VI.

ISSUE:

Whether or not the money placements subject matter of these petitions are assessable for
insurance purposes under the PDIC Act

VII. RULING:

The court ruled that the funds in question are not deposits within the definition of the
PDIC Charter and are, thus, excluded from assessment. Pursuant toSection 3(f) of the PDIC
Charter, the term deposit means unpaid balance of money or its equivalent received by a bank in
the usual course of business and for which it has given or is obliged to give credit to a commercial,
checking, savings, time or thrift account or which is evidenced by its certificate of deposit, and trust
funds held by such bank whether retained or deposited in any department of said bank or deposit
in another bank, together with such other obligations of a bank as the Board of Directors shall find
and shall prescribe by regulations to be deposit liabilities of the Bank; Provided, that any obligation
of a bank which is payable at the office of the bank located outside of the Philippines shall not be a
deposit for any of the purposes of this Act or included as part of the total deposits or of the insured
deposits.As explained by the respondents, the transfer of funds, which resulted from the inter-
branch transactions, took place in the books of account of the respective branches in their head
office located in the United States. Hence, because it is payable outside of the Philippines, it is not
considered a deposit.

VIII. DISPOSITIVE PORTION:

WHEREFORE, the petition is DENIED. The October 27, 2005 Decision of the Court of
Appeals in CA-G.R. CV No. 61316 is AFFIRMED.
I.SHORT TITLE: FIRESTONE TIRE V. CA

II. FULL TITLE: FIRESTONE TIRE & RUBBER COMPANY OF THE

PHILIPPINES, vs., COURT OF APPEALS and LUZON DEVELOPMENT BANK –
353 SCRA 601
March 5, 2001, J. Quisumbing

III. TOPIC: General Banking Law

IV. STATEMENT OF FACTS:

In January 1978, plaintiff and Fojas-Arca entered into a Franchised Dealership Agreement
(Exh. B) whereby Fojas-Arca has the privilege to purchase on credit and sell plaintiffs products.
On January 14, 1978 up to May 15, 1978. Pursuant to the aforesaid Agreement, Fojas-Arca
purchased on credit Firestone products from plaintiff with a total amount of P4,896,000.00. In
payment of these purchases, Fojas-Arca delivered to plaintiff six (6) special withdrawal slips drawn
upon the defendant.In turn, these were deposited by the plaintiff with its current account with the
Citibank. All of them were honored and paid by the defendant. This singular circumstance made
plaintiff believe [sic] and relied [sic] on the fact that the succeeding special withdrawal slips drawn
upon the defendant would be equally sufficiently funded. Relying on such confidence and belief
and as a direct consequence thereof, plaintiff extended to Fojas-Arca other purchases on credit of
its products.

On the following dates Fojas-Arca purchased Firestone products on credit (Exh. M, I, J, K)

and delivered to plaintiff the corresponding special withdrawal slips in payment thereof drawn
upon the defendant, to wit:

DATE WITHDRAWAL AMOUNT

SLIP NO.
June 15, 1978 42127 P1,198,092.80
July 15, 1978 42128 940,190.00
Aug. 15, 1978 42129 880,000.00
Sep. 15, 1978 42130 981,500.00

These were likewise deposited by plaintiff in its current account with Citibank and in turn
the Citibank forwarded it [sic] to the defendant for payment and collection, as it had done in
respect of the previous special withdrawal slips. Out of these four (4) withdrawal slips only
withdrawal slip No. 42130 in the amount of P981,500.00 was honored and paid by the defendant
in October 1978. Because of the absence for a long period coupled with the fact that defendant
honored and paid withdrawal slips No. 42128 dated July 15, 1978, in the amount of P981,500.00
plaintiffs belief was all the more strengthened that the other withdrawal slips were likewise
sufficiently funded, and that it had received full value and payment of Fojas-Arcas credit purchased
then outstanding at the time. On this basis, plaintiff was induced to continue extending to Fojas-
Arca further purchase on credit of its products as per agreement (Exh. B).
 However, on December 14, 1978, plaintiff was informed by Citibank that special
withdrawal slips No. 42127 dated June 15, 1978 for P1,198,092.80 and No. 42129 dated August
15, 1978 for P880,000.00 were dishonored and not paid for the reason NO ARRANGEMENT.
As a consequence, the Citibank debited plaintiffs account for the total sum of P2,078,092.80
representing the aggregate amount of the above-two special withdrawal slips. Under such situation,
plaintiff averred that the pecuniary losses it suffered is caused by and directly attributable to
defendants gross negligence.

V. STATEMENT OF THE CASE:

On September 25, 1979, counsel of plaintiff served a written demand upon the defendant
for the satisfaction of the damages suffered by it. And due to defendants refusal to pay plaintiffs
claim, plaintiff has been constrained to file this complaint, thereby compelling plaintiff to incur
litigation expenses and attorneys fees which amount are recoverable from the defendant.

