the highest degree of care, considering the fiduciary nature of
SUMMARY GBL CASES
1. SANDEJAS v. SPS IGNACIO: THE GENEROUS UNCLE. Check
worth 3M prepared for renewal of condo lease, payable to Dr.
Borja, obtained by Alice and got her driver to pretend to be Dr.
Borja, deposited amount to Alice’s account, did not required ID
and cleared check w/o indorsement. Bank is liable as apparent
from its gross negligence as to amount to a willful injury to
the respondents. Banks have attained a ubiquitous presence
among the people, who have come to regard them with respect
and even gratitude and most of all, confidence. For this reason,
banks should guard against injury attributable to negligence or
bad faith on its part. The award of exemplary damages in
favor of respondents is in order for the purpose of deterring
those who intend to enforce their rights by taking measures or
remedies which are not in accord with law and public policy.
2. SBTC v. RCBC: IKOT-IKOT LANG. SBTC issued manager’s check
worth 8M, deposited by CMC to RCBC which immediately
honored the check and allowed CMC to withdraw it. Was
apparently released by mistake by GCDC. Subsequently
dishonored and returned check to RCBC, back and forth
ensued, RCBC claimed for damages. Same ratio as Ignacio case.
SBTC is liable for damages. Also, Monetary Board Resolution
No. 2202, which prohibits drawings against uncollected
deposits, was interpreted by a Memorandum, which states that
banks were given the discretion to allow immediate drawings
on uncollected deposits of manager’s checks, among others.
Consequently, RCBC, in allowing the immediate withdrawal
against the subject manager’s check, only exercised a
prerogative expressly granted to it by the Monetary Board.
3. PNB v. VELASCO: OFFLINE BANKING IN THE PROVINCE. No-
passbook transaction allowed which led to Velasco maintaining
a balance higher than his actual deposits. Since he was a bank
office, when this was found out, he was dismissed. There was a
valid dismissal. The misconduct was serious. Considering that
the PNB Ligao, Albay Branch is an offline branch, it is a must
that an LOI and the passbook be presented by the depositor
before any withdrawal is allowed. As an audit officer, Velasco
should be the first to ensure that banking laws, policies, rules
and regulations, are strictly observed and applied by its
officers in the day-to-day transactions. Why? Same ratio.
4. BDO-EPCI v. JAPRL: LIARS GO TO HELL. JAPRL was given credit
facilities, with sureties. Defaulted in the payment of obligations.
Was eventually discovered that it bloated its sales revenues to
post a big income from operations as a viable investment. BDO-
EPCI demanded immediate payment. Sec. 40 of GBL, get SAL,
Tax Declaration, etc. to prove that the borrower can pay.
Should such statements prove to be false or incorrect in any
material detail, the bank may terminate any loan or credit
accommodation granted on the basis of said statements and
shall have the right to demand immediate repayment or
liquidation of the obligation.
5. BA v. PRC: NO ERASURE POLICY PALA DAPAT SA ENCASHMENT
OF CHECKS. Scheduled to go on a business trip, left pre-signed
checks in case they would be needed. The accountant would
prepare in case of such need. A John Doe encashed the checks,
had various infirmities and irregularities. It is well-settled that
banks are engaged in a business impressed with public interest,
and it is their duty to protect in return their many clients and
depositors who transact business with them. They have the
obligation to treat their client’s account meticulously and with
their relationship. The diligence required of banks, therefore, is
more than that of a good father of a family.
6. CITIBANK v. DINOPOL: NAKAKAHIYA KAPAG MAY NA-DAIF KA.
Atty. Dinopol issued a check for Geonzon for investment
purposes. The checkbook was from Citibank. DAIF. Humiliated,
filed a civil case for damages against the bank. Citibank is liable.
It did not even refute the allegation that it gave Atty. Dinopol
the go-signal to issue such a check. Both moral (due to the
humiliation faced by Dinopol) and exemplary damages (law
allows by way of example for the public good) should be
granted because Citibank should have been more cautious in
dealing with its clients since its business is imbued with public
interest.
