SECOND DIVISION

[G.R. No. 115324. February 19, 2003]

PRODUCERS BANK OF THE PHILIPPINES (now FIRST INTERNATIONAL

BANK), petitioner, vs. HON. COURT OF APPEALS AND FRANKLIN
VIVES, respondents.

DECISION
CALLEJO, SR., J.:

This is a petition for review on certiorari of the Decision of the Court of Appeals dated
[1]

June 25, 1991 in CA-G.R. CV No. 11791 and of its Resolution dated May 5, 1994, denying
[2]

the motion for reconsideration of said decision filed by petitioner Producers Bank of the
Philippines.
Sometime in 1979, private respondent Franklin Vives was asked by his neighbor and
friend Angeles Sanchez to help her friend and townmate, Col. Arturo Doronilla, in
incorporating his business, the Sterela Marketing and Services (Sterela for
brevity). Specifically, Sanchez asked private respondent to deposit in a bank a certain
amount of money in the bank account of Sterela for purposes of its incorporation. She
assured private respondent that he could withdraw his money from said account within a
months time. Private respondent asked Sanchez to bring Doronilla to their house so that
they could discuss Sanchezs request. [3]

On May 9, 1979, private respondent, Sanchez, Doronilla and a certain Estrella Dumagpi,
Doronillas private secretary, met and discussed the matter. Thereafter, relying on the
assurances and representations of Sanchez and Doronilla, private respondent issued a
check in the amount of Two Hundred Thousand Pesos (P200,000.00) in favor of
Sterela. Private respondent instructed his wife, Mrs. Inocencia Vives, to accompany
Doronilla and Sanchez in opening a savings account in the name of Sterela in the Buendia,
Makati branch of Producers Bank of the Philippines. However, only Sanchez, Mrs. Vives
and Dumagpi went to the bank to deposit the check. They had with them an authorization
letter from Doronilla authorizing Sanchez and her companions, in coordination with Mr. Rufo
Atienza, to open an account for Sterela Marketing Services in the amount
of P200,000.00. In opening the account, the authorized signatories were Inocencia Vives
and/or Angeles Sanchez. A passbook for Savings Account No. 10-1567 was thereafter
issued to Mrs. Vives.[4]
 Subsequently, private respondent learned that Sterela was no longer holding office in
the address previously given to him. Alarmed, he and his wife went to the Bank to verify if
their money was still intact. The bank manager referred them to Mr. Rufo Atienza, the
assistant manager, who informed them that part of the money in Savings Account No. 10-
1567 had been withdrawn by Doronilla, and that only P90,000.00 remained therein. He
likewise told them that Mrs. Vives could not withdraw said remaining amount because it had
to answer for some postdated checks issued by Doronilla. According to Atienza, after Mrs.
Vives and Sanchez opened Savings Account No. 10-1567, Doronilla opened Current
Account No. 10-0320 for Sterela and authorized the Bank to debit Savings Account No. 10-
1567 for the amounts necessary to cover overdrawings in Current Account No. 10-0320. In
opening said current account, Sterela, through Doronilla, obtained a loan of P175,000.00
from the Bank. To cover payment thereof, Doronilla issued three postdated checks, all of
which were dishonored. Atienza also said that Doronilla could assign or withdraw the money
in Savings Account No. 10-1567 because he was the sole proprietor of Sterela. [5]

Private respondent tried to get in touch with Doronilla through Sanchez. On June 29,
1979, he received a letter from Doronilla, assuring him that his money was intact and would
be returned to him. On August 13, 1979, Doronilla issued a postdated check for Two
Hundred Twelve Thousand Pesos (P212,000.00) in favor of private respondent. However,
upon presentment thereof by private respondent to the drawee bank, the check was
dishonored. Doronilla requested private respondent to present the same check on
September 15, 1979 but when the latter presented the check, it was again dishonored. [6]

Private respondent referred the matter to a lawyer, who made a written demand upon
Doronilla for the return of his clients money. Doronilla issued another check for P212,000.00
in private respondents favor but the check was again dishonored for insufficiency of funds. [7]

Private respondent instituted an action for recovery of sum of money in the Regional
Trial Court (RTC) in Pasig, Metro Manila against Doronilla, Sanchez, Dumagpi and
petitioner. The case was docketed as Civil Case No. 44485. He also filed criminal actions
against Doronilla, Sanchez and Dumagpi in the RTC. However, Sanchez passed away on
March 16, 1985 while the case was pending before the trial court. On October 3, 1995, the
RTC of Pasig, Branch 157, promulgated its Decision in Civil Case No. 44485, the dispositive
portion of which reads:

IN VIEW OF THE FOREGOING, judgment is hereby rendered sentencing defendants Arturo J.

