[ G.R. No. 156940, December 14, 2004 ]ASSOCIATED BANK (NOW
WESTMONT BANK), PETITIONER, VS. VICENTE HENRY TAN, RESPONDENT.
DECISIONPANGANIBAN, J.:While banks are granted by law the right
to debit the value of a dishonored check from a depositors account,
they must do so with the highest degree of care, so as not to
prejudice the depositor unduly.
The Case
Before us is a Petition for Review[1]under Rule 45 of the Rules
of Court, assailing the January 27, 2003 Decision[2]of the Court of
Appeals (CA) in CA-GR CV No. 56292. The CA disposed as
follows:WHEREFORE, premises considered, the Decision dated December
3, 1996, of the Regional Trial Court of Cabanatuan City, Third
Judicial Region, Branch 26, in Civil Case No. 892-AF is
herebyAFFIRMED.Costs against the [petitioner].[3]The Facts
The CA narrated the antecedents as follows:Vicente Henry Tan
(hereafter TAN) is a businessman and a regular depositor-creditor
of the Associated Bank (hereinafter referred to as the BANK).
Sometime in September 1990, he deposited a postdated UCPB check
with the said BANK in the amount of P101,000.00 issued to him by a
certain Willy Cheng from Tarlac. The check was duly entered in his
bank record thereby making his balance in the amount of
P297,000.00, as of October 1, 1990, from his original deposit of
P196,000.00. Allegedly, upon advice and instruction of the BANK
that the P101,000.00 check was already cleared and backed up by
sufficient funds, TAN, on the same date, withdrew the sum of
P240,000.00, leaving a balance of P57,793.45. A day after, TAN
deposited the amount of P50,000.00 making his existing balance in
the amount of P107,793.45, because he has issued several checks to
his business partners, to wit:CHECK NUMBERSDATEAMOUNT
a. 138814Sept. 29, 1990P9,000.00
b. 138804Oct. 8, 19909,350.00
c. 138787Sept. 30, 19906,360.00
d. 138847Sept. 29, 199021,850.00
e. 167054Sept. 29, 19904,093.40
f. 138792Sept. 29, 19903,546.00
g. 138774Oct. 2, 19906,600.00
h. 167072Oct. 10, 19909,908.00
i. 168802Oct. 10, 19903,650.00
However, his suppliers and business partners went back to him
alleging that the checks he issued bounced for insufficiency of
funds. Thereafter, TAN, thru his lawyer, informed the BANK to take
positive steps regarding the matter for he has adequate and
sufficient funds to pay the amount of the subject checks.
Nonetheless, the BANK did not bother nor offer any apology
regarding the incident. Consequently, TAN, as plaintiff, filed a
Complaint for Damages on December 19, 1990, with the Regional Trial
Court of Cabanatuan City, Third Judicial Region, docketed as Civil
Case No. 892-AF, against the BANK, as defendant.
In his [C]omplaint, [respondent] maintained that he ha[d]
sufficient funds to pay the subject checks and alleged that his
suppliers decreased in number for lack of trust. As he has been in
the business community for quite a time and has established a good
record of reputation and probity, plaintiff claimed that he
suffered embarrassment, humiliation, besmirched reputation, mental
anxieties and sleepless nights because of the said unfortunate
incident. [Respondent] further averred that he continuously lost
profits in the amount of P250,000.00. [Respondent] therefore prayed
for exemplary damages and that [petitioner] be ordered to pay him
the sum of P1,000,000.00 by way of moral damages, P250,000.00 as
lost profits, P50,000.00 as attorneys fees plus 25% of the amount
claimed including P1,000.00 per court appearance.
Meanwhile, [petitioner] filed a Motion to Dismiss on February 7,
1991, but the same was denied for lack of merit in an Order dated
March 7, 1991. Thereafter, [petitioner] BANK on March 20, 1991
filed its Answer denying, among others, the allegations of
[respondent] and alleged that no banking institution would give an
assurance to any of its client/depositor that the check deposited
by him had already been cleared and backed up by sufficient funds
but it could only presume that the same has been honored by the
drawee bank in view of the lapse of time that ordinarily takes for
a check to be cleared. For its part, [petitioner] alleged that on
October 2, 1990, it gave notice to the [respondent] as to the
return of his UCPB check deposit in the amount of P101,000.00,
hence, on even date, [respondent] deposited the amount of
P50,000.00 to cover the returned check.
By way of affirmative defense, [petitioner] averred that
[respondent] had no cause of action against it and argued that it
has all the right to debit the account of the [respondent] by
reason of the dishonor of the check deposited by the [respondent]
which was withdrawn by him prior to its clearing. [Petitioner]
further averred that it has no liability with respect to the
clearing of deposited checks as the clearing is being undertaken by
the Central Bank and in accepting [the] check deposit, it merely
obligates itself as depositors collecting agent subject to actual
payment by the drawee bank. [Petitioner] therefore prayed that
[respondent] be ordered to pay it the amount of P1,000,000.00 by
way of loss of goodwill, P7,000.00 as acceptance fee plus P500.00
per appearance and by way of attorneys fees.
Considering that Westmont Bank has taken over the management of
the affairs/properties of the BANK, [respondent] on October 10,
1996, filed an Amended Complaint reiterating substantially his
allegations in the original complaint, except that the name of the
previous defendant ASSOCIATED BANK is now WESTMONT BANK.
Trial ensured and thereafter, the court rendered its Decision
dated December 3, 1996 in favor of the [respondent] and against the
[petitioner], ordering the latter to pay the [respondent] the sum
of P100,000.00 by way of moral damages, P75,000.00 as exemplary
damages, P25,000.00 as attorneys fees, plus the costs of this suit.
In making said ruling, it was shown that [respondent] was not
officially informed about the debiting of the P101,000.00 [from]
his existing balance and that the BANK merely allowed the
[respondent] to use the fund prior to clearing merely for
accommodation because the BANK considered him as one of its valued
clients. The trial court ruled that the bank manager was negligent
in handling the particular checking account of the [respondent]
stating that such lapses caused all the inconveniences to the
[respondent]. The trial court also took into consideration that
[respondents] mother was originally maintaining with the x x x BANK
[a] current account as well as [a] time deposit, but [o]n one
occasion, although his mother made a deposit, the same was not
credited in her favor but in the name of another.[4]Petitioner
appealed to the CA on the issues of whether it was within its
rights, as collecting bank, to debit the account of its client for
a dishonored check; and whether it had informed respondent about
the dishonor prior to debiting his account.
Ruling of the Court of Appeals
Affirming the trial court, the CA ruled that the bank should not
have authorized the withdrawal of the value of the deposited check
prior to its clearing. Having done so, contrary to its obligation
to treat respondents account with meticulous care, the bank
violated its own policy. It thereby took upon itself the obligation
to officially inform respondent of the status of his account before
unilaterally debiting the amount of P101,000. Without such notice,
it is estopped from blaming him for failing to fund his
account.
The CA opined that, had the P101,000 not been debited,
respondent would have had sufficient funds for the postdated checks
he had issued. Thus, the supposed accommodation accorded by
petitioner to him is the proximate cause of his business woes and
shame, for which it is liable for damages.
Because of the banks negligence, the CA awarded respondent moral
damages of P100,000. It also granted him exemplary damages of
P75,000 and attorneys fees of P25,000.
Hence this Petition.[5]Issue
In its Memorandum, petitioner raises the sole issue of whether
or not the petitioner, which is acting as a collecting bank, has
the right to debit the account of its client for a check deposit
which was dishonored by the drawee bank.[6]
The Courts Ruling
The Petition has no merit.
Sole Issue:Debit of Depositors Account
Petitioner-bank contends that its rights and obligations under
the present set of facts were misappreciated by the CA. It insists
that its right to debit the amount of the dishonored check from the
account of respondent is clear and unmistakable. Even assuming that
it did not give him notice that the check had been dishonored, such
right remains immediately enforceable.
In particular, petitioner argues that the check deposit slip
accomplished by respondent on September 17, 1990, expressly
stipulated that the bank was obligating itself merely as the
depositors collecting agent and -- until such time as actual
payment would be made to it -- it was reserving the right to charge
against the depositors account any amount previously credited.
Respondent was allowed to withdraw the amount of the check prior to
clearing, merely as an act of accommodation, it added.
At the outset, we stress that the trial courts factual findings
that were affirmed by the CA are not subject to review by this
Court.[7]As petitioner itself takes no issue with those findings,
we need only to determine the legal consequence, based on the
established facts.
Right of Setoff
A bank generally has a right of setoff over the deposits therein
for the payment of any withdrawals on the part of a
depositor.[8]The right of a collecting bank to debit a clients
account for the value of a dishonored check that has previously
been credited has fairly been established by jurisprudence. To
begin with, Article 1980 of the Civil Code provides that [f]ixed,
savings, and current deposits of money in banks and similar
institutions shall be governed by the provisions concerning simple
loan.
Hence, the relationship between banks and depositors has been
held to be that of creditor and debtor.[9]Thus, legal compensation
under Article 1278[10]of the Civil Code may take place when all the
requisites mentioned in Article 1279 are present,[11]as follows:(1)
That each one of the obligors be bound principally, and that he be
at the same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things
due are consumable, they be of the same kind, and also of the same
quality if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or
controversy, commenced by third persons and communicated in due
time to the debtor.[12]Nonetheless, the real issue here is not so
much the right of petitioner to debit respondents account but,
rather, the manner in which it exercised such right. The Court has
held that even while the right of setoff is conceded, separate is
the question of whether that remedy has properly been
exercised.[13]
The liability of petitioner in this case ultimately revolves
around the issue of whether it properly exercised its right of
setoff. The determination thereof hinges, in turn, on the banks
role and obligations,first, as respondents depositary bank;
andsecond, as collecting agent for the check in question.