VI. ISSUE:

Whether or not respondent bank should be held liable for damages suffered by petitioner,
due to its allegedly belated notice of non-payment of the subject withdrawal slips.

VII. RULING:

A bank is under obligation to treat the accounts of its depositors with meticulous care,
whether such account consists only of a few hundred pesos or of millions of pesos. The fact that
the other withdrawal slips were honored and paid by respondent bank was no license for Citibank
to presume that subsequent slips would be honored and paid immediately. By doing so, it failed in
its fiduciary duty to treat the accounts of its clients with the highest degree of care.

In the ordinary and usual course of banking operations, current account deposits are
accepted by the bank on the basis of deposit slips prepared and signed by the depositor, or the
latters agent or representative, who indicates therein the current account number to which the
deposit is to be credited, the name of the depositor or current account holder, the date of the
deposit, and the amount of the deposit either in cash or in check.

The withdrawal slips deposited with petitioners current account with Citibank were not
checks, as petitioner admits. Citibank was not bound to accept the withdrawal slips as a valid mode
of deposit. But having erroneously accepted them as such, Citibank and petitioner as account-
holder must bear the risks attendant to the acceptance of these instruments. Petitioner and
Citibank could not now shift the risk and hold private respondent liable for their admitted mistake.

VIII. DISPOSITIVE PORTION:

WHEREFORE, the petition is DENIED and the decision of the Court of Appeals in CA-G.R.
CV No. 29546 is AFFIRMED. Costs against petitioner.
I.SHORT TITLE: CANLAS V. CA

II. FULL TITLE: OSMUNDO S. CANLAS and ANGELINA CANLAS, vs. COURT OF
APPEALS, ASIAN SAVINGS BANK, MAXIMO C. CONTRERAS and VICENTE
MAOSCA- 326 SCRA 415
February 28, 2001, J. Purisima

III. TOPIC: General Banking Law

IV. STATEMENT OF FACTS:

Sometime in August, 1982, the petitioner, Osmundo S. Canlas, and private respondent,
Vicente Maosca, decided to venture in business and to raise the capital needed therefor. The
former then executed a Special Power of Attorney authorizing the latter to mortgage two parcels of
land situated in San Dionisio, (BF Homes) Paranaque, Metro Manila, each lot with semi-concrete
residential house existing thereon, and respectively covered by Transfer Certificate of Title No.
54366 in his (Osmundo's) name and Transfer Certificate of Title No. S-78498 in the name of his
wife Angelina Canlas.

Subsequently, Osmundo Canlas agreed to sell the said parcels of land to Vicente Manosca,
for and in consideration of P850,000.00,P500,000.00 of which payable within one week, and the
balance of P350,000.00 to serve as his (Osmundo's) investment in the business. Thus, Osmundo
Canlas delivered to Vicente Maosca the transfer certificates of title of the parcels of land involved.
Vicente Maosca, as his part of the transaction, issued two postdated checks in favor of Osmundo
Canlas in the amounts of P40,000.00 and P460,000.00, respectively, but it turned out that the
check covering the bigger amount was not sufficiently funded Ne-xold

On September 3, 1982, Vicente Maosca was able to mortgage the same parcels of land
for P100,000.00 to a certain Attorney Manuel Magno, with the help of impostors who
misrepresented themselves as the spouses, Osmundo Canlas and Angelina Canlas.
On September 29, 1982, private respondent Vicente Maosca was granted a loan by the respondent
Asian Savings Bank (ASB) in the amount of P500,000.00, with the use of subject parcels of land as
security, and with the involvement of the same impostors who again introduced themselves as the
Canlas spouses. When the loan it extended was not paid, respondent bank extrajudicially
foreclosed the mortgaged.

On January 15, 1983, Osmundo Canlas wrote a letter informing the respondent bank that
the execution of subject mortgage over the two parcels of land in question was without
their (Canlas spouses) authority, and request that steps be taken to annul and/or revoke the
questioned mortgage. On January 18, 1983, petitioner Osmundo Canlas also wrote the office of
Sheriff Maximo C. Contreras, asking that the auction sale scheduled on February 3, 1983 be
cancelled or held in abeyance. But respondents Maximo C. Contreras and Asian Savings Bank
refused to heed petitioner Canlas' stance and proceeded with the scheduled auction sale
V. STATEMENT OF THE CASE:

Consequently, on February 3, 1983 the herein petitioners instituted the present case for
annulment of deed of real estate mortgage with prayer for the issuance of a writ of preliminary
injunction; and on May 23, 1983, the trial court issued an Order restraining the respondent sheriff
from issuing the corresponding Certificate of Sheriffs Sale.