7. GSIS v. SANTIAGO: SABI KO SA’YO WAG MO ISAMA EH. Sps.
Zulueta obtained from GSIS various loans, secured through and
REM, which was later foreclosed. Some properties were
excluded because those that were sold were sufficient to pay
the debts. The properties were still included. Filed a complaint
for reconveyance. GSIS cannot claim ownership over the
excluded lots on the basis of the CTs issued in its name . The due
diligence required of banks extend even to person, or
institutions regularly engaged in the business of lending money
secured by real estate mortgage, such as the GSIS . Even if titles
over the lots had been issued in the name of the GSIS, still it
could not legally claim ownership and absolute dominion over
them because indefeasibility of title under the Torrens system
does not attach to titles secured by fraud or misrepresentation.
8. BPI v. CASA MONTESSORI and YABUT: LEBRON FOR THE WIN!
After conducting an investigation, CASA discovered that 9 of its
checks had been encashed by a certain Santos since 1990. It
turned out that Santos was actually a fictitious name used by
Yabut who worked as an external auditor of CASA, who
voluntary admitted that he forged the signature of Lebron
(CASA President) and encashed the checks. Collection case +
damages was filed. YES. It failed to detect the eight instances of
forgery. Its negligence consisted in the omission of that degree
of diligence required of a bank. It cannot now feign ignorance,
for very early on we have already ruled that a bank is "bound to
know the signatures of its customers; and if it pays a forged
check, it must be considered as making the payment out of its
own funds, and cannot ordinarily charge the amount so paid to
the account of the depositor whose name was forged.”
9. PBC v. CA and MARCOS: WAG YAN, DAPAT ITO! MARCOS kept
the various time deposit certificates with the BANK. MARCOS
wanted to withdraw from the BANK his time deposits and the
accumulated interests to buy materials for his construction
business. However, the BANK convinced him to keep his time
deposits intact and instead to open several domestic letters of
credit. So he did. Secured various loan obligations using the
TDCs, defaulted, applied the TDs to the obligation. When asked
for copies of a second loan, only gave machine copies of the
duplication. BANK IS LIABLE. As the BANK’s depositor, Marcos
had the right to expect that the BANK was accurately recording
his transactions with it. Upon the maturity of his time deposits,
Marcos also had the right to withdraw the amount due him
after the BANK had correctly debited his outstanding
obligations from his time deposits. By the very nature of its
business, the BANK should have had in its possession the
original copies of the disputed promissory note and the records
and ledgers evidencing the offsetting of the loan with the time
 deposits of Marcos. The BANK inexplicably failed to produce the
original copies of these documents. Clearly, the BANK failed to
treat the account of Marcos with meticulous care.
10. PNB v. PIKE: BONGGA KA DAY! Pike, before he left for Japan as
a gay entertainer, kept his passbook inside a cabinet under lock
in his home. Went missing, discovered that Davasol made two
unauthorized withdrawals. Demanded the return of the
amount since the signatures appearing on the slips were
forgeries. PNB refused. Filed a complaint for bank’s negligence.
BANK IS LIABLE. the negligence in this case lies in the
lackadaisical attitude exhibited by the employees of PNB in
their treatment of respondent Pike's US Dollar Savings Account
that resulted in the unauthorized withdrawal of $7,500 . Having
admitted that pre-signed withdrawal slips do not constitute the
normal procedure with respect to withdrawals by
representatives should have already put PNB's employees on
guard. Rather than readily validating and permitting said
withdrawals, they should have proceeded more cautiously.
Clearly, PNB’s employee, Bal, was exceedingly careless in his
treatment of Pike's savings account.
11. FAR EAST BANK v. CHANTE MAMAYA KA NA LUCKY GUY
12. REYES v. CA: WELCOME ROTONDA. Applied for foreign
exchange demand draft (AUS). First application was denied, no
AUS account. Was informed of a roundabout way—draw DD
against Westpac in Sydney and reimburse from US account in
Westpac New York—which was customarily resorted to.
Agreed. Upon first and second presentment, dishonored. Went
to register as a conference delegate, but could not do so
because DD as reg. fee was dishonored. Embarrassed and
humiliated, they filed a complaint for damages against the
bank. The circumstance show that all efforts were made by
respondent Bank to avoid such mistake. The Philippine Bank of
Commerce vs. Court of Appeals ruling upholding a long-
standing doctrine that the degree of diligence required of
banks, is more than that of a good father of a family where the
fiduciary nature of their relationship with their depositors is
concerned, applies only to the cases where banks act under
their fiduciary capacity, that is, as depository of the deposits of
their depositors. Such degree of diligence is not expected to be
exerted by banks in commercial transactions that do not involve
their fiduciary relationship with depositors.
