BPI VS LIFETIME MARKETING (2008)
A certain Alice Laurel (Laurel) deposited several checks in favor of respondent Lifetime
Marketing. The deposit of these checks was later reversed upon request by Laurel. In turn,
the amount that was supposed to be credited to respondent Lifetime Marketing
was cancelled. The above fraudulent transactions of Laurel was made possible through
BPI tellers’ failure to retrieve the duplicate original copies of the deposit slips from
the former, every time they ask for cancellation or reversal of the deposit or payment
transaction. Respondent then filed a complaint for damages against petitioner. RTC ruled
in favor of respondent. CA affirmed the decision of the trial court.
Issue: Whether BPI is liable
Ruling: Yes. The court have repeatedly emphasized that the banking industry is
impressed with public interest. Of paramount importance thereto is the trust and confidence
of public in general. Accordingly, the highest degree of diligence is expected, and high
standards of integrity and performance are required of it. By the nature of its functions, a
bank is under obligation to treat the accounts of its depositors with meticulous care, always
having in mind the fiduciary nature of its relationship with them.
BPI cannot escape liability because of LMC’s failure to scrutinize the monthly statements
sent to it by the bank. This omission does not change the fact that were it not for the
wanton and reckless negligence of BPIÊs tellers in failing to require the surrender of the
machine-validated deposit slips before reversing the deposit transactions, the loss would
not have occurred. BPI’s negligence is undoubtedly the proximate cause of the loss.
Proximate cause is that cause which, in a natural and continuous sequence, unbroken by
any efficient intervening cause, produces the injury, and without which the result would not
have occurred.
LMC should have been more vigilant in managing and overseeing its own financial affairs.
The damages awarded to it were correctly reduced on account of its own contributory
negligence in accordance with Article 1172 of the Civil Code.
FIRESTONE VS CA (2001)
Fojas-Arca Enterprises Company maintained a special account with respondent Luzon
Development Bank which authorized and allowed the former to withdraw funds from its
account through the medium of special withdrawal slips.  Fojas-Arca purchased on credit
products from Firestone with a total amount of P4,896,000.00.  In payment of these
purchases, Fojas-Arca delivered to plaintiff six special withdrawal slips drawn upon the
respondent bank.   In turn, these were deposited by the plaintiff with its current account with
the Citibank.  All of them were honored and paid by the Luzon Development
Bank.  However, in a subsequent transaction involving the payment of withdrawal slips by
Fojas-Arca for purchases on credit from petitioner, two withdrawal slips for the total sum of
P2,078,092.80 were dishonored and not paid by respondent bank for the reason “NO
ARRANGEMENT”.
As a consequence, the Citibank debited Firestone’s account for the total sum of
P2,078,092.80 representing the aggregate amount of the above-two special withdrawal
slips. Under such situation, plaintiff averred that the pecuniary losses it suffered is caused
by and directly attributable to defendants gross negligence. Hence, Firestone filed a case
before the RTC, but such was dismissed. The case was appealed by the CA.
ISSUE: Whether or not the acceptance and payment of the special withdrawal slips gives
the impression that it is a negotiable instrument like a check?
HELD: No. The essence of negotiability which characterizes a negotiable paper as a credit
instrument lies in its freedom to circulate freely as a substitute for money. The withdrawal
slips in question lacked this character.  As the withdrawal slips in question were non-
negotiable,  the rules governing the giving of immediate notice of dishonor of negotiable
instruments do not apply.
The respondent bank was under no obligation to give immediate notice that it would not
make payment on the subject withdrawal slips. Citibank should have known that withdrawal
slips were not negotiable instruments.  It could not expect these slips to be treated as
checks by other entities.  Payment or notice of dishonor from respondent bank could not be
expected immediately, in contrast to the situation involving checks. Citibank was not bound
to accept the withdrawal slips as a valid mode of deposit.  But having erroneously accepted
them as such, Citibank – and petitioner as account-holder – must bear the risks attendant
to the acceptance of these instruments.
It bears stressing that Citibank could not have missed the non-negotiable nature of the
withdrawal slips. The essence of negotiability which characterizes a negotiable paper as a
credit instrument lies in its freedom to circulate freely as a substitute for money. The
withdrawal slips in question lacked this character.
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 millions of pesos. The fact
that the other withdrawal slips were honored and paid by respondent bank was no license
for Citibank to presume that subsequent slips would be honored and paid immediately. By
doing so, it failed in its fiduciary duty to treat the accounts of its clients with the highest
degree of care.
