G.R. No.

160260 October 24, 2012

WESTMONT BANK, formerly ASSOCIATED BANK now UNITED OVERSEAS BANK PHILIPPINES, Petitioner,
vs.
MYRNA DELA ROSA-RAMOS, DOMINGO TAN and WILLIAM CO, Respondents.

FACTS:

1. DELA ROSA MET DOMINGO TAN (FINANCIER-DEBTOR RELATIONSHIP) - From 1986, respondent Myrna Dela Rosa-Ramos (Dela Rosa-Ramos)
maintained a checking/current account with the United Overseas Bank Philippines 3 (Bank) at the latters Sto. Cristo Branch, Binondo, Manila. In her
several transactions with the Bank, Dela Rosa-Ramos got acquainted with its Signature Verifier, respondent Domingo Tan (Tan).

In the course of their acquaintance, Tan offered Dela Rosa-Ramos a "special arrangement" wherein he would finance or place sufficient funds in her
checking/current account whenever there would be an overdraft or when the amount of said checks would exceed the balance of her current account. It
was their arrangement to make sure that the checks she would issue would not be dishonored. Tan offered the service for a fee of P50.00 a day for
every P40,000.00 he would finance. This financier-debtor relationship started in 1987 and lasted until1998 (11 YEARS).

2. DELA ROSA ISSUED CHECK AND DELIVER IT TO TAN BOUNCED TAN DEPOSITED IT TO WILLIAM COS ACCOUNT -To guarantee
payment for the funding, Dela Rosa-Ramos issued postdated checks covering the principal amount plus interest as computed by Tan on specified date.
There were also times when she just paid in cash. Relative to their said agreement, Dela Rosa-Ramos issued and delivered to Tan the following
Associated Bank checks8 drawn against her current account and payable to "cash,"

CHECK NO. CURRENT ACCT. DATE AMOUNT

467322 (Exh. A) 1008-08341-0 May 8, 1988 PhP200,000.00

510290 (Exh. C) 1008-08734-3 June 10, 1988 232,500.00

613307 (Exh. E) 1008-08734-3 June 14, 1988 200,000.00

613306 (Exh. D) 1008-08734-3 July 4, 1988 290,595.00

According to Dela Rosa-Ramos, Check No. 467322 for P200,000.00 was a "stale" guarantee check. The check was originally dated August 28, 1987
but was altered to make it appear that it was dated May 8, 1988. Tan then deposited the check in the account of the other respondent, William Co
(Co), despite the obvious superimposed date. As a result, the amount of P200,00.00 or the value indicated in the check was eventually
charged against her checking account.

A. Check No. 510290 for P232,500.00, dated June 10, 1988, was issued in payment of cigarettes that Dela Rosa-Ramos bought from Co. This
check allegedly "bounced" so she replaced it with her "good customers check and cash" and gave it to Tan. The latter, however, did not
return the bounced check to her. Instead, he "redeposited" it in Cos account.
B. Check No. 613307 for P200,000.00, was another guarantee check that was also "undated." Dela Rosa-Ramos claimed that it was Tan who
placed the date "June 14, 1988." For this check, an order to stop payment was issued because of insufficient funds. This check was not
returned to her either and, instead, it was "redeposited" in Cos account.
C. Check Nos. 510290 and 613307 were both dishonored for insufficient funds.

3. DELA ROSA CONFRONTED CO BLACKMAILED HER - When Dela Rosa-Ramos got the opportunity to confront Co regarding their deposit of the
two checks, the latter disclosed that her two checks were deposited in his account to cover for his P432,500.00 cash which was taken by Tan. Then,
with a threat to expose her relationship with a married man, Tan and Co were able to coerce her to replace the two above-mentioned checks
with Check No. 59864812 in the amount of P432,500.00 which was equivalent to the total amount of the two dishonored checks.

D. Check No. 613306 for P290,595.00, was also undated when delivered to Tan who later placed the date, July 4, 1988. Dela Rosa-Ramos pointed out
that as of July 5, 1988, her checking account had P121,989.66 which was insufficient to answer for the value of said check. A check of a certain Lee
See Bin in the amount of P170,000.00 was, however, deposited in her checking account. As a result, Tan was able to encash the check and
withdrew her P121,989.66 balance. Later, Dela Rosa-Ramos found out that the Lee See Bin Check was not funded because the Banks bookkeeper
demanded from her the return of the deficiency.

4. DELA ROSA FILED COMPLAINT AGAINST TAN (AND EVENTUALLY TOGETHER WITH CO) - Claiming that the four checks mentioned were
deposited by Tan without her consent, Dela Rosa-Ramos instituted a complaint against Tan and the Bank before the RTC seeking, among other things,
to recover from the Bank the sum of 754,689.66 representing the total amount charged or withdrawn from her current account. Dela Rosa-
Ramos subsequently amended her complaint to include Co.

5. TRIAL COURT RULED IN FAVOR OF DELA ROSA AND ORDERED TAN AND CO TO PAY HER P754,689.66, representing plaintiffs lost deposit,
plus interest. CA AFFIRMED THE TC DECISION.