Doronila, Estrella Dumagpi and Producers Bank of the Philippines to pay plaintiff Franklin Vives
jointly and severally

(a) the amount of P200,000.00, representing the money deposited, with interest at the legal rate
from the filing of the complaint until the same is fully paid;

(b) the sum of P50,000.00 for moral damages and a similar amount for exemplary damages;
(c) the amount of P40,000.00 for attorneys fees; and

(d) the costs of the suit.

SO ORDERED. [8]

Petitioner appealed the trial courts decision to the Court of Appeals. In its Decision dated
June 25, 1991, the appellate court affirmed in toto the decision of the RTC. It likewise
[9]

denied with finality petitioners motion for reconsideration in its Resolution dated May 5,
1994. [10]

On June 30, 1994, petitioner filed the present petition, arguing that
I.

THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THAT THE

TRANSACTION BETWEEN THE DEFENDANT DORONILLA AND RESPONDENT VIVES
WAS ONE OF SIMPLE LOAN AND NOT ACCOMMODATION;

II.

THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THAT PETITIONERS

BANK MANAGER, MR. RUFO ATIENZA, CONNIVED WITH THE OTHER DEFENDANTS
IN DEFRAUDING PETITIONER (Sic. Should be PRIVATE RESPONDENT) AND AS A
CONSEQUENCE, THE PETITIONER SHOULD BE HELD LIABLE UNDER THE PRINCIPLE
OF NATURAL JUSTICE;

III.

THE HONORABLE COURT OF APPEALS ERRED IN ADOPTING THE ENTIRE RECORDS

OF THE REGIONAL TRIAL COURT AND AFFIRMING THE JUDGMENT APPEALED
FROM, AS THE FINDINGS OF THE REGIONAL TRIAL COURT WERE BASED ON A
MISAPPREHENSION OF FACTS;

IV.

THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT THE CITED

DECISION IN SALUDARES VS. MARTINEZ, 29 SCRA 745, UPHOLDING THE LIABILITY
OF AN EMPLOYER FOR ACTS COMMITTED BY AN EMPLOYEE IS APPLICABLE;

V.

THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE DECISION OF THE

LOWER COURT THAT HEREIN PETITIONER BANK IS JOINTLY AND SEVERALLY
LIABLE WITH THE OTHER DEFENDANTS FOR THE AMOUNT OF P200,000.00
REPRESENTING THE SAVINGS ACCOUNT DEPOSIT, P50,000.00 FOR MORAL
DAMAGES, P50,000.00 FOR EXEMPLARY DAMAGES, P40,000.00 FOR ATTORNEYS FEES
AND THE COSTS OF SUIT. [11]

Private respondent filed his Comment on September 23, 1994. Petitioner filed its Reply
thereto on September 25, 1995. The Court then required private respondent to submit a
rejoinder to the reply. However, said rejoinder was filed only on April 21, 1997, due to
petitioners delay in furnishing private respondent with copy of the reply and several
[12]

substitutions of counsel on the part of private respondent. On January 17, 2001, the Court
[13]

resolved to give due course to the petition and required the parties to submit their respective
memoranda. Petitioner filed its memorandum on April 16, 2001 while private respondent
[14]

submitted his memorandum on March 22, 2001.

Petitioner contends that the transaction between private respondent and Doronilla is a
simple loan (mutuum) since all the elements of a mutuum are present: first, what was
delivered by private respondent to Doronilla was money, a consumable thing; and second,
the transaction was onerous as Doronilla was obliged to pay interest, as evidenced by the
check issued by Doronilla in the amount of P212,000.00, or P12,000 more than what private
respondent deposited in Sterelas bank account. Moreover, the fact that private respondent
[15]

sued his good friend Sanchez for his failure to recover his money from Doronilla shows that
the transaction was not merely gratuitous but had a business angle to it. Hence, petitioner
argues that it cannot be held liable for the return of private respondents P200,000.00
because it is not privy to the transaction between the latter and Doronilla.[16]

