CHECKS- CASES

SPOUSES MORAN vs CA and CITYTRUST BANKING CORPORATION

G.R. No. 105836 March 7, 1994
FACTS:

 Spouses George and Librada Moran are the owners of the Wack-Wack Petron gasoline
station.They regularly purchased bulk fuel and other related products from Petrophil
Corporation on cash on delivery (COD) basis. Orders for bulk fuel and other related
products were made by telephone and payments were effected by personal checks upon
delivery. They maintained 3 joint accounts, 1 current account and 2 savings accounts with
the Citytrust Banking Corporation, Shaw Branch. As a special privilege to the Morans,
(valued clients), the bank allowed them to maintain a zero balance in their current account.
 Transfers from SA to CA account could be made only with their prior authorization but they
gave written authority to Citytrust to automatically transfer funds from their Savings Account
to their Current Account at any time whenever the funds in their current account were
insufficient to meet withdrawals from said current account = pre-authorized transfer (PAT)
agreement
 Dec. 12, 1983: Librada Moran drew a check =P50,576.00 payable to Petrophil ;
Dec 13, 1983: She issued another check=P56,090.00 in favor of the same corporation
 December 14, 1983: Petrophil deposited the 2 checks to its account with the Pandacan
branch of the PNB the collecting bank. PNB presented them for clearing with the Philippine
Clearing House Corporation in the afternoon of the same day
 Records shows: Current Account= 0 balance; Savings Account = P26,104.30 and Savings
Account = P43,268.39
 December 15, 1983 10 a.m.: George Moran went to the bank, as was his regular practice, to
personally oversee their daily transactions with the bank deposited in their Savings Account
the amounts of P10,874.58 and P6,754.25; deposited in their Savings Account No.
1037001372 the amounts of P5,900.00, P35,100.00 and 30.00
 P40,000.00 was then transferred by him from Saving Account No. 1037002387 to their
current account by means of a pro forma withdrawal form (a debit memorandum), which
was provided by the bank, authorizing the latter to make the necessary transfer.
 P66,666.00 was transferred from Savings Account No. 1037001372 to the same current
account through the pre-authorized transfer (PAT) agreement.
 December 15 or 16, 1983: George Moran was informed by his wife Librada that Petrophil
refused to deliver their orders on a credit basis because the 2 checks they had previously
issued were dishonored upon presentment for payment due to "insufficiency of funds." This
caused them to stop their business operations. They filed complaint against Citytrust for
moral damages.

ISSUE: W/N the spouses are entitled to moral damages?

HELD: No.

 A check is a bill of exchange drawn on a bank payable on demand. Thus, a check is a

written order addressed to a bank or persons carrying on the business of banking, by a party
having money in their hands, requesting them to pay on presentment, to a person named
therein or to bearer or order, a named sum of money.
 Fixed savings and current deposits of money in banks and similar institutions shall be
governed by the provisions concerning simple loan. In other words, the relationship
between the bank and the depositor is that of a debtor and creditor. By virtue of the contract
 of deposit between the banker and its depositor, the banker agrees to pay checks drawn by
the depositor provided that said depositor has money in the hands of the bank.\Hence,
where the bank possesses funds of a depositor, it is bound to honor his checks to the extent
of the amount of his deposits. The failure of a bank to pay the check of a merchant or a
trader, when the deposit is sufficient, entitles the drawer to substantial damages without any
proof of actual
damages.
 Conversely, a bank is not liable for its refusal to pay a check on account of insufficient
funds, notwithstanding the fact that a deposit may be made later in the day. 25 Before a
bank depositor may maintain a suit to recover a specific amount from his bank, he must first
show that he had on deposit sufficient funds to meet his demand.
 Actions taken by the bank after the incident clearly show that there was neither malice nor
bad faith, but rather a clear intent to mollify an obviously agitated client
 Letter was sent by respondent bank to Petrophil explaining that the dishonor of the checks
was due to "operational error." - NOT an admission of guilt
 Bank may not be held responsible for such damages in the absence of fraud, bad faith,
malice, or wanton attitude.

PRUDENTIAL BANK vs. CA and LETICIA TUPASI-VALENZULA

G.R. No. 125536 March 16, 2000

FACTS:

Private respondent Leticia Tupasi-Valenzuela opened an account in the Petitioner Prudential

bank. On June 1, 1988, herein private respondent deposited P35,271.60 drawn against the
PhilippineCommercial International Bank (PCIB). Thereafter, private respondent issued
Prudential Bank check in the amount of P11,500 post-dated June 20, 1988 in favor of
one Belen Legaspi. Legaspi, who was in jewelry trade, endorsed the check to Philip Lhuiller, a
businessman in the same field. When the check was deposited with the PCIB, it was dishonored
for being drawn against insufficient funds. Private respondent asked why her check was
dishonored where there was sufficient funds. The bank officer told her there was no need to
review the passbook because the bank ledger was the best proof that she did not have
sufficient funds. Then he abruptly faced his typewriter and started typing. Later, it was found out
that the bank misposted private respondent’s check deposit to another account and delayed the
posting of the same to the proper account. The bank admitted that it was at fault. But since it is
not the first time that private respondent experienced this scenario, she commenced a suit
for damages.

ISSUE: W/N damages be awarded to private respondent on account of the bank’s negligence ?

HELD: Yes. The trial court found “that the misposting is a clear proof of lack of supervision on
the part of the defendant bank”. The appellatecourt also found out that “while it may be true that
the bank’s negligence in dishonoring the properly funded check might not have been attended
with malice and bad faith, as appellee submits, nevertheless, it is the result of lack of due care
and caution expected of an employee of a firm engaged in so sensitive and accurately
demanding task as banking”.
In Simex International vs. CA, 183 SCRA 360,367 (1990), and BPI vs. IAC, 206 SCRA 408, this
court had occasion to stress the fiduciary nature of the relationship between a bank and its
depositors and the extent of diligence expected from the former in handling the accounts
entrusted to its care.

In the case of PNB vs. CA, we held that “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
millions of pesos. Responsibility arising from negligence in the performance of every kind of
obligation is demandable. While petitioner’s negligence in this case may not have been
attended with malice and bad faith, nevertheless, it caused serious anxiety, embarrassment and
humiliation”.