1
ISSUE: WON THE BANK IS MADE LIABLE FROM THE FRAUD OF THEIR EMPLOYEE DOMINGO TAN

RULING:

1. FIDUCIARY NATURE OF BANKS -- It must be remembered that public interest is intimately carved into the banking industry because the primordial
concern here is the trust and confidence of the public. This fiduciary nature of every banks relationship with its clients/depositors impels it to
exercise the highest degree of care, definitely more than that of a reasonable man or a good father of a family. It is, therefore, required to treat
the accounts and deposits of these individuals with meticulous care.

The banking system has become an indispensable institution in the modern world and plays a vital role in the economic life of every civilized society
banks have attained a ubiquitous presence among the people, who have come to regard them with respect and even gratitude and most of all,
confidence, and it is for this reason, banks should guard against injury attributable to negligence or bad faith on its part.

Considering that banks can only act through their officers and employees, the fiduciary obligation laid down for these institutions necessarily
extends to their employees. Thus, banks must ensure that their employees observe the same high level of integrity and performance for it is
only through this that banks may meet and comply with their own fiduciary duty. It has been repeatedly held that "a banks liability as an obligor is
not merely vicarious, but primary" since they are expected to observe an equally high degree of diligence, not only in the selection, but also in the
supervision of its employees. Thus, even if it is their employees who are negligent, the banks responsibility to its client remains paramount making its
liability to the same to be a direct one.

2. BANK FAILED TO SAFEGUARD AND PROTECT MONEY DEPOSITED BY DELA ROSA -- As found by both the RTC and the CA, Ramos was
defrauded and she lost her money because of the negligence attributable to the Bank and its employees. Indeed, it was the employees who
directly dealt with Dela Rosa-Ramos, but the Bank cannot distance itself from them. That they were the ones who gained at the expense of Dela
Rosa-Ramos will not excuse it of its fundamental responsibility to her.

3. BANK IS NEGLIGENT SINCE TAN WAS THEIR EMPLOYEE BANK IS LIABLE FOR DAMAGES -- It could not possibly be committed by
defendant Tan alone considering the fact that the processing of the questioned checks would pass the hands of various bank officers who positively
identified their initials therein. Having a number of employees commit mistake or gross negligence at the same situation is so puzzling and obviates the
appellant banks laxity in hiring and supervising its employees. Hence, this Court is of the opinion that the appellant bank should be held liable for the
damages suffered by the plaintiff-appellee in the case at bench.

4. AMOUNT OF LIABILITY OF THE BANK -

a. FIRST CHECK - Banks Argument As regards the 1ST Check, Dela Rosa- Ramos acquiesced to the change of the date in the said check. It argues
that her continued acts of dealing and transacting with the Bank like subsequently issuing checks despite her experience with this check only shows her
acquiescence which is tantamount to giving her consent.

Courts Answer - Obviously, the Bank has not taken to heart its fiduciary responsibility to its clients. Rather than ask and wonder why there were indeed
subsequent transactions, the more paramount issue is why the Bank through its several competent employees and officers, did not stop,
double check and ascertain the genuineness of the date of the check which displayed an obvious alteration. This failure on the part of the
Bank makes it liable for that loss.

Bank is not faultless in the irregularities of its signature-verifier. In the first place, it should have readily rejected the obviously altered plaintiffs
P200,000.00-check, thus, avoid its unwarranted deposit in defendant-Cos account and its corollary loss from plaintiffs deposit, had its other
employees, even excepting TAN, performed their duties efficiently and well. RTC

A careful scrutiny of the evidence shows that indeed the date of Check No. 467322 had been materially altered from August 1987 to May 8, 1988 in
accordance with Section 125 of the Negotiable Instruments Law. It is worthy to take note of the fact that such alteration was not countersigned by the
drawer to make it a valid correction of its date as consented by its drawer as the standard operating procedure of the appellant bank in such
situation as admitted by its bank manager. - CA

b. SECOND CHECK - Banks Argument: As regards to the 2nd check, the CA erred in considering that the said check was debited against the account of
Dela Rosa-Ramos when the fact was that it was dishonored for having been drawn against insufficient funds. This means that the check was not
charged against her account. -- In this regard, the Court agrees with the Bank. Indeed, the admission made by Dela Rosa-Ramos that she had to
issue a replacement check for Check No. 613307 as well as for Check No. 510290 only proves that these checks were never paid and charged
or debited against her account. The replacement check is, of course, a totally different matter and is not covered as an issue in this case.

c. THIRD CHECK - Lastly, with respect to Check No. 613306, the Court agrees with the CA when it found that no manifest irregularity exists as shown
from the Statement of Accounts for the month of July 1988 that as of July 4, 1988, the plaintiff-appellee had an outstanding deposit of P121,989.66. It
was also cleared therein that, on July 5, 1988, P170,000.00, through the check of Lee See Bin with the same UNITED OVERSEAS BANK-Sto. Cristo
Branch, was deposited on the account of the plaintiff-appellee and on the very same day Check No. 613306 in the amount of P290,595.00 was
approved and processed and its equivalent was debited from the account of the plaintiff-appellee since the check is an on-us check which is deposited
to an account of another with the same branch as that of the drawer of the said check, and is considered as good as cash if funded, hence, may be
withdrawn on the very same day it was deposited.Thus, there was no irregularity. The burden of proof was on Dela Rosa-Ramos to establish that Lee
See Bin was fictitious and that the money which purportedly came from him was merely simulated. She unfortunately failed to discharge this burden.

