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FIRSTDIVISION

[G.R.No.108957.June14,1993.]

PRUDENTIALBANK,petitioner,vs.THECOURTOF
APPEALS,AURORACRUZ,respondents.

MoniqueQ.Ignacioforpetitioner.
EduardoC.Tutaanforprivaterespondent.

SYLLABUS

1. CIVILLAWAGENCYLIABILITYOFBANKFORWRONGFULACTS
OFITSOFFICERS.Abankisliableforwrongfulactsofitsofficersdonein
theinterestsofthebankorinthecourseofdealingsoftheofficersintheir
representativecapacitybutnotforactsoutsidethescopeoftheirauthority.(9
c.q.sp.417)Abankholdingoutitsofficersandagentasworthyofconfidence
willnotbepermittedtoprofitbythefraudstheymaythusbeenabledto
perpetrateintheapparentscopeoftheiremploymentnorwillitbepermitted
toshirkitsresponsibilityforsuchfrauds,eventhoughnobenefitmayaccrue
tothebanktherefrom(10AmJur2d,p.114).Accordingly,abanking
corporationisliabletoinnocentthirdpersonswheretherepresentationis
madeinthecourseofitsbusinessbyanagentactingwithinthegeneral
scopeofhisauthorityeventhough,intheparticularcase,theagentissecretly
abusinghisauthorityandattemptingtoperpetrateafrauduponhisprincipal
orsomeotherperson,forhisownultimatebenefit(McIntoshv.DakotaTrust
Co.,52ND752,204NW818,40ALR1021.)
2. ID.ID.ID.BASISOFLIABILITY.Suchliabilitydatesbacktothe
RomanLawmaxim,Quiperaliumfacitperseipsumfacerevidetur."Hewho
doesathingbyanagentisconsideredasdoingithimself."Thisruleis
affirmedbytheCivilCodethus:Art.1910.Theprincipalmustcomplywithall
theobligationswhichtheagentmayhavecontractedwithinthescopeofhis
authority.Art.1911.Evenwhentheagenthasexceededhisauthority,the
principalissolidarilyliablewiththeagentiftheformerallowedthelattertoact
asthoughhehadfullpowers.Conformably,wehavedeclaredincountless
decisionsthattheprincipalisliableforobligationscontractedbytheagent.
Theagent'sapparentrepresentationyieldstotheprincipal'strue
representationandthecontractisconsideredasenteredintobetweenthe
principalandthethirdperson.
3. ID.ID.ID.NECESSITYOFENFORCINGLIABILITY.Applicationof
theseprinciplesisespeciallynecessarybecausebankshaveafiduciary
relationshipwiththepublicandtheirstabilitydependsontheconfidenceof
thepeopleintheirhonestyandefficiency.Suchfaithwillbeerodedwhere
banksdonotexercisestrictcareintheselectionandsupervisionofits
employees,resultinginprejudicetotheirdepositors.
4. ID.ID.ID.EFFECTOFLIABILITY:BREACHOFCONTRACTFOR
LOSS/THEFTOFDEPOSIT/INVESTMENTCASEATBAR.Thereisno
questionthatthepetitionerwasmadeliableforitsfailureorrefusaltodeliver