Obligation asDepositary Bank
InBPI v. Casa Montessori,[14]the Court has emphasized that the
banking business is impressed with public interest. Consequently,
the highest degree of diligence is expected, and high standards of
integrity and performance are even required of it. By the nature of
its functions, a bank is under obligation to treat the accounts of
its depositors with meticulous care.[15]
Also affirming this long standing doctrine,Philippine Bank of
Commerce v. Court of Appeals[16]has held 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.[17]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.[18]The standard applies, regardless of whether the
account consists of only a few hundred pesos or of
millions.[19]
The fiduciary nature of banking, previously imposed by case
law,[20]is now enshrined in Republic Act No. 8791 or the General
Banking Law of 2000. Section 2 of the law specifically says that
the State recognizes the fiduciary nature of banking that requires
high standards of integrity and performance.
Did petitioner treat respondents account with the highest degree
of care? From all indications, it did not.
It is undisputed -- nay, even admitted -- that purportedly as an
act of accommodation to a valued client, petitioner allowed the
withdrawal of the face value of the deposited check prior to its
clearing. That act certainly disregarded the clearance requirement
of the banking system. Such a practice is unusual, because a check
is not legal tender or money;[21]and its value can properly be
transferred to a depositors account only after the check has been
cleared by the drawee bank.[22]
Under ordinary banking practice, after receiving a check
deposit, a bankeitherimmediately credit the amount to a depositors
account; or infuse value to that account only after the drawee bank
shall have paid such amount.[23]Before the check shall have been
cleared for deposit, the collecting bank can only assume at its own
risk -- as herein petitioner did -- that the check would be cleared
and paid out.
Reasonable business practice and prudence, moreover, dictated
that petitioner should not have authorized the withdrawal by
respondent of P240,000 on October 1, 1990, as this amount was over
and above his outstanding cleared balance of P196,793.45.[24]Hence,
the lower courts correctly appreciated the evidence in his
favor.
Obligation asCollecting Agent
Indeed, the bank deposit slip expressed this reservation:In
receiving items on deposit, this Bank obligates itself only as the
Depositors Collecting agent, assuming no responsibility beyond
carefulness in selecting correspondents, and until such time as
actual payments shall have come to its possession, this Bank
reserves the right to charge back to the Depositors account any
amounts previously credited whether or not the deposited item is
returned. x x x."[25]However, this reservation is not enough to
insulate the bank from any liability. In the past, we have
expressed doubt about the binding force of such conditions
unilaterally imposed by a bank without the consent of the
depositor.[26]It is indeed arguable that in signing the deposit
slip, the depositor does so only to identify himself and not to
agree to the conditions set forth at the back of the deposit
slip.[27]
Further, by the express terms of the stipulation, petitioner
took upon itself certain obligations as respondents agent,
consonant with the well-settled rule that the relationship between
the payee or holder of a commercial paper and the collecting bank
is that of principal and agent.[28]Under Article 1909[29]of the
Civil Code, such bank could be held liable not only for fraud, but
also for negligence.
As a general rule, a bank is liable for the wrongful or tortuous
acts and declarations of its officers or agents within the course
and scope of their employment.[30]Due to the very nature of their
business, banks are expected to exercise the highest degree of
diligence in the selection and supervision of their
employees.[31]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;[32]in this
case, the depositor.
The manager of the banks 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. Santiago testified that respondent was not
officially informed about the debiting of the P101,000 from his
existing balance of P170,000 on October 2, 1990 x x x.[33]
Being the branch manager, Santiago clearly acted within the
scope of her authority in authorizing the withdrawal and the
subsequent debiting without notice. Accordingly, what remains to be
determined is whether her actions proximately caused respondents
injury. Proximate cause is that 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.[34]
Let us go back to the facts as they unfolded. It is undeniable
that the banks 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. The CA correctly
noted thus:x x x [T]he depositor x x x withdrew his money upon the
advice by [petitioner] that his money was already cleared. Without
such advice, [respondent] would not have withdrawn the sum of
P240,000.00. Therefore, it cannot be denied that it was
[petitioners] fault which allowed [respondent] to withdraw a huge
sum which he believed was already his.
To emphasize, it is beyond cavil that [respondent] had
sufficient funds for the check. Had the P101,000.00 not [been]
debited, the subject checks would not have been dishonored. Hence,
we can say that [respondents] injury arose from the dishonor of his
well-funded checks. x x x.[35]Aggravating matters, petitioner
failed to show that it had immediately and duly informed respondent
of the debiting of his account. Nonetheless, it argues that the
giving of notice was discernible from his act of depositing P50,000
on October 2, 1990, to augment his account and allow the debiting.
This argument deserves short shrift.
First, notice was proper and ought to be expected. By the bank
managers account, respondent was considered a valued client whose
checks had always been sufficiently funded from 1987 to
1990,[36]until the October imbroglio. Thus, he deserved nothing
less than an official notice of the precarious condition of his
account.
Second, under the provisions of the Negotiable Instruments Law
regarding the liability of a general indorser[37]and the procedure
for a notice of dishonor,[38]it was incumbent on the bank to give
proper notice to respondent. InGullas v. National Bank,[39]the
Court emphasized:x x x [A] general indorser of a negotiable
instrument engages that if the instrument the check in this case is
dishonored and the necessary proceedings for its dishonor are duly
taken, he will pay the amount thereof to the holder (Sec. 66) It
has been held by a long line of authorities that notice of dishonor
is necessary to charge an indorser and that the right of action
against him does not accrue until the notice is given.
x x x. The fact we believe is undeniable that prior to the
mailing of notice of dishonor, and without waiting for any action
by Gullas, the bank made use of the money standing in his account
to make good for the treasury warrant.At this point recall that
Gullas was merely an indorser and had issued checks in good faith.
As to a depositor who has funds sufficient to meet payment of a
check drawn by him in favor of a third party, it has been held that
he has a right of action against the bank for its refusal to pay
such a check in the absence of notice to him that the bank has
applied the funds so deposited in extinguishment of past due claims
held against him.(Callahan vs. Bank of Anderson [1904], 2 Ann.
Cas., 203.)However this may be, as to an indorser the situation is
different, and notice should actually have been given him in order
that he might protect his interests.[40]Third, regarding the
deposit of P50,000 made by respondent on October 2, 1990, we fully
subscribe to the CAs observations that it was not unusual for a
well-reputed businessman like him, who ordinarily takes note of the
amount of money he takes and releases, to immediately deposit money
in his current account to answer for the postdated checks he had
issued.[41]
Damages
Inasmuch as petitioner does not contest the basis for the award
of damages and attorneys fees, we will no longer address these
matters.WHEREFORE, the Petition isDENIEDand the assailed
DecisionAFFIRMED. Costs against petitioner.SO ORDERED.
[ G.R. No. 115324, February 19, 2003 ]PRODUCERS BANK OF THE
PHILIPPINES (NOW FIRST INTERNATIONAL BANK), PETITIONER, VS. HON.
COURT OF APPEALS AND FRANKLIN VIVES, RESPONDENTS.
D E C I S I O NCALLEJO, SR., J.:This is a petition for review on
certiorari of the Decision[1]of the Court of Appeals dated June 25,
1991 in CA-G.R. CV No. 11791 and of its Resolution[2]dated May 5,
1994, denying the motion for reconsideration of said decision filed
by petitioner Producers Bank of the Philippines.
Sometime in 1979, private respondent Franklin Vives was asked by
his neighbor and friend Angeles Sanchez to help her friend and
townmate, Col. Arturo Doronilla, in incorporating his business, the
Sterela Marketing and Services (Sterela for brevity). Specifically,
Sanchez asked private respondent to deposit in a bank a certain
amount of money in the bank account of Sterela for purposes of its
incorporation. She assured private respondent that he could
withdraw his money from said account within a months time. Private
respondent asked Sanchez to bring Doronilla to their house so that
they could discuss Sanchezs request.[3]
On May 9, 1979, private respondent, Sanchez, Doronilla and a
certain Estrella Dumagpi, Doronillas private secretary, met and
discussed the matter. Thereafter, relying on the assurances and
representations of Sanchez and Doronilla, private respondent issued
a check in the amount of Two Hundred Thousand Pesos (P200,000.00)
in favor of Sterela. Private respondent instructed his wife, Mrs.
Inocencia Vives, to accompany Doronilla and Sanchez in opening a
savings account in the name of Sterela in the Buendia, Makati
branch of Producers Bank of the Philippines. However, only Sanchez,
Mrs. Vives and Dumagpi went to the bank to deposit the check. They
had with them an authorization letter from Doronilla authorizing
Sanchez and her companions, in coordination with Mr. Rufo Atienza,
to open an account for Sterela Marketing Services in the amount of
P200,000.00. In opening the account, the authorized signatories
were Inocencia Vives and/or Angeles Sanchez. A passbook for Savings
Account No. 10-1567 was thereafter issued to Mrs. Vives.[4]
Subsequently, private respondent learned that Sterela was no
longer holding office in the address previously given to him.
