Philippine Bank Of Commerce V. CA (1997)G.R. No.

97626 March 14, 1997

ISSUE:
1. W/N applying the last clear chance, PBC's teller is negligent for failing to

FACTS:

avoid the injury by not exercising the proper validation procedure-YES

May 5, 1975 to July 16, 1976: Romeo Lipana claims to have

2. W/N there was contirbutory negligence by RMC - YES

entrusted RMC funds in the form of cash totalling P304,979.74 to his

secretary, Irene Yabut, for the purpose of depositing said funds in the

HELD: 60-40 ratio. only the balance of 60% needs to be paid by the PBC

current accounts of RMC with Philippine Bank of Commerce (PBC)

They were not credited to RMC's account but were instead

deposited to Account No. 53-01734-7 of Yabut's husband, Bienvenido

1. YES.

Cotas

bank in accepting deposits should not relieve the PBC of responsibility

Romeo Lipana never checked their monthly statements of account

reposing complete trust and confidence on PBC

Ms. Mabayad on guard.

Mabayad :
original showed the name of her husband as depositor and

Mabayad.

duplicate copy was written the account number of her

ordered the investigation of the incident, he never came to know that

After validation, Yabut would then fill up the name of RMC in the

blank deposit slips were validated in total disregard of the bank's

space left blank in the duplicate copy and change the account number
to RMC's account number

This went on in a span of more than 1 year without private

validation procedures until 7 years later

to determine whose fault or negligence should be attributed to the

the return of its money and later on filed in the RTC

RTC: PBC and Azucena Mabayad jointly and severally liable

CA: affirmed with modification deleting awards of exemplary

damages and attorney's fees

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

Upon discovery of the loss of its funds, RMC demanded from PBC

last clear chance/supervening negligence/discovered peril

respondent's knowledge

Mr. Romeo Bonifacio, then Manager of the Pasig Branch of the

petitioner bank and now its Vice-President, to the effect that, while he

husband but the name of the account holder was left blank

Negligence here lies not only on the part of Ms. Mabayad but also on
the part of the bank itself in its lack in selection and supervision of Ms.

his current account number - retained by the bank

The odd circumstance alone that such duplicate copy lacked one
vital information (Name of the account holder) should have already put

Irene Yabut's modus operandi was to furnish 2 copies of deposit slip

upon and both are always validated and stamped by the teller Azucena

The fact that the duplicate slip was not compulsorily required by 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

antecedent negligence of a person does not preclude the

recovery of damages for the supervening negligence of, or bar a defense
against liability sought by another, if the latter, who had the last fair

chance, could have avoided the impending harm by the exercise of due

defendant's lack of due care, the plaintiff may recover damages, but the

diligence.

courts shall mitigate the damages to be awarded.

Here, assuming that RMC was negligent in

entrusting cash to a dishonest employee, yet it cannot be denied that

PBC bank, thru its teller, had the last clear opportunity to avert the injury
incurred by its client, simply by faithfully observing their self-imposed
validation procedure.
Art. 1173. The fault or negligence of the obligor consists in the

omission of that diligence which is required by the nature of the

obligation and corresponds with the circumstances of the persons, of the
time and of the place. When negligence shows bad faith, the provisions
of articles 1171 and 2201, paragraph 2, shall apply.
If the law or contract does not state the diligence which is to be observed
in the performance, that which is expected of a good father of a
family shall be required. In the case of banks, however, the degree of
diligence required is more than that of a good father of a family.
Considering the fiduciary nature of their relationship with their depositors,
banks are duty bound to treat the accounts of their clients with
the highest degree of care
2. YES.

it cannot be denied that, indeed, private respondent was likewise

negligent in not checking its monthly statements of account. Had it done
so, the company would have been alerted to the series of frauds being
committed against RMC by its secretary. The damage would definitely
not have ballooned to such an amount if only RMC, particularly Romeo
Lipana, had exercised even a little vigilance in their financial affairs. This
omission by RMC amounts to contributory negligence which shall
mitigate the damages that may be awarded to the private respondent

Article 2179 of the New Civil Code

When the plaintiff's own negligence was the immediate and proximate cause
of his injury, he cannot recover damages. But if his negligence was only
contributory, the immediate and proximate cause of the injury being the

