Case Digest (G.R. No. 141835) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Central Bank of the Philippines v. Citytrust Banking Corporation, petitioner Central Bank, now Bangko Sentral ng Pilipinas, maintained a demand deposit account for respondent Citytrust (formerly Feati Bank) under Republic Act No. 625. Citytrust furnished specimen signatures of its five authorized signatories and its roving tellers, to whom petitioner issued identification cards. On July 15, 1977, one teller, Rounceval Flores, presented two Citytrust checks totaling ₱1,750,000 to petitioner’s Senior Teller Iluminada dela Cruz. After certification, Iluminada prepared a cash transfer slip, stamped “Received Payment,” and asked Flores to sign above the stamp. Flores instead signed “Rosauro C. Cayabyab,” which Iluminada did not detect. The Cash Department then compared the drawer signatures with Citytrust’s specimens, approved the slip, disbursed the proceeds, and debited Citytrust’s account. Over a year later, Citytrust alleged the checks had been stolen and cancelled, demanded r Case Digest (G.R. No. 141835) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Account relationship and authorized signatories
- Pursuant to Republic Act No. 625, Citytrust Banking Corporation (formerly Feati Bank) maintained a demand deposit account with the Central Bank of the Philippines (now Bangko Sentral ng Pilipinas).
- Citytrust furnished lists and specimen signatures of five officers authorized to sign checks, and of its roving tellers authorized to withdraw funds; the Central Bank issued identification cards to the tellers, including one “Rounceval Flores.”
- Fraudulent presentation and payment of checks
- On July 15, 1977, Flores presented two Citytrust checks (₱850,000 and ₱900,000) payable to Citytrust, each bearing valid drawer signatures.
- Senior Teller Iluminada dela Cruz certified the checks, prepared a cash transfer slip, stamped “Received Payment,” and asked Flores to sign above the stamp. Flores signed as “Rosauro C. Cayabyab,” but this discrepancy went unnoticed.
- The Cash Department verified the drawer signatures only, approved the slip, paid Flores ₱1,750,000, and debited Citytrust’s account accordingly.
- Post-encashment developments
- On April 23, 1979, Citytrust demanded restoration of the ₱1,750,000, alleging the checks had been stolen and cancelled; the Central Bank refused.
- Citytrust filed criminal estafa charges against Flores; he was convicted.
- Citytrust then sued the Central Bank in the RTC of Manila for recovery of the sum with damages. The RTC found both parties equally negligent and liable. The Court of Appeals affirmed, applying Civil Code Articles 2179 (contributory negligence mitigates damages) and 1172 (negligence liability regulated by courts).
- Supreme Court appeal contentions
- The Central Bank argued Flores was an authorized teller, hence Citytrust bound by his acts; teller diligence dispensation justified payment without signature verification; Citytrust’s theft and delay in cancelling/checking caused the loss.
- Citytrust contended the bank breached its fiduciary duty by failing to verify signatures; contributory negligence did not bar recovery; damages should be mitigated under Article 2179.
Issues:
- Whether the Central Bank is liable for the fraudulently encashed checks despite Flores’s status as an authorized roving teller and whether its teller’s failure to verify his signature constituted negligence.
- If liability exists, how should the loss be apportioned between the bank and Citytrust under Civil Code Articles 2179 and 1172.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)