Alarmed, he and his wife went to the Bank to verify if their money
was still intact. The bank manager referred them to Mr. Rufo
Atienza, the assistant manager, who informed them that part of the
money in Savings Account No. 10-1567 had been withdrawn by
Doronilla, and that only P90,000.00 remained therein. He likewise
told them that Mrs. Vives could not withdraw said remaining amount
because it had to answer for some postdated checks issued by
Doronilla. According to Atienza, after Mrs. Vives and Sanchez
opened Savings Account No. 10-1567, Doronilla opened Current
Account No. 10-0320 for Sterela and authorized the Bank to debit
Savings Account No. 10-1567 for the amounts necessary to cover
overdrawings in Current Account No. 10-0320. In opening said
current account, Sterela, through Doronilla, obtained a loan of
P175,000.00 from the Bank. To cover payment thereof, Doronilla
issued three postdated checks, all of which were dishonored.
Atienza also said that Doronilla could assign or withdraw the money
in Savings Account No. 10-1567 because he was the sole proprietor
of Sterela.[5]
Private respondent tried to get in touch with Doronilla through
Sanchez. On June 29, 1979, he received a letter from Doronilla,
assuring him that his money was intact and would be returned to
him. On August 13, 1979, Doronilla issued a postdated check for Two
Hundred Twelve Thousand Pesos (P212,000.00) in favor of private
respondent. However, upon presentment thereof by private respondent
to the drawee bank, the check was dishonored. Doronilla requested
private respondent to present the same check on September 15, 1979
but when the latter presented the check, it was again
dishonored.[6]
Private respondent referred the matter to a lawyer, who made a
written demand upon Doronilla for the return of his clients money.
Doronilla issued another check for P212,000.00 in private
respondents favor but the check was again dishonored for
insufficiency of funds.[7]
Private respondent instituted an action for recovery of sum of
money in the Regional Trial Court (RTC) in Pasig, Metro Manila
against Doronilla, Sanchez, Dumagpi and petitioner. The case was
docketed as Civil Case No. 44485. He also filed criminal actions
against Doronilla, Sanchez and Dumagpi in the RTC. However, Sanchez
passed away on March 16, 1985 while the case was pending before the
trial court. On October 3, 1995, the RTC of Pasig, Branch 157,
promulgated its Decision in Civil Case No. 44485, the dispositive
portion of which reads:IN VIEW OF THE FOREGOING, judgment is hereby
rendered sentencing defendants Arturo J. Doronila, Estrella Dumagpi
and Producers Bank of the Philippines to pay plaintiff Franklin
Vives jointly and severally
(a) the amount of P200,000.00, representing the money deposited,
with interest at the legal rate from the filing of the complaint
until the same is fully paid;
(b) the sum of P50,000.00 for moral damages and a similar amount
for exemplary damages;
(c) the amount of P40,000.00 for attorneys fees; and
(d) the costs of the suit.
SO ORDERED.[8]Petitioner appealed the trial courts decision to
the Court of Appeals. In its Decision dated June 25, 1991, the
appellate court affirmedin totothe decision of the RTC.[9]It
likewise denied with finality petitioners motion for
reconsideration in its Resolution dated May 5, 1994.[10]
On June 30, 1994, petitioner filed the present petition, arguing
that I.
THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THAT THE
TRANSACTION BETWEEN THE DEFENDANT DORONILLA AND RESPONDENT VIVES
WAS ONE OF SIMPLE LOAN AND NOT ACCOMMODATION;II.
THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THAT
PETITIONERS BANK MANAGER, MR. RUFO ATIENZA, CONNIVED WITH THE OTHER
DEFENDANTS IN DEFRAUDING PETITIONER (Sic. Should be PRIVATE
RESPONDENT) AND AS A CONSEQUENCE, THE PETITIONER SHOULD BE HELD
LIABLE UNDER THE PRINCIPLE OF NATURAL JUSTICE;III.
THE HONORABLE COURT OF APPEALS ERRED IN ADOPTING THE ENTIRE
RECORDS OF THE REGIONAL TRIAL COURT AND AFFIRMING THE JUDGMENT
APPEALED FROM, AS THE FINDINGS OF THE REGIONAL TRIAL COURT WERE
BASED ON A MISAPPREHENSION OF FACTS;IV.
THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT THE CITED
DECISION IN SALUDARES VS. MARTINEZ, 29 SCRA 745, UPHOLDING THE
LIABILITY OF AN EMPLOYER FOR ACTS COMMITTED BY AN EMPLOYEE IS
APPLICABLE;V.
THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE DECISION
OF THE LOWER COURT THAT HEREIN PETITIONER BANK IS JOINTLY AND
SEVERALLY LIABLE WITH THE OTHER DEFENDANTS FOR THE AMOUNT OF
P200,000.00 REPRESENTING THE SAVINGS ACCOUNT DEPOSIT, P50,000.00
FOR MORAL DAMAGES, P50,000.00 FOR EXEMPLARY DAMAGES, P40,000.00 FOR
ATTORNEYS FEES AND THE COSTS OF SUIT.[11]Private respondent filed
his Comment on September 23, 1994. Petitioner filed its Reply
thereto on September 25, 1995. The Court then required private
respondent to submit a rejoinder to the reply. However, said
rejoinder was filed only on April 21, 1997, due to petitioners
delay in furnishing private respondent with copy of the
reply[12]and several substitutions of counsel on the part of
private respondent.[13]On January 17, 2001, the Court resolved to
give due course to the petition and required the parties to submit
their respective memoranda.[14]Petitioner filed its memorandum on
April 16, 2001 while private respondent submitted his memorandum on
March 22, 2001.
Petitioner contends that the transaction between private
respondent and Doronilla is a simple loan (mutuum) since all the
elements of amutuumare present: first, what was delivered by
private respondent to Doronilla was money, a consumable thing; and
second, the transaction was onerous as Doronilla was obliged to pay
interest, as evidenced by the check issued by Doronilla in the
amount of P212,000.00, or P12,000 more than what private respondent
deposited in Sterelas bank account.[15]Moreover, the fact that
private respondent sued his good friend Sanchez for his failure to
recover his money from Doronilla shows that the transaction was not
merely gratuitous but had a business angle to it. Hence, petitioner
argues that it cannot be held liable for the return of private
respondents P200,000.00 because it is not privy to the transaction
between the latter and Doronilla.[16]
It argues further that petitioners Assistant Manager, Mr. Rufo
Atienza, could not be faulted for allowing Doronilla to withdraw
from the savings account of Sterela since the latter was the sole
proprietor of said company. Petitioner asserts that Doronillas May
8, 1979 letter addressed to the bank, authorizing Mrs. Vives and
Sanchez to open a savings account for Sterela, did not contain any
authorization for these two to withdraw from said account. Hence,
the authority to withdraw therefrom remained exclusively with
Doronilla, who was the sole proprietor of Sterela, and who alone
had legal title to the savings account.[17]Petitioner points out
that no evidence other than the testimonies of private respondent
and Mrs. Vives was presented during trial to prove that private
respondent deposited his P200,000.00 in Sterelas account for
purposes of its incorporation.[18]Hence, petitioner should not be
held liable for allowing Doronilla to withdraw from Sterelas
savings account. Petitioner also asserts that the Court of Appeals
erred in affirming the trial courts decision since the findings of
fact therein were not accord with the evidence presented by
petitioner during trial to prove that the transaction between
private respondent and Doronilla was amutuum, and that it committed
no wrong in allowing Doronilla to withdraw from Sterelas savings
account.[19] Finally, petitioner claims that since there is no
wrongful act or omission on its part, it is not liable for the
actual damages suffered by private respondent, and neither may it
be held liable for moral and exemplary damages as well as attorneys
fees.[20] Private respondent, on the other hand, argues that the
transaction between him and Doronilla is not amutuumbut an
accommodation,[21]since he did not actually part with the ownership
of his P200,000.00 and in fact asked his wife to deposit said
amount in the account of Sterela so that a certification can be
issued to the effect that Sterela had sufficient funds for purposes
of its incorporation but at the same time, he retained some degree
of control over his money through his wife who was made a signatory
to the savings account and in whose possession the savings account
passbook was given.[22]
He likewise asserts that the trial court did not err in finding
that petitioner, Atienzas employer, is liable for the return of his
money. He insists that Atienza, petitioners assistant manager,
connived with Doronilla in defrauding private respondent since it
was Atienza who facilitated the opening of Sterelas current account
three days after Mrs. Vives and Sanchez opened a savings account
with petitioner for said company, as well as the approval of the
authority to debit Sterelas savings account to cover any
overdrawings in its current account.[23]
There is no merit in the petition.
At the outset, it must be emphasized that only questions of law
may be raised in a petition for review filed with this Court. The
Court has repeatedly held that it is not its function to analyze
and weigh all over again the evidence presented by the parties
during trial.[24]The Courts jurisdiction is in principle limited to
reviewing errors of law that might have been committed by the Court
of Appeals.[25]Moreover, factual findings of courts, when adopted
and confirmed by the Court of Appeals, are final and conclusive on
this Court unless these findings are not supported by the evidence
on record.[26]There is no showing of any misapprehension of facts
on the part of the Court of Appeals in the case at bar that would
require this Court to review and overturn the factual findings of
that court, especially since the conclusions of fact of the Court
of Appeals and the trial court are not only consistent but are also
amply supported by the evidence on record.
No error was committed by the Court of Appeals when it ruled
that the transaction between private respondent and Doronilla was
acommodatumand not amutuum. A circumspect examination of the
records reveals that the transaction between them was acommodatum.
