BPI FAMILY BANK VS.

FRANCO
G.R. No. 123498 J. Nachura November 23, 2007

FACTS: On August 15, 1989, Tevesteco opened a savings and current account with BPI-FB. Soon thereafter, FMIC also opened a time deposit account with the same branch of BPI-FB

On August 31, 1989, Franco opened three accounts, namely, a current, savings, and time deposit, with BPI-FB. The total amount of P2,000,000.00 used to open these accounts is traceable to a check issued by Tevesteco allegedly in consideration of Francos introduction of Eladio Teves, to Jaime Sebastian, who was then BPI-FB SFDMs Branch Manager. In turn, the funding for the P2,000,000.00 check was part of the P80,000,000.00 debited by BPI-FB from FMICs time deposit account and credited to Tevestecos current account pursuant to an Authority to Debit purportedly signed by FMICs officers.

It appears, however, that the signatures of FMICs officers on the Authority to Debit were forged. BPI-FB, debited Francos savings and current accounts for the amounts remaining therein. In the meantime, two checks drawn by Franco against his BPI-FB current account were dishonored and stamped with a notation account under garnishment. Apparently, Francos current account was garnished by virtue of an Order of

Notably, the dishonored checks were issued by Franco and presented for payment at BPIFB prior to Francos receipt of notice that his accounts were under garnishment. It was only on May 15, 1990, that Franco was impleaded in the Makati case. Immediately, upon receipt of such copy, Franco filed a Motion to Discharge Attachment. On May 17, 1990, Franco pre-terminated his time deposit account.

BPI-FB deducted the amount of P63,189.00 from the remaining balance of the time deposit account representing advance interest paid to him. Consequently, in light of BPI-FBs refusal to heed Francos demands to unfreeze his accounts and release his deposits therein, Franco filed on June 4, 1990 with the Manila RTC the subject suit.

ISSUE: WON Respondent had better right to the deposits in the subject accounts which are part of the proceeds of a forged Authority to Debit

HELD: NO

There is no doubt that BPI-FB owns the deposited monies in the accounts of Franco, but not as a legal consequence of its unauthorized transfer of FMICs deposits to Tevestecos account. BPI-FB conveniently forgets that the deposit of money in banks is governed by the Civil Code provisions on simple loan or mutuum. As there is a debtor-creditor relationship between a bank and its depositor, BPI-FB ultimately acquired ownership of Francos deposits, but such ownership is coupled with a corresponding obligation to pay him an equal amount on demand. Although BPI-FB owns the deposits in Francos accounts, it cannot prevent him from demanding payment of BPI-FBs obligation by drawing checks against his current account, or asking for the release of the funds in his savings account. Thus, when Franco issued checks drawn against his current account, he had every right as creditor to expect that those checks would be honored by BPI-FB as debtor.

More importantly, BPI-FB does not have a unilateral right to freeze the accounts of Franco based on its mere suspicion that the funds therein were proceeds of the multi-million peso scam Franco was allegedly involved in. To grant BPI-FB, or any bank for that matter, the right to take whatever action it pleases on deposits which it supposes are derived from shady transactions, would open the floodgates of public distrust in the banking industry.

Ineluctably, BPI-FB, as the trustee in the fiduciary relationship, is duty bound to know the signatures of its customers. Having failed to detect the forgery in the Authority to Debit and in the process inadvertently facilitate the FMIC-Tevesteco transfer, BPI-FB cannot now shift liability thereon to Franco and the other payees of checks issued by Tevesteco, or prevent withdrawals from their respective accounts without the appropriate court writ or a favorable final judgment.

Consolidated Bank and Trust Corp vs CA G.R. No. 138569. September 11, 2003 First Division J. Carpio Facts: Private respondent L.C. Diaz instructed his employee, Calapre, to deposit in his savings account in petitioner bank. Calapre left the passbook of L.C. Diaz to the teller of the petitioner bank because it was taking time to accomplish the transaction and he had to go to another bank. When Calapre returned, the teller told him that somebody got it. The following day, an impostor succeeded in withdrawing P300,000.00 by using said passbook and a falsified withdrawal slip. L.C. Diaz through its counsel demanded from Solidbank the return of its money. However, Solidbank refused. 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. On appeal, the Court of Appeals reversed the decision of the trial court and held the bank liable.

