Professional Documents
Culture Documents
Issue: Whether or not the bank can be held liable for negligence by reason of its unjustified
dishonor of a check
Held: The depositor expects the bank to treat his account with the utmost fidelity whether
such account consists only of a few hundred pesos or of millions. The bank must record
every single transaction accurately, down to the last centavo, and as promptly as possible.
This has to be done if the account is to reflect at any given time the amount of money the
depositor can dispose of as he sees fit, confident that the bank will deliver it as and to
whomever he directs. A blunder on the part of the bank, such as the dishonour of a check
without good reason, can cause the depositor not a little embarrassment if not also financial
loss and perhaps even civil and criminal litigation.
Article 2205 of the Civil Code provides that actual or compensatory damages may be
received (2) for injury to the plaintiff s business standing or commercial credit. There is no
question that the petitioner did sustain actual injury as a result of the dishonored checks and
that the existence of the loss having been established absolute certainty as to its amount is
not required. 7 Such injury should bolster all the more the demand of the petitioner for
moral damages and justifies the examination by this Court of the validity and
reasonableness of the said claim.
Issue:
Whether or not petitioner is entitled to damages due to respondent banks negligence.
Ruling: YES.
As the Court sees it, the initial carelessness of the respondent bank, aggravated by the lack of
promptitude in repairing its error, justifies the grant of moral damages. This rather lackadaisical
attitude toward the complaining depositor constituted the gross negligence, if not wanton bad
faith, that the respondent court said had not been established by the petitioner. We shall
recognize that the petitioner did suffer injury because of the private respondents negligence
that caused the dishonor of the checks issued by it. The immediate consequence was that its
prestige was impaired because of the bouncing checks and confidence in it as a reliable debtor
was diminished.
The point is that as a business affected with public interest and because of the nature of its
functions, the bank is under obligation to treat the accounts of its depositors with meticulous
care, always having in mind the fiduciary nature of their relationship. In the case at bar, it is
obvious that the respondent bank was remiss in that duty and violated that relationship. What is
especially deplorable is that, having been informed of its error in not crediting the deposit in
question to the petitioner, the respondent bank did not immediately correct it but did so only one
week later or twenty-three days after the deposit was made. It bears repeating that the record
does not contain any satisfactory explanation of why the error was made in the first place and
why it was not corrected immediately after its discovery. Such ineptness comes under the
concept of the wanton manner contemplated in the Civil Code that calls for the imposition of
exemplary damages.
Facts: Godofredo, Casheir of the Philippine Racing Club (PCRI), went to respondent bank to
apply for a demand draft in the amount AU$1,610.00 payable to the order of the 20 th Asian
Racing Conference Secretariat of Sydney, Australia. He was attended to by respondent
banks assistant cashier, Mr. Yasis, who at first denied the application for the reason that
respondent bank did not have an Australian dollar account in any bank in Sydney. Godofredo
asked if there could be a way for respondent bank to accommodate PRCIs urgent need to
remit Australian dollars to Sydney. Yasis of respondent bank then informed Godofredo of a
roundabout way of effecting the requested remittance to Sydney thus: the respondent bank
would draw a demand draft against Westpac Bank in Sydney, Australia (Westpac-Sydney)
and have the latter reimburse itself from the U.S. dollar account of the respondent in
Westpac Bank in New York, U.S.A. (Westpac-New York).
However, upon due presentment of the foreign exchange demand draft, the same was
dishonored, with the notice of dishonor stating that there is No account held with Westpac.
