BPI vs. Lifetime Marketing Corporation

SUPREME COURT REPORTS ANNOTATED VOLUME 555 1/19/22, 8:12 PM
G.R. No. 176434. June 25, 2008.*

BANK OF THE PHILIPPINE ISLANDS, petitioner, vs.
LIFETIME MARKETING CORPORATION, respondent.
Commercial Law; Banks and Banking; General Banking Law of

2000 (R.A. No. 8791); The banking industry is impressed with public
interest; The fiduciary nature of banking, previously imposed by case
law, is now enshrined in Republic Act No. 8791 or the General
Banking Law of 2000·Section 2 thereof specifically says that the
state recognizes the fiduciary nature of banking that requires high
standards of integrity and performance.·We have repeatedly
emphasized that the banking industry is impressed with public
interest. Of paramount importance thereto is the trust and
confidence of the public in general. Accordingly, the highest degree
of diligence is expected, and high standards of integrity and
performance are required of it. By the nature of its functions, a
bank is under obligation to treat the accounts of its depositors with
meticulous care, always having in mind the fiduciary nature of its
relationship with them. The fiduciary nature of banking, previously
imposed by case law, is now enshrined in Republic Act No. 8791 or
the General Banking Law of 2000. Section 2 thereof specifically
says that the state recognizes the fiduciary nature of banking that
requires high standards of integrity and performance.
Same; Same; Torts and Damages; Quasi-Delicts; Elements.·
LMC sought recovery from BPI on a cause of action based on tort.
Article 2176 of the Civil Code provides, „Whoever by act or omission
causes damage to another, there being fault or negligence, is obliged
to pay for the damage done. Such fault or negligence if there is no
pre-existing contractual relation between the parties, is called a
quasi-delict and is governed by the provisions of this Chapter.‰
There are three elements of quasi-delict: (a) fault or negligence of
the defendant, or some other person for whose acts he must
respond; (b) damages suffered by the plaintiff; and (c) the
connection of cause and effect between the fault or negligence of the
defendant and the damages incurred by the plaintiff.
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_______________
* SECOND DIVISION.
374
374 SUPREME COURT REPORTS ANNOTATED
Bank of the Philippine Islands vs. Lifetime Marketing Corporation
Same; Same; Same; Same; Words and Phrases; „Negligence‰

Defined.·Negligence is the omission to do something which a
reasonable man, guided by those considerations which ordinarily
regulate the conduct of human affairs, would do, or the doing of
something which a prudent and reasonable man would not do.
Negligence in this case lies in the tellersÊ disregard of the validation
procedures in place and BPIÊs utter failure to supervise its
employees. Notably, BPIÊs managers admitted in several
correspondences with LMC that the deposit transactions were
cancelled without LMCÊs knowledge and consent and based only
upon the request of Alice Laurel and her husband.
Same; Same; Same; Same; The degree of diligence required of
banks is more than that of a reasonable man or a good father of a
family; In view of the fiduciary nature of their relationship with
their depositors, banks are duty-bound to treat the accounts of their
clients with the highest degree of care.·It is well to reiterate that
the degree of diligence required of banks is more than that of a
reasonable man or a good father of a family. In view of the fiduciary
nature of their relationship with their depositors, banks are duty-
bound to treat the accounts of their clients with the highest degree
of care.
Same; Same; Same; Same; Words and Phrases; „Proximate
Cause,‰ Defined.·BPI cannot escape liability because of LMCÊs
failure to scrutinize the monthly statements sent to it by the bank.
This omission does not change the fact that were it not for the
wanton and reckless negligence of BPIÊs tellers in failing to require
the surrender of the machine-validated deposit slips before
reversing the deposit transactions, the loss would not have
occurred. BPIÊs negligence is undoubtedly the proximate cause of
the loss. Proximate cause is that cause which, in a natural and
continuous sequence, unbroken by any efficient intervening cause,

