PAGANTIAN, JEMELYN C.

CASE DIGEST COMPILATION IN BANKING LAW

Allied Bank vs. Lim Sio Wan, G.R. No. 133179, March 27, 2008

FACTS:

Respondent filed a complaint against petitioner to recover the proceeds of her first money market
placement. Allied avers that respondent instructed the bank to preterminate the placement and
deposit the proceeds thereof to Metrobank.

RTC ruled in favor of respondent. CA, on appeal, ordered both petitioner and Metrobank to pay
plaintiff.

ISSUE:

Whether petitioner is liable

RULING:

Yes.

The court ruled in a line of cases that a bank deposit is in the nature of a simple loan or mutuum.

A money market is a market dealing in standardized short-term credit instruments where lenders
and borrowers do not deal directly with each other but through a middle man or dealer in open
market. In a money market transaction, the investor is a lender who loans his money to a
borrower through a middleman or dealer.
 Associated Bank vs. Tan, G.R. No. 156940, Dec. 14, 2004

FACTS:

Respondent filed a complaint against petitioner after the latter reversed the deposit of a check
issued in respondent’s favor. It averred that it has all the right to debit the account by reason of
the dishonor of the check was deposited by the respondent which was withdrawn by him prior to
its clearing.

The trial court ruled in favor of respondent and ordered the bank to pay the former. In making said
ruling, it was shown that [respondent] was not officially informed about the debiting of the
P101,000.00 [from] his existing balance and that the BANK merely allowed the [respondent] to
use the fund prior to clearing merely for accommodation because the BANK considered him as
one of its valued clients. The trial court ruled that the bank manager was negligent in handling the
particular checking account of the [respondent] stating that such lapses caused all the
inconveniences to the [respondent].

CA affirmed the trial court’s decision. It ruled that the bank should not have authorized the
withdrawal of the value of the deposited check prior to its clearing

ISSUE:
Whether or not the petitioner, which is acting as a collecting bank, has the right to debit the
account of its client for a check deposit which was dishonored by the drawee bank.

RULING:

Philippine Bank of Commerce v. Court of Appeals16 has held that "the degree of diligence
required of banks is more than that of a good father of a family where the fiduciary nature of their
relationship with their depositors is concerned."17 Indeed, the banking business is vested with
the trust and confidence of the public; hence the "appropriate standard of diligence must be very
high, if not the highest, degree of diligence."18 The standard applies, regardless of whether the
account consists of only a few hundred pesos or of millions.19
The fiduciary nature of banking, previously imposed by case law,20 is now enshrined in Republic
Act No. 8791 or the General Banking Law of 2000. Section 2 of the law specifically says that the
State recognizes the "fiduciary nature of banking that requires high standards of integrity and
performance."
Did petitioner treat respondent’s account with the highest degree of care? From all indications, it
did not.
It is undisputed -- nay, even admitted -- that purportedly as an act of accommodation to a valued
client, petitioner allowed the withdrawal of the face value of the deposited check prior to its
clearing. That act certainly disregarded the clearance requirement of the banking system. Such a
practice is unusual, because a check is not legal tender or money;21 and its value can properly
be transferred to a depositor’s account only after the check has been cleared by the drawee
bank.22
Under ordinary banking practice, after receiving a check deposit, a bank either immediately credit
the amount to a depositor’s account; or infuse value to that account only after the drawee bank
shall have paid such amount.23 Before the check shall have been cleared for deposit, the
collecting bank can only "assume" at its own risk -- as herein petitioner did -- that the check would
be cleared and paid out.
Reasonable business practice and prudence, moreover, dictated that petitioner should not have
authorized the withdrawal by respondent of P240,000 on October 1, 1990, as this amount was
over and above his outstanding cleared balance of P196,793.45.24 Hence, the lower courts
correctly appreciated the evidence in his favor.
Allied Banking Corporation vs. Sps. Macam, G.R. No. 200635, February 01, 2021

FACTS:
On February 19, 2003, Angela Barcelona, Region Head, Retail Banking Group for Allied Bank's
South Metro Manila Branches, ordered the debit of the remaining Pl .1 Million from the account of
the Spouses Mario Macam which resulted in the closure thereof.
On March 3, 2003, the Spouses Mario Macam learned of the closure after they were unable to
withdraw from their account. Hence, the Spouses Mario Macam filed the complaint for Damages
against the bank and the AB-PT Branch Head, Dimog.