Issue: Whether or not petitioners had sufficient funds in their accounts when
the bank dishonored the checks in question.
Moran vs. Court of Appeals, 230 SCRA 798
Facts: Petitioner spouses Moran maintained three joint accounts with
respondent Citytrust Banking Corporation. As a special privilege to the
Morans, a pre-authorized transfer (PAT) agreement was entered into by the
parties. The PAT letter-agreement contained the following provisions:
(1) xxx the checks would be honored if the savings account has sufficient
balance to cover the overdraft; xxx
(3) that the bank has the right to refuse to effect transfer of funds at their sole

Held: No. Under the clearing house rules, a bank processes a check on the
date it was presented for clearing. The available balance of December 14,
1983 was used by the bank in determining whether or not there was sufficient
cash deposited to fund the two checks, although what was stamped on the
dorsal side of the two checks was DAIF/12-15-83, since December 15,
1983 was the actual date when the checks were processed. When
petitioners checks were dishonored, the available balance of the savings
account, which was subject of the PAT agreement, was not enough to cover
either of the two checks.

and absolute option and discretion;

(4) Citytrust is free and harmless for any and all omissions or oversight in

Moran vs Court of Appeals, GR No. 105836, March 7, 1994

executing this automatic transfer of funds.

On December 12, 1983, petitioners, through Librada Moran, drew a check
payable to Petrophil Corporation.
The next day, petitioners issued another check in favor of the same
corporation. Later, the bank dishonored the checks due to insufficiency of
funds. As a result, Petrophil refused to deliver the orders of petitioners on a
credit.
The non-delivery of gasoline forced petitioners to temporarily stop business
operations.

Facts: M who regularly purchased bulk fuel from P maintained 3 joint

accounts with Citytrust Bank, namely: Current Account No. 1 (CA1), Savings
Account No. 1 (SA1), and Savings Account No. 2 (SA2).
M had a pre-authorized transfer (PAT) agreement with Citytrust wherein the
former have written authority to the latter to automatically transfer funds from
their SA1 to their CA1 at any time whenever the funds in their current
account were insufficient to meet withdrawals from said current account.
On December 12, 1983, M drew a check for P50, 576.00 payable to P.

Petitioners wrote Citytrust claiming the dishonor of the checks caused them
besmirched business and personal reputation, shame and anxiety. Hence,
they were contemplating filing legal actions, unless the bank clears their
name and paid for moral damages.
The trial court dismissed the complaint. The CA affirmed.

On December 13, 1983, M issued another check in the amount of P56,

090.00 in favor of the same.
On December 14, 1983, P deposited the 2 aforementioned check to its
account with the PNB. In turn, PNB presented them for clearing and the
record shows that on December 14, 1983, the accounts has insufficient funds
(CA1 had a zero balance, while SA1 [covered by PAT] had an available

balance of P26, 104.30 and SA2 had an available balance of P43, 268.39).

First, a check is a bill of exchange drawn on a bank payable on demand.

Hence the checks were dishonoured.

Thus, a check is a written order addressed to a bank or persons carrying on

On December 15, 1983 at 10:00 AM, M went to the bank as was his regular
practice and deposited in their SA2 the amounts of P10, 874.58 and P6,
754.25, and he deposited likewise in the SA1 the amounts of P5, 900.00,

the business of banking, by a party having money in their hands, requesting

them to pay on presentment, to a person named therein or to bearer or order,
a named sum of money.

P35, 100.00 and 30.00. The amount of P40,000.00 was then transferred by

Second, the relationship between the bank and the depositor is that of a

him from SA2 to their CA1. At the same time, the amount of P66,666.00 was

debtor and creditor. By virtue of the contract of deposit between the banker

transferred from SA1 to the same current account through PAT agreement.

and its depositor, the banker agrees to pay checks drawn by the depositor

Sometime on December 15 or 16, 1983 M was informed that that P refused

provided that said depositor has money in the hands of the bank.