Issues: 1. WON the contract of loan was converted into a trust agreement.

2. WON Petitioner bank is liable solely for the amount withdrawn by the impostor.

Held: FIRST ISSUE: No. The Supreme Court held that the bank is liable for breach of contract due to negligence or culpa contractual. 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 depositor lends the bank money and the bank agrees to pay the depositor on demand. The law imposes on banks high standards in view of the fiduciary nature of banking. Section 2 of Republic Act No. 8791 (RA 8791), declares that the State recognizes the fiduciary nature of banking that requires high standards of integrity and performance. However, the fiduciary nature of a bank-depositor relationship does not convert the contract between the bank and its depositors from a simple loan to a trust agreement whether express or implied. Failure by the bank to pay the depositor is failure to pay a simple loan, and not a breach of trust. The law simply imposes on the bank a higher standard of integrity and performance in complying with its obligations under the contract of simple loan, beyond those required of non-bank debtors under a similar contract of simple loan. The fiduciary nature of banking does not convert a simple loan into a trust agreement because banks do not accept deposits to enrich depositors but to earn money for themselves. 2. YES. Article 1172 of the Civil Code provides that responsibility arising from negligence in the performance of every kind of obligation is demandable. The bank is liable to its depositor for breach of the savings deposit agreement due to negligence or culpa contractual. 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 International vs. CA). 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. If the tellers give the passbook to the wrong person, they would be clothing that person presumptive ownership of the passbook, facilitating unauthorized withdrawals by that person. The doctrine of last clear chance states that where both parties are negligent but the negligent act of one is appreciably later than that of the other, or where it is impossible to determine whose fault or negligence caused the loss, the one who had the last clear opportunity to avoid the loss but failed to do so, is chargeable with the loss. This doctrine is not applicable to the present case. The contributory negligence of the private respondent or his last clear chance to avoid the loss would not exonerate the petitioner from liability. However, it serves to reduce the recovery of damages by the private respondent. Under Article 1172, the liability may be regulated by the courts, according to the circumstances. In this case, respondent L.C. Diaz was guilty of contributory negligence in allowing awithdrawal slip signed by its authorized signatories to fall into the hands of an impostor. Thus, the liability of petitioner bank should be reduced. In PHILIPPINE BANK OF COMMERCE VS. CA, the Supreme Court allocated the damages between the depositor who is guilty of contributory negligence and the bank on a 40-60 ratio. The same ruling was applied to this case. Petitioner bank must pay only 60% of the actual damages.

YHT Realty Corporation et al vs. CA G.R. No. 126780 February 17, 2005 2nd Division J. Tinga FACTS: Respondent McLoughlin would always stay at Tropicana Hotel every time he is here in the Philippines and would rent a safety deposit box. The safety deposit box could only be opened through the use of 2 keys, one of which is given to the registered guest, and the other remaining in the possession of the management of the hotel. McLoughlin allegedly placed the following in his safety deposit box 2 envelopes containing US Dollars, one envelope containing Australian Dollars, Letters, credit cards, bankbooks and a checkbook. On 12 December 1987, before leaving for a brief trip, McLoughlin took some items from the safety box which includes the ff: envelope containing Five Thousand US Dollars (US$5,000.00), the other envelope containing Ten Thousand Australian Dollars (AUS$10,000.00),