13. FIRST PLANTER PAWNSHOP v. CIR
14. PCIB v. CABRERA: ANOMALOUS PHILIPPINES. Anomalous
transactions were made against the savings account of a PCIB’s
client. Cabrera, PCIB’s personnel who personally undertook the
investigation of the anomalous transactions, was terminated
from his employment. The evidence against him was that: (a)
on the day of the anomalous transaction, Cabrera was
supposed to be on a leave yet he work in the morning of that
day; and (b) Cabrera was allegedly seen taking an amount from
an unlocked drawer of Advincula while the latter was on a
ladies’ room. Cabrera filed a case for illegal dismissal. He denied
PCIB’s allegations and presented evidence proving his
innocence. A bank owes great fidelity to the public it deals
with, its operation being essentially imbued with public interest.
In turn, it cannot be compelled to continue in its employ a
person in who it had lost trust and confidence and whose
continued employment would patently be inimical to the bank’
interest. In protecting rights of labor, the law authorizes neither
oppression not self-destruction of an employer company, which
itself is oppressed of rights that must be entitled to respect .
However, bank must still comply with die process in terminating
the services of its employees and officers. In this case, the mere
presence of Cabrera at the bank does not establish his guilt for
the fraudulent withdrawals.
15. DYOCO v. EQUITABLE-PCIB: EVERYBODY WANNA STEAL THE
FUNDS. The Personal Banking Manager (PBM) of the bank was
remiss in his duties in requiring the clients’ signature and
ensuring compliance with documentary requirements. This
allowed another bank employee to steal funds from the bank.
The PBM was dismissed on the ground of negligence. VALIDLY
DISMISSED. As the banking industry is impressed with public
interest, all bank personnel are burdened with a high level of
responsibility insofar as care and diligence in the custody and
management of funds are concerned. Petitioner miserably
failed to discharge this burden . As a PBM, petitioner should
have exercised much care in performing his functions.
Petitioner's failure on three separate occasions to require
clients to sign the requisite documents (a vital and standard
procedure in all banking transactions) was a clear
manifestation of serial negligence. Because of this gross
negligence, Carlo Quirong, respondent bank's Customer Sales
Assistant, was able to filch millions of pesos from respondent
bank by manipulating clients' accounts.
16. UNION BANK v. CA: REDEMPTION PERIOD. Pursuant to Section
78 of the General Banking Act, a mortgagor whose real
property has been sold at a public auction, judicially or
extrajudicially, for the full or partial payment of an obligation to
any bank, shall have the right, within one year after the sale of
the real estate to redeem the property. The one-year period is
actually to be reckoned from the date of the registration of the
sale. Clearly therefore, respondents had only until May 8, 1992
to redeem the subject foreclosed property. Their failure to
exercise that right of redemption by paying the redemption
price within the period prescribed by law effectively divested
them of said right. It bears reiterating that during the one year
redemption period, respondents never attempted to redeem the
subject property but instead persisted in their theory that the
mortgage is null and void. To allow them now to redeem the
same property would, as petitioner aptly puts it, be letting them
have their cake and eat it too.
17. PDIC v. CITIBANK: BRANCHES. Citibank and BA sought a
declaratory judgment stating that the money placements they
received from their head office and other foreign branches
were not deposits and did not give rise to insurable deposit
liabilities under Sections 3 and 4 of R.A. No. 3591 (the PDIC
Charter) and, as a consequence, the deficiency assessments
made by PDIC were improper and erroneous. It is apparent
that they both did not incorporate a separate domestic
corporation to represent its business interests in the Philippines .
Their Philippine branches are, as the name implies, merely
branches, without a separate legal personality from their
parent company, Citibank and BA. Thus, being one and the
same entity, the funds placed by the respondents in their
respective branches in the Philippines should not be treated as
deposits made by third parties subject to deposit insurance
under the PDIC Charter.
18. CBTC v. CA and L.C. DIAZ: SOMEBODY GOT THE PASSBOOK!
Calapre went to Solidbank and presented to Teller No. 6 the
two deposit slips and the passbook. The teller acknowledged
receipt of the deposit by returning to Calapre the duplicate
 copies of the two deposit slips. Since the transaction took time
and Calapre had to make another deposit for L.C. Diaz with
Allied Bank, he left the passbook with Solidbank. Calapre then
went to Allied Bank. When Calapre returned to Solidbank to
retrieve the passbook, Teller No. 6 informed him that
"somebody got the passbook”. Calapre went back to L.C. Diaz
and reported the incident to Macaraya. BANK IS LIABLE.
