the privilege to purchase
on credit the latter’s products. In paying for these products, the former could pay through special withdrawal slips. In turn,
Firestone would deposit these slips with Citibank. Citibank would then honor and pay the slips. Citibank automatically
credits the account of Firestone then merely waited for the same to be honored and paid by Luzon Development
Bank. As this was the circumstances, Firestone believed in the sufficient funding of the slips until there was a
time that Citibank informed it that one of the slips was dishonored. It wrote then a demand letter to Fojas Arca
for the payment and damages but the latter refused to pay, prompting Firestone to file an action against it.

HELD: The withdrawal slips, at the outset, are non-negotiable. Hence, the rule on immediate notice of dishonor is non-
applicable to the case at hand. Thus, the bank was under no obligation to give immediate notice that it wouldn't make
payment on the subject withdrawal slips. Citibank should have known that withdrawal slips are not negotiable
instruments. It couldn't expect then the slips be treated like checks by other entities. Payment or notice of dishonor from
respondent bank couldn't be expected immediately in contrast to the situation involving checks.

In the case at bar, Citibank relied on the fact that LDB honored and paid the withdrawal slips which made it automatically
credit the account of Firestone with the amount of the subject withdrawal slips then merely waited for LDB to honor
and pay the same. It bears stressing though that Citibank couldn't have missed the non-negotiable character of the slips.
The essence of negotiability which characterizes a negotiable paper as a credit instrument lies in its freedom to be
a substitute for money. The withdrawal slips in question lacked this character.

The withdrawal slips deposited were not checks as Firestone admits and Citibank generally was not bound to accept the
withdrawal slips as a valid mode of deposit. Nonetheless, Citibank erroneously accepted the same as such and thus, must
bear the risks attendant to the acceptance of the instruments. Firestone and Citibank could not now shift the risk to LDB
for their committed mistake.

PBCom v. CA, 269 SCRA 695 (1997)

FACTS: Rommel’s Marketing Corporation (RMC) maintained two separate current accounts with PBC in connection with
its business of selling appliances. The RMC General Manager Lipana entrusted to his secretary, Irene Yabut, RMC funds
amounting to P300,000+ for the purpose of depositing the same to RMC’s account with PBC. However, it turned out that
Yabut deposited the amounts in her husband’s account instead of RMC. Lipana never checked his monthly statement of
accounts regularly furnished by PBC so that Yabut’s modus operandi went on for the span of more than one year.
ISSUE: What is the proximate cause of the loss – Lipana’s negligence in not checking his monthly statements or the bank’s
negligence through its teller in validating the deposit slips?

HELD: The bank teller was negligent in validating, officially stamping and signing all the deposit slips prepared and
presented by Yabut, despite the glaring fact that the duplicate copy was not completely accomplished contrary to the self-
imposed procedure of the bank with respect to the proper validation of deposit slips, original or duplicate.

The bank teller’s negligence, as well as the negligence of the bank in the selection and supervision of its bank teller, is the
proximate cause of the loss suffered by the private respondent, not the latter’s entrusting cash to a dishonest employee. Xxx
Even if Yabut had the fraudulent intention to misappropriate the funds, she would not have been able to deposit those funds
in her husband’s current account, and then make plaintiff believe that it was in the latter’s accounts wherein she had
deposited them, had it not been for the bank teller’s aforesaid gross and reckless negligence.

Doctrine of Last Clear Chance – where both parties are negligent, but the negligent act of one is appreciably later in time
than that of the other, or when it is impossible to determine whose fault or negligence should be attributed to the incident, the
one who had the last clear opportunity to avoid the impending harm and failed to do so is chargeable with the consequences
thereof. It means that the antecedent negligence of a person does not preclude the recovery of damages for the supervening
negligence of, or bar a defense against liability sought by another, if the latter, who had the last fair chance, could have
avoided the impending harm by exercise of due diligence. (Phil. Bank of Commerce v. CA, supra)