produces the injury, and without which the result would not have
occurred.
Same; Same; Same; Same; Same; Contributory Negligence; The
damages awarded to a bank depositor may be reduced on account of
its own contributory negligence in accordance with Article 1172 of
the Civil Code.·LMC should have been more vigilant in managing
and overseeing its own financial affairs. The damages awarded to it
were correctly reduced on account of its own contributory negligence
in accordance with Article 1172 of the Civil Code.
375
VOL. 555, JUNE 25, 2008 375
Appeals; Pleadings and Practice; A party who does not appeal

from the decision may not obtain any affirmative relief from the
appellate court other than what he has obtained from the lower court
whose decision is brought up on appeal, except in cases where there
are (1) errors affecting the lower courtÊs jurisdiction over the subject
matter, (2) plain errors not specified, and (3) clerical errors.·We
find the appellate courtÊs decision increasing the award of actual
damages in favor of LMC improper since the latter did not appeal
from the decision of the trial court. It is well-settled that a party
who does not appeal from the decision may not obtain any
affirmative relief from the appellate court other than what he has
obtained from the lower court whose decision is brought up on
appeal. The exceptions to this rule, such as where there are (1)
errors affecting the lower courtÊs jurisdiction over the subject
matter, (2) plain errors not specified, and (3) clerical errors, do not
apply in this case.
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Justino M. Marquez III for petitioner.
Wilfredo T. Garcia for respondent.
TINGA, J.:
The Bank of the Philippine Islands (BPI) seeks the

reversal of the Decision1 of the Court of Appeals dated 31
July 2006 in CA-G.R. CV No. 62769 which ordered it to pay
Lifetime Marketing Corporation (LMC) actual damages in
the amount of P2,075,695.50 on account of its gross
negligence in handling LMCÊs account.
The following facts, quoted from the decision of the
Court of Appeals, are undisputed:
_______________
1 Rollo, pp. 7-21; penned by Associate Justice Normandie B. Pizarro

and concurred in by Associate Justices Josefina Guevara-Salonga and
Aurora Santiago-Lagman.
376

Bank of the Philippine Islands vs. Lifetime Marketing
Corporation
„On October 22, 1981, Lifetime Marketing Corporation (LMC, for

brevity), opened a current account with the Bank of the Philippine
Islands (BPI, for brevity), Greenhills-Edsa branch, denominated as
Account No. 3101-0680-63. In this account, the „sales agents‰ of
LMC would have to deposit their collections or payments to the
latter. As a result, LMC and BPI, made a special arrangement that
the formerÊs agents will accomplish three (3) copies of the deposit
slips, the third copy to be retained and held by the teller until
LMCÊs authorized representatives, Mrs. Virginia Mongon and Mrs.
Violeta Ancajas, shall retrieve them on the following banking day.
Sometime in 1986, LMC availed of the BPIÊs inter-branch
banking network services in Metro Manila, whereby the formerÊs
agents could make [a] deposit to any BPI branch in Metro Manila
under the same account. Under this system, BPIÊs bank tellers were
no longer obliged to retain the extra copy of the deposit slips
instead, they will rely on the machine-validated deposit slip, to be
submitted by LMCÊs agents. For its part, BPI would send to LMC a
monthly bank statement relating to the subject account. This
practice was observed and complied with by the parties.
As a business practice, the registered sales agents or the
Lifetime Educational Consultants of LMC, can get the books from
the latter on consignment basis, then they would go directly to their

