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February 29, 2000
BANK OF THE PHILIPPINE ISLANDS, petitioner, vs. COURT OF APPEALS and BENJAMIN C. NAPIZA, respondents. YNARES-SANTIAGO, J.: This is a petition for review on certiorari of the Decision 1 of the Court of Appeals in CA-G.R. CV No. 37392 affirming in toto that of the Regional Trial Court of Makati, Branch 139,2 which dismissed the complaint filed by petitioner Bank of the Philippine Islands against private respondent Benjamin C. Napiza for sum of money. On September 3, 1987, private respondent deposited in Foreign Currency Deposit Unit (FCDU) Savings Account No. 028-187 3 which he maintained in petitioner bank's Buendia Avenue Extension Branch, Continental Bank Manager's Check No. 00014757 4 dated August 17, 1984, payable to "cash" in the amount of Two Thousand Five Hundred Dollars ($2,500.00) and duly endorsed by private respondent on its dorsal side.5 It appears that the check belonged to a certain Henry who went to the office of private respondent and requested him to deposit the check in his dollar account by way of accommodation and for the purpose of clearing the same. Private respondent acceded, and agreed to deliver to Chan a signed blank withdrawal slip, with the understanding that as soon as the check is cleared, both of them would go to the bank to withdraw the amount of the check upon private respondent's presentation to the bank of his passbook. Using the blank withdrawal slip given by private respondent to Chan, on October 23, 1984, one Ruben Gayon, Jr. was able to withdraw the amount of $2,541.67 from FCDU Savings Account No. 028-187. Notably, the withdrawal slip shows that the amount was payable to Ramon A. de Guzman and Agnes C. de Guzman and was duly initialed by the branch assistant manager, Teresita Lindo.6 On November 20, 1984, petitioner received communication from the Wells Fargo Bank International of New York that the said check deposited by private respondent was a counterfeit check 7 because it was "not of the type or style of checks issued by Continental Bank International."8 Consequently, Mr. Ariel Reyes, the manager of petitioner's Buendia Avenue Extension Branch, instructed one of its employees, Benjamin D. Napiza IV, who is private respondent's son, to inform his father that the check bounced.9 Reyes himself sent a telegram to private respondent regarding the dishonor of the check. In turn, private respondent's son wrote to Reyes stating that the check been assigned "for encashment" to Ramon A. de Guzman and/or Agnes C. de Guzman after it shall have been cleared upon instruction of Chan. He also said that upon learning of the dishonor of the check, his father immediately tried to contact Chan but the latter was out of town. 10
Private respondent's son undertook to return the amount of $2,500.00 to petitioner bank. On December 18, 1984, Reyes reminded private respondent of his son's promise and warned that should he fail to return that amount within seven (7) days, the matter would be referred to the bank's lawyers for appropriate action to protect the bank's interest.11 This was followed by a letter of the bank's lawyer dated April 8, 1985 demanding the return of the $2,500.00. 12 In reply, private respondent wrote petitioner's counsel on April 20, 198513 stating that he deposited the check "for clearing purposes" only to accommodate Chan. He added: Further, please take notice that said check was deposited on September 3, 1984 and withdrawn on October 23, 1984, or a total period of fifty (50) days had elapsed at the time of withdrawal. Also, it may not be amiss to mention here that I merely signed an authority to withdraw said deposit subject to its clearing, the reason why the transaction is not reflected in the passbook of the account. Besides, I did not receive its proceeds as may be gleaned from the withdrawal slip under the captioned signature of recipient.1âwphi1.nêt If at all, my obligation on the transaction is moral in nature, which (sic) I have been and is (sic) still exerting utmost and maximum efforts to collect from Mr. Henry Chan who is directly liable under the circumstances. xxx xxx xxx
being grossly negligent;" in fact, it had allegedly admitted having paid the amount in the check "by mistake" . . . "if not altogether due to collusion and/or bad faith on the part of (its) employees." Charging petitioner with "apparent ignorance of routine bank procedures," by way of counterclaim, private respondent prayed for moral damages of P100,000.00, exemplary damages of P50,000.00 and attorney's fees of 30% of whatever amount that would be awarded to him plus an honorarium of P500.00 per appearance in court. Private respondent also filed a motion for admission of a third party complaint against Chan. He alleged that "thru strategem and/or manipulation," Chan was able to withdraw the amount of $2,500.00 even without private respondent's passbook. Thus, private respondent prayed that third party defendant Chan be made to refund to him the amount withdrawn and to pay attorney's fees of P5,000.00 plus P300.00 honorarium per appearance. Petitioner filed a comment on the motion for leave of court to admit the third party complaint, whenever it asserted that per paragraph 2 of the Rules and Regulations governing BPI savings accounts, private respondent alone was liable "for the value of the credit given on account of the draft or check deposited." It contended that private respondent was estopped from disclaiming liability because he himself authorized the withdrawal of the amount by signing the withdrawal slip. Petitioner prayed for the denial of the said motion so as not to unduly delay the disposition of the main case asserting that private respondent's claim could be ventilated in another case. Private respondent replied that for the parties to obtain complete relief and to avoid multiplicity of suits, the motion to admit third party complaint should be granted. Meanwhile, the trial court issued orders on August 25, 1987 and October 28, 1987 directing private respondent to actively participate in locating Chan. After private respondent failed to comply, the trial court, on May 18, 1988, dismissed the third party complaint without prejudice. On November 4, 1991, a decision was rendered dismissing the complaint. The lower court held that petitioner could not hold private respondent liable based on the check's face value alone. To so hold him liable "would render inutile the requirement of "clearance" from the drawee bank before the value of a particular foreign check or draft can be credited to the account of a depositor making such deposit." The lower court further held that "it was incumbent upon the petitioner to credit the value of the check in question to the account of the private respondent only upon receipt of the notice of final payment and should not have authorized the withdrawal from the latter's account of the value or proceeds of the check." Having admitted that it committed a "mistake" in not waiting for the clearance of the check before authorizing the withdrawal of its value or proceeds, petitioner should suffer the resultant loss.
On August 12, 1986, petitioner filed a complaint against private respondent, praying for the return of the amount of $2,500.00 or the prevailing peso equivalent plus legal interest from date of demand to date of full payment, a sum equivalent to 20% of the total amount due as attorney's fees, and litigation and/or costs of suit. Private respondent filed his answer, admitting that he indeed signed a "blank" withdrawal slip with the understanding that the amount deposited would be withdrawn only after the check in question has been cleared. He likewise alleged that he instructed the party to whom he issued the signed blank withdrawal slip to return it to him after the bank draft's clearance so that he could lend that party his passbook for the purpose of withdrawing the amount of $2,500.00. However, without his knowledge, said party was able to withdraw the amount of $2,541.67 from his dollar savings account through collusion with one of petitioner's employees. Private respondent added that he had "given the Plaintiff fifty one (51) days with which to clear the bank draft in question." Petitioner should have disallowed the withdrawal because his passbook was not presented. He claimed that petitioner had no one to blame except itself "for
Such request must indicate the name of the payee/s." Maniego may also be deemed an "accommodation party" in the light of the facts. the Bank may allow withdrawal by another upon the depositor's written authority duly authenticated. "a person placing his signature upon an instrument otherwise than as a maker. notwithstanding such holder at the time of taking the instrument knew * * (her) to be only an accommodation party. according to its tenor. after paying the holder. and held that the check deposited in this case must be cleared before its value could be properly transferred to private respondent's account. two requisites must be presented to petitioner bank by the person withdrawing an amount: (a) a duly filled-up withdrawal slip. Liability of general indorser. however. according to its tenor. The interest of justice thus demands looking into the events that led to the encashment of the check.On appeal. And. 6. in addition. and may be withdrawal only in the manner above provided. The check still had to be cleared and its proceeds can only be withdrawn upon presentation of a passbook in accordance with the bank's rules and regulations. Maniego. drawer or acceptor * * unless he clearly indicated by appropriate words his intention to be bound in some other capacity. Inc.. to obtain reimbursement from the party accommodated." As such. 2. to hold private respondent liable for the amount of the check he deposited by the strict application of the law and without considering the attending circumstances in the case would result in an injustice and in the erosion of the public trust in the banking system. and for the purpose of lending his name to some other person. she may not be liable on account of the dishonor of the checks indorsed by her. it shall be accepted or paid.19 Under these rules. provides for the following warranties of a person negotiating an instrument by delivery or by qualified indorsement: (a) that the instrument is genuine and in all respects what it purports to be." 18 We hold. WHETHER OR NOT RESPONDENT NAPIZA IS LIABLE UNDER HIS WARRANTIES AS A GENERAL INDORSER. and neither a deposit nor a withdrawal will be permitted except upon the presentation of the depositor's savings passbook.16 this Court described the liabilities of an indorser as follows: Appellant's contention that as mere indorser. he will pay the amount thereof to the holder. Petitioner claims that private respondent." Is an indorser of the instrument. the personality of private respondent's son and the lapse of more than fifty (50) days from date of deposit of the Continental Bank draft. It is thus clear that ordinarily private respondent may be held liable as an indorser of the check or even as an accommodation party. The appellate court held that petitioner committed "clears gross negligence" in allowing Ruben Gayon. or both. * * (the instrument) shall be accepted or paid. upon presentation of the depositor's savings passbook and with the withdrawal form supplied by the Bank at the counter. petitioner filed this petition for review on certiorari. or to any subsequent indorser who may be compelled to pay it.. these requirements are designed to protect the bank from deception or fraud. she is under the law "liable on the instrument to a holder for value. 65. should be liable for the amount stated therein in accordance with the following provision of the Negotiable Instruments Law (Act No. in which the amount deposited withdrawn shall be entered only by the Bank. 5. The Court of Appeals cited the case of Roman Catholic Bishop of Malolos. Furthermore. the amount . and (c) of the next preceding section." inter alia "engages that on due presentment. the holder or last indorsee of a negotiable instrument has the right "to enforce payment of the instrument for the full amount thereof against all parties liable thereon.15 In People v. or indorser. and that if it be dishonored. and the necessary proceedings on dishonor be duly taken. without the same being returned yet. IAC. 66. and the necessary proceedings on dishonor be duly taken. It stressed that the mere deposit of a check in private respondent's account did not mean that the check was already private respondent's property. (b) that he has a good title to it. and that if it be dishonored. and (b) the depositor's passbook. mail or telegraphic transfer in currency of the account at the request of the depositor in writing on the withdrawal slip or by authenticated cable. he engages that on due presentment. a person "who has signed the instrument as maker." Such an indorser "who indorses without qualification. "since the relation between them is in effect that of principal and surety. valid and subsisting. acceptor. to be able to withdraw from the savings account deposit under the Philippine foreign currency deposit system. Sec. to withdraw the money without presenting private respondent's passbook and.14 where this Court stated that a personal check is not legal tender or money.17 However. the accommodation party being the surety. amount and the place where the funds are to be paid. Private respondent admits he signed a blank withdrawal slip ostensibly in violation of Rule No. Likewise. as the case may be. 3. (b). Petitioner asserts that by signing the withdrawal slip. i. i. without receiving value thereof. and (b) That the instrument is at the time of his indorsement. private respondent "presented the opportunity for the withdrawal of the amount in question. warrants to all subsequent holders in due course — (a) The matters and things mentioned in subdivisions (a).e. 2031): Sec. or any subsequent indorser who may be compelled to pay it. on the other hand. is likewise untenable. Any stamp. — Every indorser who indorses without qualification. that the propriety of the withdrawal should be gauged by compliance with the rules thereon that both petitioner bank and its depositors are duty-bound to observe. transmission and other charges related to such withdrawals shall be for the account of the depositor and shall be paid by him/her upon demand. and (c) that all prior parties had capacity to contract. Deposits shall not be subject to withdrawal by check. before the check was cleared and in crediting the amount indicated therein in private respondent's account. Under the law. to their (availability). he will pay the amount thereof to the holder. Without filing a motion for the reconsideration of the Court of Appeals' Decision. or both. Withdrawals may be made by draft. After all.e. as the case may be. having affixed his signature at the dorsal side of the check. petitioner's contention that private respondent warranted the check's genuineness by endorsing it is untenable for it would render useless the clearance requirement. In the passbook that petitioner issued to private respondent. WHETHER OR NOT PETITIONER WAS GROSSLY NEGLIGENT IN ALLOWING THE WITHDRAWAL. Withdrawals may also be made in the form of travellers checks and in pesos. v. Among the "parties liable thereon. Jr. the Court of Appeals affirmed the lower court's decision. WHETHER OR NOT A CONTRACT OF AGENCY WAS CREATED BETWEEN RESPONDENT NAPIZA AND RUBEN GAYON. Withdrawals must be made by the depositor personally but in some exceptional circumstances. Withdrawals in the form of notes/bills are allowed subject however." although she has the right. 6 requiring that the request for withdrawal must name the payee. the following rules on withdrawal of deposits appear: 4. raising the following issues: 1." Petitioner relied "on the genuine signature on the withdrawal slip. drawer. the requirement of presentation of a passbook to ascertain the propriety of the accounting reflected would be a meaningless exercise.
