G.R. No. 115324 - Producers Bank of the Philippines vs. Court of Appeals

Case Summary (G.R. No. 115324)

Key Dates

Relevant chronological events stated in the record: deposit and meeting (May 9, 1979); Doronilla’s letter to Vives (June 29, 1979); issuance and presentment of postdated checks (August 13, 1979; September 15, 1979); Sanchez’s death (March 16, 1985); Court of Appeals decision (June 25, 1991) and resolution denying reconsideration (May 5, 1994); petition for review to the Supreme Court (filed June 30, 1994); RTC decision in Civil Case No. 44485 (dispositive quoted in the record).

Facts of the Deposit and Account Opening

On May 9, 1979, after discussions with Angeles Sanchez and Doronilla, Franklin Vives issued a check for P200,000 in favor of Sterela Marketing and Services and instructed his wife, Inocencia Vives, to accompany Doronilla and Sanchez to Producers Bank to open a savings account for Sterela. An authorization letter from Doronilla, referencing coordination with Mr. Rufo Atienza, authorized the opening of such account. The savings account (No. 10-1567) was opened in Sterela’s name with Inocencia Vives and/or Angeles Sanchez as authorized signatories; a passbook was issued to Mrs. Vives. Private respondent testified that the deposit was made to show Sterela’s capitalization for incorporation and that he expected to withdraw the money within thirty days.

Discovery of Withdrawals, Returned Checks, and Attempts at Recovery

After discovering that Sterela no longer maintained the stated office address, Vives and his wife inquired at the bank. Assistant Manager Atienza informed them that portions of the P200,000 deposit had been withdrawn by Doronilla, leaving P90,000, and that withdrawals were restricted because postdated checks issued by Doronilla had been dishonored. Bank records showed that Doronilla subsequently opened a current account (No. 10-0320), obtained a loan of P175,000, and authorized the bank to debit the savings account to cover overdrawings; three postdated checks issued in respect of the loan were dishonored. Doronilla issued checks for P212,000 to Vives that were dishonored upon presentment. Vives made written demand through counsel; another check for P212,000 issued by Doronilla was also dishonored.

Procedural History Through the Trial Courts

Vives sued Doronilla, Sanchez, Dumagpi, and Producers Bank in the Regional Trial Court (Civil Case No. 44485) for recovery of the P200,000 (and related reliefs). The RTC rendered judgment ordering Doronilla, Dumagpi, and Producers Bank to pay Vives jointly and severally: (a) P200,000 with legal interest from filing of complaint; (b) P50,000 moral damages; (c) P50,000 exemplary damages; (d) P40,000 attorney’s fees; and (e) costs. Petitioner appealed to the Court of Appeals, which affirmed the RTC decision in toto; the CA denied petitioner’s motion for reconsideration.

Issues Presented to the Supreme Court

Petitioner’s petition for review alleged, inter alia, that: (I) the transaction between Vives and Doronilla was a simple loan (mutuum), not an accommodation (commodatum); (II) the bank and its assistant manager did not connive with the other defendants and thus the bank should not be held liable; (III) the CA erred by adopting RTC findings allegedly based on misapprehension of facts; (IV) employer liability precedent (Saludares v. Martinez) was inapplicable; and (V) the CA erred in holding the bank jointly and severally liable for principal, damages, attorney’s fees, and costs.

Scope of Review and Standard Applied by the Supreme Court

The Court reiterated established limitations on its review: under Rule 45, only questions of law may be raised in a petition for review, and findings of fact adopted by the Court of Appeals are final and conclusive unless unsupported by the record. The Supreme Court declined to reweigh evidence where lower courts’ factual findings were consistent and amply supported.