Article 1933 of the Civil Code distinguishes between the two kinds
of loans in this wise:By the contract of loan, one of the parties
delivers to another, either something not consumable so that the
latter may use the same for a certain time and return it, in which
case the contract is called a commodatum; or money or other
consumable thing, upon the condition that the same amount of the
same kind and quality shall be paid, in which case the contract is
simply called a loan or mutuum.
Commodatum is essentially gratuitous.
Simple loan may be gratuitous or with a stipulation to pay
interest.
In commodatum, the bailor retains the ownership of the thing
loaned, while in simple loan, ownership passes to the borrower.The
foregoing provision seems to imply that if the subject of the
contract is a consumable thing, such as money, the contract would
be amutuum. However, there are some instances where acommodatummay
have for its object a consumable thing. Article 1936 of the Civil
Code provides:Consumable goods may be the subject of commodatum if
the purpose of the contract is not the consumption of the object,
as when it is merely for exhibition.Thus, if consumable goods are
loaned only for purposes of exhibition, or when the intention of
the parties is to lend consumable goods and to have the very same
goods returned at the end of the period agreed upon, the loan is
acommodatumand not amutuum.
The rule is that the intention of the parties thereto shall be
accorded primordial consideration in determining the actual
character of a contract.[27]In case of doubt, the contemporaneous
and subsequent acts of the parties shall be considered in such
determination.[28]
As correctly pointed out by both the Court of Appeals and the
trial court, the evidence shows that private respondent agreed to
deposit his money in the savings account of Sterela specifically
for the purpose of making it appear that said firm had sufficient
capitalization for incorporation, with the promise that the amount
shall be returned within thirty (30) days.[29]Private respondent
merely accommodated Doronilla by lending his money without
consideration, as a favor to his good friend Sanchez. It was
however clear to the parties to the transaction that the money
would not be removed from Sterelas savings account and would be
returned to private respondent after thirty (30) days. Doronillas
attempts to return to private respondent the amount of P200,000.00
which the latter deposited in Sterelas account together with an
additional P12,000.00, allegedly representing interest on
themutuum, did not convert the transaction from acommodatuminto
amutuumbecause such was not the intent of the parties and because
the additional P12,000.00 corresponds to the fruits of the lending
of the P200,000.00. Article 1935 of the Civil Code expressly states
that [t]he bailee incommodatumacquires the use of the thing loaned
but not its fruits. Hence, it was only proper for Doronilla to
remit to private respondent the interest accruing to the latters
money deposited with petitioner.
Neither does the Court agree with petitioners contention that it
is not solidarily liable for the return of private respondents
money because it was not privy to the transaction between Doronilla
and private respondent. The nature of said transaction, that is,
whether it is amutuumor acommodatum, has no bearing on the question
of petitioners liability for the return of private respondents
money because the factual circumstances of the case clearly show
that petitioner, through its employee Mr. Atienza, was partly
responsible for the loss of private respondents money and is liable
for its restitution.
Petitioners rules for savings deposits written on the passbook
it issued Mrs. Vives on behalf of Sterela for Savings Account No.
10-1567 expressly states that2. Deposits and withdrawals must be
made by the depositor personally or upon his written authority duly
authenticated, andneither a deposit nor a withdrawal will be
permitted except upon the production of the depositor savings bank
bookin which will be entered by the Bank the amount deposited or
withdrawn.[30]Said rule notwithstanding, Doronilla was permitted by
petitioner, through Atienza, the Assistant Branch Manager for the
Buendia Branch of petitioner, to withdraw therefrom even without
presenting the passbook (which Atienza very well knew was in the
possession of Mrs. Vives), not just once, but several times. Both
the Court of Appeals and the trial court found that Atienza allowed
said withdrawals because he was party to Doronillas scheme of
defrauding private respondent:
But the scheme could not have been executed successfully without
the knowledge, help and cooperation of Rufo Atienza, assistant
manager and cashier of the Makati (Buendia) branch of the defendant
bank. Indeed, the evidence indicates that Atienza had not only
facilitated the commission of the fraud but he likewise helped in
devising the means by which it can be done in such manner as to
make it appear that the transaction was in accordance with banking
procedure.
To begin with, the deposit was made in defendants Buendia branch
precisely because Atienza was a key officer therein. The records
show that plaintiff had suggested that the P200,000.00 be deposited
in his bank, the Manila Banking Corporation, but Doronilla and
Dumagpi insisted that it must be in defendants branch in Makati for
it will be easier for them to get a certification. In fact before
he was introduced to plaintiff, Doronilla had already prepared a
letter addressed to the Buendia branch manager authorizing Angeles
B. Sanchez and company to open a savings account for Sterela in the
amount of P200,000.00, as per coordination with Mr. Rufo Atienza,
Assistant Manager of the Bank x x x (Exh. 1). This is a clear
manifestation that the other defendants had been in consultation
with Atienza from the inception of the scheme. Significantly, there
were testimonies and admission that Atienza is the brother-in-law
of a certain Romeo Mirasol, a friend and business associate of
Doronilla. Then there is the matter of the ownership of the fund.
Because of the coordination between Doronilla and Atienza, the
latter knew before hand that the money deposited did not belong to
Doronilla nor to Sterela. Aside from such foreknowledge, he was
explicitly told by Inocencia Vives that the money belonged to her
and her husband and the deposit was merely to accommodate
Doronilla. Atienza even declared that the money came from Mrs.
Vives. Although the savings account was in the name of Sterela, the
bank records disclose that the only ones empowered to withdraw the
same were Inocencia Vives and Angeles B. Sanchez. In the signature
card pertaining to this account (Exh. J), the authorized
signatories were Inocencia Vives &/or Angeles B. Sanchez.
Atienza stated that it is the usual banking procedure that
withdrawals of savings deposits could only be made by persons whose
authorized signatures are in the signature cards on file with the
bank. He, however, said that this procedure was not followed here
because Sterela was owned by Doronilla. He explained that Doronilla
had the full authority to withdraw by virtue of such ownership. The
Court is not inclined to agree with Atienza. In the first place, he
was all the time aware that the money came from Vives and did not
belong to Sterela. He was also told by Mrs. Vives that they were
only accommodating Doronilla so that a certification can be issued
to the effect that Sterela had a deposit of so much amount to be
sued in the incorporation of the firm. In the second place, the
signature of Doronilla was not authorized in so far as that account
is concerned inasmuch as he had not signed the signature card
provided by the bank whenever a deposit is opened. In the third
place, neither Mrs. Vives nor Sanchez had given Doronilla the
authority to withdraw.Moreover, the transfer of fund was done
without the passbook having been presented. It is an accepted
practice that whenever a withdrawal is made in a savings deposit,
the bank requires the presentation of the passbook. In this case,
such recognized practice was dispensed with. The transfer from the
savings account to the current account was without the submission
of the passbook which Atienza had given to Mrs. Vives. Instead, it
was made to appear in a certification signed by Estrella Dumagpi
that a duplicate passbook was issued to Sterela because the
original passbook had been surrendered to the Makati branch in view
of a loan accommodation assigning the savings account (Exh. C).
Atienza, who undoubtedly had a hand in the execution of this
certification, was aware that the contents of the same are not
true. He knew that the passbook was in the hands of Mrs. Vives for
he was the one who gave it to her. Besides, as assistant manager of
the branch and the bank official servicing the savings and current
accounts in question, he also was aware that the original passbook
was never surrendered. He was also cognizant that Estrella Dumagpi
was not among those authorized to withdraw so her certification had
no effect whatsoever.
The circumstance surrounding the opening of the current account
also demonstrate that Atienzas active participation in the
perpetration of the fraud and deception that caused the loss. The
records indicate that this account was opened three days later
after the P200,000.00 was deposited. In spite of his disclaimer,
the Court believes that Atienza was mindful and posted regarding
the opening of the current account considering that Doronilla was
all the while in coordination with him. That it was he who
facilitated the approval of the authority to debit the savings
account to cover any overdrawings in the current account (Exh. 2)
is not hard to comprehend.Clearly Atienza had committed wrongful
acts that had resulted to the loss subject of this case. Under
Article 2180 of the Civil Code, employers shall be held primarily
and solidarily liable for damages caused by their employees acting
within the scope of their assigned tasks. To hold the employer
liable under this provision, it must be shown that an
employer-employee relationship exists, and that the employee was
acting within the scope of his assigned task when the act
complained of was committed.[32]Case law in the United States of
America has it that a corporation that entrusts a general duty to
its employee is responsible to the injured party for damages
flowing from the employees wrongful act done in the course of his
general authority, even though in doing such act, the employee may
have failed in its duty to the employer and disobeyed the latters
instructions.[33]
There is no dispute that Atienza was an employee of petitioner.
Furthermore, petitioner did not deny that Atienza was acting within
the scope of his authority as Assistant Branch Manager when he
assisted Doronilla in withdrawing funds from Sterelas Savings
Account No. 10-1567, in which account private respondents money was
deposited, and in transferring the money withdrawn to Sterelas
Current Account with petitioner. Atienzas acts of helping
Doronilla, a customer of the petitioner, were obviously done in
furtherance of petitioners interests[34]even though in the process,
Atienza violated some of petitioners rules such as those stipulated
in its savings account passbook.[35]It was established that the
transfer of funds from Sterelas savings account to its current
account could not have been accomplished by Doronilla without the
invaluable assistance of Atienza, and that it was their connivance
which was the cause of private respondents loss.