in a way. This is in consonance with the rule that a negotiable instrument.26 Banco Atlantico. petitioner's personnel negligently handled private respondent's account to petitioner's detriment. the withdrawal slip contains a boxed warning that states: "This receipt must be signed and presented with the corresponding foreign currency savings passbook by the depositor in person. or negligent in the man of ordinary intelligence and prudence and determines liability by that. then he is guilty of negligence." 24 The rule finds more meaning in this case where the check involved is drawn on a foreign bank and therefore collection is more difficult than when the drawee bank is a local one even though the check in question is a manager's check. petitioner likewise overlooked another rule that is printed in the passbook.00. after receiving the deposit. Private respondent does not deny having signed such authority. In total disregard of its own rules." Accordingly. as well as on the savings passbook at the first opportunity to reflect such cancellation. who was also employed in petitioner's Buendia Ave. either Ramon or Agnes de Guzman should have issued another authority to Gayon for such withdrawal.500. this is in accordance with ordinary banking practices and with this Court's pronouncement that "the collecting bank or last endorser generally suffers the loss because has the duty to ascertain the genuineness of all prior endorsements considering that the act of presenting the check for payment to the drawee is an assertion that the party making the presentment has done its duty to ascertain the genuineness of the endorsements."27 As such.e. there could not have been a principal-agent relationship between private respondent and Gayon so as to render the former liable for the amount withdrawn. Moreover.to be withdrawn and the place where such withdrawal should be made. on account of the "special treatment" that Boncan received from the personnel of Banco Atlantico's foreign department. amendments or changes in its record. The Court held that the encashment of the checks without prior clearance is "contrary to normal or ordinary banking practice specially so where the drawee bank is a foreign bank and the amounts involved were large.250. 1984. 1984 the word "hold" was written beside the balance of $109. provides that test by which to determine the existence of negligence in a particular case which may be stated as follows: Did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not. whether a manager's check or ordinary check.00 and the additional charges of $10.31 On September 10. Under these facts. etc. always having in mind the fiduciary nature of their relationship.. That the withdrawal slip was in fact a blank one with only private respondent's two signatures affixed on the proper spaces is buttressed by petitioner's allegation in the instant petition that had private respondent indicated therein the person authorized to receive the money. in allowing the withdrawal of private respondent's deposit.. By the nature of its functions. however. The bank's ledger on private respondent's account shows that before he deposited $2. Thus: 2. the Court approved the Auditor General's denial of Banco Atlantico's claim for payment of the value of the checks that was withdrawn by Boncan. paid the amounts represented in three (3) checks to Virginia Boncan. If the account has sufficient balance. the amount of $600. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. petitioner's personnel should have been duly warned that Gayon. The law considers what would be reckless. he practically authorized any possessor thereof to write any amount and to collect the same. the provisional entry therefor made by the Bank in the savings passbook and its records shall be deemed automatically cancelled regardless of the time that has elapsed.59 was reflected in the ledger and on October 23. by depositing the check with petitioner. yet still relevant. petitioner's branch manager. Said ruling brings to light the fact that the banking business is affected with public interest. Gayon.00." 20 Such contention would have been valid if not for the fact that the withdrawal slip itself indicates a special instruction that the amount is payable to "Ramon A. private respondent did not become the outright owner of the amount stated therein. a commercial bank in Madrid. private respondent was. money orders. November 20. This is clear from Rule No. blameworthy. the date he deposited the controversial check in the amount of $2. Smith. petitioner shall credit the amount in private respondent's account or infuse value thereon only after the drawee bank shall have paid the amount of the check or the check has been cleared for deposit. The seventy-eight (78)-year-old. Spain.32 On November 19. 29 Petitioner violated its own rules by allowing the withdrawal of an amount that is definitely over and above the aggregate amount of private respondent's dollar deposits that had yet to be cleared.00 were indicated therein as withdrawn thereby leaving a balance $2. Extension branch. As this Court once said on this matter: Negligence is the omission to do something which a reasonable man. guided by those considerations which ordinarily regulate the conduct of human affairs. for any reason. Again. . Jr. The law here in effect adopts the standard supposed to be supplied by the imaginary conduct of the discreet pater-familias of the Roman law. the withdrawal shall be entered in the depositor's passbook." was intercalated and thereafter it was signed by Gayon or whoever was allowed by petitioner to withdraw the amount.00 on September 3. such as a check. 28 In the case at bar. considering petitioner's clear admission that the withdrawal slip was a blank one except for private respondent's signature. de Guzman. the collection shall be debited by the Bank against the account. provided.30 Upon private respondent's deposit of $2. case of Picart v.92. but petitioner's Buendia Ave. that amount was credited in his ledger as a deposit resulting in the corresponding total balance of $3. could not have withdrawn any amount. would do. Auditor General.00.500. Collection charges by the Bank's foreign correspondent in effecting such collection shall be for the account of the depositor. 25 In Banco Atlantico v. Of course. then Ruben Gayon." Such being the case.21 was not the proper payee of the proceeds of the check. 1984. Extension Branch received a copy of the communication thereon from Wells Fargo Bank International in New York the following day. for the protection of the bank's interest and as a reminder to the depositor. For withdrawals thru a representative. 1984. the unavoidable conclusion is that the typewritten name of "Ruben C. and whether or not the defective items can be returned to the depositor. petitioner.33 That must have been the time when Reyes. Jr. an interest of $11. 22 In allowing the withdrawal. or the doing of something which a prudent and reasonable man would do. a bank is under obligation to treat the accounts of its depositors "with meticulous care. 6 set out by petitioner so that.00. 1984. de Guzman &/or Agnes C." The requirement of presentation of the passbook when withdrawing an amount cannot be given mere lip service even though the person making the withdrawal is authorized by the depositor to do so. that deposits of drafts.500. the proceeds of the deposited checks. Under the above rule. cannot be collected or if the Bank is required to return such proceeds. in depositing the check in his name. will be accented as subject to collection only and credited to the account only upon receipt of the notice of final payment . 23 As such. merely designating petitioner as the collecting bank. drafts. (Emphasis and underlining supplied. depositor should accomplish the authority at the back. Otherwise. money orders. On September 30.) As correctly held by the Court of Appeals. Petitioner contends that "(I)n failing to do so ( i. The bank did so without previously clearing the checks with the drawee bank. If.541. and the Bank is hereby authorized to execute immediately the necessary corrections. in dealing with its depositors. under its own rules.640. private respondent had a balance of only $750. the Philippine National Bank in New York. a bank should exercise its functions not only with the diligence of a good father of a family but it should do so with the highest degree of care. However. naming his authorized agent). failed to exercise the diligence of a good father of a family. etc. the finance officer of the Philippine Embassy in Madrid.00. was informed unofficially of the fact that the check deposited was a counterfeit.67 was entered as withdrawn with a balance of $109. checks. is not legal tender. The fact that private respondent's passbook was not presented during the withdrawal is evidenced by the entries therein showing that the last transaction that he made with the bank was on September 3. the amount of $2. All deposits will be received as current funds and will be repaid in the same manner. 1984. at the dorsal side of the withdrawal slip is an "authority to withdraw" naming Gayon the person who can withdraw the amount indicated in the check.92.
