SECOND DIVISION

[G.R. No. 115324. February 19, 2003]

PRODUCERS BANK OF THE PHILIPPINES (now FIRST
INTERNATIONAL BANK), petitioner, vs. HON.
COURT OF APPEALS AND FRANKLIN VIVES,
respondents.
D E C I S I O N
CALLEJO, SR., J .:
This is a petition for review on certiorari of the Decision
1
of the Court
of Appeals dated June 25, 1991 in CA-G.R. CV No. 11791 and of its
Resolution
2
dated May 5, 1994, denying the motion for reconsideration
of said decision filed by petitioner Producers Bank of the Philippines.
Sometime in 1979, private respondent Franklin Vives was asked by
his neighbor and friend Angeles Sanchez to help her friend and
townmate, Col. Arturo Doronilla, in incorporating his business, the
Sterela Marketing and Services (Sterela for brevity). Specifically,
Sanchez asked private respondent to deposit in a bank a certain amount
of money in the bank account of Sterela for purposes of its incorporation.
She assured private respondent that he could withdraw his money from
said account within a months time. Private respondent asked Sanchez
to bring Doronilla to their house so that they could discuss Sanchezs
request.
3

On May 9, 1979, private respondent, Sanchez, Doronilla and a
certain Estrella Dumagpi, Doronillas private secretary, met and
discussed the matter. Thereafter, relying on the assurances and
representations of Sanchez and Doronilla, private respondent issued a
check in the amount of Two Hundred Thousand Pesos (P200,000.00) in
favor of Sterela. Private respondent instructed his wife, Mrs. Inocencia
Vives, to accompany Doronilla and Sanchez in opening a savings
account in the name of Sterela in the Buendia, Makati branch of
Producers Bank of the Philippines. However, only Sanchez, Mrs. Vives

1
Justice Asaali S. Isnani, Ponente, with Justices Rodolfo A. Nocon, Presiding Justice,
and Antonio M. Martinez, concurring.
2
Rollo, pp. 54-55.
3
Id. at 37.
and Dumagpi went to the bank to deposit the check. They had with them
an authorization letter from Doronilla authorizing Sanchez and her
companions, in coordination with Mr. Rufo Atienza, to open an account
for Sterela Marketing Services in the amount of P200,000.00. In
opening the account, the authorized signatories were Inocencia Vives
and/or Angeles Sanchez. A passbook for Savings Account No. 10-1567
was thereafter issued to Mrs. Vives.
4

Subsequently, private respondent learned that Sterela was no
longer holding office in the address previously given to him. Alarmed,
he and his wife went to the Bank to verify if their money was still intact.
The bank manager referred them to Mr. Rufo Atienza, the assistant
manager, who informed them that part of the money in Savings Account
No. 10-1567 had been withdrawn by Doronilla, and that only P90,000.00
remained therein. He likewise told them that Mrs. Vives could not
withdraw said remaining amount because it had to answer for some
postdated checks issued by Doronilla. According to Atienza, after Mrs.
Vives and Sanchez opened Savings Account No. 10-1567, Doronilla
opened Current Account No. 10-0320 for Sterela and authorized the
Bank to debit Savings Account No. 10-1567 for the amounts necessary
to cover overdrawings in Current Account No. 10-0320. In opening said
current account, Sterela, through Doronilla, obtained a loan of
P175,000.00 from the Bank. To cover payment thereof, Doronilla issued
three postdated checks, all of which were dishonored. Atienza also said
that Doronilla could assign or withdraw the money in Savings Account
No. 10-1567 because he was the sole proprietor of Sterela.
5

Private respondent tried to get in touch with Doronilla through
Sanchez. On June 29, 1979, he received a letter from Doronilla,
assuring him that his money was intact and would be returned to him.
On August 13, 1979, Doronilla issued a postdated check for Two
Hundred Twelve Thousand Pesos (P212,000.00) in favor of private
respondent. However, upon presentment thereof by private respondent
to the drawee bank, the check was dishonored. Doronilla requested
private respondent to present the same check on September 15, 1979
but when the latter presented the check, it was again dishonored.
6

