SERRANO VS CENTRAL BANK for the purpose of clearing the said check.

for the purpose of clearing the said check. Napiza agreed and so he deposited the check on September
3, 1987. Napiza then delivered a signed blank withdrawal slip to Chan with the condition that the
FACTS $2,500.00 may only be withdrawn if the check cleared. For some reason, the withdrawal slip ended up
in the hands of one Ruben Gayon who went to BPI and successfully withdrew the $2,500.00. At the
Serrano filed a case against Overseas Bank and Central bank so that they may jointly separately liable,
time of the withdrawal, the check was not yet cleared. Then days later, BPI was notified by the drawee
because, the P350K worth of time deposits by Serrano in overseas bank of Manila is not successful
bank named in the check that the check is actually a counterfeit.
when he made a series of encashment, because on the alleged failure of the Overseas Bank of Manila
to return the time deposits made by petitioner and assigned to him, because respondent Central Bank ISSUE: Whether or not Napiza may be held liable to refund the amount of the check.
failed in its duty to exercise strict supervision over respondent Overseas Bank of Manila to protect
depositors and the general public. HELD: No. The Supreme Court ruled that ordinarily, Napiza would have been liable because he is an
accommodation indorser. But due to the attendant circumstances, Napiza is discharged from liability.
ISSUE

Whether the Central Bank is Liable for the case filed?

HELD
No, Bank deposits are in the nature of irregular deposits. They are really loans because they earn
interest. All kinds of bank deposits, whether fixed, savings, or current are to be treated as loans and are
to be covered by the law on loans. Current and savings deposit are loans to a bank because it can use
the same. The petitioner here in making time deposits that earn interests with respondent Overseas
Bank of Manila was in reality a creditor of the respondent Bank and not a depositor. The respondent
Bank was in turn a debtor of petitioner. Failure of the respondent Bank to honor the time deposit is
failure to pay s obligation as a debtor and not a breach of trust arising from depositary’s failure to
return the subject matter of the deposit
The withdrawal slip indicates as well as the rules promulgated by BPI that withdrawal from the bank
should be accompanied by the presentment of the account holder’s (Napiza’s) savings bankbook. This
was not done so in the case at bar because Gayon was able to withdraw without it. Further, BPI
allowed the withdrawal even before the check cleared. BPI already credited the $2,500.00 to Napiza’s
account even without the drawee bank clearing the check. This is contrary to common banking
practices and because of such negligence and lack of diligence, BPI, as the collecting bank, shall suffer
the loss.
Phil. Bank of Commerce v. CA
FACTS:

WHEREFORE, the petition is dismissed for lack of merit, with costs against petitioner.
SO ORDERED.
Bank of Philippine Islands vs Court of Appeals (February 2000)
Facts:
Benjamin Napiza maintains an account with the Bank of the Philippine Islands (BPI). In 1987, Napiza
was approached by Henry Chan and the latter gave him a $2,500 Continental Bank Manager’s check.
Chan asked if Napiza can deposit the check to his (Napiza’s BPI account) by way of accommodation and
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)
Alano vs. Planter’s Development Bank
FACTS
Armando filed a complaint for the nullification of the real estate mortgage insofar as his one-half share
is concerned. Maunlad Savings and Loan Association (now Planter’s Development Bank) argued that it
was a mortgagee in good faith which had no obligation to look beyond the title because there was no
adverse claim annotated thereto and because the mortgagee occupied the mortgaged property.
DOCTRINE
Banks and other financial institutions are required to conduct an ocular inspection of the mortgaged
property and verify the genuineness of the title. Here, Maunlad Savings and Loan Association is not a
mortgagee in good faith as it failed to discover Armando’s apartment at the back portion of the
property.
UNITED COCONUT PLANTERS BANK vs. TEOFIL RAMOSGR NO.
FACTS:
United Coconut Planters Bank (UCPB) granted a loan amounting to Zamboanga Development
Corporation(ZDC) with Venicio Ramos, and the Spouses Teofilo Sr. and Amelita Ramos as sureties.
Teofilo Ramos, Sr. was theExecutive Officer of the Iglesia ni Cristo. UPCB granted an additional loan to
ZDC with the same sureties. However,ZDC failed to pay its account to the petitioner despite demands.
