the highest degree of care, considering the fiduciary nature of
SUMMARY GBL CASES
1. SANDEJAS v. SPS IGNACIO: THE GENEROUS UNCLE. Check worth
3M prepared for renewal of condo lease, payable to Dr. Borja,
obtained by Alice and got her driver to pretend to be Dr. Borja,
deposited amount to Alice’s account, did not required ID and
cleared check w/o indorsement. Bank is liable as apparent from
its gross negligence as to amount to a willful injury to the
respondents. 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. For this reason, banks
should guard against injury attributable to negligence or bad
faith on its part. The award of exemplary damages in favor of
respondents is in order for the purpose of deterring those who
intend to enforce their rights by taking measures or remedies
which are not in accord with law and public policy.
2. SBTC v. RCBC: IKOT-IKOT LANG. SBTC issued manager’s check
worth 8M, deposited by CMC to RCBC which immediately
honored the check and allowed CMC to withdraw it. Was
apparently released by mistake by GCDC. Subsequently
dishonored and returned check to RCBC, back and forth ensued,
RCBC claimed for damages. Same ratio as Ignacio case. SBTC is
liable for damages. Also, Monetary Board Resolution No. 2202,
which prohibits drawings against uncollected deposits, was
interpreted by a Memorandum, which states that banks were
given the discretion to allow immediate drawings on uncollected
deposits of manager’s checks, among others. Consequently,
RCBC, in allowing the immediate withdrawal against the subject
manager’s check, only exercised a prerogative expressly granted
to it by the Monetary Board.
3. PNB v. VELASCO: OFFLINE BANKING IN THE PROVINCE. No-
passbook transaction allowed which led to Velasco maintaining
a balance higher than his actual deposits. Since he was a bank
office, when this was found out, he was dismissed. There was a
valid dismissal. The misconduct was serious. Considering that the
PNB Ligao, Albay Branch is an offline branch, it is a must that an
LOI and the passbook be presented by the depositor before any
withdrawal is allowed. As an audit officer, Velasco should be the
first to ensure that banking laws, policies, rules and
regulations, are strictly observed and applied by its officers in
the day-to-day transactions. Why? Same ratio.
4. BDO-EPCI v. JAPRL: LIARS GO TO HELL. JAPRL was given credit
facilities, with sureties. Defaulted in the payment of obligations.
Was eventually discovered that it bloated its sales revenues to
post a big income from operations as a viable investment. BDO-
EPCI demanded immediate payment. Sec. 40 of GBL, get SAL, Tax
Declaration, etc. to prove that the borrower can pay. Should such
statements prove to be false or incorrect in any material detail,
the bank may terminate any loan or credit accommodation
granted on the basis of said statements and shall have the right
to demand immediate repayment or liquidation of the
obligation.
5. BA v. PRC: NO ERASURE POLICY PALA DAPAT SA ENCASHMENT
OF CHECKS. Scheduled to go on a business trip, left pre-signed
checks in case they would be needed. The accountant would
prepare in case of such need. A John Doe encashed the checks,
had various infirmities and irregularities. It is well-settled that
banks are engaged in a business impressed with public interest,
and it is their duty to protect in return their many clients and
depositors who transact business with them. They have the
obligation to treat their client’s account meticulously and with
their relationship. The diligence required of banks, therefore, is
more than that of a good father of a family.
6. CITIBANK v. DINOPOL: NAKAKAHIYA KAPAG MAY NA-DAIF KA.
Atty. Dinopol issued a check for Geonzon for investment
purposes. The checkbook was from Citibank. DAIF. Humiliated,
filed a civil case for damages against the bank. Citibank is liable.
It did not even refute the allegation that it gave Atty. Dinopol the
go-signal to issue such a check. Both moral (due to the
humiliation faced by Dinopol) and exemplary damages (law
allows by way of example for the public good) should be granted
because Citibank should have been more cautious in dealing with
its clients since its business is imbued with public interest.