Private respondent referred the matter to a lawyer, who made a
written demand upon Doronilla for the return of his clients money.
Doronilla issued another check for P212,000.00 in private respondents
favor but the check was again dishonored for insufficiency of funds.
7

Private respondent instituted an action for recovery of sum of money

4
Ibid.
5
Id. at 37-38.
6
Id. at 38.
7
Id.
in the Regional Trial Court (RTC) in Pasig, Metro Manila against
Doronilla, Sanchez, Dumagpi and petitioner. The case was docketed as
Civil Case No. 44485. He also filed criminal actions against Doronilla,
Sanchez and Dumagpi in the RTC. However, Sanchez passed away on
March 16, 1985 while the case was pending before the trial court. On
October 3, 1995, the RTC of Pasig, Branch 157, promulgated its
Decision in Civil Case No. 44485, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING, judgment is hereby rendered
sentencing defendants Arturo J. Doronila, Estrella Dumagpi and
Producers Bank of the Philippines to pay plaintiff Franklin Vives jointly
and severally
(a) the amount of P200,000.00, representing the money
deposited, with interest at the legal rate from the filing of the complaint
until the same is fully paid;
(b) the sum of P50,000.00 for moral damages and a similar
amount for exemplary damages;
(c) the amount of P40,000.00 for attorneys fees; and
(d) the costs of the suit.
SO ORDERED.
8

Petitioner appealed the trial courts decision to the Court of Appeals.
In its Decision dated June 25, 1991, the appellate court affirmed in toto
the decision of the RTC.
9
It likewise denied with finality petitioners
motion for reconsideration in its Resolution dated May 5, 1994.
10

On June 30, 1994, petitioner filed the present petition, arguing that

I.
THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING
THAT THE TRANSACTION BETWEEN THE DEFENDANT
DORONILLA AND RESPONDENT VIVES WAS ONE OF SIMPLE
LOAN AND NOT ACCOMMODATION;
II.
THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING
THAT PETITIONERS BANK MANAGER, MR. RUFO ATIENZA,
CONNIVED WITH THE OTHER DEFENDANTS IN DEFRAUDING
PETITIONER (Sic. Should be PRIVATE RESPONDENT) AND AS A
CONSEQUENCE, THE PETITIONER SHOULD BE HELD LIABLE
UNDER THE PRINCIPLE OF NATURAL JUSTICE;

8
Id. at 63.
9
Id. at 35-47.
10
Id. at 54-55.
III.
THE HONORABLE COURT OF APPEALS ERRED IN ADOPTING
THE ENTIRE RECORDS OF THE REGIONAL TRIAL COURT AND
AFFIRMING THE JUDGMENT APPEALED FROM, AS THE
FINDINGS OF THE REGIONAL TRIAL COURT WERE BASED ON
A MISAPPREHENSION OF FACTS;
IV.
THE HONORABLE COURT OF APPEALS ERRED IN DECLARING
THAT THE CITED DECISION IN SALUDARES VS. MARTINEZ, 29
SCRA 745, UPHOLDING THE LIABILITY OF AN EMPLOYER FOR
ACTS COMMITTED BY AN EMPLOYEE IS APPLICABLE;
V.
THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING
THE DECISION OF THE LOWER COURT THAT HEREIN
PETITIONER BANK IS JOINTLY AND SEVERALLY LIABLE WITH
THE OTHER DEFENDANTS FOR THE AMOUNT OF P200,000.00
REPRESENTING THE SAVINGS ACCOUNT DEPOSIT,
P50,000.00 FOR MORAL DAMAGES, P50,000.00 FOR
EXEMPLARY DAMAGES, P40,000.00 FOR ATTORNEYS FEES
AND THE COSTS OF SUIT.
11