THUS the Bank should only be made to answer the value of Check No. 467322 in the amount of P200,000.00 plus the legal rate of interest. This
must be further tempered down for there is no denying that it was Dela Rosa-Ramos who exposed herself to risk when she entered into that
"special arrangement" with Tan. She is nevertheless equally guilty of contributory negligence. It has been held that where the bank and a

2
depositor are equally negligent, they should equally suffer the loss. The two must both bear the consequences of their mistakes. Thus, the Bank should
only pay 50% of the actual damages awarded while Dela Rosa-Ramos should have to shoulder the remaining 50%. The Bank can seek
compensation from Tan since he was primarily responsible for the damages.

3
 G.R. No. 165339 August 23, 2010
EQUITABLE PCI BANK, Petitioner,
vs.
ARCELITO B. TAN, Respondent.

FACTS:

1. Respondent Arcelito B.Tan maintained a current and savings account with Philippine Commercial International Bank (PCIB), now
petitioner Equitable PCI Bank.
2. Tan issued postdated PCIB Check No. 275100 in the amount of P34,588.72 in favor of Sulpicio Lines, Inc. As of May 14, 1992, respondent's
balance with petitioner was P35,147.59.
3. On May 14, 1992, Sulpicio Lines, Inc. deposited the aforesaid check to its account with Solid Bank, Carbon Branch, Cebu City.
4. After clearing, the amount of the check was immediately debited by petitioner from respondent's account thereby leaving him with a balance of
only P558.87.
5. Tan issued three checks from PCIB Check No. 275080 dated May 9, 1992, payable to Agusan del Sur Electric Cooperative Inc.
(ASELCO) for the amount of P6,427.68; PCIB Check No. 275097 dated May 10, 1992 payable to Agusan del Norte Electric Cooperative Inc.,
(ANECO) for the amount of P6,472.01; and PCIB Check No. 314104 dated May 16, 1992 payable in cash for the amount of P10,000.00.
6. When presented for payment, PCIB Check Nos. 275080, 275097 and 314014 were dishonored for being drawn against insufficient funds.
7. As a result of the dishonor of Check Nos. 275080 and 275097 which were payable to ASELCO and ANECO, respectively, the electric power
supply for the two mini-sawmills owned and operated by respondent, located in Talacogon, Agusan del Sur; and in Golden Ribbon, Butuan
City, was cut off and eventually restored.
8. Tan filed a complaint against petitioner, praying for payment of losses consisting of unrealized income in the amount of P1,864,500.00.
He also prayed for payment of moral damages, exemplary damages, attorney's fees and litigation expenses.

Tan Claims:

1. That Check No. 275100 was a postdated check in payment of Bills of Lading Nos. 15, 16 and 17, and that his account with petitioner would
have had sufficient funds to cover payment of the three other checks were it not for the negligence of petitioner in immediately debiting
from his account Check No. 275100, in the amount of P34,588.72, even as the said check was postdated to May 30, 1992. As a
consequence of petitioner's error, which brought about the dishonor of the two checks paid to ASELCO and ANECO, the electric supply to his
two mini-sawmills was cut off, the business operations thereof were stopped, and purchase orders were not duly served causing tremendous
losses to him.

Banks Defense:

1. Denied that the questioned check was postdated May 30, 1992 and claimed that it was a current check dated May 3, 1992.
2. It alleged further that the disconnection of the electric supply to respondent's sawmills was not due to the dishonor of the checks, but for other
reasons not attributable to the bank.

ISSUE: WON the date of PCIB Check No. 275100 is May 3, 1992 as contended by the defendant, or May 30, 1992 as claimed by the plaintiff.

RULING:

The date of the check is written as follows 5/3/0/92. From the manner by which the date of the check is written, the Court cannot really make a
pronouncement as to whether the true date of the check is May 3 or May 30, 1992, without inquiring into the background facts leading to the issuance of
said check.

1. INCONSISTENCIES IN THE ALLEGATIONS OF TAN -- According to the plaintiff, the check was issued to Sulpicio Lines in payment of bill of
lading nos. 15, 16 and 17.
a. An examination of bill of lading no. 15, however, shows that the same was issued, not in favor of plaintiff but in favor of Coca Cola
Bottlers Philippines, Inc. Bill of Lading No. 16 is issued in favor of Suson Lumber and not to plaintiff. Likewise, Bill of Lading No. 17 shows
that it was issued to Jazz Cola and not to plaintiff. Furthermore, the receipt for the payment of the freight for the shipments reflected in these
three bills of lading shows that the freight was paid by Coca Cola Bottlers Philippines, Inc. and not by plaintiff.
b. The said receipt shows that it was paid in cash and not by check.