Thus, a complaint was filed against ZDC and thesaid sureties. Judgment was rendered in favor of the
petitioner. A Writ of execution to enforce such decision was issued and Deputy Sheriff Pioquinto P.
Villapana was ordered to levy and attach all the real and personal properties of the defendants to
satisfy the judgment. Eduardo C. Reniva the head of the Litigation and Enforcement Division was
requested to investigate on the properties of the defendants. Reniva went to one of the properties
covered by TCT No. 275167 (PR-13108) and inspected it. Per information gathered from the
neighborhood, Reniva confirmed that the owners of such property were Spouses Teofilo and Rebecca
Ramos. The Sheriff prepared a notice of levy. On the other hand, Ramdustrial Corporation applied for a
loan with UPCB using the property covered by the same TCT as collateral. Upon verification of the said
property, it was found that the same property was subjected to a notice of levy on a civil case. The
respondent was shocked and he alleged that he was not a party in the said case and he was also not
aware that his property had been levied by the sheriff. An affidavit of denial was executed by the
respondent stating that he is not one of the judgment debtors in the previous case and thatTeofilo
Ramos, Sr., one of the judgment debtors, were not one and the same person. The responded also
wrote to the Sheriff alleging that the notice of levy on the property was unlawful considering that the
respondent was not Teofilo Ramos, Sr. and cause the cancellation of the said annotation five days from
notice thereof, otherwise, the respondent would take the appropriate civil, criminal or administrative
action against him. The respondent was informed by the UCPB that Ramdustrial Corporation’s credit
line application
had been approved. Subsequently, the respondent executed a promissory note for the said amount
payable to UCPB. The business did not go well, Ramdustrial Corporation found it difficult to pay the
loan. The company again applied foranother loan with UCPB which was however denied. The
corporation then applied for a loan with the PlantersDevelopment Bank (PDB), the proceeds of which
would be utilized to pay its account to the UCPB. The respondentoffered his property covered by TCT
No. 275167 as collateral with the loan obtained from PDB. It was thendiscovered that the notice of levy
had not yet been cancelled so PDB withheld the release of the loan pending thecancellation of the
notice of levy. An order was issued ordering the Register of Deeds to cancel the levy.
ISSUE:
Whether or not the petitioner acted negligently in causing the annotation of levy on the title of
therespondent
HELD:
The CA ruled that the petitioner was negligent in causing the annotation of notice of levy on the title of
thepetitioner for its failure to determine with certainty whether the defendant Teofilo Ramos, Sr. in
Civil Case No.16453 was the registered owner of the property covered by TCT No. 275167. It was held
that the petitioner actednegligently when it caused the annotation of the notice of levy in TCT No.
275167. It bears stressing that thepetitioner is a banking corporation, a financial institution with power
to issue its promissory notes intended tocirculate as money (known as bank notes); or to receive the
money of others on general deposit, to form a jointfund that shall be used by the institution for its own
benefit, for one or more of the purposes of making temporaryloans and discounts, of dealing in notes,
foreign and domestic bills of exchange, coin bullion, credits, and theremission of money; or with both
these powers, and with the privileges, in addition to these basic powers, of receiving special deposits,
and making collection for the holders of negotiable paper, if the institution sees fit to engage in such
business. In funding these businesses, the bank invests the money that it holds in trust of its
depositors. For this reason, we have held that the business of a bank is one affected with public
interest, for which reason the bank should guard against loss due to negligence or bad faith.
Medel vs Court of Appeals, 299 SCRA 481; GR No. 131622, November 27, 1998, digested
Facts: Defendants obtained a loan from Plaintiff in the amount P50, 000.00, payable in 2 months and
executed a promissory note. Plaintiff gave only the amount of P47, 000.00 to the borrowers and
retained P3, 000.00 as advance interest for 1 month at 6% per month.
Defendants obtained another loan from Defendant in the amount of P90, 000.00, payable in 2 months,
at 6% interest per month. They executed a promissory note to evidence the loan and received only
P84, 000.00 out of the proceeds of the loan.
For the third time, Defendants secured from Plaintiff another loan in the amount of P300, 000.00,
maturing in 1 month, and secured by a real estate mortgage. They executed a promissory note in favor
of the Plaintiff. However, only the sum of P275, 000.00, was given to them out of the proceeds of the
loan.