toCruztheamountshehaddepositedwithitandwhichshehadarightto
withdrawuponitsmaturity.Thatinvestmentwasacknowledgedbyitsown
employees,whohadtheapparentauthoritytodosoandsocouldlegallybind
itbyitsactsvisavisCruz.Whatevermighthavehappenedtotheinvestment
whetheritwaslostorstolenbywhoeverwasnottheconcernofthe
depositor.Itwastheconcernofthebank.AsfarasCruzwasconcerned,she
hadtherighttowithdrawherP200,000.00placementwhenitmatured
pursuanttothetermsofherinvestmentasacknowledgedandreflectedinthe
ConfirmationofSale.Thefailureofthebanktodelivertheamounttoher
pursuanttotheConfirmationofSaleconstituteditsbreachoftheircontract,
forwhichitshouldbeheldliable.
5. ID.ID.ID.EFFECTOFLIABILITY:LIABILITYFORDAMAGES
CASEATBAR.Weagreewiththelowercourtsthatthepetitioneractedin
badfaithindenyingCruztheobligationshewasclaimingagainstit.Itwas
obviousthatanirregularityhadbeencommittedbythebank'spersonnel,but
insteadofrepairingtheinjurytoCruzbyimmediatelyrestoringhermoneyto
her,itsoughttoglossovertheanomalyinitsownoperations.Cruznaturally
sufferedanxiousmomentsandmentalanguishoverthelossofthe
investment.TheamountofP200,000.00isnotsmallevenbypresent
standards.Byunjustlywithholdingitfromherontheunproveddefensethat
shehadalreadywithdrawnit,thebankviolatedthetrustshehadreposedinit
andthussubjecteditselftofurtherliabilityformoralandexemplarydamages.
6. ID.ID.ID.EFFECTOFLIABILITY:BANKTOJUSTIFYTRUSTOF
CUSTOMERSANDRECTIFYMISDEEDSOFEMPLOYEES.Ifaperson
dealingwithabankdoesnotreadthefineprintinthecontract,itisbecause
hetruststhebankandreliesonitsintegrity.Theordinarycustomerapplying
foraloanorevenmakingadeposit(andsohimselfextendingtheloantothe
bank)doesnotbotherwiththeredtaperequirementsandthefinicky
conditionsinthedocumentshesigns.Hisfeelingisthathedoesnothaveto
bewaryofthebankbecauseitwilldealwithhimfairlyandthereisnoreason
tosuspectitsmotives.Thisisanattitudethebankmustjustify.Whilethisis
nottosaythatbankregulationsaremeaninglessorhavenobindingeffect,
theyshould,however,notbeusedforcoveringupthefaultofbank
employeeswhentheyblunderor,worse,intentionallycheathim.The
misdeedsofsuchemployeesmustbereadilyacknowledgedandrectified
withoutdelay.Thebankmustalwaysactingoodfaith.Theordinarycustomer
doesnotfeeltheneedforalawyerbyhissideeverytimehedealswitha
bankbecauseheiscertainthatitisnotapredatororapotentialadversary.
Thebankshouldshowthatthereisreallynoreasonforanyapprehension
becauseittrulydeserveshisfaithinit.

