OLIVER v.

PSB (2016)
Topic:

PARTIES:
 Petitioners: Dra. Mercedes Oliver
 Respondents: Philippine Savings Bank, Lilia Castro

FACTS:
 Oliver alleged that sometime in 1997, she made an initial deposit of P12M into her PSB
account. Castro convinced her to loan out her deposit as interim or bridge financing for the
approved loans of bank borrowers who were waiting for the actual release of their loan
proceeds. Under this agreement, Castro would first show the approved loan documents to
Oliver then withdraw the amount needed from Oliver’s account. Upon actual release of the
loan by PSB to the borrower, Castro would charge the rate of 4% a month from the loan
proceeds as interim or bridge financing interest. Castro would earn a commission of 10% per
interest.
 The arrangement went on smoothly for months. Due to the frequency of bank transactions,
Oliver entrusted her passbook to Castro. Oliver was further convinced by Castro to avail of
an additional credit line for P10M. The credit line was secured by a real estate mortgage on
her house and lot in Ayala Alabang.
 Oliver instructed Castro to pay P2M monthly to PSB so that her P10M credit line would be
fully paid.
 Castro then stopped rendering an accounting for Oliver. Oliver demanded the return of her
passbook. Oliver noticed several erasures and superimpositions therein. Becoming
suspicious, she requested a copy of her transaction history register from PSB.
 Oliver was surprised to discover that P4.5M was entered into her account and P7M was
withdrawn from her account on the same day. Oliver asserted that she neither applied for
an additional loan of P4.5M nor authorized the withdrawal of P7M. She also discovered
another loan for P1.3M and allegedly issued in connection with the P10M credit line.
 Oliver learned that the additional P4.5M and P1.3M loans were also secured by the real
estate mortgage covering the same property in Ayala Alabang.
 Oliver received collection letters from PSB, requiring her to pay the unpaid loans. Oliver
protested that she neither availed of the said loans nor authorized the withdrawal of P7M
from her account. She also claimed that P10M loan from her credit line was already paid in
full. Oliver received a notice of sale involving the property in Ayala Alabang.
 As a result, Oliver filed the subject complaint against PSB and Castro.
 Castro admits the arrangement she made with Oliver and that she was instructed by the
latter to pay the bank P2M every month to settle the P10M credit line. Nonetheless, Castro
informed Oliver that the payment thereof was subject to the availability of funds in her
account.
 Castro denied the deceit imputed against her. She asserted that their arrangement was not
“interim or bridge financing.” Castro informed Oliver about the impending expiration of her
credit line and hence, Oliver applied for another loan in the amount of P4.5M.
 Castro asserted that the P7M was withdrawn from Oliver’s account and was then deposited
to the account of one Ben Lim on the same date. As to the amount of P1.3M, Castro
explained that it was a separate and personal loan obtained by her from Oliver. To secure
the payment, Castro mortgaged a property in Muntinlupa City.
 PSB averred that Oliver applied for a credit line of P10M which was granted by the bank and
which was secured by a real estate mortgage. Because Oliver failed to pay the P10M, she
obtained another loan of P4.5M. Later, she again acquired a separate loan amounting to
P1.3M.
  The RTC rendered a decision in favor of PSB and Castro. PSB and Castro should NOT be liable
for the P4.5M and the withdrawal of the P7M since Castro was able to submit the Debit
Credit Memo and the Savings Account Check Deposit Slip. Considering that neither PSB nor
Castro obtained the P7M, there was no obligation on their part to return the amount.
 Upon reconsideration, the RTC reversed its earlier decision, finding that Oliver’s assertion
that the withdrawal was made without her consent prevailed in the absence of any proof to
the contrary. The cash savings withdrawal slips should have been offered in evidence by
either PSB or Castro to settle the issue of whether the amount of P7M was actually
withdrawn by Oliver or by her authorized representative or agent.
 The RTC found that had it not been for the unauthorized withdrawal which was attributable
to the bank and Castro, the 4.5M and the P1.3M loans would not have remained
outstanding, considering that the improperly withdrawn P7M was more than sufficient to
discharge those liabilities.
 The CA reversed the decision of the RTC, finding no compelling evidence to prove fraud
attended the processing and release of the P4.5M. The CA found that Oliver admitted signing
the loan documents, the promissory notes and release tickets pertaining to the obligations
that she contracted with PSB. She also failed to establish her assertion that she was
manipulated and defrauded into the signing of the loan documents.
 Oliver insisted that she had no knowledge of any loan released because she never availed of
any new loan from PSB, neither the P4.5M nor withdrawal of P7M was reflected in her
passbook; that the cash savings withdrawal slip containing the signature of Oliver should
have been presented in court; that Lim was never called to witness; that the erasures and
alterations in her passbook establish that Castro manipulated the same.
 Castro asserted that there was no proof that the P7M was withdrawn without Oliver’s
authority. She added that Oliver was an astute businesswoman who knew her clients and
bank deposits and who was knowledgeable for of her bank transactions and was aware of
her loaned amounts from the bank.