Upon maturity of the three promissory notes, Defendants failed to pay the indebtedness.
Defendants consolidated all their previous unpaid loans totalling P440, 000.00, and sought from
Plaintiff another loan in the amount of P60, 000.00, bringing their indebtedness to a total of
P50,000.00. They executed another promissory note in favor of Plaintiff to pay the sum of P500, 000.00
with a 5.5% interest per month plus 2% service charge per annum, with an additional amount of 1%
per month as penalty charges.
On maturity of the loan, the Defendants failed to pay the indebtedness which prompt the Plaintiffs to
file with the RTC a complaint for collection of the full amount of the loan including interests and other
charges.
Declaring that the due execution and genuineness of the four promissory notes has been duly proved,
the RTC ruled that although the Usury Law had been repealed, the interest charged on the loans was
unconscionable and “revolting to the conscience” and ordered the payment of the amount of the first
3 loans with a 12% interest per annum and 1% per month as penalty.
On appeal, Plaintiff-appellants argued that the promissory note, which consolidated all the unpaid
loans of the defendants, is the law that governs the parties.
The Court of Appeals ruled in favor of the Plaintiff-appellants on the ground that the Usury Law has
become legally inexistent with the promulgation by the Central Bank in 1982 of Circular No. 905, the
lender and the borrower could agree on any interest that may be charged on the loan, and ordered the
Defendants to pay the Plaintiffs the sum of P500,000, plus 5.5% per month interest and 2& service
charge per annum , and 1% per month as penalty charges.
Defendants filed the present case via petition for review on certiorari.
Issue: WON the stipulated 5.5% interest rate per month on the loan in the sum of P500, 000.00 is
usurious.
Held: No.
A stipulated rate of interest at 5.5% per month on the P500, 000.00 loan is excessive, iniquitous,
unconscionable and exorbitant, but it cannot be considered “usurious” because Central Bank Circular
No. 905 has expressly removed the interest ceilings prescribed by the Usury Law and that the Usury
Law is now “legally inexistent.”
Doctrine: A CB Circular cannot repeal a law. Only a law can repeal another law.
Jurisprudence provides that CB Circular did not repeal nor in a way amend the Usury Law but simply
suspended the latter’s effectivity (Security Bank and Trust Co vs RTC). Usury has been legally non-
existent in our jurisdiction. Interest can now be charged as lender and borrower may agree upon.
Law: Article 2227, Civil Code
The courts shall reduce equitably liquidated damages, whether intended as an indemnity or a penalty if
they are iniquitous or unconscionable.
SPOUSES ZACARIAS BACOLOR and CATHERINE BACOLOR,Petitioners,
- versus -
BANCO FILIPINO SAVINGS AND MORTGAGE BANK, DAGUPAN CITY BRANCH and MARCELINO C.
BONUAN,
Respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended,
assailing the Decision[1] of the Court of Appeals in CA-G.R. CV No. 47732 promulgated on February 23,
2001 and its Resolution dated May 30, 2001.
On February 11, 1982, spouses Zacarias and Catherine Bacolor, herein petitioners, obtained a loan of
P244,000.00 from Banco Filipino Savings and Mortgage Bank, Dagupan City Branch, respondent. They
executed a promissory note providing that the amount shall be payable within a period of ten (10)
years with a monthly amortization of P5,380.00 beginning March 11, 1982 and every 11th day of the
month thereafter; that the interest rate shall be twenty-four percent (24%) per annum, with a penalty
of three percent (3%) on any unpaid monthly amortization; that there shall be a service charge of three
percent (3%) per annum on the loan; and that in case respondent bank seeks the assistance of counsel
to enforce the collection of the loan, petitioners shall be liable for ten percent (10%) of the amount
due as attorneys fees and fifteen percent (15%) of the amount due as liquidated damages.
As security for the loan, petitioners mortgaged with respondent bank their parcel of land located in
Dagupan City, Pangasinan, registered under Transfer Certificate of Title No. 40827.
From March 11, 1982 to July 10, 1991, petitioners paid respondent bank P412, 199.36. Thereafter, they
failed to pay the remaining balance of the loan.
On August 7, 1992, petitioners received from respondent bank a statement of account stating that
their indebtedness as of July 31, 1992 amounts to P840,845.61.