ISSUE:
Whether Allied Bank is liable for unilaterally debiting and closing the deposit account of the
Spouses Mario Macam.

RULING:

RA 8791 enshrines the fiduciary nature of banking that requires high standards of integrity and
performance. The statute now reflects jurisprudential holdings that the banking industry is
impressed with public interest requiring banks to assume a degree of diligence higher than that of
a good father of a family. Thus, all banks are charged with extraordinary diligence in the handling
and care of its deposits as well as the highest degree of diligence in the selection and supervision
of its employees.The foregoing obligation of banks is absolute and deemed written into every
deposit agreement with its depositors.

We affirm the lower courts' uniform factual Finding that there is a deposit agreement between
Allied Bank and the Spouses Mario Macam. The savings deposit agreement Between the bank
and the depositor is the contract that determines the rights and obligations of the parties as in a
simple loan. In contemplation of the fiduciary nature of a bank-depositor relationship, the law
imposes on the bank a higher standard of integrity and performance in complying with its
obligations under the contract of simple loan, beyond those required of non-bank debtors under a
similar contract of simple loan.
 Consolidated Bank v. CA & Diaz, G.R. No. 138569. Sept. 11, 2003
FACTS:   
Solidbank is a domestic banking corporation while private respondent L.C. Diaz and Company,
CPA’s  (“L.C. Diaz”), is a professional partnership engaged in the practice of accounting and
which opened a savings account with Solidbank. Diaz through its cashier, Mercedes Macaraya ,
filled up a savings cash deposit slip and a savings checks deposit slip.  Macaraya instructed the
messenger of L.C. Diaz, Ismael Calapre, to deposit the money with Solidbank and give him the
Solidbank passbook.  Calapre went to Solidbank and presented to Teller No. 6 the two deposit
slips and the passbook.  The teller acknowledged receipt of the deposit by returning to Calapre
the duplicate copies of the two deposit slips.  Since the transaction took time and Calapre had to
make another deposit for L.C. Diaz with Allied Bank, he left the passbook with Solidbank.  When
Calapre returned to Solidbank to retrieve the passbook, Teller No. 6 informed him that somebody
got the passbook. Calapre went back to L.C. Diaz and reported the incident to Macaraya. The
following day,, L.C. Diaz through its Chief Executive Officer, Luis C. Diaz, called up Solidbank to
stop any transaction using the same passbook until L.C. Diaz could open a new account followed
by a formal written request later that day. It was also on the same day that L.C. Diaz learned of
the unauthorized withdrawal the day before of P300,000 from its savings account.  The
withdrawal slip bore the signatures of the authorized signatories of L.C. Diaz, namely Diaz and
Rustico L. Murillo. The signatories, however, denied signing the withdrawal slip. A certain Noel
Tamayo received the P300,000. L.C. Diaz demanded from Solidbank the return of its money but
to no avail.  Hence, L.C. Diaz filed a Complaint for Recovery of a Sum of Money against
Solidbank with the Regional Trial Court. After trial, the trial court rendered a decision absolving
Solidbank and dismissing the complaint.  Court of Appeals reversed the decision of the trial court.

ISSUE:   
Whether or not Solidbank must be held liable for the fraudulent withdrawal on private
respondent’s account.

RULING:   
Solidbank’s tellers must exercise a high degree of diligence in insuring that they return the
passbook only to the depositor or his authorized representative. The tellers know, or should
know, that the rules on savings account provide that any person in possession of the passbook is
presumptively its owner.  If the tellers give the passbook to the wrong person, they would be
clothing that person presumptive ownership of the passbook, facilitating unauthorized withdrawals
by that person.  For failing to return the passbook to Calapre, the authorized representative of
L.C. Diaz, Solidbank and Teller No. 6 presumptively failed to observe such high degree of
diligence in safeguarding the passbook, and in insuring its return to the party authorized to
receive the same. However, L.C. Diaz was guilty of contributory negligence in allowing a
withdrawal slip signed by its authorized signatories to fall into the hands of an impostor.   Thus,
the liability of Solidbank should be reduced. Hence, the liability of Solidbank for actual damages
was reduced to only 60%, the remaining 40% was borne by private respondent.
The law imposes on banks high standards in view of the fiduciary nature of banking.  RA 8791
declares that the State recognizes the “fiduciary nature of banking that requires high standards of
integrity and performance.” This new provision in the general banking law, introduced in 2000, is
a statutory affirmation of Supreme Court decisions holding that “the 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. CA, G.R. No. 127469, Jan. 15, 2004