Solidbank’s tellers must exercise a high degree of diligence in
insuring that they return the passbook only to the depositor or
his authorized representative. The tellers know, or should know,
that the rules on savings account provide that any person in
possession of the passbook is presumptively its owner . If the
tellers give the passbook to the wrong person, they would be
clothing that person presumptive ownership of the passbook,
facilitating unauthorized withdrawals by that person. For failing
to return the passbook to Calapre, the authorized
representative of L.C. Diaz, Solidbank and Teller No. 6
presumptively failed to observe such high degree of diligence in
safeguarding the passbook, and in insuring its return to the
party authorized to receive the same. We do not apply the
doctrine of last clear chance to the present case. Solidbank is
liable for breach of contract due to negligence in the
performance of its contractual obligation to L.C. Diaz. This is a
case of culpa contractual, where neither the contributory
negligence of the plaintiff nor his last clear chance to avoid the
loss, would exonerate the defendant from liability.
19. BPI-FB v. FMIC: AGENT. FMIC and BPI through its manager
agreed that FMIC will maintain a 1 yr deposit with BPI for a
stipulated rate of 17%. However, FMIC discovered that the
account was being subjected to unauthorized withdrawals
prompting FMIC to withdraw the same. FMIC asked for the 17%
stipulated rate. BPI contends that its manager overstepped his
authority in granting the 17% rate. IS BPI liable for the 17%
interest? YES. A banking corporation is liable to innocent third
persons where the representation is made in the course of its
business by an agent acting within the general scope of his
authority even though the agent is secretly abusing his
authority and attempting to perpetrate a fraud upon his
principal or some other person for his own ultimate benefit.
20. ASSOCIATED BANK v. TAN: Tan deposited a Post-Dated-Check.
The bank manager allowed Tan to withdraw the proceeds of
the check even prior to its clearing. Later on, the checks issued
by Tan was dishonored due to insufficiency of funds. It was
discovered that the account balance became insufficient
because the bank debited such account for the amount of the
PDC since the PDC was dishonored. Tan sued the bank for
damages. Is the bank liable? YES. Jurisprudence has established
that the lack of diligence of a servant is imputed to the
negligence of the employer, when the negligent or wrongful act
of the former proximately results in an injury to a third person;
in this case, the depositor. The manager of the bank's
Cabanatuan branch, Consorcia Santiago, categorically admitted
that she and the employees under her control had breached
bank policies. They admittedly breached those policies when,
without clearance from the drawee bank in Baguio, they
allowed respondent to withdraw on October 1, 1990, the
amount of the check deposited . It is undeniable that the bank's
premature authorization of the withdrawal by respondent on
October 1, 1990, triggered — in rapid succession and in a
natural sequence — the debiting of his account, the fall of his
account balance to insufficient levels, and the subsequent
dishonor of his own checks for lack of funds. Indeed, the
banking business is vested with the trust and confidence of the
public; hence the "appropriate standard of diligence must be
very high, if not the highest, degree of diligence." The standard
applies, regardless of whether the account consists of only a
few hundred pesos or of millions.
CASE #29 IS IMPORTANT—SAAN LANG BA APPLICABLE ANG
EXTRAORDINARY DILIGENCE, ONLY WITH BANKS vis-à-vis
DEPOSITORS and NOT BANKS vis-à-vis its EMPLOYEES.
CASE #30 DEALS WITH THE OUTSOURCING OF BANKING
FUNCTIONS.
- ABC v. LIM SIO WAN: 60-40 sharing of both issuing bank and
drawee bank. Proximate cause + contributory negligence.
- EQUITABLE PCIB v. NG SHEUNG NGOR: DR-CR relationship,
bank can set-off.
- SIMEX INTERNATIONAL v. CA and TRB: NO DISCRIMINATION
AS TO AMOUNT OF DEPOSIT. In every case, the depositor
expects the bank to treat his account with the utmost fidelity,
whether such account consists only of a few hundred pesos or
of millions. The bank must record every single transaction
accurately, down to the last centavo, and as promptly as
possible. This has to be done if the account is to reflect at any
given time the amount of money the depositor can dispose of
as he sees fit, confident that the bank will deliver it as and to
whomever he directs. A blunder on the part of the bank, such
as the dishonor of a check without good reason, can cause the
depositor not a little embarrassment if not also financial loss
and perhaps even civil and criminal litigation.