SUPREME COURT:

From the foregoing, the evidence on record does not support the claim of the plaintiff that Check No. 275100 was issued in payment of bills of
lading nos. 15, 16 and 17. Hence, the conclusion of the Court is that the date of the check was May 3, 1992 and not May 30, 1992.13

RTC Ruling: The RTC concluded that the check was dated May 3, 1992 and not May 30, 1992, because the same check was not issued to pay
for Bills of Lading Nos. 15, 16 and 17, as respondent claims. The trial court's conclusion is preposterous and illogical. The purpose for the
issuance of the check has no logical connection with the date of the check. Besides, the trial court need not look into the purpose for which the
check was issued. A reading of Check No. 27510014 would readily show that it was dated May 30, 1992.

CA Ruling: We agree with TAN that appellee Bank apparently erred in misappreciating the date of Check No. 275100. We have carefully
examined the check in question (Exh. DDDD) and we are convinced that it was indeed postdated to May 30, 1992 and not May 3, 1992 as urged by
appellee. The date written on the check clearly appears as "5/30/1992" (Exh. DDDD-4). The first bar (/) which separates the numbers "5" and "30" and
the second bar (/) which further separates the number "30" from the year 1992 appear to have been done in heavy, well-defined and bold strokes,

4
clearly indicating the date of the check as "5/30/1992" which obviously means May 30, 1992. On the other hand, the alleged bar (/) which appellee
points out as allegedly separating the numbers "3" and "0," thereby leading it to read the date as May 3, 1992, is not actually a bar or a slant
but appears to be more of an unintentional marking or line done with a very light stroke. The presence of the figure "0" after the number "3" is
quite significant. In fact, a close examination thereof would unerringly show that the said number zero or "0" is connected to the preceeding number "3."
In other words, the drawer of the check wrote the figures "30" in one continuous stroke, thereby contradicting appellees theory that the
number "3" is separated from the figure "0" by a bar. Besides, appellees theory that the date of the check is May 3, 1992 is clearly untenable
considering the presence of the figure "0" after "3" and another bar before the year 1992. And if we were to accept appellees theory that what we find to
be an unintentional mark or line between the figures "3" and "0" is a bar separating the two numbers, the date of the check would then appear as
"5/3/0/1992, which is simply absurd. Hence, we cannot go along with appellees theory which will lead us to an absurd result. It is therefore our
conclusion that the check was postdated to May 30, 1992 and appellee Bank or its personnel erred in debiting the amount of the check from appellants
account even before the checks due date. Undoubtedly, had not appellee bank prematurely debited the amount of the check from appellants account
before its due date, the two other checks (Exhs. LLLL and GGGG) successively dated May 9, 1992 and May 16, 1992 which were paid by appellant to
ASELCO and ANECO, respectively, would not have been dishonored and the said payees would not have disconnected their supply of electric power to
appellants sawmills, and the latter would not have suffered losses.

2. BANK FAILED TO EXERCISE THE DEGREE OF DILIGENCE REQUIRED FROM IT -- The law imposes on banks high standards in view of the
fiduciary nature of banking. Section 2 of R.A. 879115decrees:

Declaration of Policy. The State recognizes the vital role of banks in providing an environment conducive to the sustained development of the national
economy and the fiduciary nature of banking that requires high standards of integrity and performance. In furtherance thereof, the State shall promote
and maintain a stable and efficient banking and financial system that is globally competitive, dynamic and responsive to the demands of a developing
economy.

Although R.A. 8791 took effect only in the year 2000, the Court had already imposed on banks the same high standard of diligence required
under R.A. 8791 at the time of the untimely debiting of respondent's account by petitioner in May 1992. In Simex International (Manila), Inc. v.
Court of Appeals,16 which was decided in 1990, the Court held 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.

The diligence required of banks, therefore, is more than that of a good father of a family. In every case, 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. From the
foregoing, it is clear that petitioner bank did not exercise the degree of diligence that it ought to have exercised in dealing with its client.

3. BANKS NEGLIGENCE WAS THE PROXIMATE CAUSE OF THE LOSS SUFFERED BY TAN -- BANK argued that it was Tans way of writing which
is the proximate cause of the dishonor of the three other checks. Contrary to the Banks view, the Court finds that its (BANKs) negligence is the
proximate cause of respondents loss.

Proximate cause is that cause which, in a natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and
without which the result would not have occurred. The proximate cause of the loss is not respondent's manner of writing the date of the check, as
it was very clear that he intended Check No. 275100 to be dated May 30, 1992 and not May 3, 1992. The proximate cause is petitioners own
negligence in debiting the account of the respondent prior to the date as appearing in the check, which resulted in the subsequent dishonor
of several checks issued by the respondent and the disconnection by ASELCO and ANECO of his electric supply.

