I. SHORT TITLE: PNB V.

SANTOS

II. FULL TITLE: PHILIPPINE NATIONAL BANK vs. CARMELITA S.

SANTOS, REYME L. SANTOS, ANGEL L. SANTOS, NONENG S.
DIANCO, ET AL. G.R. No. 208293, and LINA B. AGUILAR vs.
CARMELITA S. SANTOS, REMYE L. SANTOS, BUENVENIDO L.
SANTOS, ET AL. G.R. No. 208295, 10 December 2014, Leonen J.

III. TOPIC: Extraordinary Diligence

IV. STATEMENT OF THE FACTS:

Respondents are children of Angel C. Santos who died on 21 March 1991.

Sometime in 1996, respondents discovered that their father maintained a
premium savings account with Philippine National Bank (PNB), Sta. Elena-
Marikina City Branch. As of July 1996, the deposit amounted to
1,759,082.63. Later respondents would also discover that their father also
had a time deposit of 1,000,000.00 with PNB. Respondents went to PNB to
withdraw their fathers deposit. Lina B. Aguilar, the Branch Manager of
PNB-Sta. Elena-Marikina, required them to submit the following: (1)
original or certified true copy of the Death Certificate of Angel C. Santos;
(2) certificate of payment of, or exemption from, estate tax issued by the
Bureau of Internal Revenue (BIR); (3) Deed of Extrajudicial Settlement; and
(5) Surety bond effective for two years and in an amount equal to the
balance of the deposit to be withdrawn.

By April 1998, respondents had already obtained the necessary documents,

however, when they tried to withdraw, Aguilar informed them that the
deposit had already been released to a certain Bernardito Manimbo
(Manimbo) on 01 April 1997. An amount of 1,882,002.05 was released
upon presentation of: (1) an affidavit of self-adjudication purportedly
executed by one of the respondents, Remye L. Santos; (2) a certificate of
time deposit dated 14 December 1989 amounting to 1,000,000.00; and (3)
the death certificate of Angel C. Santos, among others. A special power of
attorney was purportedly executed by Reyme L. Santos in favor of Manimbo
and a certain Angel P. Santos for purposes of withdrawing and receiving the
proceeds of the certificate of time deposit.

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V. STATEMENT OF THE CASE

Respondents filed a complaint for the sum of money and damages against
PNB before the Regional Trial Court of Marikina City questioning the
release of the deposit amount to Manibmo who had no authority from them
to withdraw their fathers deposit and who failed to present to PNB all the
requirements for such withdrawal. PNB and Aguilar denied that the
deceased had two separate accounts (premium deposit account and time
deposit account) with PNB. They alleged that the deceaseds deposit
account was originally a time deposit account that was subsequently
converted in to a premium savings account. Also, they alleged that Aguilar
did not know about Angel C. Santoss death in 1991 because she only
assumed office in 1996. Manimbo was able to submit an affidavit of self-
adjudication, required surety bond, certificate of payment of estate tax
dated 31 March 1997. All documents appeared to be regular.

PNB and Aguilar filed a third-part complain against Manimbo, Angel P.

Santos, and Capital Insurance and Surety Co., Inc.

The trial court found PNB and Aguilar negligent in releasing the deposit to
Manimbo as they failed to notify the depositor about the maturity of the
time deposit and the conversion of the time deposit into a premium savings
account. Subsequently, Aguilar filed a motion for reconsideration which was
denied by the RTC.

Upon appeal to the Court of Appeals, Aguilar contended that she merely
implemented PNBs Legal Departments directive to release the deposit to
Manimbo. PNB, on the other hand, argued that the release of the deposit to
Manimbo was pursuant to existing policy. CA sustained the trial courts
findings of negligence in both parties.

PNB and Aguilar filed their separate petitions for review before the
Supreme Court.

VI. ISSUE

Whether or not Philippine National Bank and Aguilar was negligent in

releasing the deposit to Benardito Manimbo.

VII. RULING

Yes, PNB and Aguilar were negligent in handling the deposit of Angel C.
Santos.

The contractual relationship between banks and their depositors is

governed by the Civil Code provisions on simple loan. Once a person makes

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 a deposit of his money to the bank, he is considered to have lent the bank a
money. The bank becomes his debtor, and he becomes the creditor of the
bank, which is obligated to pay him on demand.

The default standard of diligence in the performance of obligations is

diligence of a good father of a family. However, other industries are bound
by law to observe higher standards of diligence because of the nature of
their businesses. Banking is impressed with public interest as it affects the
economy and plays a significant role in commerce. The public reposes its
faith and confidence upon banks that is why the Court recognized the
fiduciary nature of banks functions, and attached a special standard of
diligence for the exercise of their functionextraordinary diligence.

PNB and Aguilars treatment of Angel C. Santoss account is inconsistent

with the high standard of diligence required of banks. They accepted
Manimbos representations despite knowledge of the existence of
circumstances that should have raised doubts on such representations. They
did not doubt why no original death certificate could be submitted; why
Reyme L. Santos would execute an affidavit of self-adjudication when he,
together with others, had previously asked for the release of said deposit;
and they relied on the certificate of time deposit and Manimbos
representation that the passbook was lost when the passbook had just been
previously presented to Aguilar for updating.

Their negligence is not based on their failure to accept respondents

documents as evidence of the right to claim the subject deposit. Rather, it is
based on their failure to exercise the diligence required of banks when they
accepted the fraudulent representations of Manimbo.

VIII. DISPOSITIVE PORTION

WHEREFORE, the Court of Appeals decision dated 25 July 2013 is

AFFIRMED with the MODIFICATIONS in that petitioners Philippine
National Bank and Lina B. Aguilar are ordered solidarily liable to pay
respondents P100,000.00 as exemplary damages. Further, the interest rate
for the amount of P1,882,002.05, representing the face value of PNB
Managers Check No. AF-974686B is modified to 12% from 26 April 1998
until 30 June 2013, and 6% from 01 July 2013 until satisfaction. All
monetary awards shall then earn interest rate at 6% per annum per finality
of the decision until full satisfaction.

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