to deliver their orders on a credit basis because the two checks they had

Thirdly, where the bank possesses funds of the depositor, it is bound to honor

previously issued were dishonored upon presentment for payment due to

his checks to the extent of the amount deposits. The failure of a bank to

insufficiency of funds. The non-delivery of orders forced petitioners to stop

pay the check of a merchant or a trader, when the deposit is sufficient,

business operations, allegedly causing them to suffer loss of earnings.

entitles the drawer to substantial damages without any proof of actual

On December 16 or 17, 1983, P got the signature of M on an application for a

managers check so that the dishonoured checks could be redeemed and
presented the checks in payment for the two dishonoured checks.

damages. Conversely, a bank is not liable for its refusal to pay a check on
account of insufficient funds, notwithstanding the fact that a deposit may be
made later in the day. Before a bank depositor may maintain a suit to recover
a specific amount form his bank, he must first show that he had on deposit

On July 24, 1984, claimed P1,000,000.00 for moral damages.

sufficient funds to meet demand.

Considering the clearing process adopted, it is clear that the available

Issue:
WON the bank is liable for damages for its refusal to pay a check on account
of insufficient funds considering the fact that a deposit may be made later in
the day.

balance on December 14, 1983 was used by the bank in determining

whether or not there was sufficient cash deposited to fund the two checks.
When Ms checks were dishonored due to insufficiency of funds, the
available balance of SA1 which was the subject of the PAT agreement was
not enough to cover either of the two checks. On December 14, 1983, when
PNB presented the checks for collection, the available balance for SA1 was

Held:
No, Petitioners had no sufficient funds in their accounts when the bank
dishonoured the checks in question.

only P26, 104.30 while CA1had no available balance. It was only on

December 15, 1983 at around 10:00 AM that the necessary funds were
deposited, which unfortunately was too late to prevent the dishonour of the
checks.

For deposit only with Bank of the Philippine Islands, to credit of account of
San Carlos Milling Co., Ltd.
San Carlos Milling Co. Ltd V. BPI (1993)G.R. No. L-37467 December 11,

For Agent

1993

FACTS:

By (Sgd.) NEWLAND BALDWIN

San Carlos had frequently withdrawn currency for shipment to its mill
but never in so large an amount, and never under the sole

San Carlos Milling Co. Ltd. (San Carlos) was in the hands of Alfred

supervision of Dolores

D. Cooper, its agent under general power of attorney with authority of

substitution

Before delivering the money, the bank asked Dolores for P1 to cover
the cost of packing the money, and he left the bank and shortly

The principal employee in the Manila office was Joseph L. Wilson, to

afterwards returned with another check for P1, purporting to be

whom had been given a general power of attorney but without power

signed by Newland Baldwin

of substitution.

1926: Cooper, desiring to go on vacation, gave a general power of

the crime was discovered and San Carlos filed against the BPI and
China Bank (after ammendment complaint)

attorney to Newland Baldwin and at the same time revoked the

power of Wilson relative to the dealings with BPI

China Bank: as the prior endorsement had in law been

guaranteed by the BPI, they are absolved even if the

Wilson, conspiring together with Alfredo Dolores, a messenger-clerk

endorsement of Newland Baldwin on the check was a

in San Carlos' Manila office, sent a cable gram in code to the

forgery

company in Honolulu requesting a telegraphic transfer to the China

Banking Corporation (China Bank) of Manila of $100,00.

BPI: guilty of no negligence, loss was due to the dishonesty

of San Carlos employees and the negligence of San Carlos

The money was transferred by cable, and upon its receipt China

general agent

Bank sent an exchange contract to San Carlos offering the sum of

P201K, which was then the current rate of exchange.

RTC: BPI in GF and San Carlos could not recover

September 28, 1927: A manager's check on the China Banking

Corporation for P201K payable to San Carlos Milling Company or

ISSUE: W/N BPI was bound to inspect the checks and shall therefore be

order was receipted for by Dolores

liable in case of forgery

deposited with the BPI having a fake endorsement

(Baldwin forged as drawer)

HELD: YES. judgment absolving the Bank of the Philippine Islands must
therefore be reversed

duty was upon the BPI, and the China Banking Corporation was not
bound to inspect and verify all endorsements of the check, even if

then was able to get the money. This eventually came to the knowledge of
plaintiff who filed an action against China Banking and BPI. The trial court
dismissed the case.

