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SIMEX INTERNATIONAL (MANILA) INC. VS. COURT OF APPEALS

A bank may be held liable for damages by reason of its unjustified dishonor of a check, which
caused damage to its clients credit standing. 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. The bank is a
fiduciary of the depositors money.

FACTS: Simex International is a private corporation engaged in the exportation of food
products. It buys these products from various local suppliers and then sells them abroad to the
Middle East and the United States. Most of its exports are purchased by the petitioner on credit.
Simex was a depositor of the Far East Savings Bank and maintained a checking account in its
branch in Cubao, Quezon City which issued several checks against its deposit but was surprised
to learn later that they had been dishonored for insufficient funds. As a consequence, several
suppliers sent a letter of demand to the petitioner, threatening prosecution if the dishonored
check issued to it was not made good and also withheld delivery of the order made by the
petitioner. One supplier also cancelled the petitioners credit line and demanded that future
payments be made by it in cash or certified check. The petitioner complained to the respondent
bank. Investigation disclosed that the sum of P100,000.00 deposited by the petitioner on May 25,
1981, had not been credited to it. The error was rectified only a month after, and the dishonored
checks were paid after they were re-deposited. The petitioner then filed a complaint in the then
Court of First Instance of Rizal against the bank for its gross and wanton negligence.

ISSUE: Whether or not the bank can be held liable for negligence by reason of its unjustified
dishonor of a check

HELD: The depositor expects the bank to treat his account with the utmost fidelity whether
such account consists only of a few hundred pesos or of millions. The bank must record every
single transaction accurately, down to the last centavo, and as promptly as possible. This has to
be done if the account is to reflect at any given time the amount of money the depositor can
dispose of as he sees fit, confident that the bank will deliver it as and to whomever he directs. A
blunder on the part of the bank, such as the dishonour 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.