In its letter dated January 13, 1993, respondent bank informed petitioners that should they fail to pay
their loan within fifteen (15) days from notice, appropriate action shall be taken against them.
Due to petitioners failure to settle their obligation, respondent instituted, on March 5, 1993, an action
for extra-judicial foreclosure of mortgage.
Prior thereto, or on February 1, 1993, petitioners filed with Branch 40 of the same RTC, a complaint for
violation of the Usury Law against respondent, docketed as Civil Case No. D-10480. They alleged that
the provisions of the promissory note constitute a usurious transaction considering the (1) rate of
interest, (2) the rate of penalties, service charge, attorneys fees and liquidated damages, and (3)
deductions for surcharges and insurance premium. In their amended complaint, petitioners further
alleged that, during the closure of respondent bank, it ceased to be a banking institution and,
therefore, could not charge interests and institute foreclosure proceeding.
On August 25, 1994, the RTC rendered its decision dismissing petitioners complaint, holding that:
(1) The terms and conditions of the Deed of Mortgage and the Promissory Note are legal and not
usurious.
The plaintiff freely signed the Deed of Mortgage and the Promissory Note with full knowledge of its
terms and conditions.
The interest rate of 24% per annum is not usurious and does not violate the Usury Law (Act 2655) as
amended by P.D. No. 166.
The rate of interest, including commissions, premiums, fees and other charges, on a loan or
forbearance of any money etc., regardless of maturity x x x, shall not be subject to any ceiling under or
pursuant to the Usury Law, as amended (CB Circular no. 905). Hence, the 24% interest per annum is
allowed under P.D. No. 166.
For sometime now, usury has been legally non-existent. Interest can now be as lender and borrower
may agree upon (Verdejo v. CA, Jan. 29, 1988. 157 SCRA 743).
The imposition of penalties in case the obligation is not fulfilled is not prohibited by the Usury Law.
Parties to a contract of loan may validly agree upon the imposition of penalty charges in case of delay
or non-payment of the loan. The purpose is to compel the debtor to pay his debt on time (Go Chioco v.
Martinez, 45 Phil. 256, 265).
(2) The closure of Banco Filipino did not suspend or stop its usual and normal banking operations like
the collection of loan receivables and foreclosures of mortgages.
In view of the foregoing, plaintiffs failed to substantiate their cause of action against the defendant.[2]
On appeal, the Court of Appeals rendered its Decision affirming the Decision of the trial court.
Petitioners subsequent motion for reconsideration was denied.
Hence, this present petition for review on certiorari raising this lone issue: whether the interest rate is
excessive and unconscionable.
It is the petitioners contention that while the Usury Law ceiling on interest rates was lifted by Central
Bank Circular No. 905, there is nothing in the said circular which grants respondent bank carte blanche
authority to raise interest rates to levels which either enslave the borrower or lead to a hemorrhaging
of their assets.[3]
In its comment[4], respondent bank maintained that petitioner, by signing the Deed of Mortgage and
Promissory Note, knowingly and freely consented to its terms and conditions. A contract between the
parties must not be impaired. The interest rate of 24% per annum is not usurious and does not violate
the Usury Law.[5]
The petition lacks merit.
Article 1956 of the Civil Code provides that no interest shall be due unless it has been expressly
stipulated in writing. Here, the parties agreed in writing on February 11, 1982 that the rate of interest
on the petitioners loan shall be 24% per annum.
At the time the parties entered into the loan transaction, the applicable law was the Usury Law (Act
2655), as amended by P.D. No. 166, which provides that the rate of interest for the forbearance of
money when secured by a mortgage upon real estate, should not be more than 6% per annum or the
maximum rate prescribed by the Monetary Board of the Central Bank of the Philippines in force at the
time the loan was granted. Central Bank Circular No. 783, which took effect on July 1, 1981, removed
the ceiling on interest rates on a certain class of loans, thus:
SECTION 2. The interest rate on a loan forbearance of any money, goods, or credits with a maturity of
more than seven hundred thirty (730) days shall not be subject to any ceiling.[6]
In the present case, the term of the subject loan is for a period of 10 years. Considering that its
maturity is more than 730 days, the interest rate is not subject to any ceiling following the above
provision. Therefore, the 24% interest rate agreed upon by parties does not violate the Usury Law, as
amended by P.D. 116.