The bank on which the check is drawn, known as the drawee bank, is under strict liability to pay to the order of the payee in accordance with the
drawers instructions as reflected on the face and by the terms of the check. 20 Thus, payment made before the date specified by the drawer is clearly
against the drawee bank's duty to its client.

BANKs Argument: Tan caused confusion on the true date of the check by writing the date of the check as 5/3/0/92.

COURT: If, indeed, petitioner was confused on whether the check was dated May 3 or May 30 because of the "/" which allegedly separated the number
"3" from the "0," petitioner should have required respondent drawer to countersign the said "/" in order to ascertain the true intent of the
drawer before honoring the check. As a matter of practice, bank tellers would not receive nor honor such checks which they believe to be unclear,
without the counter-signature of its drawer. Petitioner should have exercised the highest degree of diligence required of it by ascertaining from
the respondent the accuracy of the entries therein, in order to settle the confusion, instead of proceeding to honor and receive the check.

4. BANK BRANCH MANAGERS LETTER ACKNOWLEDGED TANS CHECK TO ANECO WAS SUFFICIENTLY FUNDED - A letter of the Banks
Branch Manager, expressly acknowledged that Check No. 275097 (Exh. GGGG) which appellant paid to ANECO "was sufficiently funded at the time it
was negotiated," but it was dishonored as a "result of an earlier negotiation to PCIB-Mandaue Branch through a deposit made on May 14, 1992 with
SOLIDBANK xxx xxx xxx of a postdated check which xxx xxx passed undetected." He further admitted that "Mr. Arcelito B. Tan was in no way
responsible for the dishonor of said PCIB Check No. 275097." Needless to state, since appellee's Manager has cleared appellant of any fault in the
dishonor of the ANECO check, it [necessarily] follows that responsibility therefor or fault for the dishonor of the check should fall on appellee
bank. Appellee's attempt to extricate itself from its inadvertence must therefore fail in the face of its Manager's explicit acknowledgment of responsibility
for the inadvertent dishonor of the ANECO check.23

5. ISSUE ON DAMAGES -- Tans claim for damages was based on purchase orders from various customers which were allegedly not met due to the
disruption of the operation of his sawmills. However, aside from the purchase orders and his testimony, respondent failed to present competent proof
on the specific amount of actual damages he suffered during the entire period his power was cut off.

5
Moreover, the purchase orders and job orders reveal that the orders were due for delivery prior to the period when the power supply of respondent's two
sawmills was cut off. No Actual Damages. Respondent is entitled to temperate damages. It is apparent that respondent suffered pecuniary loss. The
negligence of petitioner triggered the disconnection of his electrical supply, which temporarily halted his business operations and the consequent loss of
business opportunity. However, due to the insufficiency of evidence before Us, We cannot place its amount with certainty. The unexpected cutting off of
respondent's electricity, which resulted in the stoppage of his business operations, had caused him to suffer humiliation, mental anguish and serious
anxiety. Bank also failed to exercise degree of diligence required, the award of exemplary damages in the amount of P50,000.00 is in order. The Court
affirms the appellate courts award of attorneys fees in the amount of P30,000.00.

6
 G.R. No. 141835 February 4, 2009

CENTRAL BANK OF THE PHILIPPINES, Petitioner,

vs.
CITYTRUST BANKING CORPORATION, Respondent.

FACTS:

1. Pursuant to Republic Act No. 625, the old Central Bank Law, respondent Citytrust Banking Corporation (Citytrust), formerly Feati Bank,
maintained a demand deposit account with petitioner Central Bank of the Philippines, now Bangko Sentral ng Pilipinas. As required,
Citytrust furnished petitioner with the names and corresponding signatures of five of its officers authorized to sign checks and serve as
drawers and indorsers for its account. And it provided petitioner with the list and corresponding signatures of its roving tellers authorized to
withdraw, sign receipts and perform other transactions on its behalf. Petitioner later issued security identification cards to the roving
tellers one of whom was "Rounceval Flores" (Flores).
2. Flores presented for payment to petitioners Senior Teller Iluminada dela Cruz (Iluminada) two Citytrust checks of even date, payable to
Citytrust, one in the amount of P850,000 and the other in the amount of P900,000, both of which were signed and indorsed by Citytrusts
authorized signatory-drawers.
3. After the checks were certified by petitioners Accounting Department, Iluminada verified them, prepared the cash transfer slip on which she
affixed her signature, stamped the checks with the notation "Received Payment" and asked Flores to, as he did, sign on the space above such
notation. Instead of signing his name, however, Flores signed as "Rosauro C. Cayabyab" a fact Iluminada failed to notice.
4. Iluminada thereupon sent the cash transfer slip and checks to petitioners Cash Department where an officer verified and compared the
drawers signatures on the checks against their specimen signatures provided by Citytrust, and finding the same in order, approved the cash
transfer slip and paid the corresponding amounts to Flores. Petitioner then debited the amount of the checks totaling P1,750,000 from
Citytrusts demand deposit account.
5. More than a year and nine months later, Citytrust, by letter dated April 23, 1979, alleging that the checks were already cancelled because they
were stolen, demanded petitioner to restore the amounts covered thereby to its demand deposit account. Petitioner did not heed the demand,
however.
6. Citytrust later filed a complaint for ESTAFA, with reservation on the filing of a separate civil action, against Flores. Flores was convicted.
7. Citytrust thereafter filed a complaint for recovery of sum of money with damages against petitioner which it alleged erred in encashing the
checks and in charging the proceeds thereof to its account, despite the lack of authority of "Rosauro C. Cayabyab."

