Banking Case Digests

Banking Laws - Prof. Cabaneiro

San Beda College of Law, Manila
2012

BANK OF THE PHILIPPINE ISLANDS VS. COURT OF APPEALS

232 SCRA302
G.R. NO. 104612
MAY 10, 1994
FACTS:
Private respondents Eastern Plywood Corporation and Benigno Lim as
officer of the corporation, had an AND/OR joint account with Commercial Bank
and Trust Co (CBTC), the predecessor-in-interest of petitioner Bank of the
Philippine Islands. Lim withdraw funds from such account and used it to open a
joint checking account (an AND account) with Mariano Velasco. When Velasco
died in 1977, said joint checking account had P662,522.87. By virtue of an
Indemnity Undertaking executed by Lim and as President and General Manager
of Eastern withdrew one half of this amount and deposited it to one of the
accounts of Eastern with CBTC.
Eastern obtained a loan of P73,000.00 from CBTC which was not secured.
However, Eastern and CBTC executed a Holdout Agreement providing that the
loan was secured by the Holdout of the C/A No. 2310-001-42 referring to the
joint checking account of Velasco and Lim.
Meanwhile, a judicial settlement of the estate of Velasco ordered the
withdrawal of the balance of the account of Velasco and Lim.
Asserting that the Holdout Agreement provides for the security of the loan
obtained by Eastern and that it is the duty of CBTC to debit the account of
respondents to set off the amount of P73,000 covered by the promissory note,
BPI filed the instant petition for recovery. Private respondents Eastern and Lim,
however, assert that the amount deposited in the joint account of Velasco and
Lim came from Eastern and therefore rightfully belong to Eastern and/or Lim.
Since the Holdout Agreement covers the loan of P73,000, then petitioner can
only hold that amount against the joint checking account and must return the
rest.
ISSUE:
Whether BPI can demand the payment of the loan despite the existence of
the Holdout Agreement and whether BPI is still liable to the private respondents
on the account subject of the withdrawal by the heirs of Velasco.
RULING:
Yes, for both issues. Regarding the first, the Holdout Agreement
conferred on CBTC the power, not the duty, to set off the loan from the account
subject of the Agreement. When BPI demanded payment of the loan from
Eastern, it exercised its right to collect payment based on the promissory note,
and disregarded its option under the Holdout Agreement. Therefore, its demand
was in the correct order.
Regarding the second issue, BPI was the debtor and Eastern was the
creditor with respect to the joint checking account. Therefore, BPI was obliged
to return the amount of the said account only to the creditor. When it allowed
the withdrawal of the balance of the account by the heirs of Velasco, it made the
payment to the wrong party. The law provides that payment made by the
debtor to the wrong party does not extinguish its obligation to the creditor who

is without fault or negligence. Therefore, BPI was still liable to the true creditor,
Eastern.

G.R. No. 84281 May 27, 1994

CITYTRUST BANKING CORPORATION, Petitioner, vs. THE INTERMEDIATE
APPELLATE COURT and EMME HERRERO, Respondents.