FACTS:

Leonilo Marcos filed in court a complaint for sum of money with damages against Phil. Banking
Corporation (PBC). Marcos allegedly made a time deposit in 2 occasions the amt. of P664,897.67
and P764,897.67 through the persuasion of his friend Pagsaligan, one of the bank’s officials. The
bank issued receipt for the first deposit while a letter-certification was issued for his second
deposit by Pagsaligan. Pagsaligan kept the various time deposit certificates. When Marcos
wanted to withdraw his time deposit and its accumulated interest Pagsaligan encouraged him to
open a letter of credit to the bank by executing 3 trust receipts agreement. He signed blank forms
for domestic letter of credits, trust receipts agreements and promissory notes. He was required to
deposit 30% of the total amount of credit and his time deposit will secure the remaining 70% of
the letters of credit.

He is now accusing the bank for unjustly collecting payment without deducting the 30% of his
down payment and charging him with accumulating interests since his time deposit serves as
collateral for his remaining obligation. He further denied making a loan of P500,000 with 25%
interest per annum covered by a promissory note produced by the bank. The bank explained that
the promissory notes he executed are distinct from the trust receipt agreement and denied
falsifying the promissory note covering for the loan of P500,000. The evidence presented on the
promissory note however is merely a machine copy of the document. The said loan was already
paid by offsetting it from his time deposit.

ISSUE:

Whether the bank is liable.

Law: Sec 2, RA 8791

RULING:

The bank is liable to Marcos for offsetting his time deposits with a fictitious promissory note.

Section 2 of RA 8791 expressly imposes the fiduciary duty on banks when it declared that the
State recognizes the fiduciary nature of banking that requires high standards of integrity and
performance.

The fiduciary nature of banking requires banks to assume a degree of diligence higher that that of
a good father of a family. Thus, the bank’s fiduciary duty imposes upon it a higher level of
accountability than that expected of Marcos, a businessman, who negligently signed blank forms
and entrusted his certificates of time deposits to Pagsaligan without retaining copies of the
certificates.
 PNB v. Pike, G.R. No. 157845, Sept. 20, 2005

FACTS:

Respondent filed a complaint for damages against petitioner after the latter refused to return the
amount that was withdrawn without authorization from Pike’s dollar account. When responded
demanded to withdraw the remaining balance of his account, the bank took it as a bar from
claiming on the alleged unauthorized withdrawals.

RTC ruled in favor of respondent and held that the bank is responsible for the unauthorized
withdrawals. CA affirmed the lower court’s decision.

ISSUE:
Whether the bank is liable for the unauthorized withdrawals
Law: Section 2, RA 8791

RULING:

With banks, the degree of diligence required is more than that of a good father of a family
considering that the business of banking is imbued with public interest due to the nature of their
functions.
 BPI v. Lifetime Marketing, G.R. No. 176434, June 25, 2008

FACTS:

A certain Alice Laurel (Laurel) deposited several checks in favor of respondent. The deposit
of these checks were later reversed upon request by Laurel. In turn, the amount that was
supposed to be credited to respondent 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

Law: Section 2, RA 8791

HELD:

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 v. Casa Montessori, G.R. No. 149454, May 28, 2004

FACTS:

CASA Montessori (CASA) filed a complaint for collection with damages against petitioner
bank after it discovered that nine checks had been encashed by a certain Sonny Santos in
the total amount of P782,000.00. it turned out that the signatures on the checks were made
by the external auditor of CASA.

RTC ruled in favor of CASA. However on appeal, the CA apportioned the loss between BPI
and CASA. It took into account CASA’s contributory negligence that resulted in the
undetected forgery.