Private respondent filed his Comment on September 23, 1994.
Petitioner filed its Reply thereto on September 25, 1995. The Court then
required private respondent to submit a rejoinder to the reply. However,
said rejoinder was filed only on April 21, 1997, due to petitioners delay
in furnishing private respondent with copy of the reply
12
and several
substitutions of counsel on the part of private respondent.
13
On January
17, 2001, the Court resolved to give due course to the petition and
required the parties to submit their respective memoranda.
14
Petitioner
filed its memorandum on April 16, 2001 while private respondent
submitted his memorandum on March 22, 2001.
Petitioner contends that the transaction between private respondent
and Doronilla is a simple loan (mutuum) since all the elements of a
mutuum are present: first, what was delivered by private respondent to
Doronilla was money, a consumable thing; and second, the transaction
was onerous as Doronilla was obliged to pay interest, as evidenced by
the check issued by Doronilla in the amount of P212,000.00, or P12,000
more than what private respondent deposited in Sterelas bank
account.
15
Moreover, the fact that private respondent sued his good

11
Id. at 18-19.
12
Id. at 148, 181.
13
Id. at 176, 199.
14
Id. at 227.
15
Id. at 21.
friend Sanchez for his failure to recover his money from Doronilla shows
that the transaction was not merely gratuitous but had a business angle
to it. Hence, petitioner argues that it cannot be held liable for the return
of private respondents P200,000.00 because it is not privy to the
transaction between the latter and Doronilla.
16

It argues further that petitioners Assistant Manager, Mr. Rufo
Atienza, could not be faulted for allowing Doronilla to withdraw from the
savings account of Sterela since the latter was the sole proprietor of said
company. Petitioner asserts that Doronillas May 8, 1979 letter
addressed to the bank, authorizing Mrs. Vives and Sanchez to open a
savings account for Sterela, did not contain any authorization for these
two to withdraw from said account. Hence, the authority to withdraw
therefrom remained exclusively with Doronilla, who was the sole
proprietor of Sterela, and who alone had legal title to the savings
account.
17
Petitioner points out that no evidence other than the
testimonies of private respondent and Mrs. Vives was presented during
trial to prove that private respondent deposited his P200,000.00 in
Sterelas account for purposes of its incorporation.
18
Hence, petitioner
should not be held liable for allowing Doronilla to withdraw from Sterelas
savings account.
Petitioner also asserts that the Court of Appeals erred in affirming
the trial courts decision since the findings of fact therein were not accord
with the evidence presented by petitioner during trial to prove that the
transaction between private respondent and Doronilla was a mutuum,
and that it committed no wrong in allowing Doronilla to withdraw from
Sterelas savings account.
19

Finally, petitioner claims that since there is no wrongful act or
omission on its part, it is not liable for the actual damages suffered by
private respondent, and neither may it be held liable for moral and
exemplary damages as well as attorneys fees.
20

Private respondent, on the other hand, argues that the transaction
between him and Doronilla is not a mutuum but an accommodation,
21

since he did not actually part with the ownership of his P200,000.00 and
in fact asked his wife to deposit said amount in the account of Sterela so
that a certification can be issued to the effect that Sterela had sufficient
funds for purposes of its incorporation but at the same time, he retained

16
Id. at 22.
17
Id. at 24-27.
18
Id. at 23.
19
Id. at 28.
20
Rollo, Petitioners Memorandum, pp. 13-14.
21
Id. at 11-12.
some degree of control over his money through his wife who was made
a signatory to the savings account and in whose possession the savings
account passbook was given.
22

He likewise asserts that the trial court did not err in finding that
petitioner, Atienzas employer, is liable for the return of his money. He
insists that Atienza, petitioners assistant manager, connived with
Doronilla in defrauding private respondent since it was Atienza who
facilitated the opening of Sterelas current account three days after Mrs.
Vives and Sanchez opened a savings account with petitioner for said
company, as well as the approval of the authority to debit Sterelas
savings account to cover any overdrawings in its current account.
23