7. GSIS v. SANTIAGO: SABI KO SA’YO WAG MO ISAMA EH. Sps.
Zulueta obtained from GSIS various loans, secured through and
REM, which was later foreclosed. Some properties were
excluded because those that were sold were sufficient to pay the
debts. The properties were still included. Filed a complaint for
reconveyance. GSIS cannot claim ownership over the excluded
lots on the basis of the CTs issued in its name. The due diligence
required of banks extend even to person, or institutions regularly
engaged in the business of lending money secured by real estate
mortgage, such as the GSIS. Even if titles over the lots had been
issued in the name of the GSIS, still it could not legally claim
ownership and absolute dominion over them because
indefeasibility of title under the Torrens system does not attach
to titles secured by fraud or misrepresentation.
8. BPI v. CASA MONTESSORI and YABUT: LEBRON FOR THE WIN!
After conducting an investigation, CASA discovered that 9 of its
checks had been encashed by a certain Santos since 1990. It
turned out that Santos was actually a fictitious name used by
Yabut who worked as an external auditor of CASA, who voluntary
admitted that he forged the signature of Lebron (CASA
President) and encashed the checks. Collection case + damages
was filed. YES. It failed to detect the eight instances of forgery.
Its negligence consisted in the omission of that degree of
diligence required of a bank. It cannot now feign ignorance, for
very early on we have already ruled that 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.”
9. PBC v. CA and MARCOS: WAG YAN, DAPAT ITO! MARCOS kept
the various time deposit certificates with the BANK. MARCOS
wanted to withdraw from the BANK his time deposits and the
accumulated interests to buy materials for his construction
business. However, the BANK convinced him to keep his time
deposits intact and instead to open several domestic letters of
credit. So he did. Secured various loan obligations using the
TDCs, defaulted, applied the TDs to the obligation. When asked
for copies of a second loan, only gave machine copies of the
duplication. BANK IS LIABLE. As the BANK’s depositor, Marcos
had the right to expect that the BANK was accurately recording
his transactions with it. Upon the maturity of his time deposits,
Marcos also had the right to withdraw the amount due him after
the BANK had correctly debited his outstanding obligations from
his time deposits. By the very nature of its business, the BANK
should have had in its possession the original copies of the
disputed promissory note and the records and ledgers evidencing
the offsetting of the loan with the time deposits of Marcos. The
BANK inexplicably failed to produce the original copies of these
 documents. Clearly, the BANK failed to treat the account of
Marcos with meticulous care.
10. PNB v. PIKE: BONGGA KA DAY! Pike, before he left for Japan as
a gay entertainer, kept his passbook inside a cabinet under lock
in his home. Went missing, discovered that Davasol made two
unauthorized withdrawals. Demanded the return of the amount
since the signatures appearing on the slips were forgeries. PNB
refused. Filed a complaint for bank’s negligence. BANK IS LIABLE.
the negligence in this case lies in the lackadaisical attitude
exhibited by the employees of PNB in their treatment of
respondent Pike's US Dollar Savings Account that resulted in the
unauthorized withdrawal of $7,500. Having admitted that pre-
signed withdrawal slips do not constitute the normal procedure
with respect to withdrawals by representatives should have
already put PNB's employees on guard. Rather than readily
validating and permitting said withdrawals, they should have
proceeded more cautiously. Clearly, PNB’s employee, Bal, was
exceedingly careless in his treatment of Pike's savings account.
11. FAR EAST BANK v. CHANTE MAMAYA KA NA LUCKY GUY
12. REYES v. CA: WELCOME ROTONDA. Applied for foreign
exchange demand draft (AUS). First application was denied, no
AUS account. Was informed of a roundabout way—draw DD
against Westpac in Sydney and reimburse from US account in
Westpac New York—which was customarily resorted to. Agreed.
Upon first and second presentment, dishonored. Went to
register as a conference delegate, but could not do so because
DD as reg. fee was dishonored. Embarrassed and humiliated,
they filed a complaint for damages against the bank. The
circumstance show that all efforts were made by respondent
Bank to avoid such mistake. The Philippine Bank of Commerce vs.
Court of Appeals ruling upholding a long-standing doctrine that
the degree of diligence required of banks, is more than that of a
good father of a family where the fiduciary nature of their
relationship with their depositors is concerned, applies only to
the cases where banks act under their fiduciary capacity, that is,
as depository of the deposits of their depositors. Such degree of
diligence is not expected to be exerted by banks in commercial
transactions that do not involve their fiduciary relationship with
depositors.