The foregoing shows that the Court of Appeals correctly held
that under Article 2180 of the Civil Code, petitioner is liable for
private respondents loss and is solidarily liable with Doronilla
and Dumagpi for the return of the P200,000.00 since it is clear
that petitioner failed to prove that it exercised due diligence to
prevent the unauthorized withdrawals from Sterelas savings account,
and that it was not negligent in the selection and supervision of
Atienza. Accordingly, no error was committed by the appellate court
in the award of actual, moral and exemplary damages, attorneys fees
and costs of suit to private respondent.
WHEREFORE,the petition is herebyDENIED. The assailed Decision
and Resolution of the Court of Appeals areAFFIRMED.SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing,andAustria-Martinez,
JJ., concur. [ G.R. No. 179096, February 06, 2013 ]JOSEPH GOYANKO,
JR., AS ADMINISTRATOR OF THE ESTATE OF JOSEPH GOYANKO, SR.,
PETITIONER, VS. UNITED COCONUT PLANTERS BANK, MANGO AVENUE BRANCH,
RESPONDENT.
D E C I S I O NBRION, J.:We resolve the petition for review
oncertiorari[1]filed by petitioner Joseph Goyanko, Jr.,
administrator of the Estate of Joseph Goyanko, Sr., to nullify the
decision[2]dated February 20, 2007 and the resolution[3]dated July
31, 2007 of the Court of Appeals (CA) in CA-G.R. CV. No. 00257
affirming the decision[4]of the Regional Trial Court of Cebu City,
Branch 16 (RTC) in Civil Case No. CEB-22277. The RTC dismissed the
petitioners complaint for recovery of sum of money against United
Coconut Planters Bank, Mango Avenue Branch (UCPB).The Factual
Antecedents
In 1995, the late Joseph Goyanko, Sr. (Goyanko) invested Two
Million Pesos (P2,000,000.00) with Philippine Asia Lending
Investors, Inc. (PALII); he died before the investment matured.
Goyankos legitimate family, represented by the petitioner, and his
illegitimate family presented conflicting claims to PALII for the
release of the investment. Pending the investigation of the
conflicting claims, PALII deposited the proceeds of the investment
with UCPB on October 29, 1996[5]under the name Phil Asia: ITF (In
Trust For) The Heirs of Joseph Goyanko, Sr. (ACCOUNT). On September
27, 1997, the deposit under the ACCOUNT was P1,509,318.76.
On December 11, 1997, UCPB allowed PALII to withdraw One Million
Five Hundred Thousand Pesos (P1,500,000.00) from the Account,
leaving a balance of only P9,318.76. When UCPB refused the demand
to restore the amount withdrawn plus legal interest from December
11, 1997, the petitioner filed a complaint before the RTC. In its
answer to the complaint, UCPB admitted, among others, the opening
of the ACCOUNT under the name ITF (In Trust For) The Heirs of
Joseph Goyanko, Sr., (ITF HEIRS) and the withdrawal on December 11,
1997.
The RTC Ruling
In its August 27, 2003 decision, the RTC dismissed the
petitioners complaint and awarded UCPB attorneys fees, litigation
expenses and the costs of the suit.[6] The RTC did not consider the
words ITF HEIRS sufficient to charge UCPB with knowledge of any
trust relation between PALII and Goyankos heirs (HEIRS). It
concluded that UCPB merely performed its duty as a depository bank
in allowing PALII to withdraw from the ACCOUNT, as the contract of
deposit was officially only between PALII, in its own capacity, and
UCPB. The petitioner appealed his case to the CA.
The CAs Ruling
Before the CA, the petitioner maintained thatby opening the
ACCOUNT, PALII established a trust by which it was the trustee and
the HEIRS are the trustors-beneficiaries; thus, UCPB should be
liable for allowing the withdrawal.
The CA partially granted the petitioners appeal. It affirmed the
August 27, 2003 decision of the RTC, but deleted the award of
attorneys fees and litigation expenses. The CA held that no express
trust was created between the HEIRS and PALII. For a trust to be
established, the law requires, among others, a competent trustor
and trustee and a clear intention to create a trust, which were
absent in this case. Quoting the RTC with approval, the CA noted
that the contract of deposit was only between PALII in its own
capacity and UCPB, and the words ITF HEIRS were insufficient to
establish the existence of a trust. The CA concluded that as no
trust existed, expressly or impliedly, UCPB is not liable for the
amount withdrawn.[7]
In its July 31, 2007 resolution,[8]the CA denied the petitioners
motion for reconsideration. Hence, the petitioners present
recourse.The Petition
The petitioner argues in his petition that:first,an express
trust was created, as clearly shown by PALIIs March 28, 1996 and
November 15, 1996 letters.[9] Citing jurisprudence, the petitioner
emphasizes that from the established definition of a
trust,[10]PALII is clearly the trustor as it created the trust;
UCPB is the trustee as it is the party in whom confidence is
reposed as regards the property for the benefit of another; and the
HEIRS are the beneficiaries as they are the persons for whose
benefit the trust is created.[11] Also, quotingDevelopment Bank of
the Philippines v. Commission on Audit,[12]the petitioner argues
that the naming of thecestui que trustis not necessary as it
suffices that they are adequately certain or identifiable.[13]
Second, UCPB was negligent and in bad faith in allowing the
withdrawal and in failing to inquire into the nature of the
ACCOUNT.[14]The petitioner maintains that the surrounding facts,
the testimony of UCPBs witness, and UCPBs own records showed that:
(1) UCPB was aware of the trust relation between PALII and the
HEIRS; and (2) PALII held the ACCOUNT in a trust capacity.Finally,
the CA erred in affirming the RTCs dismissal of his case for lack
of cause of action. The petitioner insists that since an express
trust clearly exists, UCPB, the trustee, should not have allowed
the withdrawal.The Case for UCPB
UCPB posits, in defense, that the ACCOUNT involves an ordinary
deposit contract between PALII and UCPB only, which created a
debtor-creditor relationship obligating UCPB to return the proceeds
to the account holder-PALII. Thus, it was not negligent in handling
the ACCOUNT when it allowed the withdrawal. The mere designation of
the ACCOUNT as ITF is insufficient to establish the existence of an
express trust or charge it with knowledge of the relation between
PALII and the HEIRS.
UCPB also argues that the petitioner changed the theory of his
case. Before the CA, the petitioner argued that the HEIRS are the
trustors-beneficiaries, and PALII is the trustee. Here, the
petitioner maintains that PALII is the trustor, UCPB is the
trustee, and the HEIRS are the beneficiaries. Contrary to the
petitioners assertion, the records failed to show that PALII and
UCPB executed a trust agreement, and PALIIs letters made it clear
that PALII, on its own, intended to turn-over the proceeds of the
ACCOUNT to its rightful owners.The Courts Ruling
The issue before us is whether UCPB should be held liable for
the amount withdrawn because a trust agreement existed between
PALII and UCPB, in favor of the HEIRS, when PALII opened the
ACCOUNT with UCPB.
We rule in the negative.
We first address the procedural issues. We stress the settled
rule that a petition for review oncertiorariunder Rule 45 of the
Rules of Court resolves only questions of law, not questions of
fact.[15]A question, to be one of law, must not examine the
probative value of the evidence presented by the
parties;[16]otherwise, the question is one of fact.[17]Whether an
express trust exists in this case is a question of fact whose
resolution is not proper in a petition underRule 45. Reinforcing
this is the equally settled rule that factual findings of the lower
tribunals are conclusive on the parties and are not generally
reviewable by this Court,[18]especially when, as here, the CA
affirmed these findings. The plain reason is that this Court is not
a trier of facts.[19]While this Court has, at times, permitted
exceptions from the restriction,[20]we find that none of these
exceptions obtain in the present case.
Second, we find that the petitioner changed the theory of his
case. The petitioner argued before the lower courts that an express
trust exists between PALII as the trustee and the HEIRS as the
trustor-beneficiary.[21] The petitioner now asserts that the
express trust exists between PALII as the trustor and UCPB as the
trustee, with the HEIRS as the beneficiaries.[22] At this stage of
the case, such change of theory is simply not allowed as it
violates basic rules of fair play, justice and due process. Our
rulings are clear - a party who deliberately adopts a certain
theory upon which the case was decided by the lower court will not
be permitted to change [it] on appeal;[23]otherwise, the lower
courts will effectively be deprived of the opportunity to decide
the merits of the case fairly.[24] Besides, courts of justice are
devoid of jurisdiction to resolve a question not in issue.[25] For
these reasons, the petition must fail. Independently of these, the
petition must still be denied.