ISSUE:

Whether the bank is liable

HELD:
Yes.

We have 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."

BPI contends that it has a signature verification procedure, in which checks are honored only
when the signatures therein are verified to be the same with or similar to the specimen
signatures on the signature cards. Nonetheless, it still failed to detect the eight instances of
forgery. Its negligence consisted in the omission of that degree of diligence required of a
bank. It cannot now feign ignorance, for very early on we have already ruled 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." In fact, BPI was the
same bank involved when we issued this ruling seventy years ago.
 Central Bank vs. Citytrust Bank, G.R. No. 141835, Feb. 4, 2009

FACTS:

Respondent filed a complaint for recovery of sum of money with damages against petitioner
which it alleged erred in encashing the checks and in charging the proceeds thereof to its
account, despite the lack of authority of Cayabyab.

It appears that a certain Flores encashed a check and signed by the name of Cayabyab.
Petitioner then debited the amount against Citytrust.

RTC ruled that both parties were negligent and accordingly held them liable for the loss. CA
affirmed the trial court’s decision and noted that while respondent failed to take adequate
precautionary measures to prevent the fraudulent encashment of its checks, petitioner was
not entirely blame-free in light of its failure to verify the signature of Citytrusts agent
authorized to receive payment.

ISSUE:

Whether petitioner is liable

Section 2, RA 8791; Art. 2179, Civil Code

HELD:

Yes.

Petitioners teller Iluminada did not verify Flores signature on the flimsy excuse that Flores
had had previous transactions with it for a number of years. That circumstance did not excuse
the teller from focusing attention to or at least glancing at Flores as he was signing, and to
satisfy herself that the signature he had just affixed matched that of his specimen signature.
Had she done that, she would have readily been put on notice that Flores was affixing, not his
but a fictitious signature.

However, Citytrusts failure to timely examine its account, cancel the checks and notify
petitioner of their alleged loss/theft should mitigate petitioners liability, in accordance with
Article 2179 of the Civil Code which provides that if the plaintiffs negligence was only
contributory, the immediate and proximate cause of the injury being the defendants lack of
due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be
awarded. For had Citytrust timely discovered the loss/theft and/or subsequent encashment,
their proceeds or part thereof could have been recovered.
 Landbank vs. Gualberto Catadman, G.R. No. 200407, June 17, 2020

FACTS:
On March 21, 1999 (Land Bank) received the following (DBP) Checks: (1) No. 1731263 in the
amounT to."8,500.00payableto GCNK Merchandising, ovvned by respondent Gualberto
Catadman (Catadman), to be credited to his Land Bank Account No. 2562-0016-49; (2) No.
151837 in the amount of Pl 00,000.00 payable to National Economic Development Authority
(NEDA) - Regional Office XI and to be credited to its Land Bank Account No. 2562-001-46; and
(3) No. 358896 in the amount of !'6,502.68 payable to Benjamin S. Reyno (Reyno) and to be
credited to his Land Bank Account No. 2561-On May 26, 1999, all three checks were cleared.
Two days later, however, NEDA's DBP Check No. 151837 and Reyno's DBP Check No. 358896
were erroneously credited to Catadman's account, while his DBP Check No. 1731263 was
inadvertently credited twice to his account. Hence, the total amount of 1'115,062.68 was credited
to his account.4 On June 25, 2001, Land Bank discovered the erroneous transactions, which
prompted it to send a formal demand letter to Catadman for the return of the amount of
1'115,002.68 which represents the total amount credited to his account less the 1'8,500.00 which
rightfully belonged to him. Catadman, however, did not heed Land Bank's letter.5 On October 8,
2001, Land Bank sent another demand letter to Catadman. Thereafter, there was an exchange of
correspondence between them. Finally, in his February 11, 2002 letter, Catadman acknowledged
that the amount was credited to his account and that he had already spent it. As a way of
settlement, he promised to pay the amount of 1'2,000.00 monthly until the whole amount is
returned. Catadman did as he promised. However, after paying an accumulated amount of Pl
5,000.00, he stopped and refused to make further payments. The matter was referred to the legal
counsel of Land Bank. Consequently, the bank sent its letter dated January 21, 2003 to
Catadman demanding payment of the entire balance. Catadman failed to respond to the letter.
Land Bank was thus constrained to file a case for collection of sum of money before the Municipal
Trial Court in Cities (MTCC) of Davao City.