his passports and his credit cards. The other items were left in the deposit box. Upon arrival, he found out that a few dollars were missing and the jewelry he bought was likewise missing. Eventually, he confronted Lainez and Paiyam who admitted that Tan opened the safety deposit box with the key assigned to him. McLoughlin went up to his room where Tan was staying and confronted her. Tan admitted that she had stolen McLouglins key and was able to open the safety deposit box with the assistance of Lopez, Paiyam and Lainez. Lopez also told McLoughlin that Tan stole the key assigned to McLouglin while the latter was asleep. McLoughlin insisted that it must be the hotel who must assume responsibility for the loss he suffered. Lopez refused to accept responsibility relying on the conditions for renting the safety deposit box entitled Undertaking For the Use of Safety Deposit Box ISSUE: WON the "Undertaking for the Use of Safety Deposit Box" admittedly executed by private respondent is null and void. HELD: YES Article 2003 was incorporated in the New Civil Code as an expression of public policy precisely to apply to situations such as that presented in this case. The hotel business like the common carriers business is imbued with public interest. Catering to the public, hotelkeepers are bound to provide not only lodging for hotel guests and security to their persons and belongings. The twin duty constitutes the essence of the business. The law in turn does not allow such duty to the public to be negated or diluted by any contrary stipulation in so-called undertakings that ordinarily appear in prepared forms imposed by hotel keepers on guests for their signature. In an early case (De Los Santos v. Tan Khey), CA ruled that to hold hotelkeepers or innkeeper liable for the effects of their guests, it is not necessary that they be actually delivered to the innkeepers or their employees. It is enough that such effects are within the hotel or inn. With greater reason should the liability of the hotelkeeper be enforced when the missing items are taken without the guests knowledge and consent from a safety deposit box provided by the hotel itself, as in this case. Paragraphs (2) and (4) of the undertaking manifestly contravene Article 2003, CC for they allow Tropicana to be released from liability arising from any loss in the contents and/or use of the safety deposit box for any cause whatsoever. Evidently, the undertaking was intended to bar any claim against Tropicana for any loss of the contents of the safety deposit box whether or not negligence was incurred by Tropicana or its employees. The New Civil Code is explicit that the responsibility of the hotel-keeper shall extend to loss of, or injury to, the personal property of the guests even if caused by servants or employees of the keepers of hotels or inns as well as by strangers, except as it may proceed from any force majeure.41 It is the loss through force majeure that may spare the hotel-keeper from liability. In the case at bar, there is no showing that the act of the thief or robber was done with the use of arms or through an irresistible force to qualify the same as force majeure.

SPOUSES OLIB VS PASTORAL G.R NO. 81120 First Division AUGUST 20, 1990

J. CRUZ FACTS: On November 13, 1981, Corazon M. Navia sued Petitioners, for dissolution of their partnership and other reliefs, with a prayer for the issuance of a writ of a preliminary attachment. 1 The petition was granted resulting in the attachment of 6 parcels of land belonging to the petitioners, along with stocks of merchandise in their bodega. The writ was amended excluding the merchandise. On May 16, 1985, the petitioners filed a motion to discharge the preliminary attachment on the ground that the attachment bond executed for one year from November 1983 had already lapsed. Judge Miguel S. Rallos of the RTC of Agusan del Norte and Butuan City ruled in favor of Petitioners. On July 20, 1987, the petitioners moved for the discharge of the writ of preliminary attachment. Navia filed an opposition, contending that as she had perfected her appeal to the Court of Appeals, the trial court no longer had any jurisdiction over the case. On August 24, 1987, Judge Edelwina C. Pastoral, who had succeeded Judge Rallos denied the motion on the ground invoked in the opposition. The petitioners moved for reconsideration however it was denied. Petitioners filed another MFR insisting that (a) the attachment had been automatically discharged under Rule 57, Section 19; and (b) the attachment bond had already lapsed for non-payment of the premiums. They were rebuffed again. They then came before this Court, contending that the respondent court committed grave abuse of discretion in denying their motion.

ISSUES: 1. WON the attachment bond had already lapsed for non-payment of the premiums. 2. WON the attachment had been automatically discharged under Rule 57 Section 19

HELD: FIRST ISSUE: NO Attachment is defined as a provisional remedy by which the property of an adverse party is taken into legal custody, either at the commencement of an action or at any time thereafter, as a security for the satisfaction of any judgment that may be recovered by the plaintiff or any proper party. 8

It is an auxiliary remedy and cannot have an independent existence apart from the main suit or claim instituted by the plaintiff against the defendant. 9 Being merely ancillary to a principal proceeding, the attachment must fail if the suit itself cannot be maintained as the purpose of the writ can no longer be justified.

