Credit Transactions

BPI vs. Intermediate Appellate Court GR# L-66826, August 19, 1988
Facts:Rizaldy T. Zshornack and his wife maintained in COMTRUST a dollar savings account and a
peso current account. An application for a dollar drat was accomplished by Virgillo Garcia branch
manager of COMTRUST payable to a certain Leovigilda Dizon. In the PPLICtion, Garcia indicated
that the amount was to be charged to the dolar savings account of the Zshornacks. There wasa no
indication of the name of the purchaser of the dollar draft. Comtrust issued a check payable to the
order of Dizon. When Zshornack noticed the withdrawal from his account, he demanded an
explainaiton from the bank. In its answer, Comtrust claimed that the peso value of the withdrawal was
given to Atty. Ernesto Zshornack, brother of Rizaldy. When he encashed with COMTRUST a cashiers
check for P8450 issued by the manila banking corporation payable to Ernesto.
Issue: Whether the contract between petitioner and respondent bank is a deposit?
Held: The document which embodies the contract states that the US$3,000.00 was received by the
bank for safekeeping. The subsequent acts of the parties also show that the intent of the parties was
really for the bank to safely keep the dollars and to return it to Zshornack at a later time. Thus,
Zshornack demanded the return of the money on May 10, 1976, or over five months later.
The above arrangement is that contract defined under Article 1962, New Civil Code, which reads:
Art. 1962. A deposit is constituted from the moment a person receives a thing belonging to another,
with the obligation of safely keeping it and of returning the same. If the safekeeping of the thing
delivered is not the principal purpose of the contract, there is no deposit but some other contract.
-BPI Family Savings Bank, Inc. vs First Metro Investment GR 132390, May 21, 2004
Facts:On August 25, 1989, FMIC, through its Executive Vice President Antonio Ong, opened current
account and deposited METROBANK check no. 898679 of P100 million with BPI Family Bank (BPI
FB). Ong made the deposit upon request of his friend, Ador de Asis, a close acquaintance of Jaime
Sebastian, then Branch Manager of BPI FB San Francisco del Monte Branch. Sebastians aim was to
increase the deposit level in his Branch.
BPI FB, through Sebastian, guaranteed the payment of P14,667,687.01 representing17% per annum
interest of P100 million deposited by FMIC. The latter, in turn, assured BPI FB that it will maintain its
deposit of P100 million for a period of one year on condition that the interest of 17% per annum is
paid in advance. This agreement between the parties was reached through their communications in
writing. Subsequently, BPI FB paid FMIC 17% interest or P14,667,687.01 upon clearance of the
latters check deposit.
However, on August 29, 1989, on the basis of an Authority to Debit signed by Ong and Ma. Theresa
David, Senior Manager of FMIC, BPI FB transferred P80 million from FMICs current account to the
savings account of Tevesteco Arrastre Stevedoring,Inc. FMIC denied having authorized the transfer
of its funds to Tevesteco, claiming that the signatures of Ong and David were falsified.
Thereupon, to recover immediately its deposit, FMIC, on September 12, 1989, issued BPI FB check
no. 129077 forP86,057,646.72 payable to itself and drawn on its deposit with BPI FB SFDM branch.
But upon presentation for payment on September 13, 1989, BPI FB dishonored thecheck as it was
drawn against insufficient funds. Consequently, FMIC filed a complaint against BPI FB.
FMIC filed an Information for estafa against Ong, de Asis, Sebastian and four others. However, the
Information was dismissed on the basis of a demurrer to evidence filed by the accused.

Issues:1. Was the transaction between FMIC and BPI, a time deposit or an interest-bearing current
account which, under existing bank regulations, was an illegal transaction?2. Is the bank liable for the
unauthorized transfer of respondents funds to Tevesteco?
Decisions:1.We hold that the parties did not intend the deposit to be treated as a demanddeposit but
rather as an interest-earning time deposit not withdrawable anytime. When respondent FMIC invested
its money with petitioner BPI FB, they intended the P100 million as a time deposit, to earn 17% per
annum interest and to remain intactuntil its maturity date one year thereafter.
Ordinarily, a time deposit is defined as one the payment of which cannot legally be required within
such a specified number of days.In contrast, demand deposits are all those liabilities of the Bangko
Sentral and of other banks which are denominated in Philippine currency and are subject to payment
in legal tender upon demand by the presentation of (depositors) checks.
While it may be true that barely one month and seven days from the date of deposit, respondent
FMIC demanded the withdrawal of P86,057,646.72 through the issuance of a check payable to itself,
the same was made as a result of the fraudulent and unauthorized transfer by petitioner BPI FB of its
P80 million deposit to Tevestecos savings account. Certainly, such was a normal reaction of
respondent as a depositor to petitioners failure in its fiduciary duty to treat its account with the highest
degree of care.
Under this circumstance, the withdrawal of deposit by respondent FMIC before the one-year maturity
date did not change the nature of its time deposit to one of demand deposit. We have held that if a
corporation knowingly permits its officer, or any other agent, to perform acts within the scope of an
apparent authority, holding him out to the public as possessing power to do those acts, the
corporation will, as against any person who has dealt in good faith with the corporation through such
agent, be estopped from denying such authority.
Petitioner maintains that respondent should have first inquired whether the deposit of P100 Million
and the fixing of the interest rate were pursuant to its (petitioners) internal procedures. Petitioners
stance is a futile attempt to evade an obligation clearly established by the intent of the parties. What
transpires in the corporate boardroom is entirely an internal matter. Hence, petitioner may not impute
negligence on the part of respondents representative in failing to find out the scope of authority of
petitioners Branch Manager.
Indeed, the public has the right to rely on the trustworthiness of bank managers and their acts.
Obviously, confidence in the banking system, which necessarily includes reliance on bank managers,
is vital in the economic life of our society. Significantly, the transaction was actually acknowledged
and ratified by petitioner when it paid respondent in advance the interest for one year. Thus, petitioner
is estopped from denying that it authorized its Branch Manager to enter into anagreement with
respondents Executive Vice President concerning the deposit withthe corresponding 17% interest per
annum.
2.Yes. We uphold the finding of both lower courts that petitioner failed to exercise that degree of
diligence required by the nature of its obligations to its depositors. A bank is under obligation to treat
the accounts of its depositors with meticulous care, whether such account consists only of a few
hundred pesos or of million of pesos. Here, petitioner cannot claim it exercised such adegree of care
required of it and must, therefore, bear the consequence.
-Tan vs. CA GR 108555, 20 December 1994
Facts:Ramon Tan, a businessman from Puerto Princesa, secured a Cashiers Check from
PhilippineCommercial Industrial Bank (PCIBank) to P30,000 payable to his order to avoid carrying
cash while enrouteto Manila. He deposited the check in his account in Rizal Commercial Banking
Corporation (RCBC) in itsBinondo Branch. RCBC sent the check for clearing to the Central Bank