VI. ISSUE:

Whether or not respondent bank exercise due diligence in granting the loan

VII. RULING:

Evidently, the efforts exerted by the bank to verify the identity of the couple posing as
Osmundo Canlas and Angelina Canlas fell short of the responsibility of the bank to observe more
than the diligence of a good father of a family. The negligence of respondent bank was magnified
by the fact that the previous deed of mortgage (which was used as the basis for checking the
genuineness of the signatures of the suppose Canlas spouses) did not bear the tax account number
of the spouses, as well as the Community Tax Certificate of Angelina Canlas. But such fact
notwithstanding, the bank did not require the impostors to submit additional proof of their true
identity.

Under the doctrine of last clear chance, which is applicable here, the respondent bank
must suffer the resulting loss. In essence, the doctrine of last clear chance is to the effect that where
both parties are negligent but the negligent act of one is appreciably later in point of time than that
of the other, or where it is impossible to determine whose fault or negligence brought about the
occurrence of the incident, the one who had the last clear opportunity to avoid the impending
harm but failed to do so, is chargeable with the consequences arising therefrom. Stated differently,
the rule is that the antecedent negligence of a person does not preclude recovery of damages
caused by the supervening negligence of the latter, who had the last fair chance to prevent the
impending harm by the exercise of due diligence.

Assuming that Osmundo Canlas was negligent in giving Vicente Maosca the opportunity to
perpetrate the fraud, by entrusting to latter the owner's copy of the transfer certificates of title of
subject parcels of land, it cannot be denied that the bank had the last clear chance to prevent the
fraud, by the simple expedient of faithfully complying with the requirements for banks to ascertain
the identity of the persons transacting with them.
For not observing the degree of diligence required of banking institutions, whose business is
impressed with public interest, respondent Asian Savings Bank has to bear the loss sued upon.

VIII. DISPOSITIVE PORTION:

WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE and a new
one is hereby entered DISMISSING the complaint of the spouses Osmundo and Angelina
Canlas. On the counterclaim of defendant Asian Savings Bank, the plaintiffs Canlas spouses are
hereby ordered to pay the defendant Asian Savings Bank the amount of P50,000.00 as moral and
exemplary damages plus P15,000.00 as and for attorney's fees.
I.SHORT TITLE: CANLAS V. CA

II. FULL TITLE: SPOUSES RAUL and AMALIA PANLILIO, vs. CITIBANK, N.A- 539
SCRA 69
November 28, 2007, J. Austria-Martinez

III. TOPIC: General Banking Law

IV. STATEMENT OF FACTS:

On October 10, 1997, petitioner Amalia Panlilio (Amalia) visited

respondent's Makati City office and deposited one million pesos (PhP1 million) in the
bank's Citihi account, a fixed-term savings account with a higher-than-average interest. On the same
day, Amalia also opened a current or checking account with respondent, to which interest earnings
of the Citihi account were to be credited. Respondent assigned one of its
employees, Jinky Suzara Lee (Lee), to personally transact with Amalia and to handle the accounts.

Amalia opened the accounts as ITF or in trust for accounts, as they were intended to
benefit her minor children, Alejandro King Aguilar and Fe Emanuelle C. Panlilio, in case she
would meet an untimely death. To open these accounts, Amalia signed two documents: a
Relationship Opening Form (ROF) and an Investor Profiling and Suitability Questionnaire
(Questionnaire).

Amalia's initial intention was to invest the money in a Citibank product called the
Peso Repriceable Promissory Note (PRPN), a product which had a higher interest. However, as
the PRPN was not available that day, Amalia put her money in the Citihi savings account.

More than a month later, or on November 28, 1997, Amalia phoned Citibank saying she
wanted to place an investment, this time in the amount of three million pesos (PhP3
million). Again, she spoke with Lee, the bank employee, who introduced her to Citibank's various
investment offerings. After the phone conversation, apparently decided on where to invest the
money, Amaliawent to Citibank bringing a PCIBank check in the amount of three million pesos
(PhP3 million). During the visit, Amalia instructed Lee on what to do with the PhP3 million. Later,
she learned that out of the said amount, PhP2,134,635.87 was placed by Citibank in a Long-Term
Commercial Paper (LTCP), a debt instrument that paid a high interest, issued by the
corporation Camella and PalmeraHomes (C&P Homes). The rest of the money was placed in two
PRPN accounts, in trust for each of Amalia's two children.

Allegations differ between petitioners and respondent as to whether Amalia instructed Lee
to place the money in the LTCP of C&P Homes.