This Court has consistently held that for sometime now, usury has been legally non-inexistent and that
interest can now be charged as lender and borrower may agree upon.[7] As a matter of fact, Section 1
of Central Bank Circular No. 905 states that:
SECTION 1. The rate of interest, including commissions, premiums, fees and other charges , on a loan
or forbearance of any money, goods, or credits, regardless of maturity and whether secured or
unsecured, that may be charged or collected by any person, whether natural or judicial, shall not be
subject to any ceiling prescribed under or pursuant to the Usury Law, as amended.[8]
Moreover, in Trade & Investment Development Corporation of the Philippines v. Roblett Industrial
Construction Corporation,[9] this Court has ruled that:
With the suspension of the Usury Law and the removal of interest ceiling, the parties are free to
stipulate the interest to be imposed on monetary obligations. Absent any evidence of fraud, undue
influence, or any vice of consent exercised by one party against the other, the interest rate agreed
upon is binding upon them.
There is no indication in the records that any of the incidents which vitiate consent on the part of
petitioners is present. Indeed, the interest rate agreed upon is binding on them. With respect to the
penalty and service charges, the same are unconscionable or excessive.
Petitioners invoke this Courts rulings in Almeda vs. Court of Appeals[10] and Medel vs. Court of
Appeals[11] to show that the interest rate in the subject promissory note is unconscionable. Their
reliance on these cases is misplaced. In Almeda, what this Court struck down as being unconscionable
and excessive was the unilateral increase in the interest rates from 18% to 68%. This Court ruled thus:
It is plainly obvious, therefore, from the undisputed facts of the case that respondent bank unilaterally
altered the terms of its contract by increasing the interest rates of the loan without the prior assent of
the latter. In fact, the manner of agreement is itself explicitly stipulated by the Civil Code when it
provides, in Article 1956, that No interest shall be due unless it has been expressly stipulated in writing.
What has been stipulated in writing from a perusal of the interest rate provision of the credit
agreement signed between the parties is that petitioners were bound merely to pay 21% interest x x x.
Petitioners also cannot find refuge in Medel. In this case, what this Court declared as unconscionable
was the imposition of a 66% interest rate per annum. In the instant case, the interest rate is only 24%
per annum, agreed upon by both parties. By no means can it be considered unconscionable or
excessive.
Verily, petitioners cannot now renege on their obligation to comply with what is incumbent upon them
under the loan agreement. A contract is the law between the parties and they are bound by its
stipulations.[12]
Petitioners further contend that during the closure of respondent bank (from January 1, 1985 to July 1,
1994), it lost its function as a banking institution and, therefore, could no longer charge interests and
institute foreclosure proceedings.
In the case of Banco Filipino Savings & Mortgage Bank vs. Monetary Board, Central Bank of the
Philippines,[13] this Court ruled that the banks closure did not diminish the authority and powers of
the designated liquidator to effectuate and carry on the administration of the bank, thus:
x x x. We did not prohibit however acts such as receiving collectibles and receivables or paying off
creditors claims and other transactions pertaining to the normal operations of a bank. There is no
doubt that that the prosecution of suits for collection and the foreclosure of mortgages against debtors
of the bank by the liquidator are among the usual and ordinary transactions pertaining to the
administration of a bank. x x x.
Likewise, in Banco Filipino Savings and Mortgage Bank vs. Ybaez,[14] where one of the issues was
whether respondent bank can collect interest on its loans during its period of liquidation and closure,
this Court held:
In Banco Filipino Savings and Mortgage Bank v. Monetary Board, the validity of the closure and
receivership of Banco Filipino was put in issue. But the pendency of the case did not diminish the
authority of the designated liquidator to administer and continue the banks transactions. The Court
allowed the bank liquidator to continue receiving collectibles and receivables or paying off creditors
claims and other transactions pertaining to normal operations of a bank. Among these transactions
were the prosecution of suits against debtors for collection and for foreclosure of mortgages. The bank
was allowed to collect interests on its loans while under liquidation, provided that the interests were
legal.
In fine, we hold that the interest rate on the loan agreed upon between the parties is not excessive or
unconscionable; and that during the closure of respondent bank, it could still function as a bonding
institution, hence, could continue collecting interests from petitioners.