Meanwhile, Wespac-New York sent a cable to respondent bank informing the latter that its
dollar account in the sum of AU$ 1,610.00 was debited. In response to PRCIs complaint
about the dishonor of the said foreign exchange demand draft, respondent bank informed
Westpac-Sydney of the issuance of the said demand draft, drawn against the Wespac-Sydney
and informing the latter to be reimbursed from the respondent banks dollar account in
Westpac-New York. The respondent bank on the same day likewise informed Wespac-New
York requesting the latter to honor the reimbursement claim of Wespac-Sydney. Upon its
second presentment for payment, the demand draft was again dishonored by Westpac-
Sydney for the same reason, that is, that the respondent bank has no deposit dollar account
with the draweeWespac-Sydney. Gregorio Reyes and Consuelo Puyat-Reyes arrived in Sydney
on a separate date and both were humiliated and embarrassed in the presence of
international audience after being denied registration of the conference secretariat since the
foreign exchange draft was dishonored. Petitioners were only able to attend the conference
after promising to pay in cash instead which they fulfilled
Issue: Whether or not respondent bank is liable for damages due to the dishonor of the
foreign exchange demand drafts.
Held: Yes. The evidence also shows that the respondent bank exercised that degree of
diligence expected of an ordinary prudent person under the circumstances obtaining; the
respondent bank advised Westpac-New York to honor the reimbursement claim of Westpac-
Sydney and to debit the dollar accountof respondent bank with the former. 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. In other words banks are duty
bound to treat the deposit accounts of their depositors with the highest degree of care. But
the said ruling applies only to cases where banks act under their fiduciary capacity, that is,
as depositary of the deposits of their depositors. But the same higher degree of diligence is
not expected to be exerted by banks in commercial transactions that do not involve their
fiduciary relationship with their depositors. The case at bar does not involve the handling of
petitioners deposit, if any, with the respondent bank. Instead, the relationship involved was
that of a buyer and seller.
Art.1172 Negligence
Vs
Norman Pike
Chico-Nazario,J.
Facts:
Pike, gay entertainer, opened a dollar account at PNB Buendia branch for which he was issued
a passbook. Before leaving for abroad, Pike verbally authorized AVP of PNB Buendia branch,
Lorenzo Bal, to honor all withdrawal that will be made by Davasol, talent manager, who will be
presenting a pre-signed withdrawal slip bearing Pikes signature. Subsequently, the passbook was
stolen in his house by his talent manager Joy Davasol who made 2 unauthorized withdrawals. After
knowing the incident, Pike demanded the total withdrawn amount on the ground that he never
authorized anyone to withdraw from his account and signatures presented on withdrawal slips was
forgeries. Pike through his counsel, demanded the bank to credit back the amount of unauthorized
withdrawal on the ground that signatures was forged. Pike in a letter to PNB prayed to lift the hold
order that her sister made and allow her to withdraw the remaining balance of the account provided
that he will not hold PNB responsible for the unauthorized withdrawal which was then approved by
PNB on the same date. On the other hand, PNB contends that they exercised due diligence of a good
father of a family in handling the transactions and cannot grant the request of pike for refund.
Plaintiffs counsel denied that petitioner made a promise not to hold PNB responsible for unauthorized
withdrawal which was answered by PNB stating that the withdrawal of remaining balance barred the
claim of petitioner for unauthorized withdrawals.
Issues:
WON PNB is negligent in accommodating the pre-signed deposit slip presented by Davasol.
Ruling:
Yes. Ordinarily, banks allow withdrawal by representative provided that said representative was
authorized and the signature of the principal is secured on the space for such transaction. The
signature of Pike was misplaced and still it wasnt corrected by Bal. PNB approved the withdrawal slip
presented by Davasol without taking any precautions regarding its authenticity. The admitted
withdrawal slips do not constitute the normal procedure with respect to withdrawals of
representatives. PNB alleged that they observed diligence of a good father of a family but according
to the jurisprudence, the bank is obliged to treat the account of depositors with meticulous care
always having in mind its fiduciary nature which then makes the degree of diligence more than
ordinary diligence. Article 1172 of the NCC provides the degree of diligence required by law to an
obligor and a diligence below that will make the obligor negligent.
Hence, the petition is DENIED. PNB is ordered to refund PIKE $7,500 plus interest 6% per annum to
be computed from the date of the filing of the complaint which interest rate shall become 12% per
annum from the time the judgment in this case becomes final and executory until its satisfaction,
moral and exemplary damages P 20,000 each, Atty. Fees P 20,000 and P 10,000 representing
expenses of litigation.