clients to sell. These agents or Lifetime Educational Consultants
would then pay to LMC, seven (7) days after they pick up all the
books to be sold. Since LMC have several agents around the
Philippines, it required to remit their payments through BPI, where
LMC maintained its current account. It has been LMCÊs practice to
require its agents to present a validated deposit slip and, on that
basis, LMC would issue to the latter an acknowledgement receipt.
Alice Laurel, is one of LMCÊs „Educational Consultants‰ or
agents. On various dates covering the period from May, [sic] 1991
up to August, 1992, Alice Laurel deposited checks to LMCÊs subject
account at different branches of BPI, specifically: at the
Harrison/Buendia branch-8 checks; at Arrangue branch-4 checks; at
Araneta branch-1 check; at Binondo branch-3 checks; at Ermita
branch-5 checks; at Cubao Shopping branch-1 check; at Escolta
branch-4 checks; at the Malate branch-2 checks; at Taft Avenue
branch-2 checks; at Paseo de Roxas branch-1 check; at J. Ruiz, San
Juan branch, at West Avenue and Commonwealth Quezon City
branch- 2 checks; and at Vito Cruz branch-2 checks.
377
VOL. 555, JUNE 25, 2008 377

Each check thus deposited were retrieved by Alice Laurel after

the deposit slips were machine-validated, except the following
thirteen (13) checks, which bore no machine validation, to wit: CBC
Check No. 484004, RCBC Check No. 419818, CBC Check No.
484042, FEBTC Check No. 171857, RCBC Check No. 419847, CBC
Check No. 484053, MBTC Check No. 080726, CBC Check No.
484062, PBC Check No. 158076, CBC Check No. 484027, CBC
Check No. 484017, CBC Check No. 484023 and CBC Check No.
218190.
A verification with BPI by LMC showed that Alice Laurel made
check deposits with the named BPI branches and, after the check
deposit slips were machine-validated, requested the teller to reverse
the transactions. Based on general banking practices, however, the
cancellation of deposit or payment transactions upon request by any
depositor or payor, requires that all copies of the deposit slips must
be retrieved or surrendered to the bank. This practice, in effect,
cancels the deposit or payment transaction, thus, it leaves no
evidence for any subsequent claim or misrepresentation made by

any innocent third person. Notwithstanding this, the verbal
requests of Alice Laurel and her husband to reverse the deposits
even after the deposit slips were already received and consummated
were accommodated by BPI tellers.
Alice Laurel presented the machine-validated deposit slips to
LMC which, on the strength thereof, considered her account paid.
LMC even granted her certain privileges or prizes based on the
deposits she made.
The total aggregate amount covered by Alice LaurelÊs deposit
slips was Two Million Seven Hundred Sixty Seven Thousand, Five
Hundred Ninety Four Pesos (P2,767,594.00) and, for which, LMC
paid Laurel the total sum of Five Hundred Sixty Thousand Seven
Hundred Twenty Six Pesos (P560,726.00) by way of „sales discount
and promo prizes.‰
The above fraudulent transactions of Alice Laurel and her
husband was made possible through BPI tellerÊs failure to retrieve
the duplicate original copies of the deposit slips from the former,
every time they ask for cancellation or reversal of the deposit or
payment transaction.
Upon discovery of this fraud in early August 1992, LMC made
queries from the BPI branches involved. In reply to said queries,
BPI branch managers formally admitted that they cancelled,
without the permission of or due notice to LMC, the deposit
transactions made
378

by Alice and her husband, and based only upon the latterÊs verbal
request or representation.
Thereafter, LMC immediately instituted a criminal action for
Estafa against Alice Laurel and her husband Thomas Limoanco,
before the Regional Trial Court of Makati, Branch 65, docketed as
Criminal Case No. 93-7970 to 71, entitled People of the Philippines
v. Thomas Limoanco and Alice Laurel. This case for estafa,
however, was archived because summons could not be served upon
the spouses as they have absconded. Thus, the BPIÊs apparent
reluctance to admit liability and settle LMCÊs claim for damages,
and a hopeless case of recovery from Alice Laurel and her husband,
has left LMC, with no option but to recover damages from BPI.
On July 24, 1995, LMC, through its representative, Miss
Consolacion C. Rogacion, the President of the company, filed a
Complaint for Damages against BPI, docketed as Civil Case No. 95-
1106, and was raffled to Regional Trial Court of Makati City,
Branch 141.
After trial on the merits, the court a quo rendered a Decision in
favor of LMC. The dispositive portion of which reads, as follows:
WHEREFORE, decision is hereby rendered ordering
defendant bank to pay plaintiff actual damages equitably
reduced to one (1) million pesos plus attorneyÊs fees of
P100,000.00.
No pronouncement as to costs.
SO ORDERED.‰2
Only BPI filed an appeal. The Court of Appeals affirmed

