Central Bank vs.

City trust Bank

G.R. No. 141835
Feb. 4, 2009
Facts:
Citytrust bank maintained a demand deposit account with petitioner Central Bank and
provided petitioner with the names and signatures of 5 of its roving tellers authorized to
sign checks and serve as drawers and indorsers for its account. Petitioner issued security
identification cards to one of them, Rounceval Flores, who presented two Citytrust
checks, both of which were signed and indorsed by Citytrust's authorized signatory-
drawers, but instead signed as "Rosauro C. Cayabyab". Petitioner then debited the
amount of the checks totaling P1, 750,000 from Citytrust's account, and Citytrust bank
filed a complaint for recovery of a sum of money with damages against petitioner,
alleging that it erred in encashing the checks and charging the proceeds thereof to its
account despite the lack of authority of Flores.

Issue: Whether or not petitioner bank is liable. 

Held: Yes.
The law imposes high standards on banks due to the fiduciary nature of banking. Section
2 of Republic Act No. 8791 states that banks must observe "high standards of integrity
and performance" in servicing their depositors. Citytrust's failure to timely examine its
account, cancel the checks and notify petitioner of their alleged loss/theft should mitigate
petitioner's liability in accordance with Article 2179 of the Civil Code.