BPI V.

COURT OF APPEALS
GR 136202, JANUARY 25, 2007

FACTS:
Templonuevo demanded payment from petitioner of a sum of money
representing the aggregate value of three checks which were allegedly
payable to him but which were deposited with the petitioner to Salazar’s account, without his knowledge and
corresponding endorsement. Finding merit in the demands of Templonuevo, the bank then froze the account of the
engineering firm as the account of Salazar was already closed or had
insufficient funds. Failure of any settlement between Templonuevo and Salazar, this prompted the bank to debit
the account of Salazar and give back the money to Templonuevo through cashier’s check. The account of Salazar was
also debited for whatever charges incurred for the issuance of the cashier’s check.

The trial court held in favor of Salazar.

ISSUE:
Does a collecting bank, over the objections of its depositor, have
the authority to withdraw unilaterally from such depositor’s account the amount it had previously paid upon
certain unendorsed order instruments deposited by the depositor to another account that she later closed?

HELD:
In the present case, the records do not support the finding made by the CA and the trial court that a prior arrangement
existed between Salazar and Templonuevo regarding the transfer of ownership of the checks. This fact is crucial as
Salazar’s entitlement to the value of the instruments is based on the assumption that she is a transferee within the
contemplation of Section 49 of the Negotiable Instruments Law.

Transferees in this situation do not enjoy the presumption of ownership in

favor of holders since they are neither payees nor indorsees of such
instruments. The weight of authority is that the mere possession of a
negotiable instrument does not in itself conclusively establish either the right of the possessor to receive payment,
or of the right of one who has made payment to be discharged from liability. Thus, something more than
mere possession by persons who are not payees or indorsers of the
instrument is necessary to authorize payment to them in the absence of
any other facts from which the authority to receive payment may be inferred.

Even if the delay in the demand for reimbursement is taken in conjunction

with Salazar’s possession of the checks, it cannot be said that the presumption of ownership in Templonuevo’s
favor as the designated payee therein was sufficiently overcome. This is consistent with the principle that
if instruments payable to named payees or to their order have not been indorsed in blank, only such payees or
their indorsees can be holders and entitled to receive payment in their own right.

The presumption that a negotiable instrument was given for a sufficient

consideration will not inure to the benefit of Salazar because the term “given” does not pertain merely to a
transfer of physical possession of the instrument. The phrase “given or indorsed” in the context of a negotiable
instrument refers to the manner in which such instrument may be negotiated.

It is an exception to the general rule for a payee of an order instrument to

transfer the instrument without indorsement. Precisely because the
situation is abnormal, it is but fair to the maker and to prior holders to
require possessors to prove without the aid of an initial presumption in
their favor, that they came into possession by virtue of a legitimate
transaction with the last holder. Salazar failed to discharge this burden,
and the return of the check proceeds to Templonuevo was therefore warranted under the circumstances despite
the fact that Templonuevo may
not have clearly demonstrated that he never authorized Salazar to deposit
the checks or to encash the same. Noteworthy also is the fact that
petitioner stamped on the back of the checks the words: "All prior
endorsements and/or lack of endorsements guaranteed," thereby making
the assurance that it had ascertained the genuineness of all prior
endorsements. Having assumed the liability of a general indorser,
petitioner’s liability to the designated payee cannot be denied.

Consequently, petitioner, as the collecting bank, had the right to debit Salazar’s account for the value of the
checks it previously credited in her favor. However, the issue of whether it acted judiciously is an entirely different
matter. As businesses affected with public interest, and because
of the nature of their functions, banks are under obligation to treat the
accounts of their depositors with meticulous care, always having in mind
the fiduciary nature of their relationship. In this regard, petitioner was
clearly remiss in its duty to private respondent Salazar as its depositor.

To begin with, the irregularity appeared plainly on the face of the checks. Despite the obvious lack of indorsement
thereon, petitioner permitted the encashment of these checks three times on three separate occasions. This
negates petitioner’s claim that it merely made a mistake in crediting the value of the checks to Salazar’s account
and instead bolsters the conclusion of the CA that petitioner recognized Salazar’s claim of ownership of checks
and acted deliberately in paying the same, contrary to ordinary banking
policy and practice. It must be emphasized that the law imposes a duty of diligence on the collecting bank to scrutinize
checks deposited with it, for the purpose of determining their genuineness and regularity. The collecting bank, being
primarily engaged in banking, holds itself out to the public as
the expert on this field, and the law thus holds it to a high standard of
conduct. The taking and collection of a check without the proper
indorsement amount to a conversion of the check by the bank.

