Banking Law — Degree of Diligence
Bank of the Philippine Islands v. Intermediate Appellate Court
G.R. No. 69162 | Feb. 21, 1992
J. Griño-Aquino
Petitioner: BPI
Respondents: IAC and the Sps. Arthur and Vivienne Canlas
SUMMARY: The Sps Canlas opened a joint current account in the QC branch of Commercial Bank and Trust
Company of the Philippines (CBTC) with an initial deposit of P2,250. However, by mistake, the “new accounts”
teller placed the old personal account number of Arthur on the deposit slip for the new joint checking account of
the spouses so that the initial deposit of P2,250 was miscredited to Mr. Canla’s personal account in the same
CBTC branch. Thus, when Mrs. Canlas subsequently issued checks, one of the checks was dishonored for
insufficient funds and a penalty was also deducted from the joint account due to overdrawings. The Sps filed a
complaint for damages against CBTC. During the pendency of the case, BPI and CBTC were merged. Hence,
BPI, as the surviving corporation, took over the defense of the action against CBTC. All courts ruled in favor of
the spouses, with the SC ruling that BPI should be considered negligent and liable for moral damages and atty’s
fees on account of the inadvertence of its bank employee.
DOCTRINE: In Simex International (Manila), Inc. vs CA, the Court stressed the fiduciary nature of the relationship
between a bank and its depositors, and the extent of diligence expected of it in handling the accounts entrusted
to its care
● “...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, confident that the bank will deliver it to whomever he directs
● A blunder on the part of the bank, such as the dishonor of a check w/o good reason, can cause the
depositor not a little embarrassment if not also financial loss and even civil and criminal litigation.
● …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…”
RELEVANT FACTS
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Arthur Canlas had a personal checking account in the QC branch of Commercial Bank and Trust
Company of the Philippines (CBTC)
Subsequently, he and his wife, Vivienne Canlas, opened a joint current account in the same CBTC branch
with an initial deposit of P2,250
o The “new accounts” teller of the bank pulled out from the bank’s files the old and existing signature
card of Arthur for his personal checking account for use as ID and reference
o However, by mistake, the teller placed the old personal account number of Arthur on the deposit
slip for the new joint checking account of the spouses so that the initial deposit of P2,250 was
miscredited to Arthur’s personal account.
o Subsequently, the sps deposited other amounts in their joint account.
However, when Vivienne issued a check for P1,639.89 in April 1977 and another check for P1,160 in
June 1977, one of the checks was dishonored by the bank for insufficient funds
o A penalty of P20 was deducted from the account in both instances
o Due to the overdrawings, the bank tried to call the spouses but could not contact them as the
number they gave belonged to Vivenne’s parents
Thus, in 1977, the Sps filed a complaint for damages against CBTC in the CFI
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During the pendency of the case, BPI and CBTC were merged.
o As the surviving corporation, BPI took over the defense of the action against CBTC.
In 1981, RTC rendered a decision against BPI, sentencing the latter to pay the sps:
o P5k as actual damages
o P150k for Arthur and P150k for Vivienne as moral damages
o P150k as exemplary damages
o P10k as atty’s fees; and
o costs
BPI appealed with the IAC
IAC modified the RTC judgment, deleting the actual damages and reduced the other awards:
o Moral damages of P50k to the sps, not each
o Exemplary damages of P5k
o Atty’s fees of P5k
In awarding moral and exemplary damages, the IAC ruled that BPI was guilty of gross negligence in the
handing of the sps’ bank account.
o That the mistake committed by the new accounts teller of BPI constituted “serious” negligence
o That BPI cannot be absolved from liability even on the assumption of an honest mistake on the
part of the bank, because of the embarrassment that even an honest mistake can cause the bank’s
depositors
BPI filed a petition for review before SC
Petitioner’s (BPI) Arguments
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Respondent’s Arguments
The bank should not be considered negligent (not indicated in the Decision)
nor held liable for damages on account of the
inadvertence of the bank’s employee as NCC
1173 only requires an obligor to exercise the
diligence of a good father of a family (if the law
or contract does not state the diligence which
is to be observed in the performance of the
obligation)
RATIO DECIDENDI
W/N BPI should be considered negligent and liable for damages on account of the inadvertence of its
bank employee - YES
In Simex International (Manila), Inc. vs CA, the Court stressed the fiduciary nature of the relationship between
a bank and its depositors, and the extent of diligence expected of it in handling the accounts entrusted to its
care
● “...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, confident that the bank will deliver it to whomever he directs
● A blunder on the part of the bank, such as the dishonor of a check w/o good reason, can cause the
depositor not a little embarrassment if not also financial loss and even civil and criminal litigation.
● …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…”
In this case, BPI must bear the blame for not discovering the mistake of its teller despite the established
procedure requiring the papers and bank books to pass through a battery of bank personnel whose duty it is
to check and countercheck for possible errors.
● The officials and employees tasked to do such duty did not perform the same with due care, as may
be gathered from the testimony of the bank’s lone witness, Antonio Enciso, who casually declared that
“the approving officer does not have to see the account numbers and all those things. Those are very
petty things for the approving manager to look into.”
● Unfortunately, it was a “petty thing,” the incorrect account number that the bank teller wrote on the
initial deposit slip for the newly-opened joint current account of the Sps Canlas, that sparked this halfa-million-peso damage suit
Re: moral damages - AWARDED
While the bank’s negligence may not have been attended with malice and bad faith, it caused serious anxiety,
embarrassment, and humiliation to the Sps Canlas for which they are entitled to recover reasonable moral
damages (American Express International, Inc. vs IAC)
Re: atty’s fees - AWARDED
The award of reasonable atty’s fees is proper as the Sps Canlas were compelled to litigate to protect their
interest (NCC 2208)
Re: exemplary damages - DELETED
The absence of malice and bad faith renders the award of exemplary damages improper (Globe Mackay Cable
and Radio Corp vs CA)
RULING
Petition GRANTED. IAC Decision MODIFIED by deleting the award of exemplary damages. In all other respects,
IAC Decision AFFIRMED. No costs.
SEPARATE OPINIONS
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N/A
NOTES
NCC 1173
o Article 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. (1104a)