the decision of the trial court but increased the award of
actual damages to P2,075,695.50 and deleted the award of
P100,000.00 as attorneyÊs fees.3 Citing public interest, the
appellate court denied reconsideration in a Resolution4
dated 30 January 2007.
In this Petition for Review5 dated 19 March 2007, BPI
insists that LMC should have presented evidence to prove
not
_______________
2 Id., at pp. 8-13.

3 Id., at pp. 20-21.
4 Id., at pp. 22-23.
5 Id., at pp. 28-49.
379
VOL. 555, JUNE 25, 2008 379

Corporation
only the amount of the checks that were deposited and

subsequently reversed, but also the actual delivery of the
books and the payment of „sales and promo prizes‰ to Alice
Laurel. Failing this, there was allegedly no basis for the
award of actual damages. Moreover, the actual damages

should not have been increased because the decision of the
trial court became conclusive as regards LMC when it did
not appeal the said decision.
BPI further avers that LMCÊs negligence in considering
the machine-validated check deposit slips as evidence of
Alice LaurelÊs payment was the proximate cause of its own
loss. Allegedly, by allowing its agents to make deposits with
other BPI branches, LMC violated its own special
arrangement with BPIÊs Greenhills-EDSA branch for the
latter to hold on to an extra copy of the deposit slip for pick
up by LMCÊs authorized representatives. BPI points out
that the deposits were in check and not in cash. As such,
LMC should have borne in mind that the machine
validation in the deposit slips is still subject to the
sufficiency of the funds in the drawersÊ account.
Furthermore, LMC allegedly ignored the express notice
indicated in its monthly bank statements and consequently
failed to check the accuracy of the transactions reflected
therein.
In its Manifestation of Compliance by Respondent on the
Order Dated 20 June 2007 Received on 29 July 2007 to
Submit Comment,6 dated 9 August 2007, LMC insists that
it is indeed entitled to the actual damages awarded to it by
the appellate court.
BPI filed a Reply7 dated 15 January 2008, in reiteration
of its submissions.
We have repeatedly emphasized that the banking
industry is impressed with public interest. Of paramount
importance thereto is the trust and confidence of the public
in general.
_______________
6 Id., at pp. 84-88.

7 Temporary Rollo.
380

Corporation
Accordingly, the highest degree of diligence is expected, and

high standards of integrity and performance are required of
it. By the nature of its functions, a bank is under obligation
to treat the accounts of its depositors with meticulous care,
always having in mind the fiduciary nature of its
relationship with them.8 The fiduciary nature of banking,
previously imposed by case law, is now enshrined in
Republic Act No. 8791 or the General Banking Law of 2000.
Section 2 thereof specifically says that the state recognizes
the fiduciary nature of banking that requires high
standards of integrity and performance.9
Whether BPI observed the highest degree of care in
handling LMCÊs account is the subject of the inquiry in this
case.
LMC sought recovery from BPI on a cause of action
based on tort. Article 2176 of the Civil Code provides,
„Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence if there is no pre-
existing contractual relation between the parties, is called
a quasi-delict and is governed by the provisions of this
Chapter.‰ There are three elements of quasi-delict: (a) fault
or negligence of the defendant, or some other person for
whose acts he must respond; (b) damages suffered by the
plaintiff; and (c) the connection of cause and effect between
the fault or negligence of the defendant and the damages
incurred by the plaintiff.10
In this case, both the trial court and the Court of
Appeals found that the reversal of the transactions in
question was unilaterally undertaken by BPIÊs tellers
without following normal banking procedure which
requires them to ensure
_______________
8 Citibank, N.A. v. Cabamongan, G.R. No. 146918, 2 May 2006, 488