No express trust exists; UCPB exercised the required diligence
in handling the ACCOUNT; petitioner has no cause of action against
UCPB
A trust, either express or implied,[26]is the fiduciary
relationship x x x between one person having an equitable ownership
of property and another person owning the legal title to such
property, the equitable ownership of the former entitling him to
the performance of certain duties and the exercise of certain
powers by the latter.[27] Express or direct trusts are created by
the direct and positive acts of the trustor or of the parties.[28]
No written words are required to create an express trust. This is
clear from Article 1444 of the Civil Code,[29]but, the creation of
an express trust must be firmly shown; it cannot be assumed from
loose and vague declarations or circumstances capable of other
interpretations.[30]
InRizal Surety & Insurance Co. v. CA,[31]we laid down the
requirements before an express trust will be
recognized:Basically,these elements include a competent trustor and
trustee, an ascertainable trust res, and sufficiently certain
beneficiaries. xxx each of the above elements is required to be
established, and, if any one of them is missing, it is fatal to the
trusts (sic). Furthermore, there must be a present and complete
disposition of the trust property, notwithstanding that the
enjoyment in the beneficiary will take place in the future. It is
essential, too, that the purpose be an active one to prevent trust
from being executed into a legal estate or interest, and one that
is not in contravention of some prohibition of statute or rule of
public policy.There must also be some power of administration other
than a mere duty to perform a contract although the contract is for
a third-party beneficiary. A declaration of terms is essential, and
these must be stated with reasonable certainty in order that the
trustee may administer,and that the court, if called upon so to do,
may enforce, the trust. [emphasis ours]
Under these standards, we hold that no express trust was
created.First,while an ascertainable trust res and sufficiently
certain beneficiaries may exist, a competent trustor and trustee do
not.Second,UCPB, as trustee of the ACCOUNT, was never under any
equitable duty to deal with or given any power of administration
over it. On the contrary, it was PALII that undertook the duty to
hold the title to the ACCOUNT for the benefit of the HEIRS.Third,
PALII, as the trustor, did not have the right to the beneficial
enjoyment of the ACCOUNT.Finally, the terms by which UCPB is to
administer the ACCOUNT was not shown with reasonable certainty.
While we agree with the petitioner that a trusts beneficiaries need
not be particularly identified for a trust to exist,the intention
to create an express trust must first be firmly established, along
with the other elements laid above; absent these, no express trust
exists.
Contrary to the petitioners contention, PALIIs letters and UCPBs
records established UCPBs participation as a mere depositary of the
proceeds of the investment. In the March 28, 1996 letter, PALII
manifested its intention to pursue an active role in and up to the
turnover of those proceeds to their rightful owners,[32]while in
the November 15, 1996 letter, PALII begged the petitioner to trust
it with the safekeeping of the investment proceeds and
documents.[33]Had it been PALIIs intention to create a trust in
favor of the HEIRS, it would have relinquished any right or claim
over the proceeds in UCPBs favor as the trustee. As matters stand,
PALII never did.
UCPBs records and the testimony of UCPBs witness[34]likewise
lead us to the same conclusion. While the words ITF HEIRS may have
created the impression that a trust account was created, a closer
scrutiny reveals that it is an ordinary savings account.[35] We
give credence to UCPBs explanation that the word ITF was merely
used to distinguish the ACCOUNT from PALIIs other accounts with
UCPB. A trust can be created without using the word trust or
trustee, but the mere use of these words does not automatically
reveal an intention to create a trust.[36] If at all, these words
showed a trustee-beneficiary relationship between PALII and the
HEIRS.
Contrary to the petitioners position, UCPB did not become a
trustee by the mere opening of the ACCOUNT. While this may seem to
be the case, by reason of the fiduciary nature of the banks
relationship with its depositors,[37]this fiduciary relationship
does not convert the contract between the bank and its depositors
from a simple loan to a trust agreement, whether express or
implied.[38] It simply means that the bank is obliged to observe
high standards of integrity and performance in complying with its
obligations under the contract of simple loan.[39] Per Article 1980
of the Civil Code,[40]a creditor-debtor relationship exists between
the bank and its depositor.[41]The savings deposit agreement is
between the bank and the depositor;[42]by receiving the deposit,
the bank impliedly agrees to pay upon demand and only upon the
depositors order.[43]
Since the records and the petitioners own admission showed that
the ACCOUNT was opened by PALII, UCPBs receipt of the deposit
signified that it agreed to pay PALII upon its demand and only upon
its order. Thus, when UCPB allowed PALII to withdraw from the
ACCOUNT, it was merely performing its contractual obligation under
their savings deposit agreement. No negligence or bad faith[44]can
be imputed to UCPB for this action. As far as UCPB was concerned,
PALII is the account holder and not the HEIRS. As we held inFulton
Iron Works Co. v. China Banking Corporation,[45]the banks duty is
to its creditor-depositor and not to third persons. Third persons,
like the HEIRS here, who may have a right to the money deposited,
cannot hold the bank responsible unless there is a court order or
garnishment.[46] The petitioners recourse is to go before a court
of competent jurisdiction to prove his valid right over the money
deposited.
In these lights, we find the third assignment of error mooted. A
cause of action requires that there be a right existing in favor of
the plaintiff, the defendants obligation to respect that right, and
an act or omission of the defendant in breach of that right.[47] We
reiterate that UCPBs obligation was towards PALII as its
creditor-depositor. While the HEIRS may have a valid claim over the
proceeds of the investment, the obligation to turn-over those
proceeds lies with PALII. Since no trust exists, the petitioners
complaint was correctly dismissed and the CA did not commit any
reversible error in affirming the RTC decision. One final note, the
burden to prove the existence of an express trust lies with the
petitioner.[48]For his failure to discharge this burden, the
petition must fail.
WHEREFORE, in view of these considerations, we herebyDENYthe
petition andAFFIRMthe decision dated February 20, 2007 and the
resolution dated July 31, 2007 of the Court of Appeals in CA-G.R.
CV. No. 00257. Costs against the petitioner.SO ORDERED. Carpio,
(Chairperson), Del Castillo, Perez,andPerlas-Bernabe, JJ.,
cocnur.
[ G.R. NO. 136202, January 25, 2007 ]BANK OF THE PHILIPPINE
ISLANDS, PETITIONER, VS. COURT OF APPEALS, ANNABELLE A. SALAZAR,
AND JULIO R. TEMPLONUEVO, RESPONDENTS.
DECISIONAZCUNA, J.:This is a petition for review under Rule 45
of the Rules of Court seeking the reversal of the Decision[1]dated
April 3, 1998, and the Resolution[2]dated November 9, 1998, of the
Court of Appeals in CA-G.R. CV No. 42241.
The facts[3]are as follows:
A.A. Salazar Construction and Engineering Services filed an
action for a sum of money with damages against herein petitioner
Bank of the Philippine Islands (BPI) on December 5, 1991 before
Branch 156 of the Regional Trial Court (RTC) of Pasig City. The
complaint was later amended by substituting the name of Annabelle
A. Salazar as the real party in interest in place of A.A. Salazar
Construction and Engineering Services. Private respondent Salazar
prayed for the recovery of the amount of Two Hundred Sixty-Seven
Thousand, Seven Hundred Seven Pesos and Seventy Centavos
(P267,707.70) debited by petitioner BPI from her account. She
likewise prayed for damages and attorneys fees.
Petitioner BPI, in its answer, alleged that on August 31, 1991,
Julio R. Templonuevo, third-party defendant and herein also a
private respondent, demanded from the former payment of the amount
of Two Hundred Sixty-Seven Thousand, Six Hundred Ninety-Two Pesos
and Fifty Centavos (P267,692.50) representing the aggregate value
of three (3) checks, which were allegedly payable to him, but which
were deposited with the petitioner bank to private respondent
Salazars account (Account No. 0203-1187-67) without his knowledge
and corresponding endorsement.
Accepting that Templonuevos claim was a valid one, petitioner
BPI froze Account No. 0201-0588-48 of A.A. Salazar and Construction
and Engineering Services, instead of Account No. 0203-1187-67 where
the checks were deposited, since this account was already closed by
private respondent Salazar or had an insufficient balance.
Private respondent Salazar was advised to settle the matter with
Templonuevo but they did not arrive at any settlement. As it
appeared that private respondent Salazar was not entitled to the
funds represented by the checks which were deposited and accepted
for deposit, petitioner BPI decided to debit the amount of
P267,707.70 from her Account No. 0201-0588-48 and the sum of
P267,692.50 was paid to Templonuevo by means of a cashiers check.
The difference between the value of the checks (P267,692.50) and
the amount actually debited from her account (P267,707.70)
represented bank charges in connection with the issuance of a
cashiers check to Templonuevo.
In the answer to the third-party complaint, private respondent
Templonuevo admitted the payment to him of P267,692.50 and argued
that said payment was to correct the malicious deposit made by
private respondent Salazar to her private account, and that
petitioner banks negligence and tolerance regarding the matter was
violative of the primary and ordinary rules of banking. He likewise
contended that the debiting or taking of the reimbursed amount from
the account of private respondent Salazar by petitioner BPI was a
matter exclusively between said parties and may be pursuant to
banking rules and regulations, but did not in any way affect him.
The debiting from another account of private respondent Salazar,
considering that her other account was effectively closed, was not
his concern.
After trial, the RTC rendered a decision, the dispositive
portion of which reads thus:WHEREFORE, premises considered,
judgment is hereby rendered in favor of the plaintiff [private
respondent Salazar] and against the defendant [petitioner BPI] and
ordering the latter to pay as follows:1. The amount of P267,707.70
with 12% interest thereon from September 16, 1991 until the said
amount is fully paid;2. The amount of P30,000.00 as and for actual
damages;3. The amount of P50,000.00 as and for moral damages;4. The
amount of P50,000.00 as and for exemplary damages;5. The amount of
P30,000.00 as and for attorneys fees; and6. Costs of suit.The
counterclaim is hereby ordered DISMISSED for lack of factual
basis.
The third-party complaint [filed by petitioner] is hereby
likewise ordered DISMISSED for lack of merit.
Third-party defendants [i.e., private respondent Templonuevos]
counterclaim is hereby likewise DISMISSED for lack of factual
basis.