WHEREFORE, we DENY the petition and AFFIRM the challenged Decision and Resolution of the Court of
Appeals in CA-G.R. CV No. 47732. Costs against petitioners.
Tolentino v CA (1988)
Private respondent Consuelo David married Arturo Tolentino in 1931. The marriage was dissolved and
terminated in 1943 pursuant to the law during the Japanese occupation by a decree of absolute
divorce on the grounds of desertion and abandonment by the wife for at least 3 continuous years.
Arturo Tolentino then married Pilar Adorable but she died soon after the marriage. After that,
Constancia married Arturo Tolentino on April 21, 1945 and they had 3 children. Constancia Tolentino is
the present legal wife of Arturo Tolentino.
Consuelo David continued using the surname Tolentino after the divorce and up to the time that the
complaint was filed. Her usage of the surname Tolentino was authorized by the family of Arturo
Tolentino (brothers and sisters).
In RTC, Consuelo David should discontinue her usage of the surname of Tolentino. The CA decision
reversed that of the RTC’s.
ISSUES:
1. WON the petitioner’s cause of action has already prescribed
2. WON the petitioner can exclude by injunction Consuelo David from using the surname of her former
husband from whom she was divorced.
HELD:
1. Yes
In Art 1150 CC The time for prescription of all kinds of actions, when there in no special provision which
ordains otherwise, shall be counted from the day they may be brought.
Art 1149 CC Period of prescription is 5 years from the right of action accrues.
The action has long prescribed because she married Arturo Tolentino on April 21, 1945; Civil Code took
effect on August 30, 1950; She acquired knowledge that Consuelo David was still using the surname
Tolentino in 1951.
She should have filed the case after she obtained knowledge that Consuelo David was still using the
surname Tolentino. The case was filed on November 23, 1971 or 20 years after she obtained
knowledge.
2. No
Philippine law is silent whether or not a divorced woman may continue to use the surname of her
husband because there are no provisions for divorce under Philippine law.
On the Commentary of Tolentino as regards Art 370 of the CC. The wife cannot claim an exclusive right
to use the husband’s surname. She cannot be prevented from using it, but neither can she restrain
others from using it.
Art 371 is not applicable because it contemplates annulment while the present case refers to absolute
divorce where there is severance of valid marriage ties. Effect of divorce was more akin to death of the
spouse where the deceased woman is continued to be referred to as “Mrs. of the husband” even if he
has remarried.
If the appeal would be granted the respondent would encounter problems because she was able to
prove that she entered into contracts with third persons, acquired properties and entered into other
legal relations using the surname Tolentino. Petitioner failed to show the she would suffer any legal
injury or deprivation of right.
There was no usurpation of the petitioner’s name and surname. Usurpation implies injury to the
interests of the owner of the name. It consists with the possibility of confusion of identity. The
elements of usurpation were 1. Actual use of another’s name, 2. Use is unauthorized, 3. Use of
another’s name is to designate personality or identity of a person. None of these elements were
present in the case because public knowledge referred to Constancia as the legal wife of Arturo, and
Consuelo did represent herself after the divorce as Mrs. Arturo Tolentino.
Silva v Peralta was cited by the petitioner but the case is not applicable. In Silva, it was not mere use of
the surname that was enjoined but the defendant’s representation that she was the wife of Saturnino
Silva, there was usurpation of the status of the wife.
Consolidated Bank and Trust Corporation vs. Court of Appeals G.R. No. 138569, September 11, 2003
Solidbank’s tellers must exercise a high degree of diligence in insuring that they return the passbook
only to the depositor or his authorized representative. The tellers know, or should know, that the rules
on savings account provide that any person in possession of the passbook is presumptively its owner.
Facts: Solidbank is a domestic banking corporation while private respondent L.C. Diaz and Company,
CPA’s (“L.C. Diaz”), is a professional partnership engaged in the practice of accounting and which
opened a savings account with Solidbank. Diaz through its cashier, Mercedes Macaraya , filled up a
savings cash deposit slip and a savings checks deposit slip. Macaraya instructed the messenger of L.C.
Diaz, Ismael Calapre, to deposit the money with Solidbank and give him the Solidbank passbook.
