Facts:

In the case at hand, Rizaldy T. Zshornack filed an action against the Commercial Bank and Trust Company of the Philippines (COMTRUST) in the Court of First Instance of Rizal-Caloocan City on June 28, 1976, citing four causes of action. The dispute arose after BPI absorbed COMTRUST in 1980, leading to BPI being substituted as the defendant in the case. The initial ruling by the lower court found in favor of Zshornack for all his claims except one. COMTRUST then appealed to the Intermediate Appellate Court. This Court modified the lower court's decision, affirming the requirement for COMTRUST to restore to Zshornack's dollar savings account the amount of $1,000.00 as of October 27, 1975, while absolving the bank from liability on Zshornack's fourth cause of action.

The pivotal events transpiring included Zshornack and his wife maintaining a dollar savings account and a peso current account at COMTRUST. On October 27, 1975, an Assistant Branch Manager, Virgilio V. Garc

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Facts:

Background and Parties

• Rizaldy T. Zshornack initiated a complaint on June 28, 1976, against the Commercial Bank and Trust Company of the Philippines (COMTRUST) in the Court of First Instance of Rizal-Caloocan City based on four causes of action.
• In 1980, the Bank of the Philippine Islands (BPI) absorbed COMTRUST through a corporate merger and was subsequently substituted as a party in the case.
• The case involved both a dollar savings account and a peso current account maintained by Rizaldy and his wife, Shirley Gorospe.

Unauthorized Withdrawal of US$1,000

• On October 27, 1975, an application for a dollar draft was processed by Virgilio V. Garcia, Assistant Branch Manager of COMTRUST’s Quezon City Branch, indicating that US$1,000 be withdrawn from Zshornack’s dollar savings account (No. 25-4109) and charged against it.
• A check payable to Leovigilda D. Dizon was issued by Garcia, drawn on the Chase Manhattan Bank in New York, marking a withdrawal from the savings account.
• Upon noticing the withdrawal, Zshornack sought an explanation. The bank provided conflicting accounts: one alleging that the peso equivalent was given to Atty. Ernesto Zshornack, Jr. during an encashment transaction involving a cashier’s check, and another claiming the withdrawal was pursuant to an alleged agreement authorizing conversion funds for his peso current account.

Transaction Involving US$3,000 for Safekeeping

• On December 8, 1975, Zshornack entrusted COMTRUST, through Garcia, with US$3,000 in cash for safekeeping. A document, attached to the complaint, acknowledged receipt and stated the money was received “for safekeeping.”
• Despite later demands by Zshornack, the bank refused to return this amount.
• At trial, it was established that:
• US$2,000 was sold on December 29, 1975, with the peso proceeds (P14,920.00) deposited into Zshornack’s current account.
• The remaining US$1,000 was sold on February 3, 1976, with the corresponding pesos (P8,350.00) similarly credited.
• The bank later contended that the document represented a contract of depositum under Article 1962 of the New Civil Code—a contract which banks allegedly do not enter into—and that Garcia had exceeded his authority.

Procedural Developments

• The trial court (CFI) ruled in favor of Zshornack on all causes except one.
• The Intermediate Appellate Court modified the decision, absolving the bank on the fourth cause of action but upholding liabilities for the first and second causes as well as awarding damages in the amount of P8,000 for litigation expenses and attorney’s fees.
• On appeal, the issues were narrowed to:
• The bank’s liability for the unauthorized withdrawal (first cause of action).
• The bank’s liability regarding the safekeeping transaction (second cause of action).
• The appropriateness of the P8,000 damages award.

Issue:

Liability for the Unauthorized Withdrawal

• Whether BPI (as successor to COMTRUST) is liable for the unauthorized withdrawal of US$1,000 from Zshornack’s dollar savings account on October 27, 1975.
• Whether the bank’s dual and inconsistent explanations regarding the withdrawal can justify its actions.

Nature and Enforceability of the Safekeeping Contract

• Whether the document evidencing the receipt of US$3,000 constituted a valid contract of depositum under Article 1962 of the New Civil Code, given the bank’s contention regarding corporate authority and the nature of the transaction.
• Whether the safekeeping arrangement violated Central Bank Circular No. 20 by failing to sell the foreign exchange (greenbacks) to the Central Bank within one business day of receipt, thereby rendering the contract void.

Award of Damages

• Whether the award of P8,000 as damages for litigation expenses and attorney’s fees is justified given the bank’s failure to restore the amounts (US$1,000 and US$3,000) appropriately.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)