Citibank vs Spouses Cabamongan

Facts: Sometime in June 10-16, the Cabamongan spouses were robbed including the subject foreign
currency deposit, IDs, passports, and bank deposit certificate.
In August 16, they opened a joint “and/or” foreign currency time deposit at Citibank.
In November 10, a person claiming to be Carmelita Cabamongan went to Citibank Makati branch,
and she preterminated the said foreign currency deposit. The bank employee San Pedro did not follow
bank procedure when she did not require from the impostor a notarized waiver document. She also
ignored the discrepancy between the actual appearance of impostor and the IDs, as well as disparities in
the signature. The entire transaction took only 40 minutes despite the anomalous transcation.

Issue: W/R Citibank is liable for damages for paying a forged check of Carmelita despite noticing
discrepancies in the signature and photograph of Carmelita.

Ruling: Yes, Citibank is liable for damages. Banks are expected of highest degree of diligence and high
standards of integrity and performance. By the nature of its functions, a bank is obliged to treat the
accounts of its depositors with meticulous care, because of fiduciary relationship. In this case, Citibank
was negligent when it failed to detect forgery despite its signature verification procedure, thus, it is liable
fore damages.

Firestone Tire & Rubber Co. of the Philippines vs CA

Facts: Fojas-Arca is a client-depositor of Luzon Development Bank (LDB), while the petitioner Firestone
is a client-depositor of Citibank.
Pursuant to Franchise Dealership Agreement entered into by Fojas-Arca and Firestone, Fojas
purchased on credit Firestone products. In payment, Fojas delivered to Firestone 6 special withdrawal
slips drawn upon LDP. Firestone deposited the slips with Citibank, and all of it were honored and paid by
LDB. This induced Firestone to continue extending purchase on credit to Fojas-Arca upon reliance that
the succeeding special withdrawal slips drawn upon LDB will be sufficiently funded.
Fojas again purchased on credit with Firestone, and it again delivered to the Citibank 4 withdrawal slips
drawn by LDB. However, the 2 withdrawal slips were dishonored and unpaid because of ‘NO
ARRANGEMENT’. The Firestone demanded damages from LDB, but the court ruled that LDB is not
obliged to inform Citibank of the dishonor of special withdrawal slips, otherwise, it will violate the Bank
Secrecy Law.

Issue: W/R Luzon Development Bank should be held liable for damages suffered by Firestone
(petitioner) for its belated notice of non-payment of the withdrawal slips.

Ruling: No, Luzon Bank cannot be held liable for the alleged belated notice of non-payment. 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. In this case, the Citibank failed to treat the
accounts of the petitioner-client with the highest degree of care, for presuming that the subsequent slips
would be honored and paid immediately. Thus, Citibank must bear the risks for accepting the withdrawal
slips, and it could not shift the risk to Luzon Development Bank.