FACTS: Private respondent Emme Herrero filed a complaint for damages against
petitioner Citytrust Banking Corporation. In her complaint, private respondent averred
that she, a businesswoman, made regular deposits, starting September of 1979, with
petitioner Citytrust Banking Corporation. She deposited with petitioner the amount of
Thirty One Thousand Five Hundred Pesos (P31,500.00), in cash, in order to amply cover
six (6) postdated checks she issued. When presented for encashment upon maturity, all
the checks were dishonored due to "insufficient funds." The last check No. 007400,
however, was personally redeemed by private respondent in cash before it could be
redeposited. Petitioner, in its answer, asserted that it was due to private respondent's
fault that her checks were dishonored. It averred that instead of stating her correct
account number, i.e., 29000823, in her deposit slip, she inaccurately wrote 2900823. The
Regional Trial Court dismissed the complaint for lack of merit. Private respondent went to
the Court of Appeals, which found the appeal meritorious. Hence, it rendered judgment
reversing the trial court's decision.
ISSUE: Whether or not the bank is liable for damages.
RULING: Yes. Private respondent is entitled to nominal damages. In Simex International
(Manila), Inc. vs. Court of Appeals, 183 SCRA 360, reiterated in Bank of Philippine Islands
vs. Intermediate Appellate Court, 206 SCRA 408, we similarly said, in cautioning
depository banks on their fiduciary responsibility, that In every case, the depositor expects the bank to treat his account with utmost fidelity,
whether such account consists only of a few hundred pesos or of millions. The bank must
record every single transaction accurately, down to the last centavo, and as promptly as
possible. This has to be done if the account is to reflect at any given time the amount of
money the depositor can dispose of as he sees fit, confident that the bank will deliver it as
and to whomever he directs. A blunder on the part of the bank, such as the dishonor of a
check without good reason, can cause the depositor not a little embarrassment if not also
financial loss and perhaps even civil and criminal litigation.
The point is that as a business affected with public interest and because of the nature of
its functions, the bank is under obligation to treat the accounts of its depositors with
meticulous care, always having in mind the fiduciary nature of their relationship.
We agree with petitioner, however, that it is wrong to award, along with nominal
damages, temperate or moderate damages. The two awards are incompatible and cannot
be granted concurrently. Nominal damages are given in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated or recognized,
and not for the purpose of indemnifying the plaintiff for any loss suffered by him (Art.
2221, New Civil Code; Manila Banking Corp. vs. Intermediate Appellate Court, 131 SCRA
271). Temperate or moderate damages, which are more than nominal but less than
compensatory damages, on the other hand, may be recovered when the court finds that
some pecuniary loss has been suffered but its amount cannot, from the nature of the
case, be proved with reasonable certainty (Art. 2224, New Civil Code).

BPI vs. CA 326 SCRA 641 (2000)

Facts: Private respondent Benjamin Napiza deposited in his foreign current deposit with BPI a dollar check owned by Henry Chan in which he affixed his
signature at the dorsal side thereof. For this purpose, Napiza gave Chan a signed blank withdrawal slip. However, Gayon Jr. got hold of the withdrawal

slip and used it to withdraw the proceeds of the dollar check, even before the check was cleared and without the presentation of the bank passbook.
Issues:
(1) Whether or not petitioner can hold private respondent liable for the proceeds of the check for having affixed his signature at the dorsal side as
indorser; and
(2) Whether or not the bank was negligent as the proximate cause of the loss and should be held liable.
Held:
(1) No. Ordinarily, private respondent may be held liable as an indorser of the check or even as an accommodation party. However, to hold him liable
would result in an injustice. The interest of justice thus demands looking into the events that led to the encashment of the check.
Under the rules appearing in the passbook that BPI issued to private respondent, to be able to withdraw under the Philippine foreign currency deposit
system, two requisites must be presented to petitioner BPI by the person withdrawing an amount:
1) A duly filled-up withdrawal slip; and
2) The depositors passbook.
Petitioner bank alleged that had private respondent indicated therein the person authorized to receive the money, then Gayon could not have withdrawn
any amount. However, the withdrawal slip itself indicates a special instruction that the amount is payable to Ramon de Guzman and/or Agnes de
Guzman. Such being the case, petitioners personnel should have been duly warned that Gayon was not the proper payee of the proceeds of the
check. Moreover, the fact that private respondents passbook was not presented during the withdrawal is evidenced by the entries therein showing that
the last transaction that he made was when he deposited the subject check.
(2) Yes. A bank is under obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their
relationship. Petitioner failed to exercise the diligence of a good father of a family. In total disregard of its own rules, petitioners personnel negligently
handled private respondents account to petitioners detriment.
The proximate cause of the withdrawal and eventual loss of the amount of $2,500.00 on petitioners part was its personnels negligence in allowing such
withdrawal in disregard of its own rules and the clearing requirement in the banking system. In so doing, petitioner assumed the risk of incurring a loss
on account of a forged or counterfeit foreign check and hence, it should suffer the resulting damage.