Characterization of the Transaction: Commodatum (Accommodation) vs Mutuum (Loan)

The Court examined Articles 1933, 1935, and 1936 of the Civil Code to distinguish mutuum and commodatum. While mutuum generally covers loans of consumable things such as money (transferring ownership), commodatum is essentially gratuitous and contemplates return of the same thing loaned; Article 1936 allows consumables to be subject to commodatum where the parties’ intention is for the identical goods to be returned. The Court accorded primacy to parties’ intention and contemporaneous/subsequent acts. On the facts, the Court found that Vives accommodated Doronilla for the specific purpose of making Sterela appear to have capitalization for incorporation and expected return within thirty days; Mrs. Vives’s status as signatory and possession of the passbook evidenced retention of control. Doronilla’s later attempts to return P200,000 plus P12,000 did not transform the accommodation into a mutuum because the parties’ original intention was accommodative and any payment of interest corresponded to fruits of the money, which ordinarily the bailee in commodatum does not acquire (Art. 1935). Accordingly, the Court held the transaction to be a commodatum (accommodation), not a mutuum (loan).

Bank’s Liability and the Role of Assistant Manager Atienza

The Court analyzed the bank’s internal rules (as printed in the passbook) requiring depositor’s personal or authenticated written authority and presentation of the passbook for withdrawals. Despite these rules, the record showed that Doronilla was permitted to withdraw funds without presenting the passbook (which was in Mrs. Vives’s possession) and that the bank facilitated transfers from the savings to the current account shortly after the savings account was opened. The trial court and Court of Appeals found that Atienza actively participated in and facilitated the scheme: pre-coordination with Doronilla (letter referencing coordination with Atienza), family/business connections, awareness that the funds belonged to Vives, tolerance of withdrawals by unauthorized persons, preparation or knowledge of a false certification claiming a duplicate passbook, and facilitation of authority to debit the savings account to cover current account overdrafts. The Supreme Court accepted these findings as supported by the record.

Application of Employer Liability (Article 2180) to the Bank

Relying on Article 2180 of the Civil Code, which imposes primary and solidary liability on employers for damages caused by employees acting within the scope of their tasks, the Court found no dispute that Atienza was an employee and that his acts in assisting Doronilla in withdrawing fu

Case Syllabus (G.R. No. 115324)

Procedural History

Petition for review on certiorari to the Supreme Court from the Court of Appeals Decision dated June 25, 1991 in CA-G.R. CV No. 11791 and its Resolution dated May 5, 1994 denying reconsideration filed by petitioner Producers Bank of the Philippines.
Case originally litigated in the Regional Trial Court (RTC) of Pasig, Metro Manila as Civil Case No. 44485; RTC decision promulgated October 3, 1995 (dispositive portion reproduced in the record).
Petitioner appealed the RTC decision to the Court of Appeals; CA affirmed the RTC decision in toto on June 25, 1991 and denied petitioner’s motion for reconsideration by Resolution on May 5, 1994.
Petitioner filed the present petition with the Supreme Court on June 30, 1994 (G.R. No. 115324). The Supreme Court gave due course to the petition on January 17, 2001 and required submission of memoranda.
Memoranda and pleadings chronology in the Supreme Court: private respondent’s Comment filed September 23, 1994; petitioner’s Reply filed September 25, 1995; rejoinder filed April 21, 1997 due to delay in furnishing copy and substitutions of counsel; petitioner’s memorandum filed April 16, 2001; private respondent’s memorandum filed March 22, 2001.
Final disposition by the Supreme Court: petition DENIED; Court of Appeals Decision and Resolution AFFIRMED. Decision penned by Justice Callejo, Sr., Second Division, dated February 19, 2003 (445 Phil. 702). Justices Bellosillo (Chairman), Mendoza, Quisumbing, and Austria-Martinez concurred.