13. FIRST PLANTER PAWNSHOP v. CIR
14. PCIB v. CABRERA: ANOMALOUS PHILIPPINES. Anomalous
transactions were made against the savings account of a PCIB’s
client. Cabrera, PCIB’s personnel who personally undertook the
investigation of the anomalous transactions, was terminated
from his employment. The evidence against him was that: (a) on
the day of the anomalous transaction, Cabrera was supposed to
be on a leave yet he work in the morning of that day; and (b)
Cabrera was allegedly seen taking an amount from an unlocked
drawer of Advincula while the latter was on a ladies’ room.
Cabrera filed a case for illegal dismissal. He denied PCIB’s
allegations and presented evidence proving his innocence. A
bank owes great fidelity to the public it deals with, its operation
being essentially imbued with public interest. In turn, it cannot be
compelled to continue in its employ a person in who it had lost
trust and confidence and whose continued employment would
patently be inimical to the bank’ interest. In protecting rights of
labor, the law authorizes neither oppression not self-destruction
of an employer company, which itself is oppressed of rights that
must be entitled to respect. However, bank must still comply with
die process in terminating the services of its employees and
officers. In this case, the mere presence of Cabrera at the bank
does not establish his guilt for the fraudulent withdrawals.
15. DYOCO v. EQUITABLE-PCIB: EVERYBODY WANNA STEAL THE
FUNDS. The Personal Banking Manager (PBM) of the bank was
remiss in his duties in requiring the clients’ signature and
ensuring compliance with documentary requirements. This
allowed another bank employee to steal funds from the bank.
The PBM was dismissed on the ground of negligence. VALIDLY
DISMISSED. As the banking industry is impressed with public
interest, all bank personnel are burdened with a high level of
responsibility insofar as care and diligence in the custody and
management of funds are concerned. Petitioner miserably failed
to discharge this burden. As a PBM, petitioner should have
exercised much care in performing his functions. Petitioner's
failure on three separate occasions to require clients to sign the
requisite documents (a vital and standard procedure in all
banking transactions) was a clear manifestation of serial
negligence. Because of this gross negligence, Carlo Quirong,
respondent bank's Customer Sales Assistant, was able to filch
millions of pesos from respondent bank by manipulating clients'
accounts.
16. UNION BANK v. CA: REDEMPTION PERIOD. Pursuant to Section
78 of the General Banking Act, a mortgagor whose real property
has been sold at a public auction, judicially or extrajudicially, for
the full or partial payment of an obligation to any bank, shall
have the right, within one year after the sale of the real estate to
redeem the property. The one-year period is actually to be
reckoned from the date of the registration of the sale. Clearly
therefore, respondents had only until May 8, 1992 to redeem the
subject foreclosed property. Their failure to exercise that right of
redemption by paying the redemption price within the period
prescribed by law effectively divested them of said right. It bears
reiterating that during the one year redemption period,
respondents never attempted to redeem the subject property but
instead persisted in their theory that the mortgage is null and
void. To allow them now to redeem the same property would, as
petitioner aptly puts it, be letting them have their cake and eat it
too.
17. PDIC v. CITIBANK: BRANCHES. Citibank and BA sought a
declaratory judgment stating that the money placements they
received from their head office and other foreign branches were
not deposits and did not give rise to insurable deposit liabilities
under Sections 3 and 4 of R.A. No. 3591 (the PDIC Charter) and,
as a consequence, the deficiency assessments made by PDIC
were improper and erroneous. It is apparent that they both did
not incorporate a separate domestic corporation to represent its
business interests in the Philippines. Their Philippine branches
are, as the name implies, merely branches, without a separate
legal personality from their parent company, Citibank and BA.
Thus, being one and the same entity, the funds placed by the
respondents in their respective branches in the Philippines should
not be treated as deposits made by third parties subject to
deposit insurance under the PDIC Charter.