ISSUE: WON BANK IS LIABLE - YES

RULING:

By Decision1 of November 13, 1991, Branch 32 of the RTC of Manila found both Citytrust and petitioner negligent and accordingly held them equally
liable for the loss. Both parties appealed to the Court of Appeals which, by Decision 2 dated July 16, 1999, affirmed the trial courts decision, it holding
that both parties contributed equally to the fraudulent encashment of the checks, hence, they should equally share the loss in consonance with Article
21793 vis a vis Article 11724 of the Civil Code.

In arriving at its Decision, the appellate court noted that while "Citytrust failed to take adequate precautionary measures to prevent the fraudulent
encashment of its checks," petitioner was not entirely blame-free in light of its failure to verify the signature of Citytrusts agent authorized to receive
payment.

Brushing aside petitioners contention that it cannot be sued, the appellate court held that petitioners Charter specifically clothes it with the power to sue
and be sued.

Also brushing aside petitioners assertion that Citytrusts reservation of the filing of a separate civil action against Flores precluded Citytrust from filing
the civil action against it, the appellate court held that the "action for the recovery of sum of money is separate and distinct and is grounded on a
separate cause of action from that of the criminal case for estafa."

CENTRAL BANKS ARGUMENT:

1. Flores having been an authorized roving teller, Citytrust is bound by his acts.
2. It was not negligent in releasing the proceeds of the checks to Flores, the failure of its teller to properly verify his signature notwithstanding,
petitioner contends that verification could be dispensed with, Flores having been known to be an authorized roving teller of Citytrust who had
had numerous transactions with it (petitioner) on its (Citytrusts) behalf for five years prior to the questioned transaction.
3. Attributing negligence solely to Citytrust, petitioner harps on Citytrusts allowing Flores to steal the checks and failing to timely cancel them;
allowing Flores to wear the issued identification card issued by it (petitioner); failing to report Flores absence from work on the day of the
incident; and failing to explain the circumstances surrounding the supposed theft and cancellation of the checks.
4. Drawing attention to Citytrusts considerable delay in demanding the restoration of the proceeds of the checks, petitioners argue that,
assuming arguendo that its teller was negligent, Citytrusts negligence, which preceded that committed by the teller, was the proximate cause
of the loss or fraud.

SUPREME COURT:

1. Petitioners teller Iluminada did not verify Flores signature on the flimsy excuse that Flores had had previous transactions with it for a number of
years. That circumstance did not excuse the teller from focusing attention to or at least glancing at Flores as he was signing, and to satisfy

7
herself that the signature he had just affixed matched that of his specimen signature. Had she done that, she would have readily been put on
notice that Flores was affixing, not his but a fictitious signature.

Given that petitioner is the government body mandated to supervise and regulate banking and other financial institutions: The law imposes on banks
high standards in view of the fiduciary nature of banking. Section 2 of Republic Act No. 8791 ("RA 8791"), which took effect on 13 June 2000, declares
that the State recognizes the "fiduciary nature of banking that requires high standards of integrity and performance." This new provision in the general
banking law, introduced in 2000, is a statutory affirmation of Supreme Court decisions, starting with the 1990 case of Simex International v. Court of
Appeals, holding that "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."

This fiduciary relationship means that the banks obligation to observe "high standards of integrity and performance" is deemed written into every deposit
agreement between a bank and its depositor. The fiduciary nature of banking requires banks to assume a degree of diligence higher than that of a good
father of a family. Article 1172 of the Civil Code states that the degree of diligence required of an obligor is that prescribed by law or contract, and absent
such stipulation then the diligence of a good father of a family. Section 2 of RA 8791 prescribes the statutory diligence required from banks that banks
must observe "high standards of integrity and performance" in servicing their depositors. Although RA 8791 took effect almost nine years after the
unauthorized withdrawal of the P300,000 from L.C. Diazs savings account, jurisprudence at the time of the withdrawal already imposed on banks the
same high standard of diligence required under RA No. 8791.

2. Citytrusts failure to timely examine its account, cancel the checks and notify petitioner of their alleged loss/theft should mitigate
petitioners liability. Citytrusts negligence was only contributory. The immediate and proximate cause of the injury being the defendants lack
of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be awarded. For had Citytrust timely discovered the
loss/theft and/or subsequent encashment, their proceeds or part thereof could have been recovered.

8
 G.R. No. 108555 December 20, 1994
RAMON TAN, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and RIZAL COMMERCIAL BANKING CORPORATION, respondents.