- BPI v. FRANCO: CANNOT UNILATERALLY FREEZE ACCOUNTS.
As there is a debtor-creditor relationship between a bank and
its depositor, BPI-FB ultimately acquired ownership of Franco’s
deposits, but such ownership is coupled with a corresponding
obligation to pay him an equal amount on demand . Although
BPI-FB owns the deposits in Franco’s accounts, it cannot
prevent him from demanding payment of BPI-FB’s obligation by
drawing checks against his current account, or asking for the
release of the funds in his savings account. Thus, when Franco
issued checks drawn against his current account, he had every
right as creditor to expect that those checks would be honored
by BPI-FB as debtor.
- SAMSON v. BPI: YARDSTICK FOR MORAL DAMAGES. The social
standing of the aggrieved party is essential to the
determination of the proper amount of the award. Otherwise,
the goal of enabling him to obtain means, diversions, or
amusements to restore him to the status quo ante would not
be achieved. Also related, case #59, PRUDENTIAL BANK v. CA.
Same ruling on moral damages.
- PNB v. SPS. CHEAH: EQUAL SHARING. The Collecting Bank’s act
of releasing the proceeds of the check prior to the lapse of the
15-day clearing period was “the proximate cause of the loss.”
While the Depositor was also at fault in accommodating a
stranger’s check and depositing it to the bank, the said bank is
also at fault for releasing the proceeds thereof without
exhausting the 15-day clearing period, an act which
contravened established banking rules and practice. Both
parties are equally negligent and should therefore equally
suffer the loss. The two must both bear the consequences of
their mistakes.
- FAR EAST BANK v. GOLD PALACE JEWELLERY: MATERIALLY
ALTERED CHECKS. The bank cannot debit the account of its
depositor despite the latter had caused the issuance of the
materially altered check. The depositor in this case is in good
faith and is protected under Sec.62 of the NIL which states that
the bank shall be primarily liable upon its acceptance of the
instrument and warrants that it shall pay it according to the
tenor of his acceptance. The remedy of the bank in cases of
materially altered check is against the drawee bank or the
person causing the material alteration and not its depositor.
- METROPOLITAN BANK v. CA: XPN to GR THAT JURIDICAL
ENTITIES CANNOT OBTAIN MORAL DAMAGES. As a general
rule juridical entities cannot be granted moral damages since
they are devoid of emotions and sufferings. However, an
exemption to this is when the reputation of the said juridical
entity has been besmirched as result of the said breach. The
creditor-bank in this case has been awarded moral damages
since the breach of the debtor-bank has resulted to the damage
in the credit standing and business reputation of the former
bank.
- PRUDENTIAL BANK v. ABASOLO: LIABILITY WHEN THERE IS NO
DR-CR RELATIONSHIP. In the absence of a lender-borrower
relationship between petitioner and Liwayway, there is no
inherent obligation of petitioner to release the proceeds of the
loan to her. To a banking institution, well-defined lending
policies and sound lending practices are essential to perform its
lending function effectively and minimize the risk inherent in
any extension of credit.
- PBC v. DY: WHEN EXTRAORDINARY DILIGENCE CAN BE
DISPENSED WITH. While bank failed to exercise greater care in
conducting the ocular inspection of the properties offered for
mortgage, its omission did not prejudice any innocent third
parties. The land owner is a party to the simulated sale. Thus,
no amount of diligence in the conduct of the ocular inspection
could have led to the discovery of the complicity between the
buyer and the owner.
- GONZALES v. PCIB: EXTRAORDINARY DILIGENCE INCLUDES
NOTIFICATION OF ACCOMMODATION PARTIES. the bank is
expected to exercise the highest degree of diligence. In failing
to notify Gonzales of the default, they were in effect, negligent.
Gonzales being an accommodation surety is still entitled to be
notified in the event that the accommodated party defaulted in
his obligation. The degree of diligence required is more than
that of a good father of the family considering that the business
of banking is imbued with public interest due to the nature of
their function.
- METROBANK v. GO: Negligence was committed by The Bank in
accepting for deposit the crossed checks without indorsement
and in not verifying the authenticity of the negotiation of the
checks. The law imposes a duty of extraordinary diligence on
the collecting bank to scrutinize checks deposited with it, for the
purpose of determining their genuineness and regularity. The
liability for moral damages is sufficient to remind it of its
responsibility to exercise extraordinary diligence in the course
of its business which is imbued with public interest.