Estrada vs Desierto
(GR No 159160, Dec 9, 2001)
FACTS:
In this case, the petitioners foreign currency deposits with Citibank are placed in a constructive restraint by the BIR. Petitoners claim that the restraint is
in violation of the FCDA.
ISSUE:
W/N the reliance of public respondent on such law is grave abuse of discretion on petitioner's part.
HELD:
The SC held that it is not sound practice to depart from the policy of non-interference in the Ombudsmans exercise of discretion to determine whether or
not to le information against an accused. But it was also quick to add that a declaration by the Court that the public respondents did not gravely abuse
their discretion in issuing the resolutions dismissing petitioner's complaint does not necessarily translate to a declaration of assent in the findings of fact
and conclusions of law contained therein. With respect specifically to the resolution for violation of Section 8 of Rep. Act. No. 6426, public respondents
relied on the "whereas" clause of P.D. No. 1246 which amended Rep. Act No. 6426 and on the Salvacion case to conclude that only non-residents who
are not engaged in trade and business are under the mantle of protection of Section 8 of Rep. Act. No. 6426. Assuming that such reliance is erroneous
as contended by petitioner, the Court, on petition for certiorari, cannot correct the sameas the error is not of a degree that would amount to a clear case
of abuse of discretion of the grave and malevolent kind. It is axiomatic that not every erroneous conclusion of law or fact is abuse of discretion.As
adverted to earlier, the Court will interfere in the Ombudsman's findings of fact and conclusions of law only in clear cases of grave abuse of discretion.

BPI Family Savings Bank vs First Metro Investment

(GR No 132390, May 21, 2004, Sandoval-Gutierrez)

Facts:
On August 25, 1989, FMIC, through its Executive Vice President Antonio Ong, opened current account number and deposited METROBANK a check of
P100 million with BPI Family Bank San Francisco del Monte Branch. Ong made the deposit upon request of his friend, Ador de Asis, a close
acquaintance of Jaime Sebastian, then Branch Manager of BPI FB San Francisco del Monte Branch. Sebastians aim was to increase the deposit level
in his Branch.
BPI FB, through Sebastian, guaranteed the payment of P14,667,687.01 representing 17% per annum interest of P100 million deposited by FMIC. The
latter, in turn, assured BPI FB that it will maintain its deposit of P100 million for a period of one year on condition that the interest of 17% per annum is
paid in advance. This agreement between the parties was reached through their communications in writing.
Subsequently, BPI FB paid FMIC 17% interest or P14,667,687.01 upon clearance of the latters check deposit. However on the basis of an Authority to
Debit signed by Ong and Ma. Theresa David, Senior Manager of FMIC, BPI FB transferred P80 million from FMICs current account to the savings
account of Tevesteco.
FMIC denied having authorized the transfer of its funds to Tevesteco, claiming that the signatures of Ong and David were falsified. Thereupon, to
recover immediately its deposit, FMIC issued BPI FB a check for P86,057,646.72 payable to itself and drawn on its deposit with BPI FB SFDM branch.
But upon presentation for payment on September 13, 1989, BPI FB dishonored the check as it was "drawn against insufficient funds" (DAIF).
Issues:
Whether or not the deposit in question may be treated as demand deposit or time deposit. If it is to be considered a demand deposit, is it legally
proscribed from earning interest?
Held:
The deposit in question is a time deposit because the deposit of Php 100 million is not withdrawable for one year provided that an advance interest of
17% is paid. Ordinarily, a time deposit is defined as one where the payment of which cannot be legally required within a specified number of days. In
contrast, a demand deposit is one where the liability of the bank is denominated in Philippine currency subject to payment in legal tender upon
presentation of the depositors check. This is quite obvious from the communications between Jaime Sebastian, petitioners Branch Manager, and
Antonio Ong, respondents Executive Vice President. Both agreed that the deposit of P100 million was non-withdrawable for one year upon payment in
advance of the 17% per annum interest.
In addition, demand deposits are not legally proscribed from earning interest. Under CB Circular No. 22, series of 1994, demand deposits shall not be
subject to any rate ceiling. This, according to the SC is an open authority to pay interest even on demand deposit and with more reason because interest
is not even subject to any ceiling.
Petition is denied and the CA decision is affirmed.