18. CBTC v. CA and L.C. DIAZ: SOMEBODY GOT THE PASSBOOK!
Calapre went to Solidbank and presented to Teller No. 6 the two
deposit slips and the passbook. The teller acknowledged receipt
of the deposit by returning to Calapre the duplicate copies of the
two deposit slips. Since the transaction took time and Calapre
had to make another deposit for L.C. Diaz with Allied Bank, he
left the passbook with Solidbank. Calapre then went to Allied
Bank. When Calapre returned to Solidbank to retrieve the
 passbook, Teller No. 6 informed him that "somebody got the
passbook”. Calapre went back to L.C. Diaz and reported the
incident to Macaraya. BANK IS LIABLE. Solidbank’s tellers must
exercise a high degree of diligence in insuring that they return
the passbook only to the depositor or his authorized
representative. The tellers know, or should know, that the rules
on savings account provide that any person in possession of the
passbook is presumptively its owner. If the tellers give the
passbook to the wrong person, they would be clothing that
person presumptive ownership of the passbook, facilitating
unauthorized withdrawals by that person. For failing to return
the passbook to Calapre, the authorized representative of L.C.
Diaz, Solidbank and Teller No. 6 presumptively failed to observe
such high degree of diligence in safeguarding the passbook, and
in insuring its return to the party authorized to receive the same.
We do not apply the doctrine of last clear chance to the present
case. Solidbank is liable for breach of contract due to negligence
in the performance of its contractual obligation to L.C. Diaz. This
is a case of culpa contractual, where neither the contributory
negligence of the plaintiff nor his last clear chance to avoid the
loss, would exonerate the defendant from liability.
19. BPI-FB v. FMIC: AGENT. FMIC and BPI through its manager
agreed that FMIC will maintain a 1 yr deposit with BPI for a
stipulated rate of 17%. However, FMIC discovered that the
account was being subjected to unauthorized withdrawals
prompting FMIC to withdraw the same. FMIC asked for the 17%
stipulated rate. BPI contends that its manager overstepped his
authority in granting the 17% rate. IS BPI liable for the 17%
interest? YES. A banking corporation is liable to innocent third
persons where the representation is made in the course of its
business by an agent acting within the general scope of his
authority even though the agent is secretly abusing his authority
and attempting to perpetrate a fraud upon his principal or some
other person for his own ultimate benefit.
20. ASSOCIATED BANK v. TAN: Tan deposited a Post-Dated-Check.
The bank manager allowed Tan to withdraw the proceeds of the
check even prior to its clearing. Later on, the checks issued by
Tan was dishonored due to insufficiency of funds. It was
discovered that the account balance became insufficient
because the bank debited such account for the amount of the
PDC since the PDC was dishonored. Tan sued the bank for
damages. Is the bank liable? YES. Jurisprudence has established
that the lack of diligence of a servant is imputed to the negligence
of the employer, when the negligent or wrongful act of the
former proximately results in an injury to a third person; in this
case, the depositor. The manager of the bank's Cabanatuan
branch, Consorcia Santiago, categorically admitted that she and
the employees under her control had breached bank policies.
They admittedly breached those policies when, without
clearance from the drawee bank in Baguio, they allowed
respondent to withdraw on October 1, 1990, the amount of the
check deposited. It is undeniable that the bank's premature
authorization of the withdrawal by respondent on October 1,
1990, triggered — in rapid succession and in a natural sequence
— the debiting of his account, the fall of his account balance to
insufficient levels, and the subsequent dishonor of his own checks
for lack of funds. Indeed, the banking business is vested with the
trust and confidence of the public; hence the "appropriate
standard of diligence must be very high, if not the highest, degree
of diligence." The standard applies, regardless of whether the
account consists of only a few hundred pesos or of millions.
CASE #29 IS IMPORTANT—SAAN LANG BA APPLICABLE ANG
EXTRAORDINARY DILIGENCE, ONLY WITH BANKS vis-à-vis
DEPOSITORS and NOT BANKS vis-à-vis its EMPLOYEES.
CASE #30 DEALS WITH THE OUTSOURCING OF BANKING FUNCTIONS.
- ABC v. LIM SIO WAN: 60-40 sharing of both issuing bank and
drawee bank. Proximate cause + contributory negligence.
- EQUITABLE PCIB v. NG SHEUNG NGOR: DR-CR relationship,
bank can set-off.
- SIMEX INTERNATIONAL v. CA and TRB: NO DISCRIMINATION AS
TO AMOUNT OF DEPOSIT. 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. 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.