ISSUE:
Whether the petitioner liable for the full amount mistakenly credited despite concluding that the
latter was unjustly enriched at the expense of Land Bank and acted in bad faith.

HELD:
YES. Truth be told, however, that Catadman was unjustly enriched when he chose to not return
and just appropriated to himself the Pl 15,002.68 knowing fully well that the same does not
belong to him.
This Court reprimands Land Bank for its negligence. This shall serve as a reminder to Land Bank
that the law imposes on banks high standards in view of the fiduciary nature of banking. Section 2
of Republic Act (R.A.) No. 879131 declares that the State recognizes the "fiduciary nature of
banking that requires high standards of integrity and performance.
The bank is under obligation to treat the accounts of all its depositors with meticulous care,
always having in mind the fiduciary nature of their relationship. This fiduciary relationship means
that the bank's obligation to observe "high standards of integrity and performance" is deemed
written into every deposit agreement between a bank and its depositor.The fiduciary nature of
banking requires banks to assume a degree of diligence higher than that of a good father of a
family.Likewise, Section 2 of R.A. No. 8791 prescribes the statutory diligence required from
banks- that banks must observe "high standards of integrity and performance" in servicing their
depositors.
 Go vs. BSP, G.R. No. G.R. No. 178429, October 23, 2009

FACTS:
An Information for violation of Section 83 of Republic Act No. 337 (RA 337) or the General
Banking Act, as amended by Presidential Decree No. 1795, was filed against Go before the RTC.
After the arraignment, both the prosecution and accused Go took part in the pre-trial conference
where the marking of the voluminous evidence for the parties was accomplished. After the
completion of the marking, the trial court ordered the parties to proceed to trial on the merits.
Before the trial could commence, Go filed a motion to quash the Information claiming that it is
defective and the facts do not constitute an offense. In support of his motion to quash, Go averred
that based on the facts alleged in the Information, he was being prosecuted for borrowing the
deposits or funds of the Orient Bank and/or acting as a guarantor, indorser or obligor for the
bank’s loans to other persons. The use of the word "and/or" meant that he was charged for being
either a borrower or a guarantor, or for being both a borrower and guarantor. Go claimed that the
charge was not only vague, but also did not constitute an offense. He posited that Section 83 of
RA 337 penalized only directors and officers of banking institutions who acted either as borrower
or as guarantor, but not as both. Go further pointed out that the Information failed to state that his
alleged act of borrowing and/or guarantying was not among the exceptions provided for in the
law.

ISSUE:
Whether Go’s contention that Section 83 of RA 337 means penalizing a director or officer of a
banking institution for either borrowing the deposits or funds of the bank or guaranteeing or
indorsing loans to others, but not for assuming both capacities and that the acts so charged do
not constitute an offense.

HELD:
NO. Under Section 83, RA 337, the following elements must be present to constitute a violation of
its first paragraph: 1. the offender is a director or officer of any banking institution; 2. the offender,
either directly or indirectly, for himself or as representative or agent of another, performs any of
the following acts: a. he borrows any of the deposits or funds of such bank; or b. he becomes a
guarantor, indorser, or surety for loans from such bank to others, or c. he becomes in any manner
an obligor for money borrowed from bank or loaned by it; 3. the offender has performed any of
such acts without the written approval of the majority of the directors of the bank, excluding the
offender, as the director concerned. A simple reading of the above elements easily rejects Go’s
contention that the law penalizes a bank director or officer only either for borrowing the bank’s
deposits or funds or for guarantying loans by the bank, but not for acting in both capacities. The
essence of the crime is becoming an obligor of the bank without securing the necessary written
approval of the majority of the bank’s directors. The second element merely lists down the various
modes of committing the offense. The third mode, by declaring that "[no director or officer of any
banking institution shall xxx] in any manner be an obligor for money borrowed from the bank or
loaned by it," in fact serves a catch-all phrase that covers any situation when a director or officer
of the bank becomes its obligor. The prohibition is directed against a bank director or officer who
becomes in any manner an obligor for money borrowed from or loaned by the bank without the
written approval of the majority of the bank’s board of directors. To make a distinction between
the act of borrowing and guarantying is therefore unnecessary because in either situation, the
director or officer concerned becomes an obligor of the bank against whom the obligation is
juridically demandable.
 Soriano vs. BSP, G.R. No. 162336, Feb. 1, 2010