it contends. in cash. and attorney's fees of P4. This is so because it is not likely to commit an error in one's name than merely relying on numbers which are difficult to remember. it is a fact that her name. Herrero. policy and precedent. she inaccurately wrote 2900823. asserted that it was due to private respondent's fault that her checks were dishonored. plaintiff is hereby adjudged to pay the defendant reasonable attorney's fee in the amount of FIVE THOUSAND PESOS (P5. even if it be true that there was error on the part of the plaintiff in omitting a "zero" in her account number. is the following printed provision: In making a deposit .299. in her deposit slip.00 1. in order to amply cover six (6) postdated checks she issued. starting September of 1979. private respondent has also the duty to use her account in accordance with the rules of petitioner bank to which she has contractually acceded. 84281 May 27. which.00).000. vs. with petitioner Citytrust Banking Corporation at its Burgos branch in Calamba. petitioner. Among such rules. The bank is engaged in business impressed with public interest. it is at once apparent that petitioner's personnel allowed the withdrawal of an amount bigger than the original deposit of $750. according to defendant. which found the appeal meritorious. banks that were deposited with petitioner. obviously. is "that cause. however. No. There could be no mistaking in her name.507.000. We are not persuaded that defendant bank was not free from blame for the fiasco.00 and the value of the check deposited in the amount of $2. the negligence of petitioner's personnel was the proximate cause of the loss that petitioner sustained. petitioner assumed the risk of incurring a loss on account of a forged or counterfeit foreign check and hence.500.00 Petitioner bank concedes that it is its obligation to honor checks issued by private respondent which are sufficiently funded.. thus: WHEREFORE. made the following findings and conclusions: 1 We cannot uphold the position of defendant. private respondent averred that she. Wells Fargo Bank International handled the clearing of checks drawn against U. 36 is untenable. lending out money and collecting interests.204. Herrero". G. . VITUG. On 15 May 1980. and without which the result would not have occurred. SO ORDERED. the petition for review on certiorari is DENIED.nêt WHEREFORE. produces the injury. Exactly the same issue was addressed by the appellate court.1984. 007400.00.1âwphi1. i. The Regional Trial Court (Branch XXXIV) of Calamba. DISMISSING the complaint for lack of merit." 37 The proximate cause of the withdrawal and eventual loss of the amount of $2. The Decision of the Court of Appeals in CA-G. unbroken by any efficient intervening cause. We view the use of numbers as simply for the convenience of the bank but was never intended to disregard the real name of its depositors. it should suffer the resulting damage. Private respondent went to the Court of Appeals. especially a number with eight (8) digits as the account numbers of defendant's depositors. "Emme E.262.34 According to Reyes. . which. contained in its "brochures" governing current account deposits. and that the deposit was made in her name.00 6. in its answer. In so doing. 37392 is AFFIRMED. with costs against him. and it is its duty to protect in return its many clients and depositors who transact business with it.716. 29000823. As it happened. Second. 1994 CITYTRUST BANKING CORPORATION. which is determined by a mixed consideration of logic. It should not be a matter of the bank alone receiving deposits.000. "B"). it contained only seven (7) digits instead of eight (8). viz: Check No.R. all the checks were dishonored due to "insufficient funds. Proximate cause. common sense. yet.00) plus cost of suit. was personally redeemed by private respondent in cash before it could be redeposited. Hence. a businesswoman. the judgment appealed from is REVERSED and a new one entered thereby ordering defendant to pay plaintiff nominal damages of P2.R. While it is true that private respondent's having signed a blank withdrawal slip set in motion the events that resulted in the withdrawal and encashment of the counterfeit check. THE INTERMEDIATE APPELLATE COURT and EMME HERRERO.00 on petitioner's part was its personnel's negligence in allowing such withdrawal in disregard of its own rules and the clearing requirement in the banking system. but. CV No." The last check No. she deposited with petitioner the amount of Thirty One Thousand Five Hundred Pesos (P31. It averred that instead of stating her correct account number. "B"). after its deliberations. otherwise it could take a long time before a depositor could make a withdrawal. judgment is hereby rendered in favor of the defendant and against the plaintiff. the complete name of plaintiff depositor appears in bold letters on the deposit slip (Exh.35 From these facts on record.00 although they had not yet received notice from the clearing bank in the United States on whether or not the check was funded.000. was erroneous because. In the case before Us. Petitioner. kindly insure accuracy in filing said deposit slip forms as we hold ourselves free of any liability for loss due to an incorrect account number indicated in the deposit slip although the name of the depositor is correctly written.00. on 15 July 1988. in natural and continuous sequence. "Emma E. . dismissed the complaint for lack of merit. J. Reyes' contention that after the lapse of the 35day period the amount of a deposited check could be withdrawn even in the absence of a clearance thereon. reversing the trial court's decision.00 4.281. The appellate court ruled: WHEREFORE. Laguna.: This case emanated from a complaint filed by private respondent Emme Herrero for damages against petitioner Citytrust Banking Corporation. plaintiff's deposit had to be consigned to the suspense When presented for encashment upon maturity. In the first place." In fact. the teller should not have accepted plaintiff's deposit without correcting the account number on the deposit slip which.500. on 27 February 1984. defendant's teller should not have fed her deposit slip to the computer knowing that her account number written thereon was wrong as it contained only seven (7) digits.e. For. The counterclaim of defendant is dismissed for lack of merit. temperate and moderate damages of P5. Said practice amounts to a disregard of the clearance requirement of the banking system. made regular deposits. In her complaint. respondents. is clearly written on said deposit slip (Exh. Amount 007383 007384 007387 007387 007492 007400 — — — — — — P1.00 2. It is also its obligation to see to it that all funds invested with it are properly accounted for and duly posted in its ledgers.00. This is controlling in determining in whose account the deposit is made or should be posted.00 4. it rendered judgment. as pointed out by defendant. Petitioner Citytrust Banking Corporation is now before us in this petition for review on certiorari. Laguna.500.S.
from the nature of the case. When these checks were forwarded to MBTC on April 12. Roque and Mrs. Roque were deposited by the Roques with the Philippine Banking Corporation. Eliza Roque for P25. ways and means are available whereby deposits with erroneous account numbers are properly credited depositor's correct account numbers. 1982 from the Central Bank in the amount of P304. along with nominal damages. vs.000. and ISABEL R. Depositors are only concerned with the facility of depositing their money. quoting the court a quo in an almost identical set of facts. Nov. and as promptly as possible. THE HON. . who are supposed to be always "on-the-go". which has been violated or invaded by the defendant. in cautioning depository banks on their fiduciary responsibility. Plaintiff's account is a "current account" which should immediately be posted. including the assurance that their deposits will be duly credited them as soon as they are made.000. Intermediate Appellate Court. or should be. and withdrawing therefrom. We agree with petitioner. part of the training and standard operating procedure of the bank's employees. like plaintiff.. We have already ruled in Mundin v. J. KATIGBAK. On April 6. which are more than nominal but less than compensatory damages. RURAL BANK OF PADRE GARCIA. be proved with reasonable certainty (Art. 0069 and 0070) were payable to Dr. vs. that — Having accepted a deposit in the course of its business transactions. "L". 1982. could have been avoided at the first instance had the teller of defendant bank performed her duties efficiently and well. temperate or moderate damages. the depositor expects the bank to treat his account with utmost fidelity. particularly businessmen. Manila Banking Corp. Court of Appeals. SO ORDERED. MBTC received from the Central Bank a credit memo dated April 5. Far East Bank & Trust Co . Felipe C. 45. INC. confident that the bank will deliver it as and to whomever he directs. the depositors are not concerned with banking procedure. that it is wrong to award. To post a deposit in somebody else's name despite the name of the depositor clearly written on the deposit slip is indeed sheer negligence which could have easily been avoided if defendant bank exercised due diligence and circumspection in the acceptance and posting of plaintiff's deposit. G. ROMERO. representing loans granted by the Central Bank to RBPG.R. . We subscribe to the above disquisitions of the appellate court. We agree with plaintiff that — . For. whether such account consists only of a few hundred pesos or of millions. where Katigbak maintains current accounts with MBTC's main office in Makati as well as its Lipa City branch. 206 SCRA 408. 1994 (CA-GR CV No. may be vindicated or recognized. vs. A blunder on the part of the bank. In the instant case. 2221. Lava & Fornier for private respondents. No. that — In every case. "O" and "P"). The point is that as a business affected with public interest and because of the nature of its functions. Fornier. The two awards are incompatible and cannot be granted concurrently. the forbearance should be commensurated with prompt. New Civil Code). 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. any delay in crediting their account can be embarrassing to them as in the case of plaintiff. and not for the purpose of indemnifying the plaintiff for any loss suffered by him (Art. the appealed decision is MODIFIED by deleting the award of temperate or moderate damages. always having in mind the fiduciary nature of their relationship. petitioner. we also find need for vindicating the wrong done on private respondent. Novaliches Branch in Quezon City. On the other hand. Metropolitan Bank and Trust Company (MBTC) is the rural bank's depository bank.00. such as the dishonor of a check without good reason. Isabel Katigbak issued several checks against its account with MBTC in the total amount of P300. on the other hand. prom. however. the appellate court's decision is AFFIRMED. can cause the depositor not a little embarrassment if not also financial loss and perhaps even civil and criminal litigation. On the basis of said credit memo. This.: This petition for certiorari seeks to annul the decision of respondent Court of Appeals dated October 29. reiterated in Bank of Philippine Islands vs. The records show that Isabel Katigbak is the president and director of RBPG. In all other respects. "N".respondents. In Simex International (Manila). As proof thereof plaintiff alludes to five particular incidents where plaintiff admittedly wrongly indicated her account number in her deposit slips (Exhs. Herrero" was erroneous and would be rejected by the computer. Inc . 03639. For then she could have readily detected that the account number in the name of "Emma E. if any. Decision). COURT OF APPEALS. AC-G. and Mrs. may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot. That is the responsibility of the bank and its employees. WHEREFORE. the bank is under obligation to treat the accounts of its depositors with meticulous care. The case emanated from a dispute between the Rural Bank of Padre Garcia. and we accordingly agree with the Court of Appeals in granting to her nominal damages but not in similarly awarding temperate or moderate damages. "J". Inc. efficient and satisfactory service. 1982 for payment (six (6) days from receipt of the Credit Memo).00 for the account of RBPG. Batangas — Branch XIII for damages.00 each. 2224. 1982 that its demand deposit account was credited with P304. 131 SCRA 271). 1985. Torres & Ibarra for petitioner.000. Said checks issued to Dr. They add that failure on the part of the defendant to do so is negligence for which they are liable. indeed.000. it behooved upon defendant bank to see to it and without recklessness — that the depositor was accurately credited therefor. the checks were returned by MBTC with the annotations . 1992 in CA — GR CV No. Makalintal. 26571 affirming the decision of the Regional Trial Court of Lipa. (RBPG) and Metropolitan Bank and Trust Company (MBTC) relative to a credit memorandum dated April 5. Temperate or moderate damages. Bank clients are supposed to rely on the services extended by the bank.accounts pending verification. even in computerized systems of accounts. we similarly said. 26571) METROPOLITAN BANK AND TRUST COMPANY. The bank must record every single transaction accurately. down to the last centavo. two (2) of which (Metrobank Check Nos.00 in favor of RBPG. CV No. earning interest thereon. 112576 October 26. and the Resolution dated November 11. 1993 denying petitioner's motion for reconsideration of the aforesaid decision. Barot. but were nevertheless properly credited her deposit (pp. Intermediate Appellate Court. That is. No costs in this instance. 183 SCRA 360. 2. Nominal damages are given in order that a right of the plaintiff. it does not earn interest. After all.R. New Civil Code. owning 65% of the shares thereof. At least.