FACTS:

Petitioner Ramon Tan, a trader-businessman and community leader in Puerto Princesa, had maintained since 1976 an account with RCBC Binondo
branch.

1. On March 11, 1988, to avoid carrying cash while enroute to Manila, he secured a Cashier's Check No. L 406000126 from the Philippine
Commercial Industrial Bank (PCIB), Puerto Princesa branch, in the amount of Thirty Thousand (P30,000.00) Pesos, payable to his order.
2. He deposited the check in his account with RCBC Binondo on March 15.
3. On the same day, RCBC erroneously sent the same cashier's check for clearing to the Central Bank which was returned for having
been "missent" or "misrouted."
4. The next day, March 16, RCBC debited the amount covered by the same cashier's check from the account of the petitioner. Respondent bank
at this time had not informed the petitioner of its action which the latter claims he learned of only 42 days after, specifically on March 16, when
he received the bank's debit memo.
5. Relying on the common knowledge that a cashier's check was as good as cash, that the usual banking practice that local checks are cleared
within three (3) working days and regional checks within seven (7) working days, and the fact that the cashier's check was accepted, petitioner
issued two (2) personal checks both dated March 18.
6. Check No. 040719 in the name of Go Lac for Five Thousand Five Hundred (P5,5000.00) Pesos was presented on April 25, 3 more than 30
days from petitioner's deposit date of the cashier's check. Check
No. 040718 in the name of MS Development Trading Corporation for Six Thousand Fifty-Three Pesos and Seventy Centavos (P6,053.70)
was returned twice on March 24, nine (9) days from his deposit date and again on April 26, twenty-two days after the day the cashier's check
was deposited for insufficiency of funds. (THE CHECK BOUNCED)
7. Petitioner, alleging to have suffered humiliation and loss of face in the business sector due to the bounced checks, filed a complaint against
RCBC for damages in the Regional Trial Court of Palawan and Puerto Princesa, Branch 47, docketed as Civil Case No. 2101. 5

Petitioners Averments:

1. First, that it was RCBC's responsibility to call his attention there and then that he had erroneously filled the wrong deposit slip at the time
he deposited the cashier's check with the respondent bank's teller and it was negligence on RCBC's part not to have done so;
2. Second, that RCBC had been remiss in the performance of its obligation to the petitioner when it "missent" the cashier's check to the
Central Bank knowing, as it should, that the source of the check, PCIB, Puerto Princesa Branch, is not included in the areas required to be
cleared by the Central Bank, a fact known to the banking world and surely to the respondent bank; 7
3. Third, that RCBC upon knowing of its error in "missending" the cashier's check to the Central Bank did not attempt to rectify its
"misclearing" error by clearing it seasonably with PCIB, Puerto Princesa, thru its own RCBC Puerto Princesa Branch with whom it had
direct radio contact;
4. Fourth, that as an old client, with twelve (12) years of good standing then, RCBC should have given him more consideration by exerting
greater diligence in clearing the check with PCIB, Puerto Princesa, to protect its client's interest;
5. Fifth, that RCBC failed to inform petitioner promptly that the check had not been cleared, despite its debiting without delay the amount
covered by the check from the account of the petitioner and hastily charging the latter service fees immediately after the return of the "missent
checks"; 10 and
6. Finally, that the bounced checks resulting from RCBC's "misclearing" had put in doubt his credibility among his business peers and
sullied his reputation as a community leader which he had painstakingly cultivated for years. His community standing as a business-
socio-civic leader was a source of pride for him in his old age of 70. He cited being Chairman of Palawan Boy Scout Council, 2-term President
of the Rotary Club of Puerto Princesa, member of Palawan Chamber of Commerce and Industry, member of the Monitoring Team of the
Palawan Integrated Area Development Project, member of Lion's Club, Philippine Rifle Pistol Association and the Saturday Health Club to
justify his claim for moral damages. 11

RCBCs Defense:

1. RCBC disowning any negligence, put the blame for the "misrouting" on the petitioner for using the wrong check deposit slip. It insisted
that the misuse of a local check deposit slip, instead of a regional check deposit slip, triggered the "misrouting" by RCBC of the cashier's
check to the Central Bank and it was petitioner's negligent "misuse" of a local deposit slip which was the proximate cause of the "misrouting,"
thus he should bear the consequence.
2. RCBC alleged that it complied strictly with accepted banking practice when it debited the amount of P30,000.00 against petitioner's
account since under a Resolution of the Monetary Board, it is a matter of policy to prohibit the drawing against uncollected deposits
(DAUDS) except when the drawings are made against uncollected deposits representing bank manager's/cashier's/treasurer's checks,
treasury warrants, postal money orders and duly funded "on us" checks which may be permitted at the discretion of each bank. Without
crediting the P30,000.00 deposit, petitioner's balance before and after was Two Thousand Seven Hundred
Ninety-Two Pesos and the (P2,792.88) Eighty-Eight Centavos. Thus, it dishonored the two (2) checks amounting to P11,553.70 since they
were drawn against insufficient funds.
3. RCBC added that petitioner had no bills purchase (BP) line which allows a depositor to receive or draw from proceeds of a check without
waiting it to be cleared.
4. Besides, RCBC maintained, had it forwarded the Cashier's Check to PCIB Puerto Princesa, Palawan, it would take at least twenty (20)
working days for the cashier's check to be cleared and it would take the same length of time to clear the two (2) personal checks of Tan.
5. That it was merely acting as petitioner's collecting agent and it assumed no responsibilitybeyond care in selecting correspondents under
the theory that where a check is deposited with a collecting bank the relationship created is that of agency and not creditor-debtor, thus it
cannot be liable.