Factual Background

In 1979 Angeles Sanchez asked respondent Franklin Vives to help her friend and townmate, Arturo (Col.) Doronilla, with incorporation of Sterela Marketing and Services (“Sterela”) by depositing money in Sterela’s bank account to evidence capitalization.
On May 9, 1979, Vives, Sanchez, Doronilla and Estrella Dumagpi met and discussed the matter; relying on assurances and representations of Sanchez and Doronilla, Vives issued a check for P200,000.00 in favor of Sterela.
Vives instructed his wife, Inocencia Vives, to accompany Doronilla and Sanchez to open a savings account in the Buendia, Makati branch of Producers Bank (Producers Bank of the Philippines). Only Sanchez, Mrs. Vives and Dumagpi went to the bank to deposit the check.
An authorization letter from Doronilla authorized Sanchez and her companions, “in coordination with Mr. Rufo Atienza,” to open a savings account for Sterela in the amount of P200,000.00. Authorized signatories for the new savings account were Inocencia Vives and/or Angeles Sanchez.
The bank issued a passbook for Savings Account No. 10-1567 to Mrs. Vives.
Afterwards, Vives and his wife discovered that Sterela no longer occupied the address previously given; at the bank they learned from Assistant Manager Rufo Atienza that part of the money in Savings Account No. 10-1567 had been withdrawn by Doronilla and only P90,000.00 remained.
Atienza told them that Mrs. Vives could not withdraw the remaining amount because the savings account had been made to answer for postdated checks issued by Doronilla; he explained that Doronilla opened Current Account No. 10-0320 for Sterela and authorized the Bank to debit Savings Account No. 10-1567 to cover overdrawings in the current account.
Sterela, through Doronilla, obtained a P175,000.00 loan from the bank in connection with the current account; Doronilla issued three postdated checks to cover the loan, all of which were dishonored.
Vives received a letter from Doronilla on June 29, 1979 assuring him the money was intact and would be returned. On August 13, 1979 Doronilla issued a postdated check for P212,000.00 to Vives; presentment resulted in dishonor. Doronilla asked Vives to present it on September 15, 1979 but it was again dishonored. Subsequent written demand by Vives’s counsel resulted in another P212,000.00 check which was also dishonored for insufficiency of funds.

Reliefs Sought, RTC Disposition and Awards

Vives instituted Civil Case No. 44485 for recovery of sum of money against Doronilla, Sanchez, Dumagpi and Producers Bank; he also filed criminal actions against Doronilla, Sanchez and Dumagpi.
The RTC (Pasig, Branch 157) rendered judgment ordering defendants Arturo J. Doronila, Estrella Dumagpi and Producers Bank of the Philippines to pay plaintiff Franklin Vives jointly and severally:
- (a) P200,000.00 representing the deposited money, with legal interest from filing of complaint until paid;
- (b) P50,000.00 for moral damages;
- (c) P50,000.00 for exemplary damages;
- (d) P40,000.00 for attorney’s fees;
- (e) costs of suit.
The Court of Appeals affirmed the RTC decision in full (Decision dated June 25, 1991) and denied petitioner’s motion for reconsideration (Resolution dated May 5, 1994).

Issues Raised by Petitioner on Appeal to the Supreme Court

I. Whether the transaction between Doronilla and Vives was a simple loan (mutuum) and not an accommodation (commodatum), such that petitioner bank should not be liable.
II. Whether the Court of Appeals erred in finding that petitioner’s bank manager, Mr. Rufo Atienza, connived with the other defendants to defraud private respondent, thereby imposing liability on petitioner under principles of natural justice.
III. Whether the Court of Appeals erred in adopting the trial court record and affirming findings made on a purported misapprehension of facts.
IV. Whether the Court of Appeals erred in applying the employer liability principle as cited in Saludares v. Martinez to hold petitioner liable for acts of an employee.
V. Whether the Court of Appeals erred in holding petitioner jointly and severally liable for P200,000.00 and damages (moral and exemplary P50,000 each), attorney’s fees P40,000, and costs.

Petitioner’s Principal Contentions (as Presented in Memoranda/Pleadings)

The transaction was a mutuum (simple loan) because:
- The subject delivered was money, a consumable thing, and thus prima facie a mutuum under Article 1933;
- The transaction was onerous and evidence of interest is the P212,000.00 check issued by Doronilla (P12,000 in purported interest over the P200,000.00 principal).
Vives’s lawsuit against Sanchez demonstrates a “business angle” and non-gratuitous nature; petitioner contends it was not privy to the private transaction between Vives and Doronilla and therefore should not be liable.
Atienza could not be faulted for allowing Doronilla to withdraw because Doronilla was the sole proprietor of Sterela; the May 8, 1979 letter did not expressly authorize Sanchez or Mrs. Vives to withdraw, so withdrawal authority remained with Doronilla as owner and legal title holder of the savings account.
Petitioner emphasized lack of evidence beyond testimonies of Vives and Mrs. Vives to establish that Vives deposited the P200,000.00 in Sterela’s account for incorporation.
Because petitioner committed no wrongful act or omission