some of them were also those of depositors in that bank

HELD:

A bank is bound to know the signatures of its customers; and if it

pays a forged check, it must be considered as making the payment
out of its own funds, and cannot ordinarily charge the amount so paid
to the account of the depositor whose name was forged.

under section 23 of the Negotiable Instruments Law they are not a

charge against San Carlos nor are the checks of any value to the
BPI.

proximate cause of loss was due to the negligence of the

Bank of the Philippine Islands in honoring and cashing the
two forged checks
SAN CARLOS MILLING V. BPI
59 PHIL 59

(FORGED SIGNATURE OF DRAWER)

FACTS:
Wilson, a principal employee of petitioner, together with Wilson, a
messenger-clerk, conspired to withdraw cash from the petitioners account
through forgery of a check, in the name of the agent authorized to sign the
check.
While the authorized agent of petitioner was on vacation, Wilson and
Dolores sent a cablegram to China Banking for the transfer of
$100,000. On the contract, the name of Baldwin was forged and it
was indicated therein that a certified check be issued. Thereafter, this was
received and
deposited with the BPI. Upon deposit, an indorsement in the name of
Baldwin was placed. The bank account was credited. Later, a letter was
sent to the bank, purporting to be signed by Baldwin asking that it be
withdrawn. This was done in supervision of Dolores. Dolores and Wilson

A bank is bound to know the signatures of its customers and if it pays a

forged check, it must be considered as making the payment out of its own
funds, and cannot ordinarily charge the amount so paid to the account of the
depositor whose name was forged.
There is no act of the plaintiff that led the bank astray. If it was in fact lulled
into the false sense of security, it was by the effrontery of Dolores, the
messenger to whom it entrusted this large sum of money.
The proximate cause of the loss must therefore be due to the negligence of
the bank in honoring and cashing the two forged checks.

The Petition has no merit.

ASSOCIATED BANK (Now WESTMONT BANK) vs. TAN

G.R. No. 156940

December 14, 2004

FACTS:
Respondent Tan is a businessman and a regular depositor-creditor of
the petitioner, Associated Bank. Sometime in September 1990, he deposited
a postdated check with the petitioner in the amount of P101,000 issued to
him by a certain Willy Cheng from Tarlac. The check was duly entered in his
bank record.
Allegedly, upon advice and instruction of petitioner that
theP101,000 check was already cleared and backed up by sufficient funds,
respondent, on the same date, withdrew the sum of P240,000 from his
account leaving a balance of P57,793.45. A day after, TAN deposited the
amount of P50,000 making his existing balance in the amount
of P107,793.45, because he has issued several checks to his business
partners. However, his suppliers and business partners went back to him
alleging that the checks he issued bounced for insufficiency of funds.
Thereafter, respondent informed petitioner to take positive steps regarding
the matter for he has adequate and sufficient funds to pay the amount of the
subject checks. Nonetheless, petitioner did not bother nor offer any apology
regarding the incident. Respondent Tan filed a Complaint for Damages on
December 19, 1990, with the RTC against petitioner. The trial court rendered
a decision in favor of respondent and ordered petitioner to pay damages and
attorneys fees. Appellate court affirmed the lower courts decision. CA ruled
that the bank should not have authorized the withdrawal of the value of the
deposited check prior to its clearing. Petitioner filed a Petition for Review
before the Supreme Court.
ISSUE:
W/N petitioner has the right to debit the amount of the dishonored check from
the account of respondent on the ground that the check was withdrawn by
respondent prior to its clearing
HELD:

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. Banks are
granted by law the right to debit the value of a dishonored check from a
depositors account but they must do so with the highest degree of care, so
as not to prejudice the depositor unduly. 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 this case,
petitioner did not treat respondents account with the highest degree of care.
Respondent withdrew his money upon the advice of petitioner that his money
was already cleared. It is petitioners premature authorization of the
withdrawal that caused the respondents account balance to fall to insufficient
levels, and the subsequent dishonor of his own checks for lack of funds.

BANK OF THE PHILIPPINE ISLANDS vs. ROXAS

Gr. No. 157833