9
 6. Bank claimed that serious attempts were made to contact petitioner through the telephone numbers in the signature specimen card of
petitioner but to no avail. The Assistant Branch Accountant of RCBC Binondo Branch testified that the first telephone number in the card had
been deleted from the phone company's list and that when RCBC tried to contact petitioner's daughter Evelyn Tan-Banzon thru a certain
telephone number and when they asked for Evelyn Tan, they were told there was no such person.

ISSUE: WON BANK IS LIABLE - YES

RULING:

1. RCBC's assertion that petitioner's use of the wrong deposit slip was the proximate cause HAS NOT MERIT -- RCBC exculpate itself from
liability by claiming that its depositor "impliedly instructed" the bank to clear his check with the Central Bank by filling a local check deposit slip. Such
posture is disingenuous, to say the least.

1. First, why would RCBC follow a patently erroneous act born of ignorance or inattention or both.
2. Second, bank transactions pass through a succession of bank personnel whose duty is to check and countercheck transactions for possible
errors.

In the instant case, the teller should not have accepted the local deposit slip with the cashier's check that on its face was clearly a regional
check without calling the depositor's attention to the mistake at the very moment this was presented to her. Neither should everyone else down
the line who processed the same check for clearing have allowed the check to be sent to Central Bank. Depositors do not pretend to be past master
of banking technicalities, much more of clearing procedures. As soon as their deposits are accepted by the bank teller, they wholly repose
trust in the bank personnel's mastery of banking, their and the bank's sworn profession of diligence and meticulousness in giving
irreproachable service.

We do not subscribe to RCBC's assertion that petitioner's use of the wrong deposit slip was the proximate cause of the clearing fiasco and
so, petitioner must bear the consequence. RCBC had been remiss in the performance of its duty and obligation to its client, as well as to
itself.

2. RCBC HAD AMPLE TIME TO CORRECT ITS MISTAKE -- We draw attention to the fact that the two dishonored checks issued by petitioner, Check
No. 040719 and Check No. 040718 were presented for payment more than 45 days from the day the cashier's check was deposited. This gave RCBC
more than ample time to have cleared the cashier's check had it corrected its "missending" the same upon return from Central Bank using
the correct slip this time so it can be cleared properly. Instead, RCBC promptly debited the amount of P30,000.00 against petitioner's account
and left it at that.

3. RCBC CALLED THE WRONG PERSON-- We observe, likewise, that RCBC inquired about an Evelyn Tan but no Evelyn Tan-Banzon as specifically
instructed in the same signature card.

4. RCBCs REFUSAL TO FAVOR PETITIONERS CHECK WAS MISPLACE SINCE IT WAS IN THE NATURE OF A CASHIERS CHECK

RCBC insists that immediate payment without awaiting clearance of a cashier's check is discretionary with the bank to whom the check is presented and
such being the case, its refusal to immediately pay the cashier's check in this case is not to be equated with negligence on its part. We find this
disturbing and unfortunate.

An ordinary check is not a mere undertaking to pay an amount of money. There is an element of certainty or assurance that it will be paid upon
presentation that is why it is perceived as a convenient substitute for currency in commercial and financial transactions. The basis of the perception
being confidence.

Now, what was presented for deposit in the instant cases was not just an ordinary check but a cashier's check payable to the account of the depositor
himself. A cashier's check is a primary obligation of the issuing bank and accepted in advance by its mere issuance. By its very nature, a cashier's
check is the bank's order to pay drawn upon itself, committing in effect its total resources, integrity and honor behind the check. A cashier's
check by its peculiar character and general use in the commercial world is regarded substantially to be as good as the money which it
represents. In this case, therefore, PCIB by issuing the check created an unconditional credit in favor of any collecting bank.

All these considered, petitioner's reliance on the layman's perception that a cashier's check is as good as cash is not entirely misplaced, as it is
rooted in practice, tradition, and principle. We see no reason thus why this so-called discretion was not exercised in favor of petitioner, specially
since PCIB and RCBC are members of the same clearing house group relying on each other's solvency. RCBC could surely rely on the
solvency of PCIB when the latter issued its cashier's check.

5. ON THE ISSUE OF DAMAGES -- We hold that petitioner has the right to recover moral damages (100,000) even if the bank's negligence may not
have been attended with malice and bad faith but its negligence caused the private respondent to suffer mental anguish, serious anxiety,
embarrassment and humiliation, for which he is entitled to recover. Tan is also granted Attorneys Fees of 50,000.

10