More importantly, however, solely upon the prompting of Templonuevo,

and with full knowledge of the brewing dispute between Salazar and Templonuevo, petitioner debited the account
held in the name of the sole proprietorship of Salazar without even serving due notice upon her. This ran contrary
to petitioner’s assurances to private respondent Salazar that
the account would remain untouched, pending the resolution of the controversy between her and Templonuevo.
For the above reasons, the Court finds no reason to disturb the award of damages granted
by the CA against petitioner. This whole incident would
have been avoided had petitioner adhered to the standard of diligence expected of one engaged in the banking
business. A depositor has the right to recover reasonable moral damages even if the bank’s negligence may
not have been attended with malice and bad faith, if the former suffered mental anguish, serious anxiety,
embarrassment and humiliation

EJERCITO V. SANDIGANBAYAN (G.R. NOS. 157294-95)

Facts:
In lieu of the Criminal Case “People v. Estrada” for plunder, the Special Prosecution Panel filed before the Sandiganbayan
a request for issuance of Subpoena Duces Tecum directing the President of Export and Industry Bank or his/her
authorized representative to produce documents namely, Trust Account and Savings Account belonging to petitioner
and statement of accounts of one named “Jose Velarde” and to testify thereon during the hearings. Sandiganbayan
granted both requests and subpoenas were accordingly issued. Sandiganbayan also granted and issued subpoenas
prayed for by the Prosecution Panel in another later date. Petitioner now assisted by his counsel filed two separate
motions to quash the two subpoenas issued. Sandiganbayan denied both motions and the consequent motions for
reconsideration of petitioner.

Issues:
(1) Whether or not the trust accounts of petitioner are covered by the term “deposits” as used in R.A. No. 1405
(2) Whether or not plunder is neither bribery nor dereliction of duty not exempted from protection of R.A. No. 1405
(3) Whether or not the unlawful examination of bank accounts shall render the evidence obtained therefrom
inadmissible in evidence.

Ruling:
(1) YES. An examination of the law shows that the term “deposits” used therein is to be understood broadly and not
limited only to accounts which give rise to a creditor-debtor relationship between the depositor and the bank.
The policy behind the law is laid down in Section 1. If the money deposited under an account may be used by banks for
authorized loans to third persons, then such account, regardless of whether it creates a creditor-debtor relationship
between the depositor and the bank, falls under the category of accounts which the law precisely seeks to protect for
the purpose of boosting the economic development of the country.
Trust Account No. 858 is, without doubt, one such account. The Trust Agreement between petitioner and Urban Bank
provides that the trust account covers “deposit, placement or investment of funds” by Urban Bank for and in behalf of
petitioner. The money deposited under Trust Account No. 858, was, therefore, intended not merely to remain with the
bank but to be invested by it elsewhere. To hold that this type of account is not protected by R.A. 1405 would encourage
private hoarding of funds that could otherwise be invested by banks in other ventures, contrary to the policy behind the
law.

Section 2 of the same law in fact even more clearly shows that the term “deposits” was intended to be understood
broadly. The phrase “of whatever nature” proscribes any restrictive interpretation of “deposits.” Moreover, it is clear
from the immediately quoted provision that, generally, the law applies not only to money which is deposited but also to
those which are invested. This further shows that the law was not intended to apply only to “deposits” in the strict sense
of the word. Otherwise, there would have been no need to add the phrase “or invested.”

Clearly, therefore, R.A. 1405 is broad enough to cover Trust Account No. 858.
(2) NO. Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no reason is seen why
these two classes of cases cannot be excepted from the rule making bank deposits confidential. The policy as to one
cannot be different from the policy as to the other. This policy expresses the notion that a public office is a public trust
and any person who enters upon its discharge does so with the full knowledge that his life, so far as relevant to his duty,
is open to public scrutiny.

The crime of bribery and the overt acts constitutive of plunder are crimes committed by public officers, and in either
case the noble idea that “a public office is a public trust and any person who enters upon its discharge does so with the
full knowledge that his life, so far as relevant to his duty, is open to public scrutiny” applies with equal force.
Plunder being thus analogous to bribery, the exception to R.A. 1405 applicable in cases of bribery must also apply to
cases of plunder.

(3) NO. Petitioner’s attempt to make the exclusionary rule applicable to the instant case fails. R.A. 1405, it bears noting,
nowhere provides that an unlawful examination of bank accounts shall render the evidence obtained therefrom
inadmissible in evidence. Section 5 of R.A. 1405 only states that “[a]ny violation of this law will subject the offender
upon conviction, to an imprisonment of not more than five years or a fine of not more than twenty thousand pesos or
both, in the discretion of the court.”

Even assuming arguendo, however, that the exclusionary rule applies in principle to cases involving R.A. 1405, the Court
finds no reason to apply the same in this particular case. Clearly, the “fruit of the poisonous tree” doctrine presupposes
a violation of law. If there was no violation of R.A. 1405 in the instant case, then there would be no “poisonous tree” to
begin with, and, thus, no reason to apply the doctrine.

Mandarin Villa, Inc. vs. CA and Clodualdo de Jesus

G.R. No. 119850. 20 June 1996.

Ponente: Franciso, J.:

Facts: In the evening of 19 Oct 1989, private respondent de Jesus hosted a dinner for his friends at the peririoner’s
restaurant, the Mandarin Villa Seafoods Village in Mandaluyong City. After dinner, the waiter handed to de Jesus the bill
amounting to P