FACTS:
Affidavits were submitted before the Prosecutor’s office charging Hilario Soriano with Estafa
through falsification of commercial documents in relation to P.D. No. 1689 and for violation of
Section 83 of RA No. 337, whereby it was alleged that spouses Enrico and Amalia Carlos
appeared to have an outstanding loan of ₱8 million with the Rural Bank of San Miguel (Bulacan),
Inc. (RBSM), but had never applied for nor received such loan; that it was petitioner, who was
then president of RBSM, who had ordered, facilitated, and received the proceeds of the loan; and
that the ₱8 million loan had never been authorized by RBSM's Board of Directors and no report
thereof had ever been submitted to the Department of Rural Banks, Supervision and Examination
Sector of the BSP. Petitioner moved to quash. Petitioner contended that the commission of estafa
under paragraph 1(b) of Article 315 of the RPC is inherently incompatible with the violation of
DOSRI law (as set out in Section 83 of RA 337, as amended by PD 1795), hence a person
cannot be charged for both offenses. He argued that a violation of DOSRI law requires the
offender to obtain a loan from his bank, without complying with procedural, reportorial, or ceiling
requirements. On the other hand, estafa under par. 1(b), Article 315 of the RPC requires the
offender to misappropriate or convert something that he holds in trust, or on commission, or for
administration, or under any other obligation involving the duty to return the same. Essentially, the
petitioner theorized that the characterization of possession is different in the two offenses. If
petitioner acquired the loan as DOSRI, he owned the loaned money and therefore, cannot
misappropriate or convert it as contemplated in the offense of estafa. Conversely, if petitioner
committed estafa, then he merely held the money in trust for someone else and therefore, did not
acquire a loan in violation of DOSRI rules.

ISSUE:
Whether a loan transaction within the ambit of the DOSRI law (violation of Section 83 of RA 337,
as amended) could also be the subject of Estafa under Article 315 (1) (b) of the Revised Penal
Code.

HELD:
YES. Petitioner’s theory is based on the false premises that the loan was extended to him by the
bank in his own name, and that he became the owner of the loan proceeds. Both premises are
wrong. The bank money (amounting to ₱8 million) which came to the possession of petitioner
was money held in trust or administration by him for the bank, in his fiduciary capacity as the
President of said bank. It is not accurate to say that petitioner became the owner of the ₱8 million
because it was the proceeds of a loan. That would have been correct if the bank knowingly
extended the loan to petitioner himself. But that is not the case here. According to the information
for estafa, the loan was supposed to be for another person, a certain "Enrico Carlos"; petitioner,
through falsification, made it appear that said "Enrico Carlos" applied for the loan when in fact he
("Enrico Carlos") did not. Through such fraudulent device, petitioner obtained the loan proceeds
and converted the same. Under these circumstances, it cannot be said that petitioner became the
legal owner of the ₱8 million. Thus, petitioner remained the bank’s fiduciary with respect to that
money, which makes it capable of misappropriation or conversion in his hands. The prohibition in
Section 83 is broad enough to cover various modes of borrowing. It covers loans by a bank
director or officer (like herein petitioner) which are made either: (1) directly, (2) indirectly, (3) for
himself, (4) or as the representative or agent of others. It applies even if the director or officer is a
mere guarantor, indorser or surety for someone else's loan or is in any manner an obligor for
money borrowed from the bank or loaned by it. Indirect borrowing applies in the instant case, the
information describes the manner of securing loan as indirect; names petitioner as the benefactor
of the indirect loan; and states that the requirements of the law were not complied with. It contains
all the required elements for a violation of Section 83, even if petitioner did not secure the loan in
his own name. In sum, information filed against Soriano do not negate each other.
 Soriano vs. People of the Philippines, G.R. No. 240458, Jan. 8, 2020