- CITIBANK v. SPS. CABAMONGAN: LIABILITY OF BANKS WITH
REGARD TO A FORGED CHECK. The SC has held that a bank is
"bound to know the signatures of its customers; and if it pays a
forged check, it must be considered as making the payment out
of its own funds, and cannot ordinarily charge the amount so
paid to the account of the depositor whose name was forged."
The Bank openly courted disaster when despite noticing
discrepancies in the signature and photograph of the person
claiming to be the depositor and the failure to surrender the
original certificate of time deposit, allowed the pre-termination
of the account.
- BANK OF AMERICA v. ASSOCIATED CITIZENS BANK: The bank
on which a check is drawn, known as the drawee bank, is under
strict liability, based on the contract between the bank and the
drawer, to pay the check only to the payee or the payee's
order. The drawer's instructions are reflected on the face and
by the terms of the check. When the drawee bank pays a
person other than the payee named on the check, it does not
comply with the terms of the check and violates its duty to
charge the drawer's account only for properly payable items.
- URSAL v. CA: BANKS CANNOT SIMPLY RELY ON CERTIFICATES
OF TITLE. Banks cannot merely rely on certificates of title in
ascertaining the status of mortgaged properties; as their
business is impressed with public interest, they are expected to
exercise more care and prudence in their dealings than private
individuals. Indeed, the rule that persons dealing with
registered lands can rely solely on the certificate of title does
not apply to banks. The ascertainment of the status or
condition of a property offered to it as security for a loan must
be a standard and indispensable part of its operations. Same
ruling in EDUARDO MANLAPAT v. CA.
o PNB v. CORPUZ: Anyone who deliberately ignores a
significant fact that would create suspicion in an
otherwise reasonable person cannot be considered as
an innocent mortgagee for value.
o DBP v. CA and CAJES: SPECIFIC RESPONSIBILITY OF
BANKS IN APPROVING A LOAN. Judicial notice is
taken of the standard practice for banks, before
approving a loan, to send representatives to the
premises of the land offered as collateral and to
investigate who are the real owners thereof.
o UCPB v. RAMOS: SAME;SAME. It bears stressing that
the business of a bank is one affected with public
interest, for which reason the bank should guard
against loss due to negligence or bad faith. In
approving the loan of an applicant, the bank concerns
itself with proper information regarding its debtors.
The UCPB, as a bank and a financial institution
engaged in the grant of loans, is expected to
ascertain and verify the identities of the persons it
transacts business with. Same ruling with SPS.
CANLAS v. CA.
o DAVID SIA TIO v. ABAYATA: Rural Bank is a
mortgagee in bad faith because of its failure to
examine more closely the title of the mortgagors
despite the first-hand knowledge that other persons,
and not the would-be mortgagors, were in possession
of the property. The very fact that the lot was not in
the possession of the Lasolas should have put the
defendant bank on guard and prompted it to make a
more thorough inquiry into the ownership of the lot.
- CA AGRO-INDUSTRIAL DEV’T v. CA: The relation between a
bank renting out safe-deposit boxes and its customer with
respect to the contents of the box is that of a bailor and bailee,
the bailment being for hire and mutual benefit. The primary
 function is still found within the parameters of a contract of
deposit, i.e., the receiving in custody of funds, documents and
other valuable objects for safekeeping. The renting out of the
safety deposit boxes is not independent from, but related to or
in conjunction with, this principal function. The depositary's
responsibility for the safekeeping of the objects deposited in
the case at bar is governed by Title I, Book IV of the Civil Code.
Accordingly, the depositary would be liable if, in performing its
obligation, it is found guilty of fraud, negligence, delay or
contravention of the tenor of the agreement. In the absence of
any stipulation prescribing the degree of diligence required,
that of a good father of a family is to be observed. Same ruling
in SIA v. CA and SBTC.
- ABC v. CA: RTC HAS NO JURISDICTION OVER THIRD-PARTY
COMPLAINTS WHERE THE BANK CONSENTS TO ARBITRATION
UNDER PCHC. A trial court, which has jurisdiction over the main
action, also has jurisdiction over the third-party complaint, even
if the said court would have had no jurisdiction over it had it
been filed as an independent action. However, this doctrine
does not apply in the case of banks, which have given written
and subscribed consent to arbitration under the auspices of the
PCHC. By participating in the clearing operations of the PCHC,
petitioner agreed to submit disputes of this nature to
arbitration. Accordingly, it cannot invoke the jurisdiction of the
trial courts without a prior recourse to the PCHC Arbitration
Committee.