- BPI v. FRANCO: CANNOT UNILATERALLY FREEZE ACCOUNTS. As
there is a debtor-creditor relationship between a bank and its
depositor, BPI-FB ultimately acquired ownership of Franco’s
deposits, but such ownership is coupled with a corresponding
obligation to pay him an equal amount on demand. Although
BPI-FB owns the deposits in Franco’s accounts, it cannot prevent
him from demanding payment of BPI-FB’s obligation by drawing
checks against his current account, or asking for the release of
the funds in his savings account. Thus, when Franco issued
checks drawn against his current account, he had every right as
creditor to expect that those checks would be honored by BPI-
FB as debtor.
- SAMSON v. BPI: YARDSTICK FOR MORAL DAMAGES. The social
standing of the aggrieved party is essential to the determination
of the proper amount of the award. Otherwise, the goal of
enabling him to obtain means, diversions, or amusements to
restore him to the status quo ante would not be achieved. Also
related, case #59, PRUDENTIAL BANK v. CA. Same ruling on
moral damages.
- PNB v. SPS. CHEAH: EQUAL SHARING. The Collecting Bank’s act
of releasing the proceeds of the check prior to the lapse of the
15-day clearing period was “the proximate cause of the loss.”
While the Depositor was also at fault in accommodating a
stranger’s check and depositing it to the bank, the said bank is
also at fault for releasing the proceeds thereof without
exhausting the 15-day clearing period, an act which contravened
established banking rules and practice. Both parties are equally
negligent and should therefore equally suffer the loss. The two
must both bear the consequences of their mistakes.
- FAR EAST BANK v. GOLD PALACE JEWELLERY: MATERIALLY
ALTERED CHECKS. The bank cannot debit the account of its
depositor despite the latter had caused the issuance of the
materially altered check. The depositor in this case is in good
faith and is protected under Sec.62 of the NIL which states that
the bank shall be primarily liable upon its acceptance of the
instrument and warrants that it shall pay it according to the
 tenor of his acceptance. The remedy of the bank in cases of
materially altered check is against the drawee bank or the person
causing the material alteration and not its depositor.
- METROPOLITAN BANK v. CA: XPN to GR THAT JURIDICAL
ENTITIES CANNOT OBTAIN MORAL DAMAGES. As a general rule
juridical entities cannot be granted moral damages since they
are devoid of emotions and sufferings. However, an exemption
to this is when the reputation of the said juridical entity has been
besmirched as result of the said breach. The creditor-bank in this
case has been awarded moral damages since the breach of the
debtor-bank has resulted to the damage in the credit standing
and business reputation of the former bank.
- PRUDENTIAL BANK v. ABASOLO: LIABILITY WHEN THERE IS NO
DR-CR RELATIONSHIP. In the absence of a lender-borrower
relationship between petitioner and Liwayway, there is no
inherent obligation of petitioner to release the proceeds of the
loan to her. To a banking institution, well-defined lending
policies and sound lending practices are essential to perform its
lending function effectively and minimize the risk inherent in any
extension of credit.
- PBC v. DY: WHEN EXTRAORDINARY DILIGENCE CAN BE
DISPENSED WITH. While bank failed to exercise greater care in
conducting the ocular inspection of the properties offered for
mortgage, its omission did not prejudice any innocent third
parties. The land owner is a party to the simulated sale. Thus, no
amount of diligence in the conduct of the ocular inspection could
have led to the discovery of the complicity between the buyer and
the owner.
- GONZALES v. PCIB: EXTRAORDINARY DILIGENCE INCLUDES
NOTIFICATION OF ACCOMMODATION PARTIES. the bank is
expected to exercise the highest degree of diligence. In failing to
notify Gonzales of the default, they were in effect, negligent.
Gonzales being an accommodation surety is still entitled to be
notified in the event that the accommodated party defaulted in
his obligation. The degree of diligence required is more than that
of a good father of the family considering that the business of
banking is imbued with public interest due to the nature of their
function.
- METROBANK v. GO: Negligence was committed by The Bank in
accepting for deposit the crossed checks without indorsement
and in not verifying the authenticity of the negotiation of the
checks. The law imposes a duty of extraordinary diligence on the
collecting bank to scrutinize checks deposited with it, for the
purpose of determining their genuineness and regularity. The
liability for moral damages is sufficient to remind it of its
responsibility to exercise extraordinary diligence in the course of
its business which is imbued with public interest.
