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Westmont Bank v.

Dela Rosa-Ramos (2012)

Mendoza, J.
Myrna Dela-Rosa Ramos (Myrna) maintained a checking/current account with United Overseas Bank Philippines
(UOB, formerly Westmont Bank, and prior to that, Associated Bank) at the latters Sto. Cristo branch in Binondo,
Myrna got acquainted with UOBs signature verifier, Domingo Tan (Tan).
Tan offered Myrna a special arrangement wherein he would finance or place sufficient funds in her
checking/current account whenever there would be an overdraft or when the amount of said checks would exceed
the balance of her current account.
o Purpose: to make sure that the checks she issued would not be discovered.
o Fee charged by Tan: P50/day for every P40,000 he would finance.
o This arrangement lasted from 1987-1998.
o Method of payment to Tan: postdated checks or cash.
Pursuant to their arrangement, Myrna issued four Associated Bank checks payable to cash.
One of the checks (No. 467322) was dated Aug. 28, 1987 but was altered to make it appear that it was dated
May 8, 1988.
o Tan deposited the check in the account of the other respondent William Co (Co).
o The amount of P200,000 was debited from Myrnas checking account.
The second check (No. 510290) was for the payment of cigarettes purchased by Myrna from Co. The check
bounced so she replaced it with a new one plus cash.
o Instead of returning the check to Myrna, Tan redeposited the check (which previously bounced) to Cos
o The amount of P232,500 was charged against Myrnas account.
Yet another check (No. 613307) was for P200,000 and was undated.
o Myrna claims Tan affixed the date June 14, 1988).
o An order to stop payment was issued because of insufficient funds.
Corresponding stamp on check: PAYMENT STOPPED.
o Again the check was redeposited to Cos account.
Nos. 510290 and 613307 were dishonored for insufficient funds.
Myrna confronted Co about the deposit of the two checks to his account.
o Co claimed Tan deposited them to replace the amount of P432,500 which the latter took from the formers
Co and Tan coerced Myrna into replacing the above bad checks with a new one, No. 598648 (NOT SUBJECT
OF THIS CASE) for P432,500 otherwise they would expose her relationship with a married man.
Myrnas final check, No. 613306 for P290,595 was also undated.
o Tan placed the date July 4, 1988.
o Myrna pointed out that as of July 5, her balance was insufficient to fund such check. She only had
o However, a check of a certain Lee See Bin in the amount of P170,000 was deposited to her account.
o Thus Tan was able to encash the subject check.
o Myrna later found out that the Lee See Bin check was not funded because the bank demanded the return
of the deficiency from her.
Claiming that the four checks were deposited by Tan without her consent, Myrna filed a complaint against Tan,
Co, and [back then] Associated Bank before the RTC.
o She sought to recover the sum of P754,689.66.
o Tans direct testimony was stricken off the records because he failed to make himself available for cross.
Later it was found out that he had passed away.
RTC: Rendered judgment in favor of Myrna.
o All three defendants solidarily liable.
CA: Affirmed with modification.
o Defendants liable only for Nos. 467322 and 613307.
o As to No. 613306, only for the amount of P121,989.66.
The Banks MR was denied, hence this petition.
o The other parties did not appeal.
Was the Bank (UOB/Westmont/Associated) negligent? YES.

It must be remembered that public interest is intimately carved into the banking industry because the primordial
concern here is the trust and confidence of the public. This fiduciary nature of every banks relationship with its
clients/depositors impels it to exercise the highest degree of care, definitely more than that of a reasonable man
or a good father of a family.
Considering that banks can only act through their officers and employees, the fiduciary obligation laid down for
these institutions necessarily extends to their employees.
A banks liability as an obligor is not merely vicarious, but primary.
o They are expected to observe an equally high degree of diligence, not only in the selection, but also in the
supervision of its employees.
o Thus, even if it is their employees who are negligent, the banks responsibility to its client remains
paramount making its liability to the same to be a direct one.
Guided by the following standard, the Bank, given the fiduciary nature of its relationship with Myrna, should have
exerted every effort to safeguard and protect her money which was deposited and entrusted with it.
o As found by both the RTC and the CA, Ramos was defrauded and she lost her money because of the
negligence attributable to the Bank and its employees.
o Indeed, it was the employees who directly dealt with Myrna, but the Bank cannot distance itself from
them. That they were the ones who gained at the expense of Myrna will not excuse it of its fundamental
responsibility to her.
RTC found that:
o Irregular entries and transactions involving Myrnas account is evidently due to, if not connivance, gross
negligence of other bank officers since the repeated assailed transactions could not possibly be
committed by defendant Tan alone considering the fact that the processing of the questioned checks
would pass the hands of various bank officers who positively identified their initials therein.
o Having a number of employees commit mistake or gross negligence at the same situation is so puzzling
and obviates the appellant banks laxity in hiring and supervising its employees.

Amount of the Banks liability:

As to Check No. 467322 [relevant to topic]:
o Bank: Myrna acquiesced to the change in date. Her continued acts of dealing and transacting with the
Bank like subsequently issuing checks despite her experience with this check only shows her
acquiescence which is tantamount to giving her consent.
o Court: The Bank failed to take to heart its fiduciary responsibility to its clients.
It should have stopped, double checked, and ascertained the genuineness od the date of the
check which displayed an obvious alteration.
o This failure of the bank makes it liable for that loss.
o As the RTC found:
The obviously-altered check should have been rejected by the Bank.
Myrna would not have suffered loss had the Banks other employees aside from Tan performed
their duties efficiently and well.
o CAs findings:
The date of Check No. 467322 had been materially altered from August 1987 to May 8, 1988 in
accordance with Section 125 of the Negotiable Instruments Law.
Alternation was not countersigned by the drawer.
Branch Manager admitted that such is the SOP of the bank to make it a valid correction.
As to Check No. 613307:
o Bank: The amount was not debited from Myrnas account. The check was dishonored for insufficient
o Court: Agrees with the Bank.
Myrna admitted to having issued a replacement check (No. 510290).
This proves that Nos. 613307 and 510290 were never paid.
As to Check No. 613306: Court agrees with the CA when it found
o As of July 1988, Myrna had P121,989.66 in her account.
o On July 5, the Lee See Bin check for P170,000 was deposited to her account.
o The subject check for P290,595 was issued and approved the same day.
The check is an onus check which is deposited to an account of another with the same branch
as that of the drawer of the said check, and is considered as good as cash if funded, hence, may
be withdrawn on the very same day it was deposited.
o The burden of proof was on Myrna to establish that Lee See Bin was fictitious and that the money which
purportedly came from him was merely simulated.
Myrna failed to discharge this burden.
CONCLUSION: Bank should only be liable for the amount of P200,000.
o HOWEVER, such should be reduced in view of Myrnas contributory negligence.


She exposed herself to risk when she entered into the special arrangement with Tan.
It has been held that where the bank and a depositor are equally negligent, they should equally suffer the
loss. The two must both bear the consequences of their mistakes.
Liability is 50-50.
Bank can seek reimbursement from Tans estate.

DISPOSITION: Partially granted. Decision modified.