DECISION

CRUZ,J :
p

Wedealherewithanothercontroversyinvolvingtheintegrityofabank.
ThecomplaintinthiscasearosewhenprivaterespondentAuroraF.Cruz,*
withhersisterascodepositor,investedP200,000.00inCentralBankbills
withthePrudentialBankatitsbranchinQuezonAvenue,QuezonCity,on
June23,1986.Theplacementwasfor63daysat13.75%annualinterest.For
thispurpose,theamountofP196,122.88waswithdrawnfromthedepositors'
SavingsAccountNo.2546andappliedtotheinvestment.Thedifferenceof
P3,877.07representedtheprepaidinterest.
ThetransactionwasevidencebyaConfirmationofSale1deliveredtoCruz
twodayslater,togetherwithaDebitMemo2intheamountwithdrawnand
appliedtotheconfirmedsale.ThesedocumentswereissuedbySusan
Quimbo,theemployeeofthebanktowhomCruzwasreferredandwhowas
apparentlyinchargeofsuchtransactions.3
UponmaturityoftheplacementonAugust25,1986,Cruzreturnedtothe
bankto"rollover"orrenewherinvestment,Quimbo,whoagainattendedto
her,preparedaCreditMemo4creditingtheamountofP200,000.00inCruz's
savingsaccountpassbook.ShealsopreparedaDebitMemofortheamount
ofP196,122.88tocoverthereinvestmentofP200,000.00minustheprepaid
interestofP3,877.02.5
Thistime,CruzwasaskedtosignaWithdrawalSlip6forP196,122.98,
representingtheamounttobereinvestedafterdeductionoftheprepaid
interest.Quimboexplainedthiswasanewrequirementofthebank.Several
dayslater,CruzreceivedanotherConfirmationofSal7andacopyofthe
DebitMemo.8
OnOctober27,1986,Cruzreturnedtothebankandsoughttowithdrawher
P200,000.00.Afterverificationofherrecords,however,shewasinformedthat
theinvestmentappearedtohavebeenalreadywithdrawnbyheronAugust
25,1986.TherewasnocopyonfileoftheConfirmationofSaleandtheDebit
MemoallegedlyissuedtoherbyQuimbobyQuimbo.Quimboherselfwasnot
availableforquestioningasshehadnotbeenreportingforthepastweek.
Shockedbythisinformation,Cruzbecamehystericalandburstintotears.The
branchmanager,RomanSantos,assuredherthathewouldlookintothe
matter.9
Everydaythereafter,Cruzwenttothebanktoinquireaboutherrequestto
withdrawherinvestment.Shereceivednodefiniteanswer,noteventothe
lattershewrotethebankwhichwasreceivedbySantoshimself.10Finally,
CruzsentthebankademandletterdatedNovember12,1986fortheamount
ofP200,000.00plusinterest.11InareplydatedNovember20,1986,the
bank'sVicePresidentLauroJ.Jocsonsaidthatthereappearedtobean
anomalyandrequestedCruztodefercourtactionastheyhopedtosettlethe
matteramicably.12Increasinglyworried,Cruzsentanotherletterreiterating
herdemand.13Thistimethereplyofthebankwasunequivocalandnegative.
Shewastoldthatherrequesthadtobedeniedbecauseshehadalready
withdrawntheamountshewasclaiming.14
Cruz'sreactionwastofileacomplaintforbreachofcontractagainst
PrudentialBankintheRegionalTrialCourtofQuezonCity.Shedemanded
thereturnofhermoneywithinterest,plusdamagesandattorney'sfees.Inits
answer,thebankdeniedliability,insistingthatCruzhadwithdrawnher
investment.ThebankalsoinstitutedathirdpartycomplaintagainstQuimbo,
whodidnotfileananswerandwasdeclaredindefault.15Thebank,however,
didnotpresentanyevidenceagainsther. llcd

Aftertrial,JudgeRodolfoA.Ortizrenderedjudgmentinfavoroftheplaintiffs
anddisposedasfollows:
ACCORDINGLY,judgmentisherebyrenderedorderingthedefendant/third
partyplaintifftopaytotheplaintiffsthefollowingamounts:
1. P200,000.00,plusinterestthereonattherateof13.75%per
annumfromOctober27,1986,untilfullypaid
2. P30,000.00,asmoraldamages
3. P20,000.00,asexemplarydamagesand
4. P25,000.00,asreasonableattorney'sfees.
Thecounterclaimandthethirdpartycomplaintofthedefendant/third
partyplaintiffaredismissed.
Withcostsagainstthedefendant/thirdpartyplaintiff.

Thedecisionwasaffirmedintotoonappealtotherespondentcourt.
ThejudgmentoftheCourtofAppeals16isnowfaultedinthispetition,mainly
onthegroundthatthebankshouldnothavebeenfoundliableforaquasi
delictwhenitwassuedforbreachofcontract.
Thepetitionshallfail.Thepetitionerisquibbling.Itappearstobemerely
temporizingtodelayenforcementoftheliabilityclearlyestablishedagainstit.
Thebasicissuesarefactual.Theprivaterespondentclaimsshehasnotyet
collectedherinvestmentofP200,000.00andhassubmittedinproofoftheir
contentiontheConfirmationofSaleandtheDebitMemoissuedtoherby
Quimboontheofficialformsofthebank.Thepetitionerdeniesherclaimand
pointstotheWithdrawalSlip,whichitsaysCruzhasnotdeniedhaving
signed.ItalsocontendsthattheConfirmationofSaleandtheDebitMemoare
fakeandshouldnothavebeengivencredencebythelowercourts.
Thefindingsofthetrialcourtontheseissueshavebeenaffirmedbythe
respondentcourtandweseenotreasontodisturbthem.Thepetitionerhas
notshownthattheyhavebeenreachedarbitrarilyorindisregardofthe
evidenceofrecord.Onthecontrary,wefindsubstantialbasisforthe
conclusionthattheprivaterespondentssignedtheWithdrawalSliponlyas
partofthebank'snewprocedureofreinvestment.Shedidnotactually
receivetheamountindicatedtherein,whichshewasmadetounderstandwas
beingreinvestedinhername.Thebankitselfsoassuredherinthe
ConfirmationofSaleandtheDebitMemolaterissuedtoherbyQuimbo. cdphil