SCRA 517, 531; Prudential Bank v. Lim, G.R. No. 136371, 11 November
2005, 474 SCRA 485, 495.
9 Associated Bank v. Tan, G.R. No. 156940, 14 December 2004, 446
SCRA 282, 292.
10 Philippine Bank of Commerce v. Court of Appeals, 336 Phil. 667,
675; 269 SCRA 695, 702-703 (1997).
381
VOL. 555, JUNE 25, 2008 381

Corporation
that all copies of the deposit slips are surrendered by the

depositor. The machine-validated deposit slips do not show
that the transactions have been cancelled, leading LMC to
rely on these slips and to consider Alice LaurelÊs account as
already paid.
Negligence is the omission to do something which a
reasonable man, guided by those considerations which
ordinarily regulate the conduct of human affairs, would do,
or the doing of something which a prudent and reasonable
man would not do.11 Negligence in this case lies in the
tellersÊ disregard of the validation procedures in place and
BPIÊs utter failure to supervise its employees. Notably,
BPIÊs managers admitted in several correspondences with
LMC that the deposit transactions were cancelled without
LMCÊs knowledge and consent and based only upon the
request of Alice Laurel and her husband.12
It is well to reiterate that the degree of diligence
required of banks is more than that of a reasonable man or
a good father of a family. In view of the fiduciary nature of
their relationship with their depositors, banks are duty-
bound to treat the accounts of their clients with the highest
degree of care.13
BPI cannot escape liability because of LMCÊs failure to
scrutinize the monthly statements sent to it by the bank.
This omission does not change the fact that were it not for
the wanton and reckless negligence of BPIÊs tellers in
failing to require the surrender of the machine-validated
deposit slips before reversing the deposit transactions, the
loss would not have occurred. BPIÊs negligence is
undoubtedly the proximate cause of the loss. Proximate
cause is that cause which, in a natural and continuous
sequence, unbroken by any efficient
_______________
11 Philippine Bank of Commerce v. Court of Appeals, 336 Phil. 667,

676; 269 SCRA 695, 703 (1997).
12 Records, pp. 28-36.
13 Supra, note 10.
382

Corporation
intervening cause, produces the injury, and without which

the result would not have occurred.14
It is also true, however, that LMC should have been
more vigilant in managing and overseeing its own financial
affairs. The damages awarded to it were correctly reduced
on account of its own contributory negligence in accordance
with Article 1172 of the Civil Code.15
Parenthetically, we find no merit in BPIÊs allegation that
LMC should have presented evidence of delivery of the
books and payment of sales and promo prizes to Alice
Laurel. The evidence presented by LMC in the form of
BPIÊs own admission that the deposit transactions were
reversed at the instance of Alice Laurel and her husband,
coupled with the machine-validated deposit slips16 which
were supposed to have been deposited to LMCÊs account but
were cancelled without its knowledge and consent,
sufficiently form the bases for the actual damages claimed
because they are the very same documents relied upon by
LMC in considering Alice LaurelÊs account paid and in
granting her monetary privileges and prizes.
Be that as it may, we find the appellate courtÊs decision
increasing the award of actual damages in favor of LMC
improper since the latter did not appeal from the decision
of the trial court. It is well-settled that a party who does
not appeal from the decision may not obtain any
affirmative relief from the appellate court other than what
he has obtained from the lower court whose decision is
brought up on appeal. The exceptions to this rule, such as
where there are (1) errors affecting the lower courtÊs
jurisdiction over the subject matter, (2)
_______________
14 Bank of the Philippine Islands v. Casa Montessori Internationale,