- PEREZ v. CA: NATURE OF MONEY MARKET TRANSACTIONS.
The fundamental function of the money market transaction in
its operation is to match and bring together in a most
impersonal manner both the "fund users" and the "fund
suppliers." The money market is an "impersonal market", free
from personal considerations." The market mechanism is
intended to provide quick mobility of money and securities."
The impersonal character of the money market device
overlooks the individuals or entities concerned. The issuer of a
commercial paper in the money market necessarily knows in
advance that it would be expeditiously transacted and
transferred to any investor/lender without need of notice to
said issuer. In practice, no notification is given to the borrower
or issuer of commercial paper of the sale or transfer to the
investor.
o RAUL SESBRENO v. CA: A money market transaction
partakes of the nature of a loan and therefore
"nonpayment thereof would not give rise to criminal
liability for estafa through misappropriation or
conversion." In money market placement, the
investor is a lender who loans his money to a
borrower through a middleman or dealer. In case of
failure to return the placement with the interest, the
liability incurred is a civil one.
- BANAS v. ASIA PACIFIC FINANCE CORP: WHEN BANKING LAWS
ARE INAPPLICABLE. What is prohibited by law is for investment
companies to lend funds obtained from the public through
receipts of deposit, which is a function of banking institutions.
But here, the funds supposedly “lent” to petitioners have not
been shown to have been obtained from the public by way of
deposits, hence, the inapplicability of banking laws.
- FIDELITY SAVINGS AND MORTGAGE BANK v. HON. PEDRO
CENZON: CLOSED BANKS NOT LIABLE TO PAY INTEREST ON
BANK DEPOSITS. It is settled jurisprudence that a banking
institution which has been declared insolvent and subsequently
ordered closed by the Central Bank of the Philippines cannot be
held liable to pay interest on bank deposits which accrued
during the period when the bank is actually closed and non-
operational.
- GO v. BSP: ELEMENTS ON DOSRI RESTRICTIONS. Under Section
83, RA 337, the following elements must be present to
constitute a violation of its first paragraph:
(1) the offender is a director or officer of any banking
institution
(2) the offender, either directly or indirectly, for himself or as
representative or agent of another, performs any of the
following acts:
a. he borrows any of the deposits or funds of such bank;
or;
b. he becomes a guarantor, indorser, or surety for loans
from such bank to others, or;
c. he becomes in any manner an obligor for money
borrowed from bank or loaned by it
(3) the offender has performed any of such acts without the
written approval of the majority of the directors of the
bank, excluding the offender, as the director concerned.
 SIMILAR RULING: HILARIO SORIANO v. PEOPLE: The
prohibition in Section 83 is broad enough to cover
various modes of borrowing. It covers loans by a bank
director or officer which are made either: (1) directly,
(2) indirectly, (3) for himself, (4) or as the
representative or agent of others. It applies even if
the director or officer is a mere guarantor, indorser or
surety for someone else's loan or is in any manner an
obligor for money borrowed from the bank or loaned
by it. The covered transactions are prohibited unless
the approval, reportorial and ceiling requirements
under Section 83 are complied with.
- IBAAN RURAL BANK v. COURT OF APPEALS: ESTOPPEL IN
PERIOD OF REDEMPTION. When circumstances imply a duty to
speak on the part of the person for whom an obligation is
proposed, his silence can be construed as consent. By its silence
and inaction, petitioner misled private respondents to believe
that they had two years within which to redeem the mortgage.
After the lapse of two years, the bank is estopped from
asserting that the period for redemption was only one year and
that the period had already lapsed.
- GOLDENWAY MERCHANDISING CORP v. EQUITABLE-PCIB:
REDEMPTION BY JURIDICAL PERSONS. Under the new law, an
exception is thus made in the case of juridical persons which
are allowed to exercise the right of redemption only "until, but
not after, the registration of the certificate of foreclosure sale"
and in no case more than three (3) months after foreclosure,
whichever comes first. The new redemption period commences
from the date of foreclosure sale, and expires upon registration
of the certificate of sale or three months after foreclosure,
whichever is earlier. There is likewise no retroactive application
of the new redemption period because Section 47 exempts
from its operation those properties foreclosed prior to its
effectivity and whose owners shall retain their redemption
rights under Act No. 3135.