FACTS:
Petitioner maintains that he did not violate Section 83 of R.A. No. 337, as amended, or the
DOSRI39 law. Specifically, petitioner avers that the prosecution attempted to establish that he
obtained an indirect loan under Malang's name in the net amount of P14,775,000.00 but its
evidence, namely the General Examination Report, refers to a different loan, i.e., his irregular
loan amounting to P34,000,000.00. Petitioner also argues that the prosecution's failure to present
Rayo as witness was fatal to its case. Petitioner also points out that the prosecution failed to
check his bank account to see if the subject went straight to his coffers to prove that it inured to
his benefit.
Petitioner also argues that the prosecution evidence was insufficient to prove his participation in
the commission of the crime of estafa through falsification of commercial documents. Specifically,
petitioner stresses the fact that it was actually Malang who signed the loan application was
established. Further, petitioner points out that as RBSM's president, he was not engaged in
frontline services for him to be able to process loan applications.

ISSUE:
Whether Petitioner is vilated DOSRI law

HELD:
We find no cogent reason to deviate from the courts a quo's ruling that petitioner was guilty
beyond reasonable doubt of violating the DOSRI law, as well as of the complex crime of estafa
through falsification of commercial documents. The clear, positive, and categorical testimonies of
the nine prosecution witnesses that corroborate each other on all material points, coupled with
the voluminous documentary evidence on record clearly establish petitioner's guilt on the
offenses charged.Violation of the DOSRI Law Section 83 of R.A. No. 337, as amended.
The following elements must be present to constitute a violation of the above-quoted provision:
(1) the offender is a director or officer of any banking institution; (2) the offender, either directly or
indirectly, for himself or as a representative or agent of another, performs any of the following
acts: (a) he borrows any of the deposits or funds of such bank; or (b) he becomes a guarantor,
indorser, or surety for loans from such bank to others; or (c) he becomes in any manner an
obligor for money borrowed from bank or loaned by it; and (3) the offender has performed any of
such acts without the written approval of the majority of the directors of the bank, excluding the
offender, as the director concerned.
The essence of the crime is becoming an obligor of the bank without securing the necessary
written approval of the majority of the bank's directors. The DOSRI law was enacted as the
Congress deemed it essential to impose certain restrictions on the borrowings undertaken by
directors and officers in order to protect the public, especially the depositors. Such restriction is
necessary because of the advantage these bank officers have because of their position, in
acquiring loans or borrowing funds from the bank funds. Indeed, banks were not created for the
benefit of their directors and officers; they cannot use the assets of the bank for their own benefit,
except as may be permitted by law.
As borne by the records, the aforecited elements were established beyond reasonable doubt in
this case.
 Benguet Management vs. Keppel Bank, G.R. No. 153571,Sept. 18, 2003

FACTS:
Benguet Management Corporation (BMC) and Keppel Bank Philippines, Inc. (KBPI), acting as
trustee of the other respondent banks, entered into a Loan Agreement and Mortgage Trust
Indenture (MTI) whereby BMC, in consideration of the syndicated loan of P190,000,000.00,
constituted in favor of KBPI a mortgage on several lots located in Alaminos, Laguna and Iba,
Zambales. On September 28, 2001, for failure of BMC to pay in full the installments due on the
Loan Agreement and Mortgage Trust Indenture, , KBPI filed an application 4 for extra-judicial
foreclosure of mortgage before the Office of the Clerk of Court of the Regional Trial Court of Iba,
Zambales. The trial court granted the foreclosure proceedings.

Hence, BMC filed a petition for certiorari with the Court of Appeals. In its Resolution dated April 5,
2002, the Court of Appeals denied BMC’s prayer to restrain the consolidation of title in the name
of KBPI.BMC filed a motion for reconsideration claiming, among others, that Section 47 of the
General Banking Act (Republic Act No. 8791), which reduced the period of redemption for extra-
judicially foreclosed properties of juridical persons from one year to— "until, but not after, the
registration of the certificate of foreclosure sale which in no case shall be more than three (3)
months after foreclosure, whichever is earlier," is unduly discriminatory and therefore
unconstitutional.

On May 28, 2002, the Court of Appeals denied BMC’s motion for reconsideration. Hence, BMC filed the
instant petition, raising the issue among others that the new law (General Banking Law of 2000)
abrogating the right to one-year redemption period of corporate mortgagors is unconstitutional.