An LTCP is an evidence of indebtedness, with a maturity period of more than 365 days,
issued by a corporation to any person or entity. It is in effect a loan obtained by a corporation (as
borrower) from the investing public (as lender) and is one of many instruments that investment
banks can legally buy on behalf of their clients, upon the latter's express instructions, for
investment purposes. LTCPs' attraction is that they usually have higher yields than most investment
instruments. In the case of the LTCP issued by C&P Homes, the gross interest rate was 16.25%
per annum at the time Amalia made her investment

On November 28, 1997, the day she made the PhP3million investment, Amalia signed the
following documents: a Directional Investment Management Agreement (DIMA), Term
Investment Application (TIA), and Directional Letter/Specific Instructions. Key features of the
DIMA and the Directional Letter are provisions that essentially clear Citibank of any obligation to
guarantee the principal and interest of the investment, absent fraud or negligence on the latter's
part. The provisions likewise state that all risks are to be assumed by the investor (petitioner).

As to the amount invested, only PhP2,134,635.87 out of the PhP3 million brought
by Amalia was placed in the LTCP since, according to Lee, this was the only amount of LTCP
then available.] According to Lee, the balance of the PhP3 million was placed in two PRPN
accounts, each one in trust for Amalia's two children, per her instructions.]

Following this investment, respondent claims to have regularly sent confirmations of

investment (COIs) to petitioners. A COI is a one-page, computer generated document informing
the customer of the investment earlier made with the bank. The first of these COIs was received
by petitioners on or about December 9, 1997, as admitted by Amalia, which is around a week after
the investment was made. Respondent claims that other succeeding COIs were sent to and
received by petitioners.

Amalia claims to have called Lee as soon as she received the first COI in December 1997,
and demanded that the investment in LTCP be withdrawn and placed in a PRPN Respondent,
however, denies this, claiming that Amalia merely called to clarify provisions in the COI and did
not demand a withdrawal

On August 6, 1998, petitioners met with respondent's other employee, Lizza Colet,
to preterminate the LTCP and their other investments. Petitioners were told that as to the LTCP,
liquidation could be made only if there is a willing buyer, a prospect which could be difficult at that
time because of the economic crisis. Still, petitioners signed three sets of Sales Order Slip to sell
the LTCP and left these with Colet

On August 18, 1998, Amalia, through counsel, sent her first formal, written demand to
respondent for a withdrawal of her investment as soon as possibleThe same was followed by
another letter dated September 7, 1998, which reiterated the same demands In answer to the
letters, respondent noted that the investment had a 2003 maturity, was not a deposit, and thus, its
return to the investor was not guaranteed by respondent; however, it added that the LTCP may be
sold prior to maturity and had in fact been put up for sale, but such sale was subject to the
availability of buyers in the secondary market. At that time, respondent was not able to find a buyer
for the LTCP. As this response did not satisfy petitioners, Amalia again wrote respondent, this
time a final demand letter dated September 21, 1998, asking for a reconsideration and a return of
the money she invested. In reply, respondent wrote a letter dated October 12, 1998 stating that
despite efforts to sell the LTCP, no willing buyers were found and that even if a buyer would come
later, the price would be lower than Amalia's original investment.
V. STATEMENT OF THE CASE:

The Complaint essentially demanded a return of the investment, alleging that Amalia never
instructed respondent's employee Lee to invest the money in an LTCP; and that far from what Lee
executed, Amalia's instructions were to invest the money in a trust account with an interest of
around 16.25% with a term of 91 days.

VI. ISSUE:

Whether or not petitioners are entitled to recover from respondent the amount of
PhP2,134,635.87 invested under the LTCP

VII. RULING:

Petitioners may not seek a return of their investment directly from respondent at or prior
to maturity. As earlier explained, the investment is not a deposit and is not guaranteed by
respondent. Absent any fraud or bad faith, the recourse of petitioners in the LTCP is solely against
the issuer, C&P Homes, and only upon maturity. The DIMA states, thus:

11. Withdrawal of Income/Principal Subject to availability of funds and taking into

consideration the commitment of this account to third parties, the PRINCIPAL may withdraw the
income/principal of the Portfolio or portion thereof upon request or application thereof from the
Bank. The INVESTMENT MANAGER shall not be required to inquire as to the
income/principal so withdrawn from the Portfolio. Any income of the Portfolio not withdrawn
shall be accumulated and added to the principal of the Portfolio for further investment and
reinvestment.

It is clear that since the money is committed to C&P Homes via LTCP for five years, or
until 2003, petitioners may not seek its recovery from respondent prior to the lapse of this
period. Petitioners must wait and meanwhile just be content with receiving their interest
regularly. If petitioners want the immediate return of their investment before the maturity date,
their only way is to find a willing buyer to purchase the LTCP at an agreed price, or to go directly
against the issuer C&P Homes, not against the respondent.

VIII. DISPOSITIVE PORTION:

WHEREFORE, the Petition is DENIED. For lack of evidence, the Decision of the Court of
Appeals dated dated May 28, 2002 and its Resolution of December 11, 2002, are AFFIRMED.