METROPOLITAN BANK AND TRUST CO. v CABILZO
Banking is a business affected with public interest. The degree of diligence required of a bank
must be a high degree of diligence.
FACTS: Renato Cabilzo was one of Metrobanks clients who maintained a current account with
the banks Pasong Tamo Branch. On Nov. 12, 1994, he issued a check payable to cash and
postdated on Nov.24, 1994 for the amount of P1,000. The check was presented to Westmont
Bank for payment and the latter indorsed it to Metrobank. Metrobank cleared the check and
debited Cabilzos account. It was found out later by Cabilzo that the checks amount was altered
to P91,000 and the date changed to Nov. 14. Cabilzo demanded that Metrobank re-credit the
90,000 to his account. Metrobank refused. Cabilzo filed a civil action for damages against
Metrobank. In its defense, Metrobank said that it exercised due diligence in examining the
genuineness of the signature and the technical entries including the amount in figures and in
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words to see if there were alterations and found that there was none. It further stated that Cabilzo
was partly responsible for leaving spaces on the check which made the fraudulent insertion
possible. TheRTC and the Court of Appeals ruled in favor of Cabilzo saying that Metrobank was
liable
ISSUE: Whether or not Metrobank should be held liable for damages for its negligence
HELD: YES. The degree of diligence required of a reasonable man in the exercise of his tasks
and the performance of his duties has been faithfully complied with by Cabilzo. In fact, he was
wary enough that he filled with asterisks the space between and after the amounts, not only those
stated in words but also those in numerical figures in order to prevent any fraudulent insertion.
Metrobank cannot rely on the doctrine of equitable estoppel which states that when one of the
two innocent persons, each guiltless of any intentional or moral wrong, must suffer a loss, it must
be borne by the one whose erroneous conduct, either by omission or commission, was the cause
of injury. Metrobank did not prove that Cabilzo was negligent or that this negligence was the
proximate cause of the loss. Negligence is not presumed but it must be proven by the one who
alleges it. Banking is 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 appropriate degree of
diligence required of a bank must be a high degree of diligence, if not the utmost diligence. Here,
the alterations on the check are visible to the naked eye but Metrobank failed to detect the
alterations which could not escape the attention of even an ordinary person. This negligence is
further exacerbated by the fact that it was the cash custodian who examined the check when his
functions do not involve the examining of checks. Obviously, the custodian was not versed and
competent in handling such duty. Banks are expected to exercise the highest degree of diligence
in the selection and supervision of employees.
SERRANO VS. CENTRAL BANK
"Bank deposits are in the nature of irregular deposits. They are really loans because they earn
interest. The petitioner here in making time deposits that earn interests with respondent
Overseas Bank of Manila was in reality a creditor of the respondent Bank and not a depositor.
The respondent Bank was in turn a debtor of petitioner. Failure of the respondent Bank to honor
the time deposit is failure to pay its obligation as a debtor and not a breach of trust arising from
a depositary's failure to return the subject matter of the deposit."
FACTS: Manuel Serrano made a time deposit, for one year with 6%interest of One Hundred
Fifty Thousand Pesos with the Respondent Overseas Bank of Manila. Concepcion Maneja also
made a time deposit, for one year with 6 1/2% interest, of Two Hundred Thousand Pesos on the
same respondent Overseas Bank of Manila. Concepcion Maneja, then married, assigned and
conveyed to petitioner Manuel Serrano, her time deposit of Php200,000.00. Notwithstanding
series of demands for encashment of the aforementioned time deposit from the respondent
Overseas Bank of Manila, not a single one of the time deposit certificates was honored by
respondent Overseas Bank of Manila. Respondent Central Bank dissolved and liquidated the
Overseas Bank of Manila. The former denied that it is a guarantor of the permanent solvency of
any banking institution as claimed by the petitioner. Respondent Central Bank avers no
knowledge of petitioners claim that the properties given by the respondent Overseas Bank of
Manila as additional collaterals to the respondent Central Bank of the Philippines for the
formers overdrafts and emergency loans were acquired from the depositors money including
the time deposits of the petitioner.
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ISSUE: Whether or not the respondents (Central Bank of the Philippines Overseas Bank of
Manila and its Stockholders) are jointly and solidary liable for damages due to breach of trust
RULING: Both parties overlooked the fundamental principle in the nature of bank deposits
when the petitioner claimed that there should be created a constructive trust in his favor when the
respondent Overseas Bank of Manila increased the collaterals in favor of the respondent Central
Bank of the Philippines for the formers overdrafts and emergency loans, since these collaterals
were acquired by the use of depositors money. Bank deposits are in nature of irregular deposits.
They are really loans because they earn interest. All kinds of bank deposits, whether fixed,
savings or current are to be treated as loans and are to be covered by the loans. Current and
savings deposits are loans to a bank because it can use the same. The petitioner here in the
making time deposits that earn interests with respondent Overseas Bank of Manila was in reality
a creditor of the respondent bank and not a depositor. The respondent bank was in turn a debtor
of petitioner. Failure of the respondent bank to honor the time deposit is failure to pay obligation
as a debtor and not a breach of trust arising from depositorys failure to return the subject matter
of the deposit.
CONSOLIDATED BANK AND TRUST CORPORATION VS. CA
FACTS: Private respondent L.C. Diaz instructed his employee, Calapre, to deposit in his
savings account in petitioner bank. Calapre left the passbook of L.C. Diaz to the teller of the
petitioner bank because it was taking time to accomplish the transaction and he had to go to
another bank. When he returned, the teller told him that somebody got it. The following day, an
impostor succeeded in withdrawing P300,000.00 by using said passbook and a falsified
withdrawal slip. Private respondent sued the bank for the amount withdrawn by the impostor.
ISSUE: Whether or not petitioner bank is liable solely for the amount withdrawn by the
impostor
HELD: No. The bank is liable for breach of contract due to negligence or culpa contractual. The
contract between the bank and its depositor is governed by the provisions of the Civil Code on
simple loan. Article 1172 of the Civil Code provides that responsibility arising from negligence
in the performance of every kind of obligation is demandable. The bank is liable to its depositor
for breach of the savings deposit agreement due to negligence or culpa contractual. 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 (Simex International vs. CA).
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.
The doctrine of last clear chance states that where both parties are negligent but the negligent act
of one is appreciably later than that of the other, or where it is impossible to determine whose
fault or negligence caused the loss, the one who had the last clear opportunity to avoid the loss
but failed to do so, is chargeable with the loss. This doctrine is not applicable to the present case.
The contributory negligence of the private respondent or his last clear chance to avoid the loss
would not exonerate the petitioner from liability. However, it serves to reduce the recovery of
damages by the private respondent. Under Article 1172, the liability may be regulated by the
courts, according to the circumstances. In this case, respondent L.C. Diaz was guilty of
contributory negligence in allowing a withdrawal slip signed by its authorized signatories to fall
into the hands of an impostor. Thus, the liability of petitioner bank should be reduced. The
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Supreme Court allocated the damages between the depositor who is guilty of contributory
negligence and the bank on a 40-60 ratio. Petitioner bank must pay only 60% of the actual
damages.