BPI VS CA and NAPIZA (2000)
Private Respondent Napiza deposited in Foreign Currency Deposit Unit (FCDU) Savings
Account which he maintained in BPI’s bank Continental Bank Manager’s Check payable to
cash in the amount of $2500 and duly endorsed by Napiza on its dorsal side. It appears
that the check belonged to Henry Chan who went to the office of Napiza and requested him
to deposit the check in his dollar account. Napiza agreed to deliver to Chan a signed blank
withdrawal slip with the understanding that as soon as the check is cleared, both of them
would withdraw upon Napiza’s presentation of his passbook. Using the blank withdrawal
slip, one Ruben Gayon Jr was able to withdraw the amount. It was later found out that the
check was counterfeit. BPI filed a complaint against Napiza praying for the return of the
amount of $2,500.00 plus interest.
Issues:
1. WON respondent Napiza liable under his warranties as a general indorser?
2. WON BPI is grossly negligent in allowing the withdrawal?
Ruling: 
1. Ordinarily, private respondent may be held liable as in indorser of the check or even as
an accommodation party. Under the law, the holder or last indorsee of a negotiable
instrument has the right to enforce payment of the instrument for the full amount thereof
against all parties liable thereon. Among the parties liable thereon is an indorser of the
instrument. Such an indorser ‘ who indorses without qualification ‘ inter alia ‘engages that
on due presentment … the instrument shall be accepted or paid, or both, as the case may
be, according to its tenor and that if it be dishonored ,he will pay the amount thereof to the
holder.
However, to hold Napiza liable without considering the attending circumstances in the case
would result in an injustice and in erosion of the public trust in the banking system. The
interest of justice thus demands looking into the events that led to the encashment of the
check.
2. Yes. To withdraw the amount, a duly-filled up withdrawal slip and depositor’s passbook
must be presented. Such requirements were not complied with yet the amount was
withdrawn. BPI violated its own rules by allowing the withdrawal of an amount that is
definitely over and above the aggregate amount of private respondent’s dollar deposits that
had yet to be cleared. The negligence of BPI’s personnel was the proximate cause of the
loss that petitioner sustained. The proximate cause of the withdrawal and eventual loss of
the amount was part of the petitioner’s negligence in allowing such withdrawal in disregard
of its own rules.
PRODUCERS BANK V. COURT OF APPEALS (2003)
Vives (will be the creditor in this case) was asked by his friend Sanchez to help the latter’s
friend, Doronilla (will be the debtor in this case) in incorporating Doronilla’s business
“Strela”. This “help” basically involved Vives depositing a certain amount of money in
Strela’s bank account for purposes of incorporation (rationale: Doronilla had to show that he
had sufficient funds for incorporation). This amount shall later be returned to Vives.
Relying on the assurances and representations of Sanchez and Doronilla, Vives issued a
check of P200,00 in favor of Strela and deposited the same into Strela’s newly-opened
bank account (the passbook was given to the wife of Vives and the passbook had an
instruction that no withdrawals/deposits will be allowed unless the passbook is presented).
Later on, Vives learned that Strela was no longer holding office in the address previously
given to him. He later found out that the funds had already been withdrawn leaving only a
balance of P90,000. The Vives spouses tried to withdraw the amount, but it was unable to
since the balance had to answer for certain postdated checks issued by Doronilla.
Doronilla made various tenders of check in favor of Vives in order to pay his debt. All of
which were dishonored.
Hence, Vives filed an action for recovery of sum against Doronilla, Sanchez, Dumagpi and
Producer’s Bank. TC & CA: ruled in favor of Vives.
Issue/s:
(1) WON the transaction is a commodatum or a mutuum. COMMODATUM.
(2) WON the fact that there is an additional P 12,000 (allegedly representing
interest) in the amount to be returned to Vives converts the transaction from
commodatum to mutuum. NO.
(3) WON Producer’s Bank is solidarily liable to Vives, considering that it was not
privy to the transaction between Vives and Doronilla. YES.
Held/Ratio:
(1) The transaction is a commodatum.
 CC 1933 (the provision distinguishing between the two kinds of loans) seem
to imply that if the subject of the contract is a consummable thing, such as
money, the contract would be a mutuum. However, there are instances when
a commodatum may have for its object a consummable thing. Such can be
found in CC 1936 which states that “consummable goods may be the subject
of commodatum if the purpose of the contract is not the consumption of the
object, as when it is merely for exhibition”. In this case, the intention of the
parties was merely for exhibition. Vives agreed to deposit his money in
Strela’s account specifically for purpose of making it appear that Streal had
sufficient capitalization for incorporation, with the promise that the amount
should be returned withing 30 days.
(2) CC 1935 states that “the bailee in commodatum acquires the use of the thing loaned
but not its fruits”. In this case, the additional P 12,000 corresponds to the fruits of the
lending of the P 200,000.
(3) Atienza, the Branch Manager of Producer’s Bank, allowed the withdrawals on the
account of Strela despite the rule written in the passbook that neither a deposit, nor
a withdrawal will be permitted except upon the production of the passbook (recall in
this case that the passbook was in the possession of the wife of Vives all along).