Calapre went to Solidbank and presented to Teller No. 6 the two deposit slips and the passbook. The
teller acknowledged receipt of the deposit by returning to Calapre the duplicate copies of the two
deposit slips. Since the transaction took time and Calapre had to make another deposit for L.C. Diaz
with Allied Bank, he left the passbook with Solidbank. When Calapre returned to Solidbank to retrieve
the passbook, Teller No. 6 informed him that somebody got the passbook. Calapre went back to L.C.
Diaz and reported the incident to Macaraya. The following day,, L.C. Diaz through its Chief Executive
Officer, Luis C. Diaz, called up Solidbank to stop any transaction using the same passbook until L.C. Diaz
could open a new account followed by a formal written request later that day. It was also on the same
day that L.C. Diaz learned of the unauthorized withdrawal the day before of P300,000 from its savings
account. The withdrawal slip bore the signatures of the authorized signatories of L.C. Diaz, namely Diaz
and Rustico L. Murillo. The signatories, however, denied signing the withdrawal slip. A certain Noel
Tamayo received the P300,000.
L.C. Diaz demanded from Solidbank the return of its money but to no avail. Hence, L.C. Diaz filed a
Complaint for Recovery of a Sum of Money against Solidbank with the Regional Trial Court. After trial,
the trial court rendered a decision absolving Solidbank and dismissing the complaint. Court of Appeals
reversed the decision of the trial court.
Issue: Whether or not Solidbank must be held liable for the fraudulent withdrawal on private Issue: Whether or not an action for Quieting of Title will prosper.
respondent’s account.
Ruling: YES. All the requisites applying Article 476 is present in the case at bar. Requisites: 1. The
Held: Solidbank’s tellers must exercise a high degree of diligence in insuring that they return the plaintiff must have legal or equitable title. Legal title- evidenced by TCT. 2. There must be a cloud on
passbook only to the depositor or his authorized representative. The tellers know, or should know, that title or interest of the reason of PRICE. Encumbrance- mortgage. 3. The PRICE is apparently valid on its
the rules on savings account provide that any person in possession of the passbook is presumptively its face. It was issued by the ROD. 4. The PRICE is invalid/voidable. It was forged. 5. The PRICE may be
owner. If the tellers give the passbook to the wrong person, they would be clothing that person prejudicial to said title. The mortgage of the subject property to the Bank of Commerce,
presumptive ownership of the passbook, facilitating unauthorized withdrawals by that person. For
failing to return the passbook to Calapre, the authorized representative of L.C. Diaz, Solidbank and annotated on the Sps. San Pablo’s TCT,
Teller No. 6 presumptively failed to observe such high degree of diligence in safeguarding the
constitutes a cloud on their title to the subject property, which may, at first, appear valid and effective,
passbook, and in insuring its return to the party authorized to receive the same. However, L.C. Diaz was
but is allegedly invalid or voidable for having been made without their knowledge and authority as
guilty of contributory negligence in allowing a withdrawal slip signed by its authorized signatories to
registered owners.
fall into the hands of an impostor. Thus, the liability of Solidbank should be reduced. Hence, the
liability of Solidbank for actual damages was reduced to only 60%, the remaining 40% was borne by
private respondent.

The contract between the bank and its depositor is governed by the provisions of the Civil Code on
simple loan. There is a debtor-creditor relationship between the bank and its depositor. The bank is
the debtor and the depositor is the creditor. The law imposes on banks high standards in view of the
fiduciary nature of banking. RA 8791 declares that the State recognizes the “fiduciary nature of
banking that requires high standards of integrity and performance.” This new provision in the general
banking law, introduced in 2000, is a statutory affirmation of Supreme Court decisions holding that
“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.”

Bank of Commerce vs San Pablo

Facts: Natividad owned a lot. It was registered under her name and covered by TCT. Santos is a very
good friend of Sps. San Pablo. To accommodate a loan from Direct Funders Management by Santos,
they executed an SPA authorizing Santos to obtain a loan and use as security said property. When the
loan was settled, Sps. San Pablo demanded from Santos the return of the title. Santos refused. Upon
inquiry with the ROD, as to the status of the TCT of the subject property, they were surprised when
they discovered that the property was again used by Santos as collateral for another loan obligation
from the Bank of Commerce. Eventually, the bank foreclosed the property. Sps. San Pablo filed a
complaint seeking for the Quieting of Title and alleging that the SPA was forged.