Especiallypersuasivearethefollowingobservationsofthetrialcourt:17
Whatismore,itcouldnotbethatplaintiffAuroraF.Cruzwithdrew
onlytheamountofP196,122.98fromtheirsavingsaccount,ifher
onlyintentionwastomakesuchawithdrawal.For,if,indeed,itwas
thedesireoftheplaintiffstowithdrawtheirmoneyfromthe
defendant/thirdpartyplaintiff,theycouldhavewithdrawnanamount
inroundfigures.Certainly,itisunbelievablethattheirwithdrawalwas
intheirregularamountofP196,122.98iftheyreallyreceivedit.On
thecontrary,thisamount,whichisthepriceoftheCentralBankbills
rolledover,indicatesthat,asclaimedbyplaintiffAuroraF.Cruz,she
didnotreceivethismoney,butitwasleftbyherwiththe
defendant/thirdpartyplaintiffinordertobuyCentralBankbills
placementforanothersixtythree(63)days,forwhichshesigneda
withdrawalslipattheinstanceofthirdpartydefendantSusan
Quimbowhotoldherthatitwasanewbankrequirementfortheroll
overofamaturedplacementwhichshetrustinglybelieved.
Indeed,thebankhasnotexplainedtheremarkablecoincidencethatthe
amountindicatedinthewithdrawalslipisexactlythesameamountCruzwas
reinvestingafterdeductingtherefromtheprepaidinterest.
Thebankhasalsonotsucceededinimpugningtheauthenticityofthe
ConfirmationofSaleandtheDebitMemowhichweremadeonitsofficial
forms.Theseareadmittedlynotavailabletothegeneralpublicorevenits
depositorsandarehandledonlybyitspersonnel.Evenassumingthatthey
werenotsignedbyitsauthorizedofficials,asitclaims,therewasnoobligation
onthepartofCruztoverifytheirauthoritybecauseshehadtherightto
presumeit.Thedocumentshadbeenissuedintheofficeofthebankitself
andbyitsownemployeeswithwhomshehadpreviouslydealt.Suchdealings
hadnotbeenquestionedbefore,muchlessinvalidated.Therewasabsolutely
noreasonwhysheshouldnothaveacceptedtheirauthoritytoactonbehalf
oftheiremployer. prcd

Itisalsoworthyofnoteandwonderthatalthoughthebankimpleaded
Quimboinathirdpartycomplaint,itdidnotpursueitssuitevenwhenshe
failedtoanswerandwasdeclaredindefault.Thebankdidnotintroduce
evidenceagainstheralthoughitcouldhavedonesoundertherules.Noless
remarkably,itdidnotcallonhertotestifyonitsbehalf,consideringthatunder
thecircumstancesclaimedbyit,shewouldhavebeenthebestwitnessto
showthatCruzhadactuallywithdrawnherP200,000.00placement.Instead,
thebankchosetorelyonitsotheremployeeswhosetestimonywasless
directandcategoricalthanthetestimonyQuimbocouldhavegiven. prcd