Hence, this only proves to show that Atienza allowed the withdrawals because he
was party to Doronilla’s scheme of defrauding Vives. By virtue of CC 2180, PNB, as
employer, is held primarily and solidarily liable for damages caused by their
employees acting within the scope of their assigned tasks. Atienza’s acts, in helpong
Doronilla, a customer of the bank, were obviously done in furtherance of the
business of the bank, even though in the process, Atienza violated some rules.
NATURE OF FUNDS DEPOSITED – QUALIFIED THEFT 1

CITIBANK V. SPOUSES CABAMONGAN (2003)
The Cabamongan spouses Luis and Carmelita are both based in California, USA. The
spouses opened a foreign currency time deposit account for their children with petitioner
Citibank with a 180-day term. An impostor who claimed to be Carmelita (wife) succeeded to
preterminate the time deposit after presenting passport, credit card and other identification.
The bank personnel who attended to the transaction ignored several red flags which could
have alerted the bank as to the real identity of the person claiming to be 'Carmelita'. For
one, she failed to present the certificate of time deposit; there was also a discrepancy in her
signature with that in the signature cards of the bank. Finally, the photo in the bank's file did
not look like this person claiming to be Carmelita. Despite all these irregularities, the bank
went through with the transaction, which only took 40 minutes. The document waiver which
the impostor signed was also not notarized, as required under bank's procedures.
To the aghast of the spouses, they only came to learn of the incident through a daughter-in-
law who called them up in the US. Apparently, a break-in occurred previously in their US
residence and several important documents were lost to the thief. The spouses demanded
payment from the bank who refused. Hence the filing of the suit against petitioner bank.
The spouses presented a PNP Document Examiner expert who analysed the signature and
concluded that the signature was forged, hence the discrepancy between the signature of
the impostor and the one written in the signature cards held by the bank.  children. And the other withdrawals were also made by Vicente in exchange for Manager’s
The trial court ruled in favor of the spouses Cabamongan, held the bank negligent and
awarded actual, moral and exemplary damages. The bank appealed to the CA which
affirmed the lower court's decision. Both parties filed a petition for review on certiorari
before the SC where the petitioner insisted that it Carmela who preterminated the TD
despite claims to the contrary, while the Cabamongan spouses contended that Citibank’s
negligence was established by evidence.
Issue: Whether or not the bank is negligent and therefore should be held liable when it
allowed the pretermination of the TD in favor of the impostor
Ruling: YES. It has been sufficiently shown that the signatures of Carmelita in the
pretermination were forged. The petitioner, even with its signature verification procedure
failed to detect the forgeries. Citibank cannot label its negligence as mere error. For not
exercising the degree of diligence required of banking institutions, it is liable for damages.
San Pedro, the employee who primarily dealt with the impostor, did not follow bank
procedure when she did not have the waiver document notarized. The said procedure was
obviously for the protection of the bank but it deliberately ignored such precaution. At the
very least, the conduct of the bank amounts to negligence. Citibank, thru San Pedro, openly
courted disaster when despite noticing discrepancies in the signature and photograph of
the person claiming to be Carmelita and the failure to surrender the original certificate of
time deposit, the pretermination of the account was allowed. In this case, it has been
sufficiently shown that the signatures of Carmelita in the forms for pretermination of
deposits are forgeries. Citibank, with its signature verification procedure, failed to detect the
forgery. Its negligence consisted in the omission of that degree of diligence required of
banks. The Court has held that a bank is "bound to know the signatures of its customers;
and if it pays a forged check, it must be considered as making the payment out of its own
funds, and cannot ordinarily charge the amount so paid to the account of the depositor
whose name was forged.” The Court has repeatedly emphasized that, since the banking
business is impressed with public interest, of paramount importance thereto is the trust and
confidence of the public in general. Consequently, the highest degree of diligence is
expected, and high standards of integrity and performance are even required of it. By the
nature of its functions, a bank is "under obligation to treat the accounts of its depositors with
meticulous care, always having in mind the fiduciary nature of their relationship.
PNB V. PIKE (2005)
Pike, gay entertainer, opened a dollar account at PNB Buendia branch for which he was
issued a passbook. Before leaving for abroad, Pike verbally authorized AVP of PNB
Buendia branch, Lorenzo Bal, to honor all withdrawal that will be made by Davasol, talent
manager, who will be presenting a pre-signed withdrawal slip bearing Pike’s signature.
Subsequently, the passbook was stolen in his house by his talent manager Joy Davasol
who made 2 unauthorized withdrawals. After knowing the incident, Pike demanded the total
withdrawn amount on the ground that he never authorized anyone to withdraw from his
account and signatures presented on withdrawal slips was forgeries. Pike through his
counsel, demanded the bank to credit back the amount of unauthorized withdrawal on the
ground that signatures was forged. Pike in a letter to PNB prayed to lift the hold order that
her sister made and allow her to withdraw the remaining balance of the account provided
that he will not hold PNB responsible for the unauthorized withdrawal which was then
approved by PNB on the same date. On the other hand, PNB contends that they exercised
due diligence of a good father of a family in handling the transactions and cannot grant the
request of pike for refund. Plaintiff’s counsel denied that petitioner made a promise not to
hold PNB responsible for unauthorized withdrawal which was answered by PNB stating that
the withdrawal of remaining balance barred the claim of petitioner for unauthorized
withdrawals.