The consequence is that where the main action is appealed, the attachment which may have been issued as an incident of that action, is also considered appealed and so also removed from the jurisdiction of the court a quo. The attachment itself cannot be the subject of a separate case independent of the principal action because the attachment was only an incident of such action.

Coming now to the argument that the attachment was automatically lifted because of the nonpayment of the premium on the attachment bond, the Court feels it is time again to correct a common misimpression. The rule is that the bond is not deemed

SECOND ISSUE: NO the order of attachment is considered discharged only where the judgment has already become final and executory and not when it is still on appeal. The obvious reason is that, except in a few specified cases, execution pending appeal is not allowed.

SOLID BANK CORP VS TAN G.R. No. 167346 First Division J Corona April 2, 2007

FACTS: On December 2, 1991, respondents representative, Remigia Frias, deposited with petitioner 10 checks. Grace Neri, petitioners teller no. 8, received 2 deposit slips for the checks, an original and a duplicate. Neri verified the checks and their amounts in the deposit slips then returned the duplicate copy to Frias and kept the original copy for petitioner. Respondents passbook was left with petitioner.

Later, respondents retrieved the passbook and discovered that one of the checks, Metrobank check no. 403954, was not posted therein. Petitioner showed respondent a duplicate copy of a deposit slip but it did not include the missing check. The deposit slip bore the stamp mark teller no. 7 instead of teller no. 8 who previously received the checks. On the other hand, respondent learned from Metrobank that the said check was already cleared.

Respondents demanded that petitioner pay the amount of the check but it refused; hence, they filed a case for collection of a sum of money

The trial court rendered its judgment in favor of respondent. Petitioner appealed but the CA affirmed the trial courts decision. Hence, this petition.

ISSUE: WON CA erred in applying the provisions of the Civil Code on common carriers to the instant case.

HELD: NO. A cursory reading of its decision reveals that it anchored its conclusion that petitioner was negligent on Article 1173 of the Civil Code.

In citing the different provisions of the Civil Code on common carriers, the trial court merely made reference to the kind of diligence that petitioner should have performed under the circumstances. In other words, like a common carrier whose business is also imbued with public interest, petitioner should have exercised extraordinary diligence to negate its liability to respondents.

Assuming arguendo that the trial court indeed used the provisions on common carriers to pin down liability on petitioner, still we see no reason to strike down the RTC and CA rulings on this ground alone.

We find no compelling reason to disallow the application of the provisions on common carriers to this case if only to emphasize the fact that banking institutions (like petitioner) have the duty to exercise the highest degree of diligence when transacting with the public. By the nature of their business, they are required to observe the highest standards of integrity and performance, and utmost assiduousness as well.

INTEGRATED REALTY CORP VS PNB G.R. No. L-60705 June 28, 1989 2nd Division J. Regalado Facts: Petitioner Raul Santos made a time deposit with OBM for the values of P500,000 and P200,000 on Jan 11 and Feb 6 1967 respectively. On Feb 9 1967, Santos and IRC applied for a credit line/loan worth P700 with PNB. To secure said loan/credit line, Santos executed a Deed of assignment over the time deposits. After due dates of said time deposits, OBM did not pay them to PNB. Hence, PNB demanded payment from IRC and Santos. IRC and Santos then disclaimed such liability, saying that obligation was extinguished upon acceptance of the assignments of the time deposits. An action was commenced by PNB against Santos and IRC to collect on their debt. IRC and Santos alleged again that their obligation was extinguished and that it is not answerable for the bank's insolvency. IRC and Santos then filed a counterclaim against PNB and a cross claim against OBM, praying that it be liable to pay whatever amount IRC and Santos should be adjudged to pay PNB. OBM answered with denial. The trial court rendered its judgment in favor of plaintiff. IRC Santos and OMB appealed but the CA affirmed the trial courts decision with modification. It deleted the portion whereby it ordered OBM to pay IRC and Santos whatever amounts they will pay to PNB with interest from the date of payment. Issues: 1. W/N Assignment of Time Deposit is payment. 2. W/N OBM is liable for interest over the Time Deposits of IRC and Santos from the time it ceased operations until it resumed its business. HELD: FIRST ISSUE: NO. The parties intended said deed of assignment to complement the promissory notes. The deed of assignment did not operate as payment of the loan so as to extinguish the obligations of IRC and Santos with PNB. For all intents and purposes , the time deposit assignment was a pledge. The deed of assignment has satisfied the requirements of a contract of pledge (1) that it be constituted to secure the fulfillment of a principal obligation; (2) that the pledgor be the absolute owner of the thing pledged; (3) that the persons constituting the pledge have the free disposal of their property, and in the absence thereof, that they be legally authorized for the purpose. The further requirement that the thing pledged be placed in the possession of the creditor, or of a third person by common agreement was complied with by the execution of the deed of assignment in favor of PNB. Hence, its purpose was only as a security, add to this the fact IRC and Santos executed promissory notes to fulfill their obligation.

