Case Summary (G.R. No. 214567)
Factual Background
Oliver deposited P12 million with PSBank in 1997. Through Castro, she agreed to lend portions of her deposit as bridge financing to PSBank borrowers, earning 4%–5% monthly interest; Castro received a 10% commission. Trusting Castro, Oliver surrendered her passbook and later obtained a P10 million credit line secured by her Ayala Alabang property. From September 1998, Castro ceased accounting. In late January 1999, Oliver retrieved her passbook to find erasures and discrepancies. The transaction register revealed unauthorized entries: a P4.5 million loan and a P7 million withdrawal on December 21, 1998, plus a P1,396,310.45 loan on January 5, 1999, all secured by the same real estate mortgage. PSBank sent demand and foreclosure notices for unpaid balances.
Pleadings and Positions
Oliver’s Complaint
• Denies authorizing the P4.5 million and P7 million transactions; challenges validity of loans and withdrawals; prays for injunction, damages, and cancellation of trusteeship foreclosure.
Castro’s Answer
• Admits the general financing scheme; contends loans were independent and duly authorized; claims P7 million was withdrawn and transferred to borrower Ben Lim upon Oliver’s instruction; acknowledges passbook alterations for reconciliation.
PSBank’s Defense
• Asserts that Oliver obtained and failed to repay three separate loans (P10 million credit line, P4.5 million, P1,396,310.45), all secured by mortgage and duly released; argues proper bank procedures were followed.
RTC Ruling and Reconsideration
March 30, 2010 Decision (Branch 276, Muntinlupa)
• Dismisses Oliver’s complaint for lack of proof of unauthorized transactions; lifts preliminary injunction; upholds foreclosure.
July 22, 2010 Reconsideration Order
• Grants Oliver’s motion: finds PSBank and Castro liable for unauthorized P7 million withdrawal; holds bank negligent for failing to safeguard deposits; reinstates permanent injunction; awards actual, moral, exemplary damages, and attorney’s fees totaling P1,411,850.77.
Court of Appeals Decision
October 25, 2013 (CA-G.R. CV No. 95656)
• Reverses RTC’s July 22 order; reinstates dismissal of complaint; deletes damages awards.
September 12, 2014 Resolution
• Denies Oliver’s motion for reconsideration.
Issues on Certiorari
I. Did the CA err in finding no compelling evidence of fraud in processing the P4.5 million loan and P7 million withdrawal?
II. Did the CA err in ruling no evidence supported an unauthorized P7 million debit?
III. Did the CA err in concluding PSBank exercised extraordinary diligence?
IV. Did the CA err in failing to hold respondents jointly and severally liable for damages?
Supreme Court Analysis – Agency and Loan Authority
An agency relationship arose by implication from Oliver and Castro’s continuous dealings. Under Article 1881, the agent must act within the scope of authority. The promissory notes and release tickets for the P4.5 million and P1,396,310.45 loans bear Oliver’s signatures; no credible evidence of forgery was offered. Hence, these loans were validly authorized and incurred.
Supreme Court Analysis – Unauthorized Withdrawal and Diligence
No proof, such as the signed withdrawal slip, was produced to justify the P7 million withdrawal. Castro’s inconsistent testimony and passbook alterations demonstrate her excess of authority and concealment. PSBank, bound by the highest degree of diligence due depositors, failed to safeguard Oliver’s funds and verify authorization. Case law (Simex, Producers Bank, PNB v. Pike, Cagungun) underscores the bank’s fiduciary dut
Case Syllabus (G.R. No. 214567)
Facts of the Case
- Dra. Mercedes Oliver was a depositor of Philippine Savings Bank (PSBank), Account No. 2812-07991-6, where she initially placed ₱12 million in 1997.
- Lilia Castro, PSBank Assistant Vice President and Acting Branch Manager at San Pedro, Laguna, proposed that Oliver lend her deposit as interim or bridge financing to approved bank borrowers awaiting release of their loan proceeds.
- Under the arrangement, Castro showed approved loan documents, withdrew the needed sum from Oliver’s account, then charged 4 % per month interest on the loan proceeds and returned principal plus interest to Oliver’s account; Castro earned a 10 % commission on the interest.
- Satisfied with returns, Oliver extended an additional ₱10 million credit line secured by mortgage on her Ayala Alabang property (TCT No. 137796), with monthly amortizations of ₱2 million from September 3, 1998 to January 3, 1999.
- In late 1998 and early 1999, Oliver found erasures and superimpositions in her passbook. A transaction history register revealed:
- A ₱4,491,250 loan credited December 21, 1998 that she did not authorize.
- A total withdrawal of ₱7 million on the same date without her consent.
- An additional ₱1,396,310.45 loan dated January 5, 1999.
- PSBank sent collection letters for the ₱4.5 million and ₱1.396 million balances and a final demand; upon refusal, an extrajudicial foreclosure notice was issued September 15, 1999 for sale on October 21, 1999.
- Oliver filed a complaint for injunction and damages against PSBank and Castro.
Positions of the Parties
- Oliver asserted she never authorized the December 21, 1998 loans or the ₱7 million withdrawal, that her ₱10 million credit line was fully paid, and sought to prevent foreclosure.
- Castro admitted the interim financing scheme and monthly payment plan, but claimed the ₱4.5 million and ₱1.396 million loans were distinct new borrowings duly authorized by Oliver via promissory notes, and that ₱7 million was withdrawn upon Oliver’s instruction and lent to a Mr. Ben Lim. She denied deceit and asserted passbook alterations were made only to reconcile discrepancies.
- PSBank maintained Oliver applied for and obtained the ₱10 million credit line, then the ₱4.5 million and ₱1.396 million loans, all secured by mortgage and evidenced by release tickets; the bank denied liability for any unauthorized withdrawal.