Issues: WON PNB is negligent in accommodating the pre-signed deposit slip presented by
Davasol.
Ruling: Yes. Ordinarily, banks allow withdrawal by representative provided that said
representative was authorized and the signature of the principal is secured on the space for
such transaction. The signature of Pike was misplaced and still it wasn’t corrected by Bal.
PNB approved the withdrawal slip presented by Davasol without taking any precautions
regarding its authenticity. The admitted withdrawal slips do not constitute the normal
procedure with respect to withdrawals of representatives. PNB alleged that they observed
diligence of a good father of a family but according to the jurisprudence, the bank is obliged
to treat the account of depositors with meticulous care always having in mind its fiduciary
nature which then makes the degree of diligence more than ordinary diligence. Article 1172
of the NCC provides the degree of diligence required by law to an obligor and a diligence
below that will make the obligor negligent. Hence, the petition is DENIED. PNB is ordered
to refund PIKE $7,500 plus interest 6% per annum to be computed from the date of the
filing of the complaint which interest rate shall become 12% per annum from the time the
judgement in this case becomes final and executory until its satisfaction, moral and
exemplary damages P 20,000 each, Atty. Fees P 20,000 and P 10,000 representing
expenses of litigation.
CAGUNGUN V. PLANTERS DEVELOPMENT BANK (2005)
The spouses Cagungun filed a suit against, then, Country Development Bank (after a
merger, known as Planters Development Bank). Vicente Cagungun has since died and was
substituted by their children as plaintiff. Country opened an extension office in Olongapo
City and the Cagungun spouses opened some accounts with them, 2 of which, they were
issued Savings Passbooks, in the name of “Puring’s Dry Goods and Savings” and “V/L
Cagungun”. Cagungun spouses claimed that because of the nature of their businesses,
requiring daily deposits and their trust to Country, they entrusted and left them with said
saving passbooks, with the arrangement that Branch manager, Ruperto Reyes, or a certain
Bong and Ding would collect their funds, round it off and deposit to their account. The
remainder of which would then be applied to their mortgage loan balance. The arrangement
went well, when they received a notice that their loan was past due. Hence, they
investigated, finding out that on the dates of October 8, 18, 20 and 31 and November 15,
and December 4 and 8, with the use of withdrawal slips, a total of P220,000.00 was
withdrawn from their Savings. These withdrawals were invalid for no such withdrawal was
authorized, made or received by the depositors, and the signatures of Vicente on the slips
were forgeries, as confirmed by the NBI Chief of Questioned Documents Division. Planters
did not cooperate with the investigation made by the Cagungun spouses. Furthermore, they
explained that the October 8 withdrawal of P20,000.00 and the other withdrawals of a total
of P30,000.00, were placed on time deposits by Vicente in 5 accounts held with their
Checks made in the names of payees Santiago Lee, Rosita Saldana, Benito Yap and
Joaquin Aganda. Hence this petition.
Issue: Whether or not was grossly negligent and entitles the plaintiff for damages
Held: YES, the bank was indeed grossly negligent when it allowed the sum of
P220,000.00 to be withdrawn through falsified withdrawal slips without petitioners’ authority
and knowledge and its failure to comply with petitioners’ instruction to apply their deposits
on their loan. In so doing, respondent bank breached the trust that petitioners reposed on it.
We agree in the findings of the two courts below that the unauthorized transactions were
committed by one or some of the employees of respondent bank for which it should be
liable. The evidence showed that respondent did not exercise the degree of diligence it
ought to have exercised in dealing with its clients -- diligence higher than that of a good
father of a family. If only respondent exercised such diligence, no anomaly or irregularity
would have happened.
Hence the court awards moral damages and exemplary damages – The Cagungun
spouses are granted moral damages for the reason that Planters was grossly negligent
when it allowed the P220,000.00 to be withdrawn and its failure to comply with the
instructions. As a settled rule, the gross negligence of the bank in handling the deposit of its
clients amounts to bad faith and calls for an award of moral damages. Moral damages are
meant to compensate the claimant for any physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and
similar injuries unjustly caused. As a bank, it should have exercised diligence higher than
that of a good father of the family. Furthermore, for the non-cooperation of Planters with the
investigation initially made by the Cagungun spouses, attempting to cover up the misdeeds
of its employees, exemplary damages are also to be awarded.