Katigbak called up MBTC. including attorney's fees. 1982. In order to appease the doctor.000 which included the two (2) checks issued to the Roque spouses in the sum of P50. wala naman kayong pondo?" These remarks allegedly so shocked Mrs. 1994." the Investigation Report of the bank's Mr. involves factual matters which. RBPG paid Dr. through a Mr. Three Hundred Thousand na. . despite daily reporting of credit memos and a corresponding daily radio message confirmation. Dungo. alleging that the trial court erred in awarding temperate and moral damages. as attorney's fees. the court held that no actual damages could have been suffered by plaintiff RBPG because on April 15. San Juan received another insulting call from Mr. berating her about the checks which bounced. considering that RBPG's credit standing and business reputation were damaged by the wrongful acts of defendant's employees. whether or not private respondents RBPG and Isabel Rodriguez are legally entitled to moral damages and attorney's fees. Dungo's improper handling of clients led to the messenger's dismissal from service and Mr. Roque P50. Dungo that Mrs. 1982. moral and exemplary damages. but the following day. Katigbak in Hongkong that evening.00 as attorney's fees and litigation expenses. San Juan to request defendant MBTC to check and verify the records regarding the aforementioned Central Bank credit memo for P304. 26571." After the second dishonor of the two (2) checks. plaintiff may be allowed to recover actual. the RTC of Lipa City rendered a decision 2 in favor of plaintiffs and against the defendant MBTC. V-329 in the RTC of Lipa. 1982. (as shown by Exhibit "I.000.58 which excluded the unprocessed credit advice of P304. Felipe C. under the facts and circumstances of the case. 1983. Elisa Roque for P25. the Court of Appeals rendered a decision 3 affirming that of the trial court. plus costs and expenses of litigation without factual or legal basis therefor. informing Isabel Katigbak that a certain Mr.00. the reduction of moral damages from P500. ordering the latter to: 1. chiding him for the bouncing checks. Valentino Elevado) and Mr.00 in favor of RBPG as she was certain that the checks were sufficiently covered by the CB credit memo as early as April 6. 1992. Antonio Katigbak who allegedly paid the amount was actually reimbursed by plaintiff RBPG. Immediately upon arrival.00 in favor of RBPG and P100. Felipe Roque. 1982 after the Central Bank finally confirmed that a credit advice was indeed issued in favor of RBPG. Moreover. Mrs. wala namang pondo. its messenger. litigation expenses and the costs of the suit. received from the Central Bank several credit advices on rural bank accounts. that due to the inadvertence of said messenger."DAIF — TNC" (Drawn Against Insufficient Funds — Try Next Clearing) so they were redeposited on April 14.000. Tense and angered. 1982. that after the confirmation.00. as well as a reappraisal of its probative value. for a re-examination of the records of MBTC regarding the Central Bank credit memo dated April 5.000.498. The case at bench was instituted to seek damages caused by the dishonor through negligence of respondent bank's checks which were actually sufficiently funded. The threshold issue was whether or not.00 for Isabel Katigbak and P50. MBTC filed this petition.000. Dungo ("Bakit kayo nag-issue ng tseke na wala namang pondo . as well as penalty charges. The motion was denied. consequently.000.000.00. Batangas — Branch XIII against the Metropolitan Bank and Trust Company for damages on April 26. The ultimate facts as alleged by the defendant MBTC in its answer are as follows: that on April 6. the latter was issued four (4) debit memos representing service and penalty charges for the returned checks.000.00 in cash to replace the aforesaid checks.000. 4. On April 13. 1989. The petition is devoid of merit. questioning the deletion of the award of temperate damages and the reduction of the award of moral damages and attorney's fees. The lower court did not award actual damages in the amount of P50. allegedly arrogantly said: "Bakit kayo magagalit.000. 3. Mrs. having been already thoroughly discussed and analyzed in the courts below. Rizal Dungo. saying "Nag-issue kayo ng tseke. Metrobank not only dishonored the checks issued by RBPG. except for the deletion of the award of temperate damages. Dungo. Katigbak.00 as temperate damages. Makati. Dr. Mrs. San Juan was constrained to place another long distance call to Mrs.000. as it found no showing that Mr.000. San Juan explained to him the need to verify the records regarding the Central Bank memo. an officer of RBPG. coupled with the rude treatment received by Isabel Katigbak at the hands of Mr. RBPG and Isabel Katigbak filed Civil Case No. MBTC appealed from the decision to the Court of Appeals in CA — GR CV No. all of which impelled her to seek medical treatment. explaining the circumstances that gave rise to the bouncing checks situation. On August 25. received overseas phone calls from Mrs. Cochico. a member of the Board of Directors of Philippine Banking Corporation. Isabel Katigbak who was in Hongkong on a business-vacation trip together with her sons Alfredo and Antonio. pay plaintiff Isabel Katigbak P50.00 representing the amount of the two (2) checks payable to Dr. and 2. the Katigbaks had to cut short their Hongkong stay with their respective families and flew back to Manila. both of whom were also officers of RBPG. as well as attorney's fees." even if it was explained to Mr.00 were already credited to the account of RBPG and the service. Plaintiffsappellees filed a motion for reconsideration of the decision. allegedly conveyed personally on two occasions its apologies to plaintiffs to show that the bank and its officers acted with no deliberate intent on their part to cause injury or damage to plaintiffs. this case does not fall under any of these.000. San Juan). While this rule admits of exceptions. Katigbak testified that she informed Mrs. Mrs.000 each.000. assuming that they are so entitled. pay the costs of suit.00 as moral damages. and the insults from petitioner bank's officer directed against private respondent Isabel R. 1982. pay P500. to whom Cochico handed over the phone. which included that of plaintiff RBPG in the amount of P304. telling her sarcastically that he was very sure that no such credit memo existed. Katigbak that her blood pressure rose to a dangerous level and she had to undergo medical treatment at the Makati Medical Center for two (2) days. were all reversed. he merely brushed it aside.00 to P50. Metrobank's negligence arising from their messenger's misrouting of the credit advice resulting in the return of the checks in question. whether or not the amounts awarded are excessive and unconscionable. presenting the following issues for resolution: 1. The presence of malice and the evidence of besmirched reputation or loss of credit and business standing. On October 29.000. Assistant Cashier of MBTC insisted on talking to her (Mrs. are no longer reviewable here. San Juan was not in any way connected with RBPG.000. catching the first available flight on April 15. the same was credited only on April 15. Roque and Mrs. Maris Katigbak-San Juan at her residence in San Lorenzo Village.00 resulting in the dishonor of the aforementioned checks. Dungo's transfer from Metro Manila to Mindoro. pay P100.") 1 When Mrs. allegedly went to the Office of Antonio Katigbak. the stated balance in RBPG's account was only P5. MBTC credited the amount of the credit advice to plaintiff RBPG's account and thru its officers. Elizer Gonzales. 2. that as regards the P304. These were however again dishonored and returned unpaid for the following reason: "DAIF — TNC — NO ADVICE FROM CB. 1982 for P304. the credit advice issued in favor of plaintiff RBPG was not delivered to the department in charge of processing the same.00 which was a re-discounting loan from the Central Bank. Mr. the Central Bank credit advice in the amount of P304. when MBTC received from the clearing department the checks in question. and.
