BANK OF THE PHILIPPINE ISLANDS vs. COURT OF APPEALS G.R. No.

104612MAY 10, 1994 FACTS: Private respondents Eastern Plywood Corporation and Benigno Lim as officer of the corporation, had an AND/OR joint account with Commercial Bank and Trust Co (CBTC) , the predecessor-in-interest of petitioner Bank of the Philippine Islands. Lim withdraw funds from such account and used it to open a joint checking account (an AND account) with Mariano Velasco. When Velasco died in 1977, said joint checking account had P662,522.87. By virtue of an Indemnity Undertaking executed by Lim and as President and General Manager of Eastern withdrew one half of this amount and deposited it to one of the accounts of Eastern with CBTC. Eastern obtained a loan of P73,000.00 from CBTC which was not secured. However, Eastern and CBTC executed a Holdout Agreement providing that the loan was secured by the Holdout of the C/A No. 2310-001-42 referring to the joint checking account of Velasco and Lim. Meanwhile, a judicial settlement of the estate of Velasco ordered the withdrawal of the balance of the account of Velasco and Lim. Asserting that the Holdout Agreement provides for the security of the loan obtained by Eastern and that it is the duty of CBTC to debit the account of respondents to set off the amount of P73,000 covered by the promissory note, BPI filed the instant petition for recovery. Private respondents Eastern and Lim, however, assert that the amount deposited in the joint account of Velasco and Lim came from Eastern and therefore rightfully belong to Eastern and/or Lim. Since the Holdout Agreement covers the loan of P73,000, then petitioner can only hold that amount against the joint checking account and must return the rest. ISSUE: Whether BPI can demand the payment of the loan despite the existence of the Holdout Agreement and whether BPI is still liable to the private respondents on the account subject of the withdrawal by the heirs of Velasco.

HELD: Yes, for both issues. Regarding the first, the Holdout Agreement conferred on CBTC the power, not the duty, to set off the loan from the account subject of the Agreement. When BPI demanded payment of the loan from Eastern, it exercised its right to collect payment based on the promissory note, and disregarded its option under the Holdout Agreement. Therefore, its demand was in the correct order. Regarding the second issue, BPI was the debtor and Eastern was the creditor with respect to the joint checking account. Therefore, BPI was obliged to return the amount of the said account only to the creditor. When it allowed the withdrawal of the balance of the account by the heirs of Velasco, it made the payment to the wrong party. The law provides that payment made by the debtor to the wrong party does not extinguish its obligation to the creditor who is without fault or negligence. Therefore, BPI was still liable to the true creditor, Eastern

PHILIPPINE BANK OF COMMERCE vs. COURT OF APPEALS G.R. No. 97626, March 14, 1997

The negligence must be the proximate cause of the loss

FACTS: Rommels Marketing Corporation (RMC) maintained two separate current accounts with PBC in connection with its business of selling appliances. The RMC General Manager Lipana entrusted to his secretary, Irene Yabut, RMC funds amounting to P300,000+ for the purpose of depositing the same to RMCs account with PBC. However, it turned out that Yabut deposited the amounts in her husbands account instead of RMC. Lipana never checked

his monthly statement of accounts regularly furnished by PBC so that Yabuts modus operandi went on for the span of more than one year. ISSUE:

a defense against liability sought by another, if the latter, who had the last fair chance, could have avoided the impending harm by exercise of due diligence. (Phil. Bank of Commerce v. CA, supra) PRUDENTIAL BANK vs. COURT OF APPEALS G.R. No. 125536, March 16, 2000 FACTS: Private respondent Leticia Tupasi-Valenzuela opened an account in the Petitioner Prudential bank. On June 1, 1988, herein private respondent deposited P35,271.60 drawn against the PhilippineCommercial International Bank (PCIB). Thereafter, private respondent issued Prudential Bank check in the amount of P11,500 post-dated June 20, 1988 in favor of one Belen Legaspi. Legaspi, who was in jewelry trade, endorsed the check to Philip Lhuiller, a businessman in the same field. When the check was deposited with the PCIB, it was dishonored for being drawn against insufficient funds. Private respondent asked why her check was dishonored where there was sufficient funds. The bank officer told her there was no need to review the passbook because the bank ledger was the best proof that she did not have sufficient funds. Then he abruptly faced his typewriter and started typing. Later, it was found out that the bank misposted private respondents check deposit to another account and delayed the posting of the same to the proper account. The bank admitted that it was at fault. But since it is not the first time that private respondent experienced this scenario, she commenced a suit for damages.

What is the proximate cause of the loss Lipanas negligence in not checking his monthly statements or the banks negligence through its teller in validating the deposit slips?