FAR EAST BANK V. CHANTE (2013)
Robert Chan, also known as Robert Chan was a current account depositor for petitioner.
He was issues a “Do-it-all” card to handle credit card and ATM transactions. A PIN, known
only to Chan, was the security feature.
FEBTC bought a complaint against Chan to recover P770,488.30 as unpaid balance for an
amount allegedly withdrawn using the card at the ATM facility at the Manila Pavilion Hotel
in Manila. The withdrawals were done in a series of 242 transactions with the use of the
same machine at P4,000 per transaction. The transactions were processed despite: the
offline status of the branch of account (FEBTC Ongpin Branch); Chan’s account balance
being only P198,511.70 at the time, as shown in the bank statement; the maximum
withdrawal limit of the ATM facility being P50,000.00/day; and his withdrawal transactions
not being reflected in his account, and no debits or deductions from his current account with
the FEBTC Ongpin Branch being recorded. FECTC alleged a bug allowed Chan to
withdraw more than his account would allow. Chan denied liability alleging he was home at
the time of the withdrawal. He argued it was humanly impossible to stand long hours in
front of the ATM to withdraw those funds. The RTC rendered judgment in favor of FEBTC.
Regardless of lack of precedence regarding computer errors, respondent should return
what is not rightfully his. The CA reversed the decision. The evidentiary dilemma was that
there was no direct evidence on who made the actual withdrawals.
Issue: Is Chan liable for the amount?
Held: The FEBTC argues that Chan authorized the withdrawals based on the fact that only
Chan knew the correct PIN. We disagree with FEBTC.
Although there was no question that Chan had the physical possession of Far East Card
No. 05-01120-5-0 at the time of the withdrawals, the exclusive possession of the card alone
did not suffice to preponderantly establish that he had himself made the withdrawals, or that
he had caused the withdrawals to be made. In his answer, he denied using the card to
withdraw funds from his account on the dates in question, and averred that the withdrawals
had been an "inside job." His denial effectively traversed FEBTC’s claim of his direct and
personal liability for the withdrawals, that it would lose the case unless it competently and
sufficiently established that he had personally made the withdrawals himself, or that he had
caused the withdrawals. In other words, it carried the burden of proof.
Burden of proof is a term that refers to two separate and quite different concepts, namely:
(a) the risk of non-persuasion, or the burden of persuasion, or simply persuasion burden;
and (b) the duty of producing evidence, or the burden of going forward with the evidence, or
simply the production burden or the burden of evidence. In its first concept, it is the duty to
establish the truth of a given proposition or issue by such a quantum of evidence as the law
demands in the case at which the issue arises. In its other concept, it is the duty of
producing evidence at the beginning or at any subsequent stage of trial in order to make or
meet a prima facie case. Generally speaking, burden of proof in its second concept passes
NATURE OF FUNDS DEPOSITED – QUALIFIED THEFT 2
from party to party as the case progresses, while in its first concept it rests throughout upon
the party asserting the affirmative of the issue.
The party who alleges an affirmative fact has the burden of proving it because mere
allegation of the fact is not evidence of it. Verily, the party who asserts, not he who denies,
must prove.
In civil cases, the burden of proof is on the party who would be defeated if no evidence is
given on either side. This is because our system frees the trier of facts from the
responsibility of investigating and presenting the facts and arguments, placing that
responsibility entirely upon the respective parties. The burden of proof, which may either be
on the plaintiff or the defendant, is on the plaintiff if the defendant denies the factual
allegations of the complaint in the manner required by the Rules of Court; or on the
defendant if he admits expressly or impliedly the essential allegations but raises an
affirmative defense or defenses, that, if proved, would exculpate him from liability.
RCBC VS. HI-TRI DEVELOPMENT CORP., (2012)
Luz Bakunawa and her husband Manuel, now deceased (Spouses Bakunawa) are
registered owners of six (6) parcels of land in Quezon City. These lots were sequestered by
the Presidential Commission on Good Government [(PCGG)]. Sometime in 1990, a certain
Teresita Millan (Millan), through her representative, Jerry Montemayor, offered to buy said
lots for ₱6,724,085.71, with the promise that she will take care of clearing whatever
preliminary obstacles there may be to effect a completion of the sale.
The Spouses Bakunawa gave to Millan the Owners Copies of said TCTs and in turn, Millan
made a downpayment of ₱1,019,514.29 for the intended purchase. However, for one
reason or another, Millan was not able to clear said obstacles. As a result, the Spouses
Bakunawa rescinded the sale and offered to return to Millan her downpayment of
₱1,019,514.29. However, Millan refused to accept back the ₱1,019,514.29 down payment.
Consequently, the Spouses Bakunawa, through their company, the Hi-Tri Development
Corporation (Hi-Tri) took out on October 28, 1991, a Managers Check from RCBC-Ermita in
the amount of ₱1,019,514.29, payable to Millan’s company Rosmil Realty and
Development Corporation (Rosmil) c/o Teresita Millan and used this as one of their basis
for a complaint against Millan and Montemayor which they filed with the Regional Trial
Court of Quezon City, Branch 99.