2001 Decision of the Court of Appeals in CA-G. SR. Sr.000.000. may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot.800. 94-1822. In the course of his investigation. 56737 which affirmed the Decision of the Regional Trial Court (RTC) of Makati City. fright. On motion of the petitioner. not to mention the insulting remarks from its Assistant Cashier. President and Chairman of the Board of Directors of the Ramdustrial Corporation. Moreover. Reniva. necessitating medical attendance for two (2) days at a hospital. 1982 was rectified only on April 15. covered by TCT No. the RTC of Makati. 2. 11 The carelessness of petitioner bank. Bank of America. from the nature of the case. 2003 UNITED COCONUT PLANTERS BANK. embarrassment and humiliation to private respondents for which they are entitled to recover reasonable moral damages. be proved with certainty. 1992 to ascertain if the defendants had any leviable real and personal property. precisely due to their nature. To help the Sheriff implement the writ. 23 SE 190. SO ORDERED. 1990 a writ of execution for the enforcement of its decision ordering Deputy Sheriff Pioquinto P. vs. Katigbak is susceptible of proof. 1983. petitioner. much less be held liable for damages on account of the inadvertence of its bank employee as Article 1173 of the Civil Code only requires it to exercise the diligence of a good pater familias. the dishonoring of the respondent's checks committed through negligence by the petitioner bank on April 6. J. it caused serious anxiety. definite proof of pecuniary loss cannot be adduced. The amount of such losses need not be established with exactitude. besmirched reputation. Block 5. serious anxiety. The bank is under obligation to treat the accounts of its depositors with meticulous care. CV No. The decision became final and executory. 1989. furnish independent. justifies the grant of moral damages. Reniva went to the property to inspect it and to verify the identity of the owner thereof. G. 3. Ramos. married to Rebecca F. B-02307600-R under the names of the said spouses. considering the fiduciary nature of their relationship. the name of one of the defendants was correctly stated as Teofilo Ramos. in Civil Case No. Davis.There is no merit in petitioner's argument that it should not be considered negligent. It was established that when Mrs. To pay plaintiff the sum of THREE MILLION ONE HUNDRED FIFTY THOUSAND PESOS (P3. nevertheless. The damage to private respondents' reputation and social standing entitles them to moral damages. "it can hardly be possible that a customer's check can be wrongfully refused payment without some impeachment of his credit. the decision of respondent Court of Appeals is AFFIRMED in all respects. Branch 134. the court issued on December 18.: Before us is a petition for review on certiorari of the March 30. it being a significant part of the foundation of his business. The appellate court. 275167 (PR-13108) under the name of Teofilo C. However. although the court is convinced that there has been such loss. It must bear the blame for failing to discover the mistake of its employee despite the established procedure requiring bank papers to pass through bank personnel whose duty it is to check and countercheck them for possible errors. the petitioner granted an additional loan to ZDC. the ZDC failed to pay its account to the petitioner despite demands. Teofilo Ramos. for the collection of the corporation’s account. Reniva found that the property was a residential lot. insult was added to injury by petitioner bank's issuance of debit memoranda representing service and penalty charges for the returned checks. distinct proof thereof". Sr. 8 Temperate or moderate damages which are more than nominal but less than compensatory damages. taking into account the latter's credit and social standing in the banking community. Cesar Bordalba. particularly since this is the very first time such humiliation has befallen private respondents. Clearly. Villapaña to levy and attach all the real and personal properties belonging to the aforesaid defendants to satisfy the judgment. As borne out by the records.00 be awarded. The case was docketed as Civil Case No. DECISION CALLEJO. Sr. Sec. rendered judgment in favor of the petitioner and against the defendants. an appraiser of the petitioner’s Credit and Appraisal In vestigation Department (CAID) on July 17. Don Jose Subdivision. To pay plaintiff the sum of P20. Ramos. 10 Moral and temperate damages which are not susceptible of pecuniary estimation are not awarded to penalize the petitioner but to compensate the respondents for injuries suffered as a result of the former's fault and negligence.000. he failed to talk to the owner of the property. from the nature of the case..00) plus interest. requested Eduardo C. considering the nature and extent of the services rendered by private respondent's counsel. aside from the fact that the amount allegedly suffered by Mrs. Reniva . respondent. petitioner bank was remiss in its duty and obligation to treat private respondent's account with the highest degree of care. 96 Ga 334. 147800. Moral damages include physical suffering. In the case of Leopoldo Araneta v. Dungo repeatedly made the insulting phone calls. 6 As the records bear out. Ocampo Avenue. The latter filed a complaint with the RTC of Makati against the ZDC. The decretal portion of the decision reads: 1. Branch 148. 458. TEOFILO C. however. the Court deems it just and equitable that attorney's fees in the amount of P50. citing 2 Morse Banks.000. Quezon City. both in the trial and appellate courts. On February 15. was the Executive Officer of the Iglesia ni Cristo. November 11. 16453. RAMOS. though he cannot. the head of the Litigation and Enforcement Division (LED) of the petitioner. No. In March 1984. which must in fact be an actual injury. identified as Lot 12. which are clearly not excessive and unconscionable.00 is not part of the relief prayed for in the complaint. Sr.00 for attorney’s fees. The lawyer furnished Reniva with a copy of Tax Declaration B-023-07600-R covering a property in Quezon City. the petitioner United Coconut Planters Bank (UCPB) granted a loan of P2. moral shock. 4 Responsibility arising from negligence in the performance of every kind of obligation is demandable. He saw workers on the property constructing a bungalow. Venicio Ramos and the Spouses Teofilo Ramos.R. As stated in the case of Atlanta National Bank vs. her wounded feelings and the mental anguish suffered by her caused her blood pressure to rise beyond normal limits. 1992 or nine (9) days after receipt of the credit memo. whether such account consists only of a few hundred pesos or of millions. The property was covered by Tax Declaration No. again with Venicio Ramos and the Spouses Teofilo Ramos and Amelita Ramos as sureties. and To pay the cost of suit. The Antecedents On December 22. aggravated by the lack of promptness in repairing the error and the arrogant attitude of the bank officer handling the matter. penalties and other charges. Atty. Per information gathered from the neighborhood. social humiliation and similar injury.150. 9 Temperate damages may be allowed in cases where from the nature of the case. WHEREFORE. mental anguish.000 to Zamboanga Development Corporation (ZDC) with Venicio Ramos and the Spouses Teofilo Ramos. 5 While the bank's negligence may not have been attended with malice and bad faith. with an area of 400 square meters. In the writ of execution.R. Katigbak learned that her checks were not being honored and Mr. justified its deletion when MBTC reasoned out that the amount of P50. However. wounded feelings. and Amelita Ramos as sureties. 7 we held that: The financial credit of a businessman is a prized and valuable asset. Any adverse reflection thereon constitutes some financial loss to him.
Ramos executed a promissory note for the said amount payable to the UCPB in installments for a period of 180 days. the petitioner could not cause the removal of the levy. In its answer.000. forthwith. 5. 1993. Cost of suit. On October 21. the respondent. The monthly amortization on its loan from UCPB became due and remained unpaid. in lieu thereof. surprisingly. Cesar Bordalba.. forthwith. Lukes Medical Center. 16453.  When apprised thereof. Zamboanga Realty Development Corporation. Dr. judgment be rendered in his favor by ordering defendants jointly and severally. the respondent.000. Ramdustrial Corporation found it difficult to pay the loan. 275167 that it learned for the first time the notice of levy on the respondent’s property. Upon advise from his lawyer.. thus made him lose an opportunity to participate in the bidding of a considerable project. and Rebecca F. neither was he aware that his property had been levied by the sheriff in the said case. the respondent dilly-dallied and failed to file the said motion. He was not a party in the said case. inter alia. the defendant in Civil Case No. who gave the respondent the usual treatment and medication for cardiovascular and hypertension problems.000. the bidding period for the San Miguel Corporation project had already elapsed. 275167 in favor of the petitioner as plaintiff in Civil Case No. It thus applied for an additional loan with the UCPB which was.confirmed that the Spouses Teofilo C.  As business did not go well.000. the petitioner and Sheriff Villapaña caused the annotation of a notice to levy on the TCT of his aforesaid property which caused the disapproval of his loan from UCPB and. the defendant in Civil Case No. P3. 275167. premises considered. the Sheriff prepared a notice of levy in Civil Case No. PDB withheld the release of the loan pending the cancellation of the notice of levy. mental anguish and almost a heart attack due to high blood pressure. filed the said motion on April 8. of Iglesia ni Cristo. in August of 1993. a notice of levy was annotated in TCT No. using the property covered by TCT No. Teofilo C. it was only on April 12. if any damages were sustained by the respondent. In a conversation over the phone with Atty. Ramos who appeared to be the registered owner of TCT No. it is respectfully prayed of this Honorable Court that judgment be rendered in favor of defendant UCPB. covered by TCT No. through counsel. 1994 that the respondent filed such motion. one of the judgment debtors in Civil Case No. it proposed that the respondent file a motion to cancel levy with a promise that it would not oppose the said motion. to pay as follows: 1. Therein. the respondent and his wife Rebecca F. the petitioner was thus surprised that the respondent filed an action for damages against it for his failure to secure a timely loan from the UCPB and PDB. Atty. 200. Carmelito A. The petitioner assured the respondent that the motion would not be opposed. Ramos and Rebecca Ramos owned the property. Ramos and Teofilo Ramos. 16453 to prove his claim that Atty. Ramos. 1993.00 as attorney’s fees. The respondent was shocked by the information. UCPB agreed. married to Rebecca Ramos. the respondent was informed that upon verification. 94-1822. in view of the foregoing premises. he proceeded to his doctor.. Carmelito Montano. Venicio A. 1994. the petitioner did not oppose the motion. Sr. Carmelito Montano. it was only when Sheriff Villapaña notified the petitioner that a certain Teofilo C. the head of the petitioner’s LED. Sheriff Villapaña furnished the petitioner with a copy of the said letter. one of the judgment debtors of UCPB in Civil Case No. criminal or administrative action against him. the respondent filed. it was because it took him quite a long time to file the motion. 4. the proceeds of which would be used to pay its account to the UCPB. The Register of Deeds of Quezon City complied and cancelled the notice of levy. 275167 as collateral for its loan. denied. were not one and the same person. The account of Ramdustrial Corporation with UCPB thus remained outstanding. The petitioner should not thus be made to suffer for the consequences of the respondent’s delay.. The petitioner thus prayed: WHEREFORE. Sr. moral shock. The Ramdustrial Corporation intended to use the proceeds of the loan as additional capital as it needed to participate in a bidding project of San Miguel Corporation. the respondent discovered that the notice of levy annotated on TCT No.000 had been approved. denied that it was motivated by malice and bad faith. On July 22. The court granted the motion and issued an order on April 12. otherwise the respondent would take the appropriate civil. a complaint for damages against the petitioner and Sheriff Villapaña before the RTC of Makati City. that without any legal basis. His blood temperature rose so much that immediately after the meeting. 275167 (PR-13108) at the instance of the petitioner had not yet been cancelled. while admitting that it made a mistake in causing the annotation of notice of levy on the TCT of the respondent. The petitioner alleged that after ascertaining that it indeed made a mistake. however. a sister company of the petitioner. because of which the bank had to hold in abeyance any action on its loan application. The petitioner further asserted that it had no knowledge that there were two persons bearing the same name Teofilo Ramos. Ramdustrial Corporation applied for a loan with the UCPB. it suggested to the respondent the filing of a motion to cancel levy and that the petitioner will not oppose such motion. Sr. that the defendants were Teofilo Ramos. Despite the cancellation of the notice of levy. 2. he suffered sleepless nights. 1994 ordering the Register of Deeds to cancel the levy. on the condition that the mortgage with the latter would be released. 16453. onOctober 22. 1992. Reniva submitted a report on his appraisal of the property. through counsel. 1994. it is most respectfully prayed of the Honorable Regional Trial Court that after due hearing. 275167 (PR-13108). Simultaneously. Montano’s client. entitled United Coconut Planters Bank v. Meanwhile. the petitioner held in abeyance the sale of the levied property at public auction.00 as actual damages. On September 30. at the St. He demanded that Sheriff Villapaña cause the cancellation of the said annotation within five days from notice thereof. Montano. 275167 (PR-13108) as collateral therefor.000 and that the owner thereof was Teofilo C. Appended thereto was the respondent’s affidavit of denial.000. 3. wrote Sheriff Villapaña. dismissing the complaint in toto and ordering the plaintiff to: . the respondent (as plaintiff) alleged that he was the owner of a parcel of land covered by TCT No. Sr. and his wife Amelita Ramos and caused the annotation thereof by the Register of Deeds on the said title. PDB agreed to pay off the outstanding loan obligation of Ramdustrial Corporation with UCPB. the petitioner. the respondent. 16453. the petitioner’s counsel suggested to the respondent that he file a motion to cancel the levy on execution to enable the court to resolve the issue. on May 26. Rather than wait for the petitioner to act. When appraised by the petitioner of the said report. in his capacity as President and Chairman of the Board of Directors of Ramdustrial Corporation. He stated therein that the fair market value of the property as of August 1. Atty. the respondent executed an affidavit of denial  declaring that he and Teofilo Ramos. suggested that the respondent file the appropriate pleading in Civil Case No. informing him that a notice of levy was annotated on the title of the residential lot of the respondent. that by reason of such wrongful annotation of notice of levy. Pending negotiations with UCPB. He thus prayed: WHEREFORE. 1992 was P900. raffled to Branch 148 and docketed as Civil Case No. the respondent was concerned because when the proceeds of the loan were released. was not defendant Teofilo Ramos. Subsequently. For his part.000. When the respondent went to the petitioner for the cancellation of the notice of levy annotated on his title. barred by the failure of the respondent to file a third-party claim in Civil Case No. Sr. 16453 stating. 300. 16453. Ramos acted as sureties to the loan of Ramdustrial Corporation. the respondent was informed by the UCPB that Ramdustrial Corporation’s credit line application for P2. Ramos. However. Atty. Gatchalian. The respondent offered to use his property covered by TCT No. 16453. was only his namesake. and that such annotation was irregular and unlawful considering that the respondent was not Teofilo Ramos. 1993. However. 16453.00 as exemplary damages.  In a meeting called for by the UCPB. The corporation then applied for a loan with the Planters Development Bank (PDB). that Teofilo Ramos. Sr. As promised.00 as moral damages. 200.