SO ORDERED.[4]On appeal, the Court of Appeals (CA) affirmed the
decision of the RTC and held that respondent Salazar was entitled
to the proceeds of the three (3) checks notwithstanding the lack of
endorsement thereon by the payee. The CA concluded that Salazar and
Templonuevo had previously agreed that the checks payable to JRT
Construction and Trading[5]actually belonged to Salazar and would
be deposited to her account, with petitioner acquiescing to the
arrangement.[6]
Petitioner therefore filed this petition on these grounds:I.The
Court of Appeals committed reversible error in misinterpreting
Section 49 of the Negotiable Instruments Law and Section 3 (r and
s) of Rule 131 of the New Rules on Evidence.II.The Court of Appeals
committed reversible error in NOT applying the provisions of
Articles 22, 1278 and 1290 of the Civil Code in favor of
BPI.III.The Court of Appeals committed a reversible error in
holding, based on a misapprehension of facts, that the account from
which BPI debited the amount of P267,707.70 belonged to a
corporation with a separate and distinct personality.IV.The Court
of Appeals committed a reversible error in holding, based entirely
on speculations, surmises or conjectures, that there was an
agreement between SALAZAR and TEMPLONUEVO that checks payable to
TEMPLONUEVO may be deposited by SALAZAR to her personal account and
that BPI was privy to this agreement.V.The Court of Appeals
committed reversible error in holding, based entirely on
speculation, surmises or conjectures, that SALAZAR suffered great
damage and prejudice and that her business standing was
eroded.VI.The Court of Appeals erred in affirming instead of
reversing the decision of the lower court against BPI and
dismissing SALAZARs complaint.VII.The Honorable Court erred in
affirming the decision of the lower court dismissing the
third-party complaint of BPI.[7]The issues center on the propriety
of the deductions made by petitioner from private respondent
Salazars account. Stated otherwise, does a collecting bank, over
the objections of its depositor, have the authority to withdraw
unilaterally from such depositors account the amount it had
previously paid upon certain unendorsed order instruments deposited
by the depositor to another account that she later closed?
Petitioner argues thus:1. There is no presumption in law that a
check payable to order, when found in the possession of a person
who is neither a payee nor the indorsee thereof, has been lawfully
transferred for value. Hence, the CA should not have presumed that
Salazar was a transferee for value within the contemplation of
Section 49 of the Negotiable Instruments Law,[8]as the latter
applies only to a holder defined under Section 191of the same.[9]2.
Salazar failed to adduce sufficient evidence to prove that her
possession of the three checks was lawful despite her allegations
that these checks were deposited pursuant to a prior internal
arrangement with Templonuevo and that petitioner was privy to the
arrangement.3. The CA should have applied the Civil Code provisions
on legal compensation because in deducting the subject amount from
Salazars account, petitioner was merely rectifying the undue
payment it made upon the checks and exercising its prerogative to
alter or modify an erroneous credit entry in the regular course of
its business.4. The debit of the amount from the account of A.A.
Salazar Construction and Engineering Services was proper even
though the value of the checks had been originally credited to the
personal account of Salazar because A.A. Salazar Construction and
Engineering Services, an unincorporated single proprietorship, had
no separate and distinct personality from Salazar.5. Assuming the
deduction from Salazars account was improper, the CA should not
have dismissed petitioners third-party complaint against
Templonuevo because the latter would have the legal duty to return
to petitioner the proceeds of the checks which he previously
received from it.6. There was no factual basis for the award of
damages to Salazar.The petition is partly meritorious.
First, the issue raised by petitioner requires an inquiry into
the factual findings made by the CA. The CAs conclusion that the
deductions from the bank account of A.A. Salazar Construction and
Engineering Services were improper stemmed from its finding that
there was no ineffective payment to Salazar which would call for
the exercise of petitioners right to set off against the formers
bank deposits. This finding, in turn, was drawn from the pleadings
of the parties, the evidence adduced during trial and upon the
admissions and stipulations of fact made during the pre-trial, most
significantly the following:(a) That Salazar previously had in her
possession the following checks:(1) Solid Bank Check No. CB766556
dated January 30, 1990 in the amount of P57,712.50;(2) Solid Bank
Check No. CB898978 dated July 31, 1990 in the amount of P55,180.00;
and,(3) Equitable Banking Corporation Check No. 32380638 dated
August 28, 1990 for the amount of P154,800.00;(b) That these checks
which had an aggregate amount of P267,692.50 were payable to the
order of JRT Construction and Trading, the name and style under
which Templonuevo does business;
(c) That despite the lack of endorsement of the designated payee
upon such checks, Salazar was able to deposit the checks in her
personal savings account with petitioner and encash the same;
(d) That petitioner accepted and paid the checks on three (3)
separate occasions over a span of eight months in 1990; and
(e) That Templonuevo only protested the purportedly unauthorized
encashment of the checks after the lapse of one year from the date
of the last check.[10]
Petitioner concedes that when it credited the value of the
checks to the account of private respondent Salazar, it made a
mistake because it failed to notice the lack of endorsement thereon
by the designated payee. The CA, however, did not lend credence to
this claim and concluded that petitioners actions were deliberate,
in view of its admission that the mistake was committed three times
on three separate occasions, indicating acquiescence to the
internal arrangement between Salazar and Templonuevo. The CA
explained thus:It was quite apparent that the three checks which
appellee Salazar deposited were not indorsed. Three times she
deposited them to her account and three times the amounts borne by
these checks were credited to the same. And in those separate
occasions, the bank did not return the checks to her so that she
could have them indorsed. Neither did the bank question her as to
why she was depositing the checks to her account considering that
she was not the payee thereof, thus allowing us to come to the
conclusion that defendant-appellant BPI was fully aware that the
proceeds of the three checks belong to appellee.
For if the bank was not privy to the agreement between Salazar
and Templonuevo, it is most unlikely that appellant BPI (or any
bank for that matter) would have accepted the checks for deposit on
three separate times nary any question. Banks are most finicky over
accepting checks for deposit without the corresponding indorsement
by their payee. In fact, they hesitate to accept indorsed checks
for deposit if the depositor is not one they know very well.[11]The
CA likewise sustained Salazars position that she received the
checks from Templonuevo pursuant to an internal arrangement between
them, ratiocinating as follows:If there was indeed no arrangement
between Templonuevo and the plaintiff over the three questioned
checks, it baffles us why it was only on August 31, 1991 or more
than a year after the third and last check was deposited that he
demanded for the refund of the total amount of P267,692.50.
A prudent man knowing that payment is due him would have
demanded payment by his debtor from the moment the same became due
and demandable. More so if the sum involved runs in hundreds of
thousand of pesos. By and large, every person, at the very moment
he learns that he was deprived of a thing which rightfully belongs
to him, would have created a big fuss. He would not have waited for
a year within which to do so. It is most inconceivable that
Templonuevo did not do this.[12]Generally, only questions of law
may be raised in an appeal by certiorari under Rule 45 of the Rules
of Court.[13]Factual findings of the CA are entitled to great
weight and respect, especially when the CA affirms the factual
findings of the trial court.[14]Such questions on whether certain
items of evidence should be accorded probative value or weight, or
rejected as feeble or spurious, or whether or not the proofs on one
side or the other are clear and convincing and adequate to
establish a proposition in issue, are questions of fact. The same
holds true for questions on whether or not the body of proofs
presented by a party, weighed and analyzed in relation to contrary
evidence submitted by the adverse party may be said to be strong,
clear and convincing, or whether or not inconsistencies in the body
of proofs of a party are of such gravity as to justify refusing to
give said proofs weight all these are issues of fact which are not
reviewable by the Court.[15]
This rule, however, is not absolute and admits of certain
exceptions, namely: a) when the conclusion is a finding grounded
entirely on speculations, surmises, or conjectures; b) when the
inference made is manifestly mistaken, absurd, or impossible; c)
when there is a grave abuse of discretion; d) when the judgment is
based on a misapprehension of facts; e) when the findings of fact
are conflicting; f) when the CA, in making its findings, went
beyond the issues of the case and the same are contrary to the
admissions of both appellant and appellee; g) when the findings of
the CA are contrary to those of the trial court; h) when the
findings of fact are conclusions without citation of specific
evidence on which they are based; i) when the finding of fact of
the CA is premised on the supposed absence of evidence but is
contradicted by the evidence on record; and j) when the CA
manifestly overlooked certain relevant facts not disputed by the
parties and which, if properly considered, would justify a
different conclusion.[16]
In the present case, the records do not support the finding made
by the CA and the trial court that a prior arrangement existed
between Salazar and Templonuevo regarding the transfer of ownership
of the checks. This fact is crucial as Salazars entitlement to the
value of the instruments is based on the assumption that she is a
transferee within the contemplation of Section 49 of the Negotiable
Instruments Law.
Section 49 of the Negotiable Instruments Law contemplates a
situation whereby the payee or indorsee delivers a negotiable
instrument for value without indorsing it, thus:Transfer without
indorsement; effect of- Where the holder of an instrument payable
to his order transfers it for value without indorsing it, the
transfer vests in the transferee such title as the transferor had
therein, and the transferee acquires in addition, the right to have
the indorsement of the transferor. But for the purpose of
determining whether the transferee is a holder in due course, the
negotiation takes effect as of the time when the indorsement is
actually made.[17]It bears stressing that the above transaction is
an equitable assignment and the transferee acquires the instrument
subject to defenses and equities available among prior parties.
Thus, if the transferor had legal title, the transferee acquires
such title and, in addition, the right to have the indorsement of
the transferor and also the right, as holder of the legal title, to
maintain legal action against the maker or acceptor or other party
liable to the transferor. The underlying premise of this provision,
however, is that a valid transfer of ownership of the negotiable
instrument in question has taken place.