SECOND ISSUE: The answer is in the negative. As held in The Overseas Bank of Manila vs. Court of Appeals and Tony D. Tapia, the Supreme Court held that: It is a matter of common knowledge, which We take judicial notice of, that what enables a bank to pay stipulated interest on money deposited with it is that thru the other aspects of its operation it is able to generate funds to cover the payment of such interest. Unless a bank can lend money, engage in international transactions, acquire foreclosed mortgaged properties or their proceeds and generally engage in other banking and financing activities from which it can derive income, it is inconceivable how it can carry on as a depository obligated to pay stipulated interest. Conventional wisdom dictated; this inexorable fair and just conclusion. And it can be said that all who deposit money in banks are aware of such a simple economic proposition petition. Consequently, it should be deemed read into every contract of deposit with a bank that the obligation to pay interest on the deposit ceases the moment the operation of the bank is completely suspended by the duly constituted authority, the Central Bank. We consider it of trivial consequence that the stoppage of the bank's operation by the Central Bank has been subsequently declared illegal by the Supreme Court, for before the Court's order, the bank had no alternative under the law than to obey the orders of the Central Bank. Whatever be the juridical significance of the subsequent action of the Supreme Court, the stubborn fact remained that the petitioner was totally crippled from then on from earning the income needed to meet its obligations to its depositors. If such a situation cannot, strictly speaking, be legally denominated as 'force majeure', as maintained by private respondent, We hold it is a matter of simple equity that it be treated as such.

FIDELITY SAVINGS AND MORTGAGE BANK VS CENZON G.R. No. L-46208 April 5, 1990 2ND DIVISION J. REGALADO

FACTS: - On May 16, 1968, Sps Santiago deposited Petitioner bank P50,000.00. Also on July 6,1968, Sps Santiago deposited another P50,000.00. On February 18, 1969, the Monetary Board issued Resolution No. 350 whereby forbidding the Petitioner bank to do business in the Philippines and its assets shall be taken in charge by the Board. - On October 10, 1969 the Philippine Deposit Insurance Corporation paid the Spouses P10,000.00 pursuant to Republic Act No. 5517, thereby leaving a deposit balance of P90,000.00. On Dec 9, the Monetary Board issued Resolution No. 2124 directing the liquidation of the affairs of Petitioner bank. - On January 25, 1972, the Solicitor General of the Philippines filed a "Petition for Assistance and Supervision in Liquidation" of the affairs of Petitioner bank. Spouses Santiago sent demand letters to Petitioner bank demanding the immediate payment of the aforementioned savings and time deposits. However their demands were left unheeded hence the Sps instituted an action for a sum of money with damages. The lower court ruled in favor of the spouses. Hence, this petition.

ISSUES:

1. WON Petitioner bank may be adjudged to pay interest on unpaid deposits even after its closure by the Central Bank by reason of insolvency without violating the provisions of the Civil Code on preference of credits 2. WON Petitioner bank may be adjudged to pay moral and exemplary damages, attorney's fees and costs when the insolvency is caused b the anomalous real estate transactions without violating the provisions of the Civil Code on preference of credits. HELD: FIRST ISSUE: NO It is settled jurisprudence that a banking institution which has been declared insolvent and subsequently ordered closed by the Central Bank of the Philippines cannot be held liable to pay interest on bank deposits which accrued during the period when the bank is actually closed and non-operational.