the property which was levied was the respondent’s only property where he and his family resided. A.000. as Chairman of Ramdustrial Corporation. THE AWARD OF MORAL DAMAGES TO RESPONDENT RAMOS WAS UNREASONABLE AND OPPRESSIVE. The trial court further stated that while it was Ramdustrial Corporation which applied for a loan with UCPB and PDB. 16453 was the registered owner of the property covered by TCT No.00 as moral damages. The CA ruled that the petitioner was negligent in causing the annotation of notice of levy on the title of the petitioner for its failure to determine with certainty whether the defendant Teofilo Ramos. (2) P100. HENCE. the thought of losing it for reasons not of his own doing gave rise to his entitlement to moral damages.000. The complaint against Sheriff Villapaña was dismissed on the ground that he was merely performing his duties. Thus.000. Sr. while the respondent was married to Rebecca Ramos and had “C” for his middle initial. THE COURT OF APPEALS COMMITTED MANIFESTLY MISTAKEN INFERENCES AND EGREGIOUS MISAPPREHENSION OF FACTS AND GRAVE ERRORS OF LAW. On the first issue.000. the respondent. However. the assailed decision is hereby AFFIRMED. it acted with caution in looking for leviable properties of the judgment debtors/defendants in Civil Case No. the petitioner filed this instant petition assigning the following errors: I IN AFFIRMING THE TRIAL COURT’S ORDER. exemplary damages and attorney’s fees. a financial institution with power to issue its promissory notes intended to circulate as money (known as bank notes). based on the foregoing premises.00 as attorney’s fees. ON THE EVIDENCE. and the latter is hereby ordered to pay the following: (1) (4) P800. ANY DAMAGE RESULTING FROM THE ANNOTATION WAS SUFFERED BY THE CORPORATION AND NOT BY RESPONDENT RAMOS. . it proceeded with haste as it did not take into consideration that the defendant Teofilo Ramos was married to Amelita Ramos and had a “Sr. C. III THE AWARD OF EXEMPLARY DAMAGES AND ATTORNEY’S FEES IS CONTRARY TO LAW SINCE THE AWARD OF MORAL DAMAGES WAS IMPROPER IN THE FIRST PLACE. the decision of the trial court. On March 4. CONSIDERING THAT: A. PDB released the proceeds of the loan of Ramdustrial Corporation which the latter remitted to UCPB. and thereafter request for the cancellation of the motion of levy on the property. the decretal portion of which is herein quoted: WHEREFORE. IN ANY EVENT. in toto. to form a joint fund that shall be used by the institution for its own benefit. Disappointed. Other reliefs and remedies deemed just and equitable under the premises are also prayed for. were one and the same person. judgment is hereby rendered in favor of the plaintiff and against the defendant UCPB. WAS RAMDUSTRIAL CORPORATION. In his comment. pay attorney’s fees and litigation expenses in an amount of not less than PESOS: TWO HUNDRED THOUSAND P200. in toto. in Civil Case No. Reniva did not conclusively ascertain if the respondent and Teofilo Ramos. (c) if so. signed in the promissory note and acted as sureties on the said obligations. whether or not the respondent was the real party-in-interest as plaintiff to file an action for damages against the petitioner considering that the loan applicant with UCPB and PDB was RAMDUSTRIAL CORPORATION. Sr. The decretal part of the decision is herein quoted: WHEREFORE. Dissatisfied. whether or not the respondent is entitled to moral damages. The investigation conducted by CAID appraiser Eduardo C. with his wife Rebecca Ramos. THE DELAY IN THE CANCELLATION OF THE ANNOTATION WAS OF RESPONDENT RAMOS’S (SIC) OWN DOING.00 and exemplary damages in the amount of PESOS: FIVE HUNDRED THOUSAND P500. the RTC rendered a decision in favor of the respondent. the court a quo dismissed the respondent’s claim therefor. 1997. pay moral damages in the amount of PESOS: THREE MILLION P3. (3) P100. The issues posed for our resolution are the following: (a) whether or not the petitioner acted negligently in causing the annotation of levy on the title of the respondent. the court considered the cancellation of annotation of levy as a B. 16453. B. for one or more of the purposes of making temporary loans and discounts. 2001. In the meantime. or to receive the money of others on general deposit. and ordering the dismissal of respondent Ramos’ Complaint dated 05 May 1994. 275167. the petitioner interposed an appeal to the Court of Appeals (CA).000 ON A FINDING OF NEGLIGENCE IS CONTRARY TO LAW AND EVIDENCE. the respondent alleged that the CA did not err in affirming.00. AS A MATTER OF LAW. On March 30.000. The trial court further ruled that the mere fact that the petitioner did not file an opposition to the respondent’s motion to cancel levy did not negate its negligence and bad faith. THE BORROWER OF THE LOAN. C. in 1995.00 as exemplary damages. (b) if so. Moreover. THE LOAN APPLICATIONS WITH UNITED COCONUT SAVINGS BANK AND PLANTERS DEVELOPMENT BANK WERE GRANTED PRIOR TO THE CANCELLATION OF THE ANNOTATION ON THE TITLE OF THE SUBJECT PROPERTY. He prayed that the petition be denied due course. and to inform the sheriff that the registered owners of the property were the respondent and his wife Rebecca Ramos. For failure to show that he suffered actual damages. Cost of suit. WHICH RESPONDENT RAMOS CLAIMED HE TRIED TO OBTAIN.1. the decision of the trial court. premises considered.” in his name. the CA rendered a decision affirming.000. mitigating factor on the damages caused to the respondent. The trial court found that contrary to the contention of the petitioner. II THE COURT OF APPEALS’ DECISION AFFIRMING THE TRIAL COURT’S AWARD OF MORAL DAMAGES TO RESPONDENT RAMOS IN THE AMOUNT OF P800.000.00. UCPB WAS NOT NEGLIGENT WHEN IT CAUSED THE LEVY ON THE SUBJECT PROPERTY. It bears stressing that the petitioner is a banking corporation. MORAL DAMAGES CANNOT BE AWARDED ON A FINDING OF MERE NEGLIGENCE. we rule that the petitioner acted negligently when it caused the annotation of the notice of levy in TCT No. 275167. of dealing 2. UCPB prayed that: WHEREFORE. petitioner UNITED COCONUT PLANTERS BANK respectfully prays that this Honorable Court render judgment reversing and setting aside the Court of Appeals’ Decision dated 30 March 2001.