On January 31, 2003, during the pendency of the above mentioned case and without the
knowledge of [Hi-Tri and Spouses Bakunawa], RCBC reported the ₱1,019,514.29-credit
existing in favor of Rosmil to the Bureau of Treasury as among its unclaimed balances as of
January 31, 2003. Allegedly, a copy of the Sworn Statement executed by Florentino N.
Mendoza, Manager and Head of RCBCs Asset Management, Disbursement & Sundry
Department (AMDSD) was posted within the premises of RCBC-Ermita.
On December 14, 2006, x x x Republic, through the [Office of the Solicitor General (OSG)],
filed with the RTC the action below for Escheat [(Civil Case No. 06-244)].
On April 30, 2008, [Spouses Bakunawa] settled amicably their dispute with Rosmil and
Millan. Instead of only the amount of ₱1,019,514.29, [Spouses Bakunawa] agreed to pay
Rosmil and Millan the amount of ₱3,000,000.00, [which is] inclusive [of] the amount of []
₱1,019,514.29. But during negotiations and evidently prior to said settlement, [Manuel
Bakunawa, through Hi-Tri] inquired from RCBC-Ermita the availability of the ₱1,019,514.29
under RCBC Managers Check No. ER 034469. [Hi-Tri and Spouses Bakunawa] were
however dismayed when they were informed that the amount was already subject of the
escheat proceedings before the RTC.
Issue: Whether or not the escheat (the reversion of property to the state on the owner’s
dying without legal heirs) of the account in RCBC is proper.
Held: No. There are checks of a special type called managers or cashiers checks. These
are bills of exchange drawn by the banks manager or cashier, in the name of the bank,
against the bank itself. Typically, a managers or a cashiers check is procured from the bank
by allocating a particular amount of funds to be debited from the depositors account or by
directly paying or depositing to the bank the value of the check to be drawn. Since the bank
issues the check in its name, with itself as the drawee, the check is deemed accepted in
advance. Ordinarily, the check becomes the primary obligation of the issuing bank and
constitutes its written promise to pay upon demand.
Nevertheless, the mere issuance of a managers check does not ipso facto work as an
automatic transfer of funds to the account of the payee. In case the procurer of the
managers or cashiers check retains custody of the instrument, does not tender it to the
intended payee, or fails to make an effective delivery, we find the following provision on
undelivered instruments under the Negotiable Instruments Law applicable:
Sec. 16. Delivery; when effectual; when presumed. Every contract on a negotiable
instrument is incomplete and revocable until delivery of the instrument for the purpose of
giving effect thereto. As between immediate parties and as regards a remote party other
than a holder in due course, the delivery, in order to be effectual, must be made either by or
under the authority of the party making, drawing, accepting, or indorsing, as the case may
be; and, in such case, the delivery may be shown to have been conditional, or for a special
purpose only, and not for the purpose of transferring the property in the instrument. But
where the instrument is in the hands of a holder in due course, a valid delivery thereof by all
parties prior to him so as to make them liable to him is conclusively presumed. And where
the instrument is no longer in the possession of a party whose signature appears thereon, a
valid and intentional delivery by him is presumed until the contrary is proved.
Since there was no delivery, presentment of the check to the bank for payment did not
occur. An order to debit the account of respondents was never made. In fact, petitioner
confirms that the Managers Check was never negotiated or presented for payment to its
Ermita Branch, and that the allocated fund is still held by the bank. As a result, the assigned
fund is deemed to remain part of the account of Hi-Tri, which procured the Managers
Check. The doctrine that the deposit represented by a managers check automatically
passes to the payee is inapplicable, because the instrument although accepted in advance
remains undelivered. Hence, respondents should have been informed that the deposit had
been left inactive for more than 10 years, and that it may be subjected to escheat
proceedings if left unclaimed.
ANA RIVERA V. PEOPLE’S BANK ANG TRUST CO (1942)
1. Banks and Banking; Validity of Survivorship Agreement; Joint Deposits.—The
survivorship agreement here involves is prima facie valid. It is an aleatory contract
supported by a lawful consideration—the mutual agreement of the joint depositors
permitting either of them to withdraw the whole deposit during their lifetime, and transferring
the balance to the survivor upon the death of one of them. It is covered by Article 1790 of
the Civil Code. Furthermore, it is well established that a bank account may be so created
that two persons shall be joint owners thereof during their mutual lives, and the survivor
take the whole on the death of the other. The right to make such joint deposits has
generally been held not to be done away with by statutes abolishing joint tenancy and
survivorship generally as they existed at common law.