which was returned for having beenmissent or misrouted. RCBC debited Tans account without
informing him. Relying on commonknowledge that a cashiers check was as good as cash, and a
month after depositing the check, he issued twopersonal checks in the name of Go Lak and MS
Development Trading Corporation. Both checks bounced dueto insufficiency of funds. Tan filed a
suit for damages against RCBC.
Issue: Whether a cashiers check is as good as cash, so as to have funded the two checks
subsequently drawn.
Held: An ordinary check is not a mere undertaking to pay an amount of money. There is an element
ofcertainty or assurance that it will be paid upon presentation; that is why it is perceived as a
convenientsubstitute for currency in commercial and financial transactions. Herein, what is involved is
more than anordinary check, but a cashiers check. A cashiers check is a primary obligation of the
issuing bank andaccepted in advance by its mere issuance. By its very nature, a cashiers check is a
banks order to pay what isdrawn upon itself, committing in effect its total resources, integrity and
honor beyond the check. Herein,PCIB by issuing the check created an unconditional credit in favor
any collecting bank. Reliance on thelaymans perception that a cashiers check is as good as cash is
not entirely misplaced, as it is rooted inpractice, tradition and principle.
-Solidbank vs CA, Central Bank GR 120010
Facts:The Pacific Banking Corporation (PBC) was placed under receivership. A Liquidator was
designated for the liquidation process. The Central Bank invited several banks to buy the assets and
the franchise of the various offices of PBC and to assume its liabilities. The Far East Bank and Trust
Company (FEBTC) was one of the bidders, and its bid was found to be the most advantageous. PBC
and Central Bank on the one hand and FEBTC on the other, signed: (a) Purchase Agreement; and (b)
Memorandum of Agreement.
The Solidbank Corporation (a.k.a. the Consolidated Bank and Trust Corporation, hereafter,
Solidbank) through its Senior Vice-President/Comptroller Ms. Corazon R. Dayao, filed its claims with
the Liquidator of PBC, Mr. Renan V. Santos, namely:
(1) P8,024,007.27 (excluding interests and surcharges) covering eight (8) receivables (computer
machines and other accessories connected with their operations and the right to collect rentals
therefrom) due from PBC and assigned to Solidbank by the United Pacific Leasing and Finance
Corporation, a subsidiary of PBC, which amount due as of totalled P24,158,263.10;
(2) several deposits (proceeds of collection items evidenced by registers of collection items and
balances of the current accounts in the various branches of PBC).
Solidbank filed with the liquidation court a Motion for Summary Judgment in connection with the
claims aforementioned, citing the following grounds: there is no genuine issue as to any material fact;
there is no substantial controversy in the case; and, it is entitled to summary judgment as a matter of
law.
FEBTC filed its Comment alleging: FEBTC did not specifically deny the claims of Solidbank in the
Motion to Implead; the issues before the liquidation court are not purely legal, but factual, i.e.,
whether the subject receivables as well as deposit liabilities were included in the Purchase
Agreement as among those purchased by FEBTC.
Issues:Whether or not the deposit liabilities are included in the Purchase Agreement as among those
purchased by FEBTC with Solidbank?
Whether or not summary judgment is proper in the case at bar.

Ruling:Summary judgment is a procedural device resorted to in order to avoid long drawn out
litigations and useless delays. When the pleadings on file show that there are no genuine issues of
fact to be tried, the Rules of Court allows a party to obtain immediate relief by way of summary
judgment. That is, when the facts are not in dispute, the court is allowed to decide the case summarily
by applying the law to the material facts.
In the case at bar, it cannot be said that the foregoing requisites are present. There is a genuine
issue, the resolution of which requires the presentation of evidence, i.e., whether or not Solidbanks
claim is included in the purchase agreement as among the properties and items purchased and
assumed by FEBTC from Pacific Bank/Central Bank. While the counsel for FEBTC did say that in
principle he is not objecting to the motion for summary judgment and that they will have no objection
if the Court will just require the parties to submit affidavit and counter-affidavits in support to their
respective contentions, this should not be taken out of context for in the same manifestation, said
counsel clearly expressed that he does not agree that there are no material issues raised in the
pleadings.
SC: Solidbank lost. The party who moves for summary judgment has the burden of demonstrating
clearly the absence of any genuine issue of fact, or that the issue posed in the complaint is patently
unsubstantial so as not to constitute a genuine issue for trial.