as the registered owner of the property whose ownership had been unlawfully disturbed and limited by the unlawful annotation of notice of levy on his TCT. particularly. As an owner. with Atty. allow the award for exemplary damages. caused the annotation of notice of levy in the respondent’s title despite its knowledge that the property was owned by the respondent and his wife Rebecca Ramos. the name of the judgment debtor in Civil Case No. As owner of the property. did the act complained of. For this reason. It should have acted more cautiously. 16453 was the same person who appeared as the owner of the property covered by the said title. is expected to ascertain and verify the identities of the persons it transacts business with. of receiving special deposits. (3) the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant. In approving the loan of an applicant. Third. as appearing in the judgment of the court and in the writ of execution issued by the trial court. Bordalba as the Chief of LED and handling lawyer of Civil Case No. coin bullion. mental or psychological. or who is entitled to the avails of the suit for an action for damages against one who disturbed his right of ownership. He could no longer mortgage the same or use it as collateral for a loan. The respondent very clearly stated in his complaint that as a result of the unlawful levy by the petitioner of his property. instead of a given name. Hence. Sr. it would have surely discovered that the respondent was not the surety and the judgment debtor in Civil Case No. of which he was merely the President and Chairman of the Board of Directors. and in many. the respondent’s property was used as collateral of the loans applied for by Ramdustrial Corporation. or is injured or sued or the like. The petitioner. Arising from his right of ownership over the said property is a cause of action against persons or parties who have disturbed his rights as an owner. In the case at bar.. Sr. the necessity that these initials be all given and correctly given in court proceedings has become of importance in every case. the respondent was compelled to engage the services of counsel and to incur expenses of litigation in order to protect his interest to the subject property against the petitioner’s unlawful levy. were one and the same person. if the institution sees fit to engage in such business. moral shock. On the third issue. In sum. through counsel. On the second issue. and Amelita Ramos were specified in the writ of execution issued by the trial court. the petitioner insists that the respondent is not the real party-in-interest to file the action for damages. foreign and domestic bills of exchange. 16453. all four requisites were established. We do not agree. we have held that the business of a bank is one affected with public interest. hounded him endlessly. and the remission of money. the respondent. If the petitioner had done so. While it is true that the loss of business opportunities cannot be used as a reason for an action for damages arising from loss of business opportunities caused by the negligent act of the petitioner. The names of the Spouses Teofilo Ramos. the respondent had the legal standing to file the said action for damages. The petitioner. We note. First. he suffered sleepless nights. the annotation of notice of levy on the TCT of the private respondent was wrongful. Sr. Sr. The petitioner has access to more facilities in confirming the identity of their judgment debtors. for the award of moral damages to be granted. in coordination with the sheriff. The award is reasonable in view of the time it has taken this case to be resolved. 16453. Moreover. as a registered owner whose right of ownership had been disturbed and limited. as a bank and a financial institution engaged in the grant of loans. together with his wife. although the respondent was not the loan applicant and the business opportunities lost were those of Ramdustrial Corporation. and with the privileges. as the Supreme Court of Washington in 1909 had. whether physical. number 10 thereof. In both instances. the award for damages is predicated on Article 2219 of the Civil Code. 16453. The name of the owner of the property covered by TCT No. and (4) the award for damages is predicated on any of the cases stated in Article 2219 of the Civil Code. credits. In determining whether or not the petitioner acted negligently. the bank invests the money that it holds in trust of its depositors. In this case. the following must exist: (1) there must be an injury clearly sustained by the claimant. the respondent has the right to enjoy. However. or with both these powers. The petitioner failed to do so. In funding these businesses. Even when the respondent informed the petitioner. It is a requisite in the grant of exemplary damages that the act of the offender must be accompanied by bad faith or done in a wanton. the respondent sustained injuries in that his physical health and cardio-vascular ailment were aggravated. encumber and dispose of his property was diminished. in Civil Case No. It behooved the petitioner to ascertain whether the defendant Teofilo Ramos. Not even the respondent’s failure to have the annotation cancelled im mediately after he came to know of the said wrongful levy negates his cause of action.in notes. Necessarily. we cannot. his fear that his one and only property would be foreclosed. It placed more importance on the information regarding the marketability and market value of the property. Sr. .  It must be underscored that the registered owner of the property which was unlawfully levied by the petitioner is the respondent. the petitioner failed to have the annotation cancelled by the Register of Deeds. Second. Sr. the constant test is: “Did the defendant in doing the negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not. and his reputation as mortgagor had been tarnished. and Amelita Ramos. Fourth. has become a practice. (2) there must be a culpable act or omission factually established. utterly disregarding the identity of the registered owner thereof. if not negated. upon the annotation of the notice of levy on the TCT. 16453 was Teofilo Ramos. that a legal name consists of one given name and one surname or family name. in addition to these basic powers. 94-1822 were the Spouses Teofilo Ramos. then he is guilty of negligence. who were not privies to the loan availment of ZDC nor parties-defendants in Civil Case No. regardless of the fact that the respondent was not the loan applicant with the UCPB and PDB. especially since some uncertainty had been reported by the appraiser whom the petitioner had tasked to make verifications.” Considering the testimonial and documentary evidence on record. was a surety of the aforesaid loans. and making collection for the holders of negotiable paper. and almost a heart attack due to high blood pressure. In this case. Reniva as a flimsy matter. and that its negligence was the proximate cause of the damages sustained by the respondent. the bank concerns itself with proper informations regarding its debtors. A middle name is very important or even decisive in a case in which the issue is as between two persons who have the same first name and surname.  Although the respondent was able to establish the petitioner’s negligence. the petitioner knew that the sureties to the loan granted to ZDC and the defendants in Civil Case No. absent the private respondent’s failure to show that the petitioner acted with malice and bad faith. we are convinced that the petitioner failed to act with the reasonable care and caution which an ordinarily prudent person would have used in the same situation. such wrongful levy was the proximate cause of the respondent’s misery. It appears that the petitioner treated the uncertainty raised by appraiser Eduardo C. Ramos. fraudulent or malevolent manner. It should not be amiss to note that the judgment debtor’s name was Teofilo Ramos. The owner also has a right of action against the holder and possessor of the thing in order to recover it. we find that the petitioner acted negligently in causing the annotation of notice of levy in the title of the herein respondent. for which reason the bank should guard against loss due to negligence or bad faith. encumber and dispose of his property without other limitations than those established by law. as he was not the one who applied for a loan from UCPB and PDB but Ramdustrial Corporation. he is one who would be benefited or injured by the judgment. and a mistake in a middle name is not regarded as of consequence. before a surname. the respondent. that the property levied by the sheriff was owned by the respondent. arising as it did from the petitioner’s negligent act of allowing the levy without verifying the identity of its judgment debtor. 275167 was Teofilo C. Attorney’s fees may be awarded when a party is compelled to litigate or to incur expenses to protect his interest by reason of an unjustified act of the other party. and merely assumed that the respondent and the judgment debtor Teofilo Ramos. however. clearly has the legal personality and cause of action to file an action for damages. absolutely essential to a correct designation of the person intended. his right to use. since the use of initials. In this case.
considering all the foregoing. the amount of P100. issued BPI FB check no. On October 1. a wrongful levy was made. D. 56737 is AFFIRMED WITH MODIFICATION. Thereupon. we rule that the petitioner acted negligently in levying the property of the respondent despite doubts as to the identity of the respondent vis-à-vis its judgment debtor.In sum. Sebastian and four others." BPI FB then filed a motion for reconsideration but was denied by the Court of Appeals. on September 12. Ong made the deposit upon request of his friend. FMIC. Further. is an investment house organized under Philippine laws. No. the award of attorney’s fees. BPI FB dishonored the check as it was "drawn against insufficient funds" (DAIF). "First Metro Investment Corporation vs. respondent. 89-5280 against BPI FB. By reason of such negligent act. the respondent had to hire the services of counsel to cause the cancellation of the annotation. (Tevesteco). the cost. is a banking corporation also organized under Philippine laws. the Court of Appeals rendered a Decision affirming the assailed Decision with modification. By reason of such wrongful levy. WHEREFORE.01 representing 17% per annum interest of P100 million deposited by FMIC. CV No. opened current account no. on August 29. BPI FB transferred P80 million from FMIC’s current account to the savings account of Tevesteco Arrastre – Stevedoring. 1989. 2004 BPI FAMILY SAVINGS BANK. The award for exemplary damages is deleted. Ador de Asis.678. THE COURT OF APPEALS DECIDED THE APPEALED CASE IN A MANNER NOT IN ACCORDANCE WITH LAW OR THE APPLICAPLE DECISIONS OF THE HONORABLE COURT. FIRST METRO INVESTMENT CORPORATION. Subsequently. 1993. G. FMIC.687. UNDER THE EXISTING BANK REGULATIONS. BPI FB paid FMIC 17% interest or P14. CV No. BPI FB ascribes to the Appellate Court the following assignments of error: "A. claiming that the signatures of Ong and David were falsified. Consequently. as amended.000. through Sebastian. 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. FMIC denied having authorized the transfer of its funds to Tevesteco.R.. THE COURT OF APPEALS TOTALLY IGNORED THE JUDICIAL ADMISSIONS MADE BY FMIC WHEN IT CHARACTERIZED THE TRANSACTION BETWEEN FMIC AND BPI FB AS A TIME DEPOSIT WHEN IN FACT IT WAS AN INTEREST-BEARING CURRENT ACCOUNT WHICH. then Branch Manager of BPI FB San Francisco del Monte Branch. to recover immediately its deposit. the decision of the Court of Appeals in CA-G. WAS AN ILLEGAL TRANSACTION. BPI FB. However. 132390 May 21. Inc. SO ORDERED. 898679 of P100 million with BPI Family Bank* (BPI FB) San Francisco del Monte Branch (Quezon City). On August 25. the amount of P80 million with interest at the legal rate from the time this complaint was filed less P14.646. INC. J.687. DECISION SANDOVAL-GUTIERREZ. mental and psychological injuries on the person of the respondent. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT REFUSED TO CONSIDER THE NEGLIGENT ACTS COMMITTED BY FMIC ITSELF WHICH LED TO THE TRANSFER OF THE P80 MILLION FROM THE FMIC ACCOUNT TO THE TEVESTECO ACCOUNT. Sebastian’s aim was to increase the deposit level in his Branch. this 17% interest shall itself earn interest at 12% from October 4.00 as reasonable attorney’s fees. IN VALIDATING A CLEARLY ILLEGAL AND VOID AGREEMENT BETWEEN FMIC AND AN OVERSTEPPING BRANCH MANAGER OF BPI FB. BPI Family Bank. 1989. This agreement between the parties was reached through their communications in writing. petitioner. through its Executive Vice President Antonio Ong. .667.321.: For our resolution is the instant petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure. 1989. THE COURT OF APPEALS COMMITTED AN EGREGIOUS ERROR IN RULING THAT BPI FB CLOTHED ITS BRANCH MANAGER WITH APPARENT AUTHORITY TO ENTER INTO SUCH A PATENTLY ILLEGAL ARRANGEMENT.01 upon clearance of the latter’s check deposit. 44986. Inc. Theresa David. SO ORDERED. FMIC filed with the Regional Trial Court. on the basis of an Authority to Debit signed by Ong and Ma. causing physical.01.667. FMIC likewise caused the filing by the Office of the State Prosecutors of an Information for estafa against Ong. judgment is rendered in favor of plaintiff. 1998 of the Court of Appeals in CA-G. ordering defendant to pay: a.667. 1989 until fully paid. Bank of Philippine Islands Family Savings Bank. SO ORDERED." The facts as found by the trial court and affirmed by the Court of Appeals are as follows: First Metro Investment Corporation (FMIC). respondent. Such injuries entitle the respondent to an award of moral damages in the amount of P800. hence. 840107473-0 and deposited METROBANK check no. No costs. a close acquaintance of Jaime Sebastian. In the instant petition. B. No exemplary damages can be awarded because the petitioner’s negligent act was not tainted with malice and bad faith. 1997 and Resolution2 dated January 28. the trial court rendered its Decision in Civil Case No. Makati City Civil Case No.332. the dispositive portion of which reads: "Premises considered. 129077 for P86. 1989 until fully restored. 1989. and c. However. b. Senior Manager of FMIC. Branch 146. de Asis. this Court hereby modifies the decision of the trial court and adjudges BPI Family Bank liable to First Metro Investment Corporation for the amount of P65. the Information was dismissed on the basis of a demurrer to evidence filed by the accused.R.R.000.057. 89-5280. assailing the Decision 1 dated July 4. in turn.72 payable to itself and drawn on its deposit with BPI FB SFDM branch. But upon presentation for payment on September 13. vs. C. The latter.99 plus interest at 17% per annum from August 29." On appeal by both parties. guaranteed the payment of P14. Petitioner. thus: "WHEREFORE.