ISSUE:
W/N the General Banking Law of 2000 is Constitutional
 
HELD:
The resolution of the constitutionality of Section 47 of the General Banking Act (Republic
Act No.8791) is not the very lis mota of the controversy:1. Anent the constitutional issue raised by
BMC, we have repeatedly held that the constitutionalityof a law may be passed upon by the
Court, where there is an actual case and that the resolution of the constitutional question must be
necessary in deciding the controversy.

In this case, the resolution of the constitutionality of Section 47 of the General Banking Act
(Republic Act No. 8791) which reduced the period of redemption of extra-judicially foreclosed
propertiesof juridical persons is not the very lis mota of the controversy. BMC is not asserting a
legal right for which it is entitled to a judicial determination at this time in as much as it may not
even be entitled to redeem the foreclosed properties. Until an actual controversy is brought to test
the constitutionality of Republic Act No. 8791, the presumption of validity, which inheres in every
statute, must be accorded to it.

San Fernando Rural Bank vs. Pampanga, G.R. No. 168088, April 3, 2007
FACTS:
Pampanga Omnibus Development Corporation (respondent PODC) was the registered owner of
a parcel of land. PODC secured loans from San Fernando Rural Bank (petitioner SFRB). Eliza M.
Garbes (PODC President and daughter of Federico Mendoza), also secured a loan from the
petitioner. PODC failed to pay the loan. SFRB, filed a petition for extra-judicial foreclosure. SFRB
emerged as the winning bidder. The Ex-Officio Sheriff executed a Certificate of Sale and stated
that "the period of redemption of the property shall expire one (1) year after registration in the
Register of Deeds.

ISSUE:
Whether or not the Court of Appeals seriously erred when it sanctioned the PODC resort to
Certiorari under Rule 65 of the Revised Rules of Court, questioning a final order and not an
interlocutory order of the RTC.

HELD:
The petition is meritorious. The CA erred in holding that the Order of the RTC granting the
petition for a writ of possession was merely interlocutory. Interlocutory orders are those that
determine incidental matters and which do not touch on the merits of the case or put an end
to the proceedings. A petition for certiorari under Rule 65 of the Rules of Court is the proper
remedy to question an improvident interlocutory order. On the other hand, a final order is one
that disposes of the whole matter or terminates the particular proceedings or action leaving
nothing to be done but to enforce by execution what has been determined. It is one that
finally disposes of the pending action so that nothing more can be done with it in the lower
court. The remedy to question a final order is appeal under Rule 41 of the Rules of Court.

Even if the trial court erred in granting a petition for a writ of possession, such an error is
merely an error of judgment correctible by ordinary appeal and not by a petition for a writ of
certiorari. Such writ cannot be legally used for any other purpose.

Certiorari is a remedy narrow in its scope and inflexible in character. It is not a general utility
tool in the legal workshop. Certiorari will issue only to correct errors of jurisdiction and not to
correct errors of judgment. An error of judgment is one which the court may commit in the
exercise of its jurisdiction, and which error is reviewable only by an appeal. Error of
jurisdiction is one where the act complained of was issued by the court without or in excess of
jurisdiction and which error is correctible only by the extraordinary writ of certiorari. As long as
the court acts within its jurisdiction, any alleged errors committed in the exercise of its
discretion will amount to nothing more than mere errors of judgment, correctible by an appeal
if the aggrieved party raised factual and legal issues; or a petition for review under Rule 45 of
the Rules of Court if only questions of law are involved.

A certiorari writ may be issued if the court or quasi-judicial body issues an order with grave
abuse of discretion amounting to excess or lack of jurisdiction. Grave abuse of discretion
implies such capricious and whimsical exercise of judgment as is equivalent to lack of
jurisdiction or, in other words, where the power is exercised in an arbitrary manner by reason
of passion, prejudice, or personal hostility, and it must be so patent or gross as to amount to
an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all
in contemplation of law. Mere abuse of discretion is not enough. Moreover, a party is entitled
to a writ of certiorari only if there is no appeal nor any plain, speedy or adequate relief in the
ordinary course of law.