2. Id.; Id., Id.—But although the survivorship agreement is per se not contrary to law, its
operation or effect may be violative of the law. For instance, if it be shown in a given case
that such agreement is a mere cloak to hide an inofficious donation, to transfer property in
fraud of creditors, or to defeat the legitime of a forced heir, it may be assailed and annulled
upon such grounds. No such vice has been imputed and established against the agreement
involved in this case.
FACTS:
The question raised in this appeal is the validity of the survivorship agreement made by and
between Edgar Stephenson, now deceased, and Ana Rivera, appellant herein.
SURVIVORSHIP AGREEMENT
Know All Men by These Presents:
That we hereby agree with each other and with the PEOPLES BANK AND TRUST
COMPANY, Manila, Philippine Islands (hereinafter called the Bank), that all moneys now or
hereafter deposited by us or either of us with the Bank in our savings account shall be
deposited in and received by the Bank with the understanding and upon the condition that
said money be deposited without consideration of its previous ownership, and that said
money and all interest thereon, if any there be, shall be the property of both of us joint
tenants, and shall be payable to and collectible by either of us during our joint lives, and
after the death of one of us shall belong to and be the sole property of the survivor, and
shall be payable to and collectible by such survivor.
And we further covenant and agree with each other and the Bank, its successors or
assigns, that the receipt or check of either of us during our joint lives, or the receipt or
check of the survivor, for any payment made from this account, and shall be valid and
sufficient and discharge to the Bank for such payment.
The Bank is hereby authorized to accept and deposit to this account all checks made
payable to either or both of us, when endorsed by either or both of us or one for the other.
This is a joint and several agreement and is binding upon each of us, our heirs, executors,
administrators, and assigns.
In witness whereof we have signed our names here to this 17th day of October, 1931.
(Sgd.) EDGAR STEPHENSON
(Sgd.) Ana Rivera
Address: 799 Sta. Mesa, Manila
        Witness:
        (Sgd.) FRED W. BOHLER
        (Sgd.) Y. E. Cox
        S. A. #4146
Ana Rivera was employed by Edgar Stephenson as housekeeper from the year 1920 until
his death on June 8, 1939. On December 24, Stephenson opened an account in his name
with the defendant Peoples Bank by depositing therein the sum of P1,000. On October 17,
1931, when there was a balance of P2,072 in said account, the survivorship agreement in
question was executed and the said account was transferred to the name of "Edgar
Stephenson and/or Ana Rivera." At the time of Stephenson's death Ana Rivera held the
deposit book, and there was a balance in said account of P701.43, which Ana Rivera
claimed but which the bank refused to pay to her upon advice of its attorneys who gave the
opinion that the survivorship agreement was of doubtful validity. Thereupon Ana Rivera
instituted the present action against the bank, and Minnie Stephenson, administratix of the
estate of the deceased, intervened and claimed the amount for the estate, alleging that the
money deposited in said account was and is the exclusive property of the deceased.
TC: Held that the agreement in question, viewed from its effect during the lives of
the parties, was a mere power of attorney authorizing Ana Rivera to withdraw
the said deposit, which power terminated upon the death of the principal,
Edgar Stephenson; but that, viewed from its effect after the death of either
parties, that the agreement was a donation mortis causa with reference to the
NATURE OF FUNDS DEPOSITED – QUALIFIED THEFT 3
 balance remaining at the death of one of them, which, not having been
executed with the formalities of a testamentary disposition as required by In 1980, Dolores Luchanco Vitug died in New York. Her husband, Romarico Vitug and
Article 620 of the Civil Code, was of no legal effect. Nenita Alonte were appointed co-administrator of her estate. Rowena Corona was the
executrix.
Defendant bank contention: None, did not appear in Court.
In 1985, Romarico filed a motion asking for authority from the probate court to sell certain
Minnie Stephenson’s contention: the survivorship agreement was a donation mortis shares of stock and real properties belonging to the estate to cover allegedly his advances
causa from Stephenson to Ana Rivera of the bank account in question and to the estate in the sum of P 667,731.66, plus interests, which he claimed were personal
funds. He used the amount to pay estate taxes.
that, since it was not executed with the formalities of a will, it can have no legal
effect.
Rowena Corona opposed the motion to sell on the ground that the same funds withdrawn
from savings account No. 35342-038 were conjugal partnership properties and part of the
The Court in this case found no basis for the conclusion that the survivorship agreement estate, hence, there was allegedly no ground for reimbursement.
was a mere power of attorney from Stephenson to Ana, or that it is a gift mortis causa from
him to her. Such conclusion is evidently predicated on the assumption that Stephenson was Romarico insists that the account was previously a conjugal property but by virtue of a
the exclusive owner of the funds deposited in the bank, which assumption was in turn survivorship agreement between him and Dolores, it became his exclusive property.
based on the facts (1) that the account was originally opened in the name of Stephenson
alone and (2) that Ana Rivera "served only as housemaid of the deceased." But it not Trial Court – upheld the validity of the survivorship agreement.