WedonotfindthattheCourtofAppealsheldthebankliableonaquasidelict.
Theargumentofthepetitioneronthisissueispallid,tosaytheleast,
consistingasitdoesonlyoftheobservationthatthearticlecitedbythe
respondentcourtontheagent'sliabilityfallsundertheheadingintheCivil
Codeonquasidelicts.Ontheotherhand,therespondentcourtclearly
declaredthat:
Thedefendant/thirdpartyplaintiffbeingliableforthereturnofthe
P200,000.00placementoftheplaintiffs,theextentoftheliabilityof
thedefendant/thirdpartyprosecutionfordamagesresultantthereof,
whichiscontractual,isforalldamageswhichmaybereasonably
attributedtothenonperformanceoftheobligation,...
xxxxxxxxx
Becauseofthebadfaithofthedefendant/thirdpartyplaintiffinits
breachofitscontractwiththeplaintiffs,thelatterare,therefore,
entitledtoanawardofmoraldamages...(Emphasissupplied).
Thereisnoquestionthatthepetitionerwasmadeliableforitsfailureor
refusaltodelivertoCruztheamountshehaddepositedwithitandwhichshe
hadarighttowithdrawuponitsmaturity.Thatinvestmentwasacknowledged
byitsownemployees,whohadtheapparentauthoritytodosoandsocould
legallybinditbyitsactsvisavisCruz.Whatevermighthavehappenedtothe
investmentwhetheritwaslostorstolenbywhoeverwasnotthe
concernofthedepositor.Itwastheconcernofthebank.
AsfarasCruzwasconcerned,shehadtherighttowithdrawherP200,000.00
placementwhenitmaturedpursuanttothetermsofherinvestmentas
acknowledgedandreflectedintheConfirmationofSale.Thefailureofthe
banktodelivertheamounttoherpursuanttotheConfirmationofSale
constituteitsbreachoftheircontract,forwhichitshouldbeheldliable.
Theliabilityoftheprincipalfortheactsoftheagentisnotevendebatable.
Lawandjurisprudenceareclearlyandabsolutelyagainstthepetitioner.
SuchliabilitydatesbacktotheRomanLawmaxim,Quiperaliumfacitper
seipsumfacerevidetur."Hewhodoesathingbyanagentisconsideredas
doingithimself."ThisruleisaffirmedbytheCivilCodethus:
"Art.1910. Theprincipalmustcomplywithalltheobligations
whichtheagentmayhavecontractedwithinthescopeofhis
authority.
Art.1911. Evenwhentheagenthasexceededhisauthority,the
principalissolidarilyliablewiththeagentiftheformerallowedthe
lattertoactasthoughhehadfullpowers.
Conformably,wehavedeclaredincountlessdecisionsthattheprincipalis
liableforobligationscontractedbytheagent.Theagent'sapparent
representationyieldstotheprincipal'struerepresentationandthecontractis
consideredasenteredintobetweentheprincipalandthethirdperson.18
Abankisliableforwrongfulactsofitsofficersdoneintheinterestsof
thebankorinthecourseofdealingsoftheofficersintheirauthority.
(9c.q.s.p.417)Abankholdingoutitsofficersandagentasworthyof
confidencewillnotbepermittedtoprofitbythefraudstheymaythus
beenabledtoperpetuateintheapparentscopeoftheiremployment
norwillitbepermittedtoshirkitsresponsibilityforsuchfrauds,even
thoughnobenefitmayaccruetothebanktherefrom(10AmJur2d,
p.114).Accordingly,abankingcorporationisliabletoinnocentthird
personswheretherepresentationismadeinthecourseofits
businessbyanagentactingwithinthegeneralscopeofhisauthority
eventhough,intheparticularcase,theagentissecretlyabusinghis
authorityandattemptingtoperpetrateafrauduponhisprincipalor
someotherperson,forhisownultimatebenefit(McIntoshv.Dakota
TrustCo.,52ND752,204NW818,40ALR1021.)
Applicationoftheseprinciplesisespeciallynecessarybecausebankshavea
fiduciaryrelationshipwiththepublicandtheirstabilitydependsonthe
confidenceofthepeopleintheirhonestyandefficiency.Suchfaithwillbe
erodedwherebanksdonotexercisestrictcareintheselectionand
supervisionofitsemployees,resultinginprejudicetotheirdepositors. LibLex