G.R. No. 149507, 28 May 2004, 430 SCRA 261, 287.
15 The Consolidated Bank & Trust Corporation v. Court of Appeals,
457 Phil. 688, 713; 410 SCRA 562, 581 (2003).
16 Records, pp. 15-27.
383
VOL. 555, JUNE 25, 2008 383

Corporation
plain errors not specified, and (3) clerical errors, do not

apply in this case.17
WHEREFORE, the Decision of the Court of Appeals in
CA-G.R. CV No. 62769 dated 31 July 2006 and its
Resolution dated January 30, 2007 are AFFIRMED with
the MODIFICATION that the Bank of the Philippine
Islands is ordered to pay actual damages to Lifetime
Marketing Corporation in the amount of One Million Pesos
(P1,000,000.00). No pronouncement as to costs.
SO ORDERED.
Quisumbing (Chairperson), Carpio-Morales, Velasco,

Jr. and Brion, JJ., concur.
Judgment and resolution affirmed with modification.
Notes.·The issue of negligence is factual and, in quasi-

delicts, crucial in the award of damages. (Macalinao vs.
Ong, 477 SCRA 740 [2005])
Contributory negligence is conduct on the part of the
injured party, contributing as a legal cause to the harm he
has suffered, which falls below the standard to which he is
required to conform for his own protection. (Philippine
National Railways vs. Brunty, 506 SCRA 685 [2006])
··o0o··
_______________
17 Real v. Belo, G.R. No. 146224, 26 January 2007, 513 SCRA 111,
126-127; Santos v. Court of Appeals, G.R. No. 100963, 6 April 1993, 221
SCRA 42, 46.
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SUPREME COURT REPORTS ANNOTATED VOLUME 555 1/19/22, 8:12 PM

G.R. No. 176434. June 25, 2008.*

Commercial Law; Banks and Banking; General Banking Law of

374 SUPREME COURT REPORTS ANNOTATED

Bank of the Philippine Islands vs. Lifetime Marketing Corporation

Same; Same; Same; Same; Words and Phrases; „Negligence‰

continuous sequence, unbroken by any efficient intervening cause,

VOL. 555, JUNE 25, 2008 375

Bank of the Philippine Islands vs. Lifetime Marketing Corporation

Appeals; Pleadings and Practice; A party who does not appeal

PETITION for review on certiorari of the decision and

The Bank of the Philippine Islands (BPI) seeks the

1 Rollo, pp. 7-21; penned by Associate Justice Normandie B. Pizarro

376 SUPREME COURT REPORTS ANNOTATED

„On October 22, 1981, Lifetime Marketing Corporation (LMC, for

the latter on consignment basis, then they would go directly to their

VOL. 555, JUNE 25, 2008 377

Each check thus deposited were retrieved by Alice Laurel after

evidence for any subsequent claim or misrepresentation made by

378 SUPREME COURT REPORTS ANNOTATED

Only BPI filed an appeal. The Court of Appeals affirmed

2 Id., at pp. 8-13.

VOL. 555, JUNE 25, 2008 379

only the amount of the checks that were deposited and

award of actual damages. Moreover, the actual damages

6 Id., at pp. 84-88.

380 SUPREME COURT REPORTS ANNOTATED

Accordingly, the highest degree of diligence is expected, and

8 Citibank, N.A. v. Cabamongan, G.R. No. 146918, 2 May 2006, 488

VOL. 555, JUNE 25, 2008 381

that all copies of the deposit slips are surrendered by the

11 Philippine Bank of Commerce v. Court of Appeals, 336 Phil. 667,

382 SUPREME COURT REPORTS ANNOTATED

intervening cause, produces the injury, and without which

14 Bank of the Philippine Islands v. Casa Montessori Internationale,

VOL. 555, JUNE 25, 2008 383

plain errors not specified, and (3) clerical errors, do not

Quisumbing (Chairperson), Carpio-Morales, Velasco,

Judgment and resolution affirmed with modification.

Notes.·The issue of negligence is factual and, in quasi-

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