It argues further that petitioners Assistant Manager, Mr. Rufo Atienza, could not be
faulted for allowing Doronilla to withdraw from the savings account of Sterela since the latter
was the sole proprietor of said company. Petitioner asserts that Doronillas May 8, 1979
letter addressed to the bank, authorizing Mrs. Vives and Sanchez to open a savings account
for Sterela, did not contain any authorization for these two to withdraw from said
account. Hence, the authority to withdraw therefrom remained exclusively with Doronilla,
who was the sole proprietor of Sterela, and who alone had legal title to the savings
account. Petitioner points out that no evidence other than the testimonies of private
[17]

respondent and Mrs. Vives was presented during trial to prove that private respondent
deposited his P200,000.00 in Sterelas account for purposes of its incorporation. Hence, [18]

petitioner should not be held liable for allowing Doronilla to withdraw from Sterelas savings
account.
Petitioner also asserts that the Court of Appeals erred in affirming the trial courts
decision since the findings of fact therein were not accord with the evidence presented by
petitioner during trial to prove that the transaction between private respondent and Doronilla
was a mutuum, and that it committed no wrong in allowing Doronilla to withdraw from
Sterelas savings account. [19]
 Finally, petitioner claims that since there is no wrongful act or omission on its part, it is
not liable for the actual damages suffered by private respondent, and neither may it be held
liable for moral and exemplary damages as well as attorneys fees. [20]

Private respondent, on the other hand, argues that the transaction between him and
Doronilla is not a mutuum but an accommodation, since he did not actually part with the
[21]

ownership of his P200,000.00 and in fact asked his wife to deposit said amount in the
account of Sterela so that a certification can be issued to the effect that Sterela had sufficient
funds for purposes of its incorporation but at the same time, he retained some degree of
control over his money through his wife who was made a signatory to the savings account
and in whose possession the savings account passbook was given. [22]

He likewise asserts that the trial court did not err in finding that petitioner, Atienzas
employer, is liable for the return of his money. He insists that Atienza, petitioners assistant
manager, connived with Doronilla in defrauding private respondent since it was Atienza who
facilitated the opening of Sterelas current account three days after Mrs. Vives and Sanchez
opened a savings account with petitioner for said company, as well as the approval of the
authority to debit Sterelas savings account to cover any overdrawings in its current
account. [23]

There is no merit in the petition.

At the outset, it must be emphasized that only questions of law may be raised in a
petition for review filed with this Court. The Court has repeatedly held that it is not its function
to analyze and weigh all over again the evidence presented by the parties during trial. The [24]

Courts jurisdiction is in principle limited to reviewing errors of law that might have been
committed by the Court of Appeals. Moreover, factual findings of courts, when adopted
[25]

and confirmed by the Court of Appeals, are final and conclusive on this Court unless these
findings are not supported by the evidence on record. There is no showing of any
[26]

misapprehension of facts on the part of the Court of Appeals in the case at bar that would
require this Court to review and overturn the factual findings of that court, especially since
the conclusions of fact of the Court of Appeals and the trial court are not only consistent but
are also amply supported by the evidence on record.
No error was committed by the Court of Appeals when it ruled that the transaction
between private respondent and Doronilla was a commodatum and not a mutuum. A
circumspect examination of the records reveals that the transaction between them was
a commodatum. Article 1933 of the Civil Code distinguishes between the two kinds of loans
in this wise:

By the contract of loan, one of the parties delivers to another, either something not consumable so
that the latter may use the same for a certain time and return it, in which case the contract is called a
commodatum; or money or other consumable thing, upon the condition that the same amount of the
same kind and quality shall be paid, in which case the contract is simply called a loan or mutuum.
Commodatum is essentially gratuitous.

Simple loan may be gratuitous or with a stipulation to pay interest.

In commodatum, the bailor retains the ownership of the thing loaned, while in simple loan,
ownership passes to the borrower.

The foregoing provision seems to imply that if the subject of the contract is a consumable
thing, such as money, the contract would be a mutuum. However, there are some instances
where a commodatum may have for its object a consumable thing. Article 1936 of the Civil
Code provides:

Consumable goods may be the subject of commodatum if the purpose of the contract is not the
consumption of the object, as when it is merely for exhibition.