In The Overseas Bank of Manila vs. Court of Appeals and Tony D. Tapia, we held that: It is a matter of common knowledge, which We take judicial notice of, that what enables a bank to pay stipulated interest on money deposited with it is that thru the other aspects of its operation it is able to generate funds to cover the payment of such interest. Unless a bank can lend money, engage in international transactions, acquire foreclosed mortgaged properties or their proceeds and generally engage in other banking and financing activities from which it can derive income, it is inconceivable how it can carry on as a depository obligated to pay stipulated interest. Conventional wisdom dictates this inexorable fair and just conclusion. And it can be said that all who deposit money in banks are aware of such a simple economic proposition. Consequently, it should be deemed read into every contract of deposit with a bank that the obligation to pay interest on the deposit ceases the moment the operation of the bank is completely suspended by the duly constituted authority, the Central Bank.

Petitioner cannot be held liable for interest on bank deposits which accrued from the time it was prohibited by the Central Bank to continue with its banking operations, that is, when Resolution No. 350 to that effect was issued on February 18, 1969.

SECOND ISSUE: NO We likewise find the awards of moral and exemplary damages and attorney's fees to be erroneous. It is not disputed, that there was no fraud or bad faith on the part of petitioner bank and the other defendants in accepting the deposits of private respondents. Petitioner bank could not even be faulted in not immediately returning the amount claimed by private respondents considering that the demand to pay was made and Civil Case No. 84800 was filed in the trial court several months after the Central Bank had ordered petitioner's closure. By that time, petitioner bank was no longer in a position to comply with its obligations to its creditors, including herein private respondents. Even the trial court had to admit that petitioner bank failed to pay private respondents because it was already insolvent. 8 Further, this case is not one of the specified or analogous cases wherein moral damages may be recovered. In addition, there is no valid basis for the award of exemplary damages. It was not proven by private respondents, and

neither was there a categorical finding made by the trial court, that petitioner bank actually engaged in anomalous real estate transactions.

In the absence of fraud, bad faith, malice or wanton attitude, petitioner bank may, therefore, not be held responsible for damages which may be reasonably attributed to the non-performance of the obligation.

FEBTC vs Querimit G.R No. 148582 January 16, 2002 2nd Division J. Mendoza

Facts: Respondent Estrella Querimit opened a dollar savings account in FEBTC for which she was issued 4 Certificates of Deposit. In 1989, respondent accompanied her husband to the US for

medical treatment. In 1993, her husband died and Estrella Querimit returned to the Philippines. She went to petitioner FEBTC to withdraw her deposit but she was told that her husband had withdrawn the money in deposit. Respondent demanded payment including interests earned. Respondent filed a complaint upon refusal of petitioner to pay. The trial court rendered its judgment in favor of respondent. Petitioner appealed but the CA affirmed the trial courts decision. It ruled that FEBTC failed to prove that the certificates of deposit had been paid out of its funds. Issue: Whether or not petitioner bank is liable in paying the certificates of deposit without the production of such certificates. Held: Yes. A certificate of deposit is defined as a written acknowledgement by a bank or banker of the receipt of a sum of money on deposit which the bank or banker promises to pay to the depositor, to the order of the depositor, or to some other person or his order, whereby the relation of debtor and creditor between the bank and the depositor is created. The principle that payment, in order to discharge a debt, must be made to someone authorized to receive it is applicable to the payment of certificates of deposit. In this case, the certificates of deposit were clearly marked payable to bearer, which means to the person in possession of an instrument, document of title or security payable to bearer or indorsed in blank. Petitioner should not have paid respondents husband or any third party without requiring the surrender of the certificates of deposit. The subject certificates of deposit until now remain unendorsed, undelivered and unwithdrawn by respondent Estrella Querimit. Petitioner claims that it did not demand the surrender of the subject certificates of deposit since respondents husband, Dominador Querimit, was one of the banks senior managers. But even long after respondents husband had allegedly been paid respondents deposit and before his retirement from service, the FEBTC never required him to deliver the certificates of deposit in question. Moreover, the accommodation given to respondents husband was made in violation of the banks policies and procedures. Petitioner FEBTC thus failed to exercise that degree of diligence required by the nature of its business.