There is no merit in the petition.
At the outset, it must be emphasized that only questions of law may
be raised in a petition for review filed with this Court. The Court has
repeatedly held that it is not its function to analyze and weigh all over
again the evidence presented by the parties during trial.
24
The Courts
jurisdiction is in principle limited to reviewing errors of law that might
have been committed by the Court of Appeals.
25
Moreover, factual
findings of courts, when adopted and confirmed by the Court of Appeals,
are final and conclusive on this Court unless these findings are not
supported by the evidence on record.
26
There is no showing of any
misapprehension of facts on the part of the Court of Appeals in the case
at bar that would require this Court to review and overturn the factual
findings of that court, especially since the conclusions of fact of the Court
of Appeals and the trial court are not only consistent but are also amply
supported by the evidence on record.
No error was committed by the Court of Appeals when it ruled that
the transaction between private respondent and Doronilla was a
commodatum and not a mutuum. A circumspect examination of the
records reveals that the transaction between them was a commodatum.
Article 1933 of the Civil Code distinguishes between the two kinds of
loans in this wise:
By the contract of loan, one of the parties delivers to another,
either something not consumable so that the latter may use the same
for a certain time and return it, in which case the contract is called a

22
Rollo, p. 75; Private respondents Memorandum, pp. 8-9.
23
Id. at 75-77; Id. at 12-16.
24
Flores v. Uy, G.R. No. 121492, October 26, 2001; Lim v. People, G.R. No. 143231,
October 26, 2001.
25
Section 1, Rule 45, Revised Rules of Civil Procedure.
26
Baas, Jr. v. Court of Appeals, 325 SCRA 259 (2000); Philippine National
Construction Corporation v. Mars Construction Enterprises, Inc., 325 SCRA
624 (2000).
commodatum; or money or other consumable thing, upon the
condition that the same amount of the same kind and quality shall be
paid, in which case the contract is simply called a loan or mutuum.
Commodatum is essentially gratuitous.
Simple loan may be gratuitous or with a stipulation to pay interest.
In commodatum, the bailor retains the ownership of the thing
loaned, while in simple loan, ownership passes to the borrower.
The foregoing provision seems to imply that if the subject of the
contract is a consumable thing, such as money, the contract would be a
mutuum. However, there are some instances where a commodatum
may have for its object a consumable thing. Article 1936 of the Civil
Code provides:
Consumable goods may be the subject of commodatum if the
purpose of the contract is not the consumption of the object, as when
it is merely for exhibition.
Thus, if consumable goods are loaned only for purposes of
exhibition, or when the intention of the parties is to lend consumable
goods and to have the very same goods returned at the end of the period
agreed upon, the loan is a commodatum and not a mutuum.
The rule is that the intention of the parties thereto shall be accorded
primordial consideration in determining the actual character of a
contract.
27
In case of doubt, the contemporaneous and subsequent acts
of the parties shall be considered in such determination.
28

As correctly pointed out by both the Court of Appeals and the trial
court, the evidence shows that private respondent agreed to deposit his
money in the savings account of Sterela specifically for the purpose of
making it appear that said firm had sufficient capitalization for
incorporation, with the promise that the amount shall be returned within
thirty (30) days.
29
Private respondent merely accommodated Doronilla
by lending his money without consideration, as a favor to his good friend
Sanchez. It was however clear to the parties to the transaction that the
money would not be removed from Sterelas savings account and would
be returned to private respondent after thirty (30) days.
Doronillas attempts to return to private respondent the amount of
P200,000.00 which the latter deposited in Sterelas account together
with an additional P12,000.00, allegedly representing interest on the
mutuum, did not convert the transaction from a commodatum into a

27
Tanguilig v. Court of Appeals, 266 SCRA 78, 83-84 (1997), citing Kasilag v.
Rodriguez, 69 Phil. 217; 17A Am Jur 2d 27 Contracts, 5, citing Wallace Bank
& Trust Co. v. First National Bank, 40 Idaho 712, 237 P 284, 50 ALR 316.
28
Tanguilig v. Court of Appeals, supra, p. 84.
29
Rollo, pp. 40-41, 60.
mutuum because such was not the intent of the parties and because the
additional P12,000.00 corresponds to the fruits of the lending of the
P200,000.00. Article 1935 of the Civil Code expressly states that [t]he
bailee in commodatum acquires the use of the thing loaned but not its
fruits. Hence, it was only proper for Doronilla to remit to private
respondent the interest accruing to the latters money deposited with
petitioner.
Neither does the Court agree with petitioners contention that it is
not solidarily liable for the return of private respondents money because
it was not privy to the transaction between Doronilla and private
respondent. The nature of said transaction, that is, whether it is a
mutuum or a commodatum, has no bearing on the question of
petitioners liability for the return of private respondents money because
the factual circumstances of the case clearly show that petitioner,
through its employee Mr. Atienza, was partly responsible for the loss of
private respondents money and is liable for its restitution.
Petitioners rules for savings deposits written on the passbook it
issued Mrs. Vives on behalf of Sterela for Savings Account No. 10-1567
expressly states that
2. Deposits and withdrawals must be made by the depositor
personally or upon his written authority duly authenticated, and
neither a deposit nor a withdrawal will be permitted except upon
the production of the depositor savings bank book in which will
be entered by the Bank the amount deposited or withdrawn.
30