Thus, if consumable goods are loaned only for purposes of exhibition, or when the
intention of the parties is to lend consumable goods and to have the very same goods
returned at the end of the period agreed upon, the loan is a commodatum and not
a mutuum.
The rule is that the intention of the parties thereto shall be accorded primordial
consideration in determining the actual character of a contract. In case of doubt, the
[27]

contemporaneous and subsequent acts of the parties shall be considered in such

determination. [28]

As correctly pointed out by both the Court of Appeals and the trial court, the evidence
shows that private respondent agreed to deposit his money in the savings account of Sterela
specifically for the purpose of making it appear that said firm had sufficient capitalization for
incorporation, with the promise that the amount shall be returned within thirty (30)
days. Private respondent merely accommodated Doronilla by lending his money without
[29]

consideration, as a favor to his good friend Sanchez. It was however clear to the parties to
the transaction that the money would not be removed from Sterelas savings account and
would be returned to private respondent after thirty (30) days.
Doronillas attempts to return to private respondent the amount of P200,000.00 which
the latter deposited in Sterelas account together with an additional P12,000.00, allegedly
representing interest on the mutuum, did not convert the transaction from
a commodatum into a mutuum because such was not the intent of the parties and because
the additional P12,000.00 corresponds to the fruits of the lending of the P200,000.00. Article
1935 of the Civil Code expressly states that [t]he bailee in commodatum acquires the use
of the thing loaned but not its fruits. Hence, it was only proper for Doronilla to remit to private
respondent the interest accruing to the latters money deposited with petitioner.
 Neither does the Court agree with petitioners contention that it is not solidarily liable for
the return of private respondents money because it was not privy to the transaction between
Doronilla and private respondent. The nature of said transaction, that is, whether it is
a mutuum or a commodatum, has no bearing on the question of petitioners liability for the
return of private respondents money because the factual circumstances of the case clearly
show that petitioner, through its employee Mr. Atienza, was partly responsible for the loss
of private respondents money and is liable for its restitution.
Petitioners rules for savings deposits written on the passbook it issued Mrs. Vives on
behalf of Sterela for Savings Account No. 10-1567 expressly states that

2. Deposits and withdrawals must be made by the depositor personally or upon his written authority
duly authenticated, and neither a deposit nor a withdrawal will be permitted except upon the
production of the depositor savings bank book in which will be entered by the Bank the amount
deposited or withdrawn. [30]

Said rule notwithstanding, Doronilla was permitted by petitioner, through Atienza, the
Assistant Branch Manager for the Buendia Branch of petitioner, to withdraw therefrom even
without presenting the passbook (which Atienza very well knew was in the possession of
Mrs. Vives), not just once, but several times. Both the Court of Appeals and the trial court
found that Atienza allowed said withdrawals because he was party to Doronillas scheme of
defrauding private respondent:

XXX

But the scheme could not have been executed successfully without the knowledge, help and
cooperation of Rufo Atienza, assistant manager and cashier of the Makati (Buendia) branch of the
defendant bank. Indeed, the evidence indicates that Atienza had not only facilitated the commission
of the fraud but he likewise helped in devising the means by which it can be done in such manner
as to make it appear that the transaction was in accordance with banking procedure.

To begin with, the deposit was made in defendants Buendia branch precisely because Atienza was a
key officer therein. The records show that plaintiff had suggested that the P200,000.00 be deposited
in his bank, the Manila Banking Corporation, but Doronilla and Dumagpi insisted that it must be in
defendants branch in Makati for it will be easier for them to get a certification. In fact before he
was introduced to plaintiff, Doronilla had already prepared a letter addressed to the Buendia branch
manager authorizing Angeles B. Sanchez and company to open a savings account for Sterela in the
amount of P200,000.00, as per coordination with Mr. Rufo Atienza, Assistant Manager of the Bank
x x x (Exh. 1). This is a clear manifestation that the other defendants had been in consultation with
Atienza from the inception of the scheme. Significantly, there were testimonies and admission that
Atienza is the brother-in-law of a certain Romeo Mirasol, a friend and business associate of
Doronilla.
Then there is the matter of the ownership of the fund. Because of the coordination between
Doronilla and Atienza, the latter knew before hand that the money deposited did not belong to
Doronilla nor to Sterela. Aside from such foreknowledge, he was explicitly told by Inocencia Vives
that the money belonged to her and her husband and the deposit was merely to accommodate
Doronilla. Atienza even declared that the money came from Mrs. Vives.

