Prudential Bank v CA (1993) Cruz, J.

FACTS: Private respondent Aurora Cruz invested P200,000 with petitioner bank at its Quezon Avenue Branch. The placement was for 63 days at 13.75% annual interest. The amount of P196,122.88 was withdrawn on June 23, 1986 from the savings account and applied to the investment, the difference of P3,877.07 representing the prepaid investment. The transaction was evidence by a Confirmation Sale and Debit Memo delivered to Cruz after two days. Bank employee Susan Quimbo issued the documents. Upon maturity of the placement on Aug 25, 1986, Cruz returned to the bank to renew her investment. Quimbo again issued the same documents but now asked Cruz to sign a Withdrawal Slip for P196,122.98, representing the amount to be re-invested. Quimbo explained that this was a new requirement of the bank. On Oct 27, 1986, Cruz returned to the Bank to withdraw P200,000 but was informed that according to their records, she had already withdrawn the money of Aug 25, 1986. The bank had no copy of the Confirmation Sale or Debit Memo issued by Quimbo, Quimbo also stopped reporting to the bank. Cruz made several demands for the return of the money but was told by bank officials to defer court action. Subsequently, the Bank denied the request of Cruz because she allegedly had withdrawn the money already. Cruz filed an action for breach of contract. The bank denied liability and instituted a third-party suit against Quimbo. Trial court and CA decided in favor of Cruz. Petitioner claims that the documents presented by Cruz were fake and she did not deny signing the Withdrawal Slip. On the other hand, Cruz states that she merely signed as part of the new procedure for re-investment but has not received the amount. ISSUES + RULING: WoN the bank, as principal, should be held liable for the acts of Quimbo, its agent. YES. The amount in the Withdrawal Slip relied on by petitioner is an irregular figure which corresponded to the very same amount Cruz was re-investing after the deduction of the pre-paid interest. If the intention of Cruz were to withdraw her money, she would have done so in round figures. The bank failed to impugn the authenticity of the documents presented by Cruz. Even if authorized officials did not sign the documents, Cruz had no obligation to verify the authority of Quimbo who handed the same to her. She had the right to presume the authenticity of the documents. Cruz had no reason to not accept Quimbos authority to act in behalf of her employer. The Court also took note of the fact that although the bank filed a third-party claim against Quimbo, it did not pursue the case. The bank also did not present Quimbo to testify. The bases of the petitioners liability are Arts. 1910 and 1911 of the Civil Code. The agents apparent representation yields to the principals true representation and the contract is considered as entered into between the principal and the third person. rd The Court also had previously held that banks are liable to innocent 3 persons where the representation is made in the course of its business by an agent acting within the general scope of his authority, notwithstanding the fact that the latter may already be abusing his authority in order to commit fraud. The banks relationship with the public is fiduciary. The ban k should have immediately repaired the injury caused to Cruz. The misdeeds of employees must be readily acknowledged and rectified. DISPOSITION: Petition denied. Appealed decision affirmed.