Transferees in this situation do not enjoy the presumption of
ownership in favor of holders since they are neither payees nor
indorsees of such instruments. The weight of authority is that the
mere possession of a negotiable instrument does not in itself
conclusively establish either the right of the possessor to receive
payment, or of the right of one who has made payment to be
discharged from liability. Thus, something more than mere
possession by persons who are not payees or indorsers of the
instrument is necessary to authorize payment to them in the absence
of any other facts from which the authority to receive payment may
be inferred.[18]
The CA and the trial court surmised that the subject checks
belonged to private respondent Salazar based on the pre-trial
stipulation that Templonuevo incurred a one-year delay in demanding
reimbursement for the proceeds of the same. To the Courts mind,
however, such period of delay is not of such unreasonable length as
to estop Templonuevo from asserting ownership over the checks
especially considering that it was readily apparent on the face of
the instruments[19]that these were crossed checks.
InState Investment House v. IAC,[20]the Court enumerated the
effects of crossing a check, thus: (1) that the check may not be
encashed but only deposited in the bank; (2) that the check may be
negotiated only once - to one who has an account with a bank; and
(3) that the act of crossing the check serves as a warning to the
holder that the check has been issued for a definite purpose so
that such holder must inquire if the check has been received
pursuant to that purpose.
Thus, even if the delay in the demand for reimbursement is taken
in conjunction with Salazars possession of the checks, it cannot be
said that the presumption of ownership in Templonuevos favor as the
designated payee therein was sufficiently overcome. This is
consistent with the principle that if instruments payable to named
payees or to their order have not been indorsed in blank, only such
payees or their indorsees can be holders and entitled to receive
payment in their own right.[21]
The presumption under Section 131(s) of the Rules of Court
stating that a negotiable instrument was given for a sufficient
consideration will not inure to the benefit of Salazar because the
term given does not pertain merely to a transfer of physical
possession of the instrument. The phrase given or indorsed in the
context of a negotiable instrument refers to the manner in which
such instrument may be negotiated. Negotiable instruments are
negotiated by transfer to one person or another in such a manner as
to constitute the transferee theholderthereof. If payable to bearer
it is negotiated by delivery. If payable to order it is negotiated
by the indorsement completed by delivery.[22]The present case
involves checks payable to order. Not being apayeeorindorseeof the
checks, private respondent Salazar could not be aholderthereof.
It is an exception to the general rule for a payee of an order
instrument to transfer the instrument without indorsement.
Precisely because the situation is abnormal, it is but fair to the
maker and to prior holders to require possessors to prove without
the aid of an initial presumption in their favor, that they came
into possession by virtue of a legitimate transaction with the last
holder.[23]Salazar failed to discharge this burden, and the return
of the check proceeds to Templonuevo was therefore warranted under
the circumstances despite the fact that Templonuevo may not have
clearly demonstrated that he never authorized Salazar to deposit
the checks or to encash the same. Noteworthy also is the fact that
petitioner stamped on the back of the checks the words: "All prior
endorsements and/or lack of endorsements guaranteed," thereby
making the assurance that it had ascertained the genuineness of all
prior endorsements. Having assumed the liability of a general
indorser, petitioners liability to the designated payee cannot be
denied.
Consequently, petitioner, as the collecting bank, had the right
to debit Salazars account for the value of the checks it previously
credited in her favor. It is of no moment that the account debited
by petitioner was different from the original account to which the
proceeds of the check were credited because both admittedly
belonged to Salazar, the former being the account of the sole
proprietorship which had no separate and distinct personality from
her, and the latter being her personal account.
The right of set-off was explained inAssociated Bank v.
Tan:[24]A bank generally has a right of set-off over the deposits
therein for the payment of any withdrawals on the part of a
depositor. The right of a collecting bank to debit a client's
account for the value of a dishonored check that has previously
been credited has fairly been established by jurisprudence. To
begin with, Article 1980 of the Civil Code provides that "[f]ixed,
savings, and current deposits of money in banks and similar
institutions shall be governed by the provisions concerning simple
loan.
Hence, the relationship between banks and depositors has been
held to be that of creditor and debtor. Thus, legal compensation
under Article 1278 of the Civil Code may take place "when all the
requisites mentioned in Article 1279 are present," as follows:(1)
That each one of the obligors be bound principally, and that he be
at the same time a principal creditor of the other;(2) That both
debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality
if the latter has been stated;(3) That the two debts be due;(4)
That they be liquidated and demandable;(5) That over neither of
them there be any retention or controversy, commenced by third
persons and communicated in due time to the debtor.While, however,
it is conceded that petitioner had the right of set-off over the
amount it paid to Templonuevo against the deposit of Salazar, the
issue of whether it acted judiciously is an entirely different
matter.[25]As businesses affected with public interest, and because
of the nature of their functions, banks are under obligation to
treat the accounts of their depositors with meticulous care, always
having in mind the fiduciary nature of their relationship.[26]In
this regard, petitioner was clearly remiss in its duty to private
respondent Salazar as its depositor.
To begin with, the irregularity appeared plainly on the face of
the checks. Despite the obvious lack of indorsement thereon,
petitioner permitted the encashment of these checks three times on
three separate occasions. This negates petitioners claim that it
merely made a mistake in crediting the value of the checks to
Salazars account and instead bolsters the conclusion of the CA that
petitioner recognized Salazars claim of ownership of checks and
acted deliberately in paying the same, contrary to ordinary banking
policy and practice. It must be emphasized that the law imposes a
duty of diligence on the collecting bank to scrutinize checks
deposited with it, for the purpose of determining their genuineness
and regularity. The collecting bank, being primarily engaged in
banking, holds itself out to the public as the expert on this
field, and the law thus holds it to a high standard of
conduct.[27]The taking and collection of a check without the proper
indorsement amount to a conversion of the check by the
bank.[28]
More importantly, however, solely upon the prompting of
Templonuevo, and with full knowledge of the brewing dispute between
Salazar and Templonuevo, petitioner debited the account held in the
name of the sole proprietorship of Salazar without even serving due
notice upon her. This ran contrary to petitioners assurances to
private respondent Salazar that the account would remain untouched,
pending the resolution of the controversy between her and
Templonuevo.[29]In this connection, the CA cited the letter dated
September 5, 1991 of Mr. Manuel Ablan, Senior Manager of petitioner
banks Pasig/Ortigas branch, to private respondent Salazar informing
her that her account had been frozen, thus:From the tenor of the
letter of Manuel Ablan, it is safe to conclude that Account No.
0201-0588-48 will remain frozen or untouched until herein [Salazar]
has settled matters with Templonuevo. But, in an unexpected move,
in less than two weeks (eleven days to be precise) from the time
that letter was written, [petitioner] bank issued a cashiers check
in the name of Julio R. Templonuevo of the J.R.T. Construction and
Trading for the sum of P267,692.50 (Exhibit 8) and debited said
amount from Ms. Arcillas account No. 0201-0588-48 which was
supposed to be frozen or controlled. Such a move by BPI is, to Our
minds, a clear case of negligence, if not a fraudulent, wanton and
reckless disregard of the right of its depositor.The records
further bear out the fact that respondent Salazar had issued
several checks drawn against the account of A.A. Salazar
Construction and Engineering Services prior to any notice of
deduction being served. The CA sustained private respondent
Salazars claim of damages in this regard:The act of the bank in
freezing and later debiting the amount of P267,692.50 from the
account of A.A. Salazar Construction and Engineering Services
caused plaintiff-appellee great damage and prejudice particularly
when she had already issued checks drawn against the said account.
As can be expected, the said checks bounced. To prove this,
plaintiff-appellee presented as exhibits photocopies of checks
dated September 8, 1991, October 28, 1991, and November 14, 1991
(Exhibits D, E and F respectively)[30]These checks, it must be
emphasized, were subsequently dishonored, thereby causing private
respondent Salazar undue embarrassment and inflicting damage to her
standing in the business community. Under the circumstances, she
was clearly not given the opportunity to protect her interest when
petitioner unilaterally withdrew the above amount from her account
without informing her that it had already done so.
For the above reasons, the Court finds no reason to disturb the
award of damages granted by the CA against petitioner. This whole
incident would have been avoided had petitioner adhered to the
standard of diligence expected of one engaged in the banking
business. A depositor has the right to recover reasonable moral
damages even if the banks negligence may not have been attended
with malice and bad faith, if the former suffered mental anguish,
serious anxiety, embarrassment and humiliation.[31]Moral damages
are not meant to enrich a complainant at the expense of defendant.
It is only intended to alleviate the moral suffering she has
undergone. The award of exemplary damages is justified, on the
other hand, when the acts of the bank are attended by malice, bad
faith or gross negligence. The award of reasonable attorneys fees
is proper where exemplary damages are awarded. It is proper where
depositors are compelled to litigate to protect their
interest.[32]
WHEREFORE,the petition is partiallyGRANTED. The assailed
Decision dated April 3, 1998 and Resolution dated April 3, 1998
rendered by the Court of Appeals in CA-G.R. CV No. 42241
areMODIFIEDinsofar as it ordered petitioner Bank of the Philippine
Islands to return the amount of Two Hundred Sixty-seven Thousand
Seven Hundred and Seven and 70/100 Pesos (P267,707.70) to
respondent Annabelle A. Salazar, which portion isREVERSEDandSET
ASIDE. In all other respects, the same areAFFIRMED.No costs. SO
ORDERED. Puno C.J., (Chairperson), Sandoval-Gutierrez,
Corona,andGarcia, JJ.,concur.
[ G.R. No.