- CITIBANK v. SPS. CABAMONGAN: LIABILITY OF BANKS WITH
REGARD TO A FORGED CHECK. The SC has held that 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."
The Bank openly courted disaster when despite noticing
discrepancies in the signature and photograph of the person
claiming to be the depositor and the failure to surrender the
original certificate of time deposit, allowed the pre-termination
of the account.
- BANK OF AMERICA v. ASSOCIATED CITIZENS BANK: The bank on
which a check is drawn, known as the drawee bank, is under
strict liability, based on the contract between the bank and the
drawer, to pay the check only to the payee or the payee's order.
The drawer's instructions are reflected on the face and by the
terms of the check. When the drawee bank pays a person other
than the payee named on the check, it does not comply with the
terms of the check and violates its duty to charge the drawer's
account only for properly payable items.
- URSAL v. CA: BANKS CANNOT SIMPLY RELY ON CERTIFICATES
OF TITLE. Banks cannot merely rely on certificates of title in
ascertaining the status of mortgaged properties; as their
business is impressed with public interest, they are expected to
exercise more care and prudence in their dealings than private
individuals. Indeed, the rule that persons dealing with registered
lands can rely solely on the certificate of title does not apply to
banks. The ascertainment of the status or condition of a property
offered to it as security for a loan must be a standard and
indispensable part of its operations. Same ruling in EDUARDO
MANLAPAT v. CA.
o PNB v. CORPUZ: Anyone who deliberately ignores a
significant fact that would create suspicion in an
otherwise reasonable person cannot be considered as
an innocent mortgagee for value.
o DBP v. CA and CAJES: SPECIFIC RESPONSIBILITY OF
BANKS IN APPROVING A LOAN. Judicial notice is taken
of the standard practice for banks, before approving a
loan, to send representatives to the premises of the
land offered as collateral and to investigate who are
the real owners thereof.
o UCPB v. RAMOS: SAME;SAME. It bears stressing that
the business of a bank is one affected with public
interest, for which reason the bank should guard
against loss due to negligence or bad faith. In
approving the loan of an applicant, the bank concerns
itself with proper information regarding its debtors.
The UCPB, as a bank and a financial institution
engaged in the grant of loans, is expected to ascertain
and verify the identities of the persons it transacts
business with. Same ruling with SPS. CANLAS v. CA.
o DAVID SIA TIO v. ABAYATA: Rural Bank is a mortgagee
in bad faith because of its failure to examine more
closely the title of the mortgagors despite the first-
hand knowledge that other persons, and not the
would-be mortgagors, were in possession of the
property. The very fact that the lot was not in the
possession of the Lasolas should have put the
defendant bank on guard and prompted it to make a
more thorough inquiry into the ownership of the lot.
- CA AGRO-INDUSTRIAL DEV’T v. CA: The relation between a bank
renting out safe-deposit boxes and its customer with respect to
the contents of the box is that of a bailor and bailee, the bailment
being for hire and mutual benefit. The primary function is still
found within the parameters of a contract of deposit, i.e., the
receiving in custody of funds, documents and other valuable
objects for safekeeping. The renting out of the safety deposit
boxes is not independent from, but related to or in conjunction
with, this principal function. The depositary's responsibility for
the safekeeping of the objects deposited in the case at bar is
governed by Title I, Book IV of the Civil Code. Accordingly, the
depositary would be liable if, in performing its obligation, it is
found guilty of fraud, negligence, delay or contravention of the
 tenor of the agreement. In the absence of any stipulation
prescribing the degree of diligence required, that of a good father
of a family is to be observed. Same ruling in SIA v. CA and SBTC.
- ABC v. CA: RTC HAS NO JURISDICTION OVER THIRD-PARTY
COMPLAINTS WHERE THE BANK CONSENTS TO ARBITRATION
UNDER PCHC. A trial court, which has jurisdiction over the main
action, also has jurisdiction over the third-party complaint, even
if the said court would have had no jurisdiction over it had it been
filed as an independent action. However, this doctrine does not
apply in the case of banks, which have given written and
subscribed consent to arbitration under the auspices of the PCHC.