infrequently happens that a person deposits money in the bank in the name of another; and
in the instant case it also appears that Ana Rivera served her master for about nineteen CA – the agreement constitutes a conveyance mortis causa which did not comply with the
years without actually receiving her salary from him. The fact that subsequently formalities of a valid will as prescribed by Article 805 of the Civil Code. Assuming that it is a
Stephenson transferred the account to the name of himself and/or Ana Rivera and mere donation inter vivos, it is a prohibited donation under the provisions of Article
executed with the latter the survivorship agreement in question although there was no 133 of the Civil Code.
relation of kinship between them but only that of master and servant, nullifies the
assumption that Stephenson was the exclusive owner of the bank account. In the absence, ISSUES: WON the survivorship agreement constitutes a donation between spouses
then, of clear proof of the contrary, we must give full faith and credit to the certificate of prohibited by the law. (NO, it is actually an aleatory contract)
deposit, which recites in effect that the funds in question belonged to Edgar Stephenson
RATIO: The survivorship agreement is not a donation inter vivos, for obvious reasons,
and Ana Rivera; that they were joint owners thereof; and that either of them could withdraw
because it was to take effect after the death of one party. Secondly , it is not a donation
any part or the whole of said account during the lifetime of both, and the balance, if any,
between the spouses because it involved no conveyance of a spouse’s own
upon the death of either, belonged to the survivor. properties to the other.
ISSUE: The spouses are not prohibited by law to invest conjugal property, say, by way of a joint
and several bank account, more commonly denominated in banking parlance as an
WON the survivorship agreement is valid. “and/or” account.

HELD: In the case at bar, when the spouses Vitug opened savings account No. 35342-038, they
merely put what rightfully belonged to them in a money-making venture.

YES. It was found by the Court to be prima facie valid. It is an aleatory contract supported They did not dispose of it in favor of the other, which would have arguably been
by law a lawful consideration — the mutual agreement of the joint depositors permitting sanctionable as a prohibited donation.
either of them to withdraw the whole deposit during their lifetime, and transferring the
balance to the survivor upon the death of one of them. The trial court said that the Civil The validity of the contract seems debatable by reason of its “survivor-take-all” feature, but
Code "contains no provisions sanctioning such an agreement" The SC opined that it is in reality, that contract imposed a mere obligation with a term, the term being death. Such
covered by article 1790 of the Civil Code, which provides as follows: agreements are permitted by the Civil Code.

The agreement is actually an aleatory contract.

ART. 1790. By an aleatory contract one of the parties binds himself, or both
reciprocally bind themselves, to give or to do something as an equivalent for ART. 2010. By an aleatory contract, one of the parties or both reciprocally bind themselves
that which the other party is to give or do in case of the occurrence of an event to give or to do something in consideration of what the other shall give or do upon the
which is uncertain or will happen at an indeterminate time. happening of an event which is uncertain, or which is to occur at an indeterminate time.

The fulfillment of an aleatory contract depends on either the happening of an event which is
Furthermore, "it is well established that a bank account may be so created that two persons (1) “uncertain,” (2) “which is to occur at an indeterminate time.”
shall be joint owners thereof during their mutual lives, and the survivor take the whole on
the death of the other. The right to make such joint deposits has generally been held not to A survivorship agreement, the sale of a sweepstake ticket, a transaction stipulating on the
be done with by statutes abolishing joint tenancy and survivorship generally as they existed value of currency, and insurance have been held to fall under the first category, while a
at common law." (7 Am. Jur., 299.) contract for life annuity or pension under Article 2021, et sequentia, has been categorized
under the second.
But although the survivorship agreement is per se not contrary to law, its operation or effect
In either case, the element of risk is present. In the case at bar, the risk was the death of
may be violative of the law. For instance, if it be shown in a given case that such agreement
one party and the survivorship of the other.
is a mere cloak to hide an inofficious donation, to transfer property in fraud of creditors, or
to defeat the legitime of a forced heir, it may be assailed and annulled upon such grounds.
Although the survivorship agreement is per se not contrary to law its operation or effect
No such vice has been imputed and established against the agreement involved in the
may be violative of the law. For instance, if it be shown in a given case that such agreement
case.
is a mere cloak to hide an inofficious donation, to transfer property in fraud of creditors, or
to defeat the legitime of a forced heir, it may be assailed and annulled upon such grounds.
WHEREFORE, the agreement appealed from is reversed and another judgment will be
No such vice has been imputed and established against the agreement involved in this
entered in favor of the plaintiff ordering the defendant bank to pay to her the sum of
case.
P701.43, with legal interest thereon from the date of the complaint, and the costs in both
instances. So ordered.

VITUG V. CA (1990)

NATURE OF FUNDS DEPOSITED – QUALIFIED THEFT 4