Provided. a banking corporation is liable to innocent third persons where the representation is made in the course of its business by an agent acting within the general scope of his authority even though the agent is secretly abusing his authority and attempting to perpetrate a fraud upon his principal or some other person for his own ultimate benefit. Petitioner further contends that the transaction is not valid as its Branch Manager. and the amount of P100 million as deposit in check. As already observed. to do acts within the scope of an apparent authority. clearly overstepped his authority in entering into such an agreement with respondent’s Executive Vice President. be estopped from denying such authority. Under this circumstance. respondent’s Executive Vice President.6 thus: "A bank holding out its officers and agent as worthy of confidence will not be permitted to profit by the frauds they may thus be enabled to perpetrate in the apparent scope of their employment. the same was made as a result of the fraudulent and unauthorized transfer by petitioner BPI FB of its P80 million deposit to Tevesteco’s savings account. Both agreed that the deposit of P100 million was nonwithdrawable for one year upon payment in advance of the 17% per annum interest. Sec. or any other agent.’" Petitioner maintains that respondent should have first inquired whether the deposit of P100 Million and the fixing of the interest . Going back to the unauthorized transfer of respondent’s funds to Tevesteco. Jaime Sebastian.72 through the issuance of a check payable to itself. the withdrawal of deposit by respondent FMIC before the one-year maturity date did not change the nature of its time deposit to one of demand deposit. Sections 1244 and 1244. to perform acts within the scope of an apparent authority. Time deposits shall not be subject to any interest rate ceiling." Petitioner BPI FB contends that the Court of Appeals erred in awarding the 17% per annum interest corresponding to the amount deposited by respondent FMIC. a time deposit is defined as "one the payment of which cannot legally be required within such a specified number of days.057. such was a normal reaction of respondent as a depositor to petitioner’s failure in its fiduciary duty to treat its account with the highest degree of care." In Francisco vs. We have held that if a corporation knowingly permits its officer. that – ‘In passing upon the liability of a corporation in cases of this kind it is always well to keep in mind the situation as it presents itself to the third party with whom the contract is made. IN SUPPORT OF ITS ALTERNATIVE PRAYER. Accordingly. even though no benefit may accrue to the bank therefrom. as against any one who has in good faith dealt with the corporation through such agent. however.. We hold that the parties did not intend the deposit to be treated as a demand deposit but rather as an interest-earning time deposit not withdrawable any time. respondent FMIC demanded the withdrawal of P86.7 we ruled: "Corporate transactions would speedily come to a standstill were every person dealing with a corporation held dutybound to disbelieve every act of its responsible officers. Interest on time deposit may be paid at maturity or upon withdrawal or in advance. Petitioner insists that respondent’s deposit is not a special savings account similar to a time deposit. to earn 17% per annum interest and to remain intact until its maturity date one year thereafter. but actually a demand deposit. when respondent FMIC invested its money with petitioner BPI FB. The integrity of commercial transactions can only be maintained by holding the corporation strictly to the liability fixed upon it by its agents in accordance with law.1. Certainly.646. such interest not being subject to any rate ceiling. petitioner’s argument that Central Bank regulations prohibit demand deposit from earning interest is bereft of merit. 1244. the corporation will. 22." 3 In contrast. 1244. Orientalist Co. Jaime Sebastian. nor will it be permitted to shirk its responsibility for such frauds. and thus holds him out to the public as possessing power to do those acts. the date of deposit. still it would earn interest. even assuming that respondent’s account with petitioner is a demand deposit. 634. be estopped from denying his authority. they intended the P100 million as a time deposit.1 of the Manual of Regulations of the Central Bank of the Philippines provide: "Sec. and Antonio Ong. overstepped the limits of his authority in accepting respondent’s deposit with 17% interest per annum. Under Central Bank Circular No.’ this means the same as ‘if the thing is permitted by the directing power of the corporation. Naturally he can have little or no information as to what occurs in corporate meetings. is an open authority to pay interest on demand deposits. F. and he must necessarily rely upon the external manifestations of corporate consent. petitioner’s Branch Manager. time deposits are not subject to interest rate ceiling. the corporation will. and where it is said ‘if the corporation permits. Ordinarily. as against any person who has dealt in good faith with the corporation through such agent. This is quite obvious from the communications between Jaime Sebastian. In fact. in its attempt to evade any liability therefor. and we would be sorry to announce a doctrine which would permit the property of a man in the city of Paris to be whisked out of his hands and carried into a remote quarter of the earth without recourse against the corporation whose name and authority had been used in the manner disclosed in this case. petitioner now impugns the validity of the subject agreement on the ground that its Branch Manager. That interest paid in advance shall not exceed the interest for one year. the rate ceiling was abolished and even allowed to float depending on the market conditions. demand deposits are "all those liabilities of the Bangko Sentral and of other banks which are denominated in Philippine currency and are subject to payment in legal tender upon demand by the presentation of (depositor’s) checks. Interest on time deposit. 654-655. 38 Phil. MOTION FOR RECONSIDERATION OF THE TRIAL COURT’S DECISION AND APPEAL BRIEF. the name of FMIC as depositor or account holder." This. THE COURT OF APPEALS DID NOT ADHERE TO SETTLED JURISPRUDENCE WHEN IT ADJUDGED BPI FB LIABLE TO FMIC FOR AN AMOUNT WHICH WAS MORE THAN WHAT WAS CONTEMPLATED OR PRAYED FOR IN FMIC’S COMPLAINT. Likewise. proscribed from earning interest under Central Bank Circular 777. Respondent’s time deposit of P100 million was accepted by petitioner as shown by a deposit slip prepared and signed by Ong himself who indicated therein the account number to which the deposit is to be credited. or any other agent. Time of payment. "4 While it may be true that barely one month and seven days from the date of deposit. 5 We reiterated this doctrine in Prudential Bank vs.E. On another tack. it is familiar doctrine that if a corporation knowingly permits one of its officers. holding him out to the public as possessing power to do those acts. Government Service Insurance System . Series of 1994. in effect. no matter how regular they should appear on their face." Thus. This Court has observed in Ramirez vs. PETITIONER SUBMITS THAT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT ORDERING THE CONSOLIDATION OF THE INSTANT CASE WITH THE TEVESTECO CASE WHICH IS STILL PENDING BEFORE THE MAKATI REGIONAL TRIAL COURT. "demand deposits shall not be subject to any interest rate ceiling . withdrawable upon demand. Clearly. Court of Appeals.
as in this case. courts may indeed grant the relief warranted by the allegations and proof even if no such specific relief is prayed for if only to conclude a complete and thorough resolution of the issues involved.rate were pursuant to its (petitioner’s) internal procedures. the transaction was actually acknowledged and ratified by petitioner when it paid respondent in advance the interest for one year. Furthermore. the matter of how much interest respondent is entitled to falls squarely within the issues framed by the parties in their respective pleadings filed with the court a quo. Hence. petitioner may not impute negligence on the part of respondent’s representative in failing to find out the scope of authority of petitioner’s Branch Manager. the petition is DENIED. whether such account consists only of a few hundred pesos or of million of pesos. . Anent the award of interest. Indeed. the interest due shall itself earn legal interest from the time it is judicially demanded.9 Finally. petitioner faults the Court of Appeals in not ordering the consolidation of Civil Case No.R. Costs against petitioner. At any rate. Obviously. i.10 Here. At this point. the interest due should be that which may have been stipulated in writing. Thus. confidence in the banking system. 89-5280 (the instant case). The assailed Decision dated July 4. petitioner contends that such award is not in order as it had not been prayed for by respondent in its complaint nor was it an issue agreed upon by the parties during the pre-trial of the case. 44986 are hereby AFFIRMED. we uphold the finding of both lower courts that petitioner failed to exercise that degree of diligence required by the nature of its obligations to its depositors. and it consists in the payment of a sum of money. SO ORDERED. Petitioner’s stance is a futile attempt to evade an obligation clearly established by the intent of the parties. A bank is under obligation to treat the accounts of its depositors with meticulous care. 89-4996 (filed by petitioner against Tevesteco) with Civil Case No. which necessarily includes reliance on bank managers. is vital in the economic life of our society. had there been consolidation of these two cases. Thus. petitioner is estopped from denying that it authorized its Branch Manager to enter into an agreement with respondent’s Executive Vice President concerning the deposit with the corresponding 17% interest per annum. CV No. Significantly. 8 Besides.. According to petitioner. 1997 and the Resolution dated January 28.e. 1998 of the Court of Appeals in CA-G. Suffice it to state that as found by both the trial court and the Appellate Court. the rule is well settled that when the obligation is breached. a loan or forbearance of money. petitioner’s transfer of respondent’s P80M to Tevesteco was unauthorized and tainted with fraud. we must emphasize that this Court is not a trier of facts. it would have been shown that the P80 Million transferred to Tevesteco’s account were proceeds of a loan extended by respondent FMIC to Tevesteco. petitioner cannot claim it exercised such a degree of care required of it and must. What transpires in the corporate board room is entirely an internal matter. WHEREFORE. Nonetheless. bear the consequence. the public has the right to rely on the trustworthiness of bank managers and their acts. therefore.
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