By participating in the clearing operations of the PCHC,
petitioner agreed to submit disputes of this nature to arbitration.
Accordingly, it cannot invoke the jurisdiction of the trial courts
without a prior recourse to the PCHC Arbitration Committee.
- PEREZ v. CA: NATURE OF MONEY MARKET TRANSACTIONS. The
fundamental function of the money market transaction in its
operation is to match and bring together in a most impersonal
manner both the "fund users" and the "fund suppliers." The
money market is an "impersonal market", free from personal
considerations." The market mechanism is intended to provide
quick mobility of money and securities." The impersonal
character of the money market device overlooks the individuals
or entities concerned. The issuer of a commercial paper in the
money market necessarily knows in advance that it would be
expeditiously transacted and transferred to any investor/lender
without need of notice to said issuer. In practice, no notification
is given to the borrower or issuer of commercial paper of the sale
or transfer to the investor.
o RAUL SESBRENO v. CA: A money market transaction
partakes of the nature of a loan and therefore
"nonpayment thereof would not give rise to criminal
liability for estafa through misappropriation or
conversion." In money market placement, the investor
is a lender who loans his money to a borrower through
a middleman or dealer. In case of failure to return the
placement with the interest, the liability incurred is a
civil one.
- BANAS v. ASIA PACIFIC FINANCE CORP: WHEN BANKING LAWS
ARE INAPPLICABLE. 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.
- FIDELITY SAVINGS AND MORTGAGE BANK v. HON. PEDRO
CENZON: CLOSED BANKS NOT LIABLE TO PAY INTEREST ON
BANK DEPOSITS. It is settled jurisprudence that a banking
institution which has been declared insolvent and subsequently
ordered closed by the Central Bank of the Philippines cannot be
held liable to pay interest on bank deposits which accrued during
the period when the bank is actually closed and non-operational.
- GO v. BSP: ELEMENTS ON DOSRI RESTRICTIONS. Under Section
83, RA 337, the following elements must be present to constitute
a violation of its first paragraph:
(1) the offender is a director or officer of any banking
institution
(2) the offender, either directly or indirectly, for himself or as
representative or agent of another, performs any of the
following acts:
a. he borrows any of the deposits or funds of such bank;
or;
b. he becomes a guarantor, indorser, or surety for loans
from such bank to others, or;
c. he becomes in any manner an obligor for money
borrowed from bank or loaned by it
(3) the offender has performed any of such acts without the
written approval of the majority of the directors of the
bank, excluding the offender, as the director concerned.
 SIMILAR RULING: HILARIO SORIANO v. PEOPLE: The
prohibition in Section 83 is broad enough to cover
various modes of borrowing. It covers loans by a bank
director or officer which are made either: (1) directly,
(2) indirectly, (3) for himself, (4) or as the
representative or agent of others. It applies even if the
director or officer is a mere guarantor, indorser or
surety for someone else's loan or is in any manner an
obligor for money borrowed from the bank or loaned
by it. The covered transactions are prohibited unless
the approval, reportorial and ceiling requirements
under Section 83 are complied with.
- IBAAN RURAL BANK v. COURT OF APPEALS: ESTOPPEL IN
PERIOD OF REDEMPTION. When circumstances imply a duty to
speak on the part of the person for whom an obligation is
proposed, his silence can be construed as consent. By its silence
and inaction, petitioner misled private respondents to believe
that they had two years within which to redeem the mortgage.
After the lapse of two years, the bank is estopped from asserting
that the period for redemption was only one year and that the
period had already lapsed.
- GOLDENWAY MERCHANDISING CORP v. EQUITABLE-PCIB:
REDEMPTION BY JURIDICAL PERSONS. Under the new law, an
exception is thus made in the case of juridical persons which are
allowed to exercise the right of redemption only "until, but not
after, the registration of the certificate of foreclosure sale" and
in no case more than three (3) months after foreclosure,
whichever comes first. The new redemption period commences
from the date of foreclosure sale, and expires upon registration
of the certificate of sale or three months after foreclosure,
whichever is earlier. There is likewise no retroactive application
of the new redemption period because Section 47 exempts from
its operation those properties foreclosed prior to its effectivity
and whose owners shall retain their redemption rights under Act
No. 3135.