Said rule notwithstanding, Doronilla was permitted by petitioner,
through Atienza, the Assistant Branch Manager for the Buendia Branch
of petitioner, to withdraw therefrom even without presenting the
passbook (which Atienza very well knew was in the possession of Mrs.
Vives), not just once, but several times. Both the Court of Appeals and
the trial court found that Atienza allowed said withdrawals because he
was party to Doronillas scheme of defrauding private respondent:
X X X
But the scheme could not have been executed successfully
without the knowledge, help and cooperation of Rufo Atienza,
assistant manager and cashier of the Makati (Buendia) branch of the
defendant bank. Indeed, the evidence indicates that Atienza had not
only facilitated the commission of the fraud but he likewise helped in
devising the means by which it can be done in such manner as to
make it appear that the transaction was in accordance with banking
procedure.
To begin with, the deposit was made in defendants Buendia
branch precisely because Atienza was a key officer therein. The
records show that plaintiff had suggested that the P200,000.00 be

30
Exhibit B, Folder of Exhibits, p. 3, emphasis supplied.
deposited in his bank, the Manila Banking Corporation, but Doronilla
and Dumagpi insisted that it must be in defendants branch in Makati
for it will be easier for them to get a certification. In fact before he
was introduced to plaintiff, Doronilla had already prepared a letter
addressed to the Buendia branch manager authorizing Angeles B.
Sanchez and company to open a savings account for Sterela in the
amount of P200,000.00, as per coordination with Mr. Rufo Atienza,
Assistant Manager of the Bank x x x (Exh. 1). This is a clear
manifestation that the other defendants had been in consultation with
Atienza from the inception of the scheme. Significantly, there were
testimonies and admission that Atienza is the brother-in-law of a
certain Romeo Mirasol, a friend and business associate of Doronilla.
Then there is the matter of the ownership of the fund. Because
of the coordination between Doronilla and Atienza, the latter knew
before hand that the money deposited did not belong to Doronilla nor
to Sterela. Aside from such foreknowledge, he was explicitly told by
Inocencia Vives that the money belonged to her and her husband and
the deposit was merely to accommodate Doronilla. Atienza even
declared that the money came from Mrs. Vives.
Although the savings account was in the name of Sterela, the
bank records disclose that the only ones empowered to withdraw the
same were Inocencia Vives and Angeles B. Sanchez. In the signature
card pertaining to this account (Exh. J), the authorized signatories
were Inocencia Vives &/or Angeles B. Sanchez. Atienza stated that
it is the usual banking procedure that withdrawals of savings deposits
could only be made by persons whose authorized signatures are in
the signature cards on file with the bank. He, however, said that this
procedure was not followed here because Sterela was owned by
Doronilla. He explained that Doronilla had the full authority to
withdraw by virtue of such ownership. The Court is not inclined to
agree with Atienza. In the first place, he was all the time aware that
the money came from Vives and did not belong to Sterela. He was
also told by Mrs. Vives that they were only accommodating Doronilla
so that a certification can be issued to the effect that Sterela had a
deposit of so much amount to be sued in the incorporation of the firm.
In the second place, the signature of Doronilla was not authorized in
so far as that account is concerned inasmuch as he had not signed
the signature card provided by the bank whenever a deposit is
opened. In the third place, neither Mrs. Vives nor Sanchez had given
Doronilla the authority to withdraw.
Moreover, the transfer of fund was done without the passbook
having been presented. It is an accepted practice that whenever a
withdrawal is made in a savings deposit, the bank requires the
presentation of the passbook. In this case, such recognized practice
was dispensed with. The transfer from the savings account to the
current account was without the submission of the passbook which
Atienza had given to Mrs. Vives. Instead, it was made to appear in a
certification signed by Estrella Dumagpi that a duplicate passbook
was issued to Sterela because the original passbook had been
surrendered to the Makati branch in view of a loan accommodation
assigning the savings account (Exh. C). Atienza, who undoubtedly
had a hand in the execution of this certification, was aware that the
contents of the same are not true. He knew that the passbook was in
the hands of Mrs. Vives for he was the one who gave it to her.
Besides, as assistant manager of the branch and the bank official
servicing the savings and current accounts in question, he also was
aware that the original passbook was never surrendered. He was also
cognizant that Estrella Dumagpi was not among those authorized to
withdraw so her certification had no effect whatsoever.
The circumstance surrounding the opening of the current account
also demonstrate that Atienzas active participation in the perpetration
of the fraud and deception that caused the loss. The records indicate
that this account was opened three days later after the P200,000.00
was deposited. In spite of his disclaimer, the Court believes that
Atienza was mindful and posted regarding the opening of the current
account considering that Doronilla was all the while in coordination
with him. That it was he who facilitated the approval of the authority
to debit the savings account to cover any overdrawings in the current
account (Exh. 2) is not hard to comprehend.
Clearly Atienza had committed wrongful acts that had resulted to
the loss subject of this case. x x x.
31