Although the savings account was in the name of Sterela, the bank records disclose that the only
ones empowered to withdraw the same were Inocencia Vives and Angeles B. Sanchez. In the
signature card pertaining to this account (Exh. J), the authorized signatories were Inocencia Vives
&/or Angeles B. Sanchez. Atienza stated that it is the usual banking procedure that withdrawals of
savings deposits could only be made by persons whose authorized signatures are in the signature
cards on file with the bank. He, however, said that this procedure was not followed here because
Sterela was owned by Doronilla. He explained that Doronilla had the full authority to withdraw by
virtue of such ownership. The Court is not inclined to agree with Atienza. In the first place, he was
all the time aware that the money came from Vives and did not belong to Sterela. He was also told
by Mrs. Vives that they were only accommodating Doronilla so that a certification can be issued to
the effect that Sterela had a deposit of so much amount to be sued in the incorporation of the
firm. In the second place, the signature of Doronilla was not authorized in so far as that account is
concerned inasmuch as he had not signed the signature card provided by the bank whenever a
deposit is opened. In the third place, neither Mrs. Vives nor Sanchez had given Doronilla the
authority to withdraw.

Moreover, the transfer of fund was done without the passbook having been presented. It is an
accepted practice that whenever a withdrawal is made in a savings deposit, the bank requires the
presentation of the passbook. In this case, such recognized practice was dispensed with. The
transfer from the savings account to the current account was without the submission of the
passbook which Atienza had given to Mrs. Vives. Instead, it was made to appear in a certification
signed by Estrella Dumagpi that a duplicate passbook was issued to Sterela because the original
passbook had been surrendered to the Makati branch in view of a loan accommodation assigning
the savings account (Exh. C). Atienza, who undoubtedly had a hand in the execution of this
certification, was aware that the contents of the same are not true. He knew that the passbook was
in the hands of Mrs. Vives for he was the one who gave it to her. Besides, as assistant manager of
the branch and the bank official servicing the savings and current accounts in question, he also was
aware that the original passbook was never surrendered. He was also cognizant that Estrella
Dumagpi was not among those authorized to withdraw so her certification had no effect
whatsoever.

The circumstance surrounding the opening of the current account also demonstrate that Atienzas
active participation in the perpetration of the fraud and deception that caused the loss. The records
indicate that this account was opened three days later after the P200,000.00 was deposited. In spite
of his disclaimer, the Court believes that Atienza was mindful and posted regarding the opening of
the current account considering that Doronilla was all the while in coordination with him. That it
was he who facilitated the approval of the authority to debit the savings account to cover any
overdrawings in the current account (Exh. 2) is not hard to comprehend.

Clearly Atienza had committed wrongful acts that had resulted to the loss subject of this case. x x
x.
[31]

Under Article 2180 of the Civil Code, employers shall be held primarily and solidarily
liable for damages caused by their employees acting within the scope of their assigned
tasks. To hold the employer liable under this provision, it must be shown that an employer-
employee relationship exists, and that the employee was acting within the scope of his
assigned task when the act complained of was committed. Case law in the United States
[32]

of America has it that a corporation that entrusts a general duty to its employee is
responsible to the injured party for damages flowing from the employees wrongful act done
in the course of his general authority, even though in doing such act, the employee may
have failed in its duty to the employer and disobeyed the latters instructions. [33]

There is no dispute that Atienza was an employee of petitioner. Furthermore, petitioner

did not deny that Atienza was acting within the scope of his authority as Assistant Branch
Manager when he assisted Doronilla in withdrawing funds from Sterelas Savings Account
No. 10-1567, in which account private respondents money was deposited, and in
transferring the money withdrawn to Sterelas Current Account with petitioner. Atienzas acts
of helping Doronilla, a customer of the petitioner, were obviously done in furtherance of
petitioners interests even though in the process, Atienza violated some of petitioners rules
[34]

such as those stipulated in its savings account passbook. It was established that the
[35]

transfer of funds from Sterelas savings account to its current account could not have been
accomplished by Doronilla without the invaluable assistance of Atienza, and that it was their
connivance which was the cause of private respondents loss.
The foregoing shows that the Court of Appeals correctly held that under Article 2180 of
the Civil Code, petitioner is liable for private respondents loss and is solidarily liable with
Doronilla and Dumagpi for the return of the P200,000.00 since it is clear that petitioner failed
to prove that it exercised due diligence to prevent the unauthorized withdrawals from
Sterelas savings account, and that it was not negligent in the selection and supervision of
Atienza. Accordingly, no error was committed by the appellate court in the award of actual,
moral and exemplary damages, attorneys fees and costs of suit to private respondent.
WHEREFORE, the petition is hereby DENIED. The assailed Decision and Resolution of
the Court of Appeals are AFFIRMED.
SO ORDERED.