HELD: The bank teller was negligent in validating, officially stamping and signing all the deposit slips prepared and presented by Yabut, despite the glaring fact that the duplicate copy was not completely accomplished contrary to the self-imposed procedure of the bank with respect to the proper validation of deposit slips, original or duplicate. The bank tellers negligence, as well as the negligence of the bank in the selection and supervision of its bank teller, is the proximate cause of the loss suffered by the private respondent, not the latters entrusting cash to a dishonestemployee. Xxx Even if Yabut had the fraudulent intention to misappropriate the funds, she would not have been able todeposit those funds in her husbands current account, and then make plaintiff believe that it was in the latters accounts wherein she had deposited them, had it not been for the bank tellers aforesaid gross and reckless negligence. Doctrine of Last Clear Chance where both parties are negligent, but the negligent act of one is appreciably later in time than that of the other, or when it is impossible to determine whose fault or negligence should be attributed to the incident, the one who had the last clear opportunity to avoid the impending harm and failed to do so is chargeable with the consequences thereof. It means that the antecedent negligence of a person does not preclude the recovery of damages for the supervening negligence of, or bar

ISSUE: Can damages be awarded to private respondent on account of the banks negligence ?

HELD: Yes. The trial court found that the misposting is a clear proof of lack of supervision on the part of the defendant bank. The appellate court also found out that while it may be true that the

banks negligence in dishonoring the properly funded check might not have been attended with malice and bad faith, as appellee submits, nevertheless, it is the result of lack of due care and caution expected of an employee of a firm engaged in so sensitive and accurately demanding task as banking. In Simex International vs. CA, 183 SCRA 360,367 (1990), and BPI vs. IAC, 206 SCRA 408, this court had occasion to stress the fiduciary nature of the relationship between a bank and its depositors and the extent of diligence expected from the former in handling the accounts entrusted to its care. In the case of PNB vs. CA, we held that a bank is under obligation to treat the accounts of its depositors with meticulous care whether such account consists only of a few hundred pesos or millions of pesos. Responsibility arising from negligence in the performance of every kind of obligation is demandable. While petitioners negligence in this case may not have been attended with malice and bad faith, nevertheless, it caused serious anxiety, embarrassment and humiliation. WESTMONT BANK V. ONG 373 SCRA 212 FACTS: Ong was supposed to be the payee of the checks issued by Island Securities. Ong has a current account with petitioner bank. He opted to sell his shares of stock through Island Securities. The company in turn issued checks in favor of Ong but unfortunately, the latter wasn't able to receive any. His signatures were forged by Tamlinco and the checks were deposited in his own account with petitioner. Ong then sought to collect the money from the family of Tamlinco first before filing a complaint with the Central Bank. As his efforts were futile to recover his money, he filed an action against the petitioner. The trial and appellate court decided in favor of Ong.

ISSUE: (1.) Whether or not respondent Ong has a cause of action against petitioner Westmont Bank (2.) Whether or not Ong is barred to recover the money from Westmont Bank due to laches.

HELD: Since the signature of the payee was forged, such signature should be deemed inoperative and ineffectual. Petitioner, as the collecting bank, grossly erred in making payment by virtue of said forged signature. The payee, herein respondent, should therefore be allowed to collect from the collecting bank. It should be liable for the loss because it is its legal duty to ascertain that the payees endorsement was genuine before cashing the check. As a general rule, a bank or corporation who has obtained possession of a check with an unauthorized or forged indorsement of the payees signature and who collects the amount of the check other from the drawee, is liable for the proceeds thereof to the payee or the other owner, notwithstanding that the amount has been paid to the person from whom the check was obtained. DOCTRINE OF DESIRABLE SHORT CUTplaintiff uses one action to reach, by desirable short cut, the person who ought to be ultimately liable as among the innocent persons involved in the transaction. In other words, the payee ought to be allowed to recover directly from the collecting bank, regardless of whether the check was delivered to the payee or not. On the issue of laches, Ong didn't sit on his rights. He immediately sought the intervention of Tamlincos family to collect the sum of money, and later the Central Bank. Only after exhausting all the measures to settle the issue amicably did he file the action.

SIMEX INTERNATIONAL (MANILA) INC. vs. COURT OF APPEALS G.R. No. 88013, March 19, 1990 FACTS: The petitioner is a private corporation engaged in the exportation of food products. It buys these products from various local suppliers and then sells them abroad. Most of its exports are purchased by the petitioner on credit. The petitioner was a depositor of the respondent bank and maintained a checking account in its branch in Cubao, Quezon City which issued several checks against its deposit but was surprised to learn later that they had been dishonored for insufficient funds. As a consequence, several suppliers sent a letter of demand to the petitioner, threatening prosecution if the dishonored check issued to it was not made good and also withheld delivery of the order made by the petitioner. One supplier also cancelled the petitioner's credit line and demanded th at future payments be made by it in cash or certified check. The petitioner complained to the respondent bank. Investigation disclosed that the sum of P100,000.00 deposited by the petitioner on May 25, 1981, had not been credited to it. The error was rectified only a month after, and the dishonored checks were paid after they were re-deposited. The petitioner then filed a complaint in the then Court of First Instance of Rizal against the bank for its gross and want on negligence. ISSUE: Whether or not the bank can be held liable for negligence 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 dishonor of a check

without good reason, can cause the depositor not a little embarrassment if not also financial loss and perhaps even civil and criminal litigation