Under Article 2180 of the Civil Code, employers shall be held
primarily and solidarily liable for damages caused by their employees
acting within the scope of their assigned tasks. To hold the employer
liable under this provision, it must be shown that an employer-employee
relationship exists, and that the employee was acting within the scope
of his assigned task when the act complained of was committed.
32
Case
law in the United States of America has it that a corporation that entrusts
a general duty to its employee is responsible to the injured party for
damages flowing from the employees wrongful act done in the course
of his general authority, even though in doing such act, the employee
may have failed in its duty to the employer and disobeyed the latters
instructions.
33

There is no dispute that Atienza was an employee of petitioner.
Furthermore, petitioner did not deny that Atienza was acting within the
scope of his authority as Assistant Branch Manager when he assisted
Doronilla in withdrawing funds from Sterelas Savings Account No. 10-
1567, in which account private respondents money was deposited, and
in transferring the money withdrawn to Sterelas Current Account with
petitioner. Atienzas acts of helping Doronilla, a customer of the

31
Rollo, pp. 43-47, citing the Decision of the Regional Trial Court, pp. 5-8.
32
Castilex Industrial Corporation v. Vasquez, Jr., 321 SCRA 393 (1999).
33
18B Am Jur 2d, p. 947, Corporations 2125, citing Pittsburgh, C.C. & S.L.R. Co. v.
Sullivan, 40 NE 138.
petitioner, were obviously done in furtherance of petitioners interests
34

even though in the process, Atienza violated some of petitioners rules
such as those stipulated in its savings account passbook.
35
It was
established that the transfer of funds from Sterelas savings account to
its current account could not have been accomplished by Doronilla
without the invaluable assistance of Atienza, and that it was their
connivance which was the cause of private respondents loss.
The foregoing shows that the Court of Appeals correctly held that
under Article 2180 of the Civil Code, petitioner is liable for private
respondents loss and is solidarily liable with Doronilla and Dumagpi for
the return of the P200,000.00 since it is clear that petitioner failed to
prove that it exercised due diligence to prevent the unauthorized
withdrawals from Sterelas savings account, and that it was not negligent
in the selection and supervision of Atienza. Accordingly, no error was
committed by the appellate court in the award of actual, moral and
exemplary damages, attorneys fees and costs of suit to private
respondent.
WHEREFORE, the petition is hereby DENIED. The assailed
Decision and Resolution of the Court of Appeals are AFFIRMED.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing and Austria-Martinez,
JJ., concur.


34
See note 31.
35
Exhibit B, Folder of Exhibits, p. 3.