Itwouldappearfromthefactsestablishedinthecasebeforeusthatthe
petitionerwaslesstheneagertopresentQuimboatthetrialorevento
establishherliabilityalthoughitmadetheinitialeffortwhichitdidnot
pursuetoholdheranswerableinthethirdpartycomplaint.Whatever
happenedtoherdoesnotappearintherecord.Herabsencefromthe
proceedingsfeedsthesuspicionofherpossiblemisdeed,whichthebank
seemstohavestudiouslyignoredbyitsinsistencethatthemissingmoney
hadbeenactuallywithdrawnbyCruz.Bysuchinsistence,thebankis
absolvingnotonlyitselfbutalso,ineffectandbyextension,thedisappeared
Quimbowhoapparentlyhasmuchtoexplain.
Weagreewiththelowercourtsthepetitioneractedinbadfaithindenying
Cruztheobligationshewasclaimingagainstit.Itwasobviousthatan
irregularityhadbeencommittedbythebank'spersonnel,butinsteadof
repairingtheinjurytoCruzbyimmediatelyrestoringhermoneytoher,it
soughttoglossovertheanomalyinitsownoperations.
Cruznaturallysufferedanxiousmomentsandmentalanguishoverthelossof
theinvestment.TheamountofP200,000.00isnotsmallevenbypresent
standards.Byunjustlywithholdingitfromherontheunproveddefensethat
shehadalreadywithdrawnit,thebankviolatedthetrustshehadreposedinit
andthussubjecteditselftofurtherliabilityformoralandexemplarydamages.
LLphil

Ifapersondealingwithabankdoesnotreadthefineprintinthecontract,itis
becausehetruststhebankandreliesonitsintegrity.Theordinarycustomer
applyingforaloanorevenmakingadeposit(andsohimselfextendingthe
loantothebank)doesnotbotherwiththeredtaperequirementsandthe
finickyconditionsinthedocumentshesigns.Hisfeelingisthathedoesnot
havetobewaryofthebankbecauseitwilldealwithhimfairlyandthereisno
reasontosuspectitsmotives.Thisisanattitudethebankmustjustify. LLpr

Whilethisisnottosaythatbankregulationsaremeaninglessorhaveno
bindingeffect,theyshould,however,notbeusedforcoveringupthefaultof
bankemployeeswhentheyblunderor,worse,intentionallycheathim.The
misdeedsofsuchemployeesmustbereadilyacknowledgedandrectified
withoutdelay.Thebankmustalwaysactingoodfaith.Theordinarycustomer
doesnotfeeltheneedforalawyerbyhissideeverytimehedealswitha
bankbecauseheiscertainthatitisnotapredatororapotentialadversary.
Thebankshouldshowthatthereisreallynoreasonforanyapprehension
becauseittrulydeserveshisfaithinit.
WHEREFORE,thepetitionisDENIEDandtheappealeddecisionis
AFFIRMED,withcostsagainstthepetitioner.Itissoordered.
GrioAquino,BellosilloandQuiason,JJ.,concur.

Footnotes

* Thepetitionerisnotrelatedtotheponente.
1. DecisionofRTCJudgeRodolfoA.Ortiz,p.3.
2. DecisionofRTCJudgeRodolfoA.Ortiz,p.3.
3. Rollo,p.28.
4. DecisionofRTCJudgeRodolfoA.Ortiz,p.4.
5. Rollo,p.29.
6. Rollo,p.29.
7. Rollo,p.29.
8. Rollo,p.29.
9. Rollo,p.30.
10. Rollo,p.30.
11. Rollo,p.30.
12. Rollo,p.31.
13. Rollo,p.31.
14. Rollo,p.31.
15. Rollo,p.36.
16. Rollo,pp.3946.
17. DecisionofRTCJudgeRodolfoA.Ortiz,pp.78.
18. NationalFoodAuthorityvs.IntermediateAppellateCourt,184SCRA166.