G.R. No. 173259, 25 July 2011


In its complaint, it is alleged that [respondent F.F. Cruz & Co., Inc.] (hereinafter FFCCI) opened savings/current or so-called combo account No. 0219-830-146 and dollar savings account No. 0219-0502-458-6 with [petitioner Philippine National Bank] (hereinafter PNB) at its Timog Avenue Branch. Its President Felipe Cruz (or Felipe) and Secretary-Treasurer Angelita A. Cruz (or Angelita) were the named signatories for the said accounts.

The said signatories on separate but coeval dates left for and returned from the Unites States of America, Felipe on March 18, 1995 until June 10, 1995 while Angelita followed him on March 29, 1995 and returned ahead on May 9, 1995.

While they were thus out of the country, applications for cashier’s and manager’s [checks] bearing Felipe’s [signature] were presented to and both approved by the PNB. The first was on March 27, 1995 for ₱9,950,000.00 payable to a certain Gene B. Sangalang and the other one was on April 24, 1995 for ₱3,260,500.31 payable to one Paul Bautista. The amounts of these checks were then debited by the PNB against the combo account of [FFCCI].

When Angelita returned to the country, she had occasion to examine the PNB statements of account of [FFCCI] for the months of February to August 1995 and she noticed the deductions of ₱9,950,000.00 and ₱3,260,500.31. Claiming that these were unauthorized and fraudulently made, [FFCCI] requested PNB to credit back and restore to its account the value of the checks. PNB refused, and thus constrained [FFCCI] filed the instant suit for damages against the PNB and its own accountant Aurea Caparas (or Caparas).

In its traverse, PNB averred lack of cause of action. It alleged that it exercised due diligence in handling the account of [FFCCI]. The applications for manager’s check have passed through the standard bank procedures and it was only after finding no infirmity that these were given due course. In fact, it was no less than Caparas, the accountant of [FFCCI], who confirmed the regularity of the transaction. The delay of [FFCCI] in picking up and going over the bank statements was the proximate cause of its self-proclaimed injury. Had [FFCCI] been conscientious in this regard, the alleged chicanery would have been detected early on and Caparas effectively prevented from absconding with its millions. It prayed for the dismissal of the complaint.

The trial court ruled that F.F. Cruz and Company, Inc. ( FFCCI) was guilty of negligence in clothing Aurea Caparas (Caparas) with authority to make decisions on and dispositions of its account which paved the way for the fraudulent transactions perpetrated by Caparas. On the other hand, the trial court found that PNB was, likewise, negligent in not calling or personally verifying from the authorized signatories the legitimacy of the subject withdrawals considering that they were in huge amounts. For this reason, PNB had the last clear chance to prevent the unauthorized debits from FFCCI’s combo account.

The appellate court ruled that PNB was negligent in not properly verifying the genuineness of the signatures appearing on the two applications for manager’s check as evidenced by the lack of the signature of the bank verifier thereon. Had this procedure been followed, the forgery would have been detected. The appellate court found FFCCI guilty of contributory negligence because it clothed its accountant/bookkeeper Caparas with apparent authority to transact business with PNB. In addition, FFCCI failed to timely examine its monthly statement of account and report the discrepancy to PNB within a reasonable period of time to prevent or recover the loss. FFCCI’s contributory negligence, thus, mitigated the bank’s liability. Pursuant to the rulings in Philippine Bank of Commerce v. Court of Appeals7 and The Consolidated Bank & Trust Corporation v. Court of Appeals,8 the appellate court allocated the damages on a 60-40 ratio with the bigger share to be borne by PNB.


Whether the Court of Appeals seriously erred when it found PNB guilty of negligence.


PNB is guilty of negligence.

We find no reversible error in the findings of the appellate court that PNB was negligent in the handling of FFCCI’s combo account, specifically, with respect to PNB’s failure to detect the forgeries in the subject applications for manager’s check which could have prevented the loss. As we have often ruled, the banking business is impressed with public trust.21 A higher degree of diligence is imposed on banks relative to the handling of their affairs than that of an ordinary business enterprise.22 Thus, the degree of responsibility, care and trustworthiness expected of their officials and employees is far greater than those of ordinary officers and employees in other enterprises.23 In the case at bar, PNB failed to meet the high standard of diligence required by the circumstances to prevent the fraud. In Philippine Bank of Commerce v. Court of Appeals24 and The Consolidated Bank & Trust Corporation v. Court of Appeals,25 where the bank’s negligence is the proximate cause of the loss and the depositor is guilty of contributory negligence, we allocated the damages between the bank and the depositor on a 60-40 ratio. We apply the same ruling in this case considering that, as shown above, PNB’s negligence is the proximate cause of the loss while the issue as to FFCCI’s contributory negligence has been settled with finality in G.R. No. 173278. Thus, the appellate court properly adjudged PNB to bear the greater part of the loss consistent with these rulings.

*Case digest by Jhazeel Zhan T. Jebone, JD-4, Andres Bonifacio Law School, SY 2019-2020