Facts:
1. Pacilan maintains a current account with petitioner bank (now BPI). He issued several
postdated checks, the last one being check no. 2434886 amounting to P680. The said check
was presented to petitioner bank for payment on April 4, 1988 but was dishonored. It
appeared that the account of Pacilan has been closed on the evening of April 4 on the ground
that it was 'improperly handled'.
2. It appeared that the plaintiff issued four checks from March 30 - April 4, 1988 amounting in
total to P7,410, on one hand, his funds in the bank only amounted to P6,981.43, thus an
overdraft of P 428.57 resulted therefrom. Consequently, the last check was dishonored
despite the fact that plaintiff deposited the amount the following day.
3. Pacilan wrote a complaint to the bank but after the bank did not reply, he filed an action for
damages against it and the employee (Villadelgado) who closed the account. The plaintiff
alleged that the immediate closure of his account was malicious and intended to embarrass
him.
4. The lower court ruled in favor of the plaintiff and awarded actual damages (P100,000) and
exemplary damages (P50,000). The bank appealed, but the CA affirmed the lower court's
decision with modifications and held that the closure of the bank of plaintiff's account despite
its rules and regulation allowing a re-clearing of a check returned for insufficiency of funds, is
patently malicious and unjustifiable. Hence, this appeal.
5. The petitioner contended that in closing the account, it acted in good faith and in
accordance with the pertinent banking rules and regulations governing the operations of a
regular demand deposit, allowing it to close an account if the depositor frequently draws
checks against insufficient funds or uncollected deposits.
NO. The award of damages under Art. 19 of the Civil Code is unjustifiable. The petitioner has
the right to close the account of plaintiff based on the rules and regulations on regular
demand deposits. The facts do not show that the petitioner abused its rights in the exercise of
its duties. The evidence negates the existence of bad faith and malice on the part of the
petitioner bank, which are the second and third elements necessary to prove an abuse of right
in violation of Art. 19.
The records also showed that indeed plaintiff has mishandled his account by issuing checks
previously against insufficient funds not just once, but more than a hundred times.
Moreover, the acceptance by the bank of the deposit the day after the closure of the account
cannot be considered as bad faith nor done with malice but a mere simple negligence of its
personnel.
As a result, whatever damage the plaintiff has suffered (by virtue of the subsequent dishonor
of the other checks he issued) should be borne by him alone as these was the result of his
own act in irregularly handling his account.
*The ruling in the case however is still unfavorable to petitioner. The court held:
Our agreement with petitioner on this point of law, notwithstanding, we are
constrained to refrain from granting the prayers of her petition. The reason is that, the
contract between petitioner and the Monesets being one of Contract to Sell Lot and
House, petitioner, under the circumstances, never acquired ownership over the
property and her rights were limited to demand for specific performance from the
Monesets, which at this juncture however is no longer feasible as the property had
already been sold to other persons.
Issues: Whether the disputed transaction between ASIA PACIFIC was engaged in banking
activities.
Held: An investment company refers to any issuer which is or holds itself out as being
engaged or proposes to engage primarily in the business of investing, reinvesting or trading
in securities. As defined in Revised Securities Act, securities shall include commercial
papers evidencing indebtedness of any person, financial or non-financial entity, irrespective
of maturity, issued, endorsed, sold, transferred or in any manner conveyed to another with
or without recourse, such as promissory notes Clearly, the transaction between petitioners
and respondent was one involving not a loan but purchase of receivables at a discount, well
within the purview of investing, reinvesting or trading in securities which an investment
company, like ASIA PACIFIC, is authorized to perform and does not constitute a violation of
the General Banking Act.
What is prohibited by law is for investment companies to lend funds obtained from the
public through receipts of deposit, which is a function of banking institutions. But here, the
funds supposedly lent to petitioners have not been shown to have been obtained from the
public by way of deposits, hence, the inapplicability of banking laws. Wherefore, the assailed
decision of the Court of Appeals was affirmed.