ISSUES/HELD:
 W/N there is an agency relationship between Oliver and Castro.
o YES. A contract of agency may be inferred from all the dealings between Oliver and
Castro. Agency can be express or implied from the acts of the principal, from his
silence, or lack of action, or his failure to repudiate the agency knowing that another
person is acting on his behalf without his authority. The question of whether an
agency has been created is ordinarily a question which may be established in the
same way as any other fact, either by direct or circumstantial evidence. The question
is ultimately one of intention.
o Here, Oliver and Castro had a business arrangement where Oliver would obtain
loans from the bank, through the help of Castro as its branch manager; and after
acquiring the loan proceeds, Castro would lend the acquired amount to prospective
borrowers who were awaiting for the actual release of their loan proceeds. Oliver
would gain 4% to 5% interest per month from the loan proceeds of her borrowers,
while Castro would earn a commission of 10% from the interests.
o Clearly, an agency was formed because Castro bound herself to render some service
in representation or on behalf of Oliver, in the furtherance of their business pursuit.
o Accordingly, the laws on agency apply to their relationship. Art. 1881 provides that
the agent must act within the scope of his authority. He may do such acts as may be
conducive to the accomplishment of the purpose of the agency. Thus, as long as the
agent acts within the scope of the authority given by his principal, the actions of the
former shall bind the latter.
 o The Court finds that the loans of P4.5M and P1.3M were acquired with Oliver’s
authority. The promissory notes and release tickets for the said loans bore her
signatures. Oliver failed to prove that her signatures were forged. Hence, the loan
documents were reliable and these proved that the loan documents were reliable
and processed within the scope of authority.

 W/N the respondents are liable for the P7M.

o YES. Although it was proven that Oliver authorized the loans in the aggregate
amount of P5.8M, there is nothing in the records that proved that she also allowed
the withdrawal of P7M from her bank account. Oliver denied that she gave any
authority to either Castro or PSB to withdraw the same amount.
o Castro, as agent of Oliver and as branch manager, utterly failed to secure the
authorization of Oliver to withdraw the P7M.
o Castro’s lack of authority to withdraw the P7M became more apparent when she
altered her passbook to hide such transaction.
o The court is convinced that Castro went beyond the scope of her authority in
withdrawing the P7M from Oliver’s bank account. Hence, Castro must be liable for
prejudicing Oliver.
o Castro, as agent of Oliver, could not produce either the said withdrawal slip allegedly
authorizing the withdrawal of the P7M.
o PSB must also be held liable because it failed to exercise utmost diligence in the
improper withdrawal of the P7M from Oliver’s bank account. The bank is under the
obligation to treat the accounts of depositors with meticulous care, always having in
mind the fiduciary nature of their relationship.
o There was a clear failure to exercise the degree of diligence that it out to have
exercised in dealing with its clients. PSB could not prove that the withdrawal of P7M
was duly authorized by Oliver. As a banking institution, PSB was expected to ensure
that such substantial amount should only be transacted with the consent and
authority of Oliver. PSB, however, reneged on its fiduciary duty by allowing an
encroachment upon its depositor’s account without the latter’s permission.
o PSB and Castro were utterly reckless in allowing the withdrawal of a huge amount
from Oliver’s account without her consent.

DOCTRINE:
 Agency can be express or implied from the acts of the principal, from his silence or lack of
action, or his failure to repudiate the agency knowing that another person is acting on his
behalf without authority.
 As long as the agent acts within the scope of the authority given by his principal, the actions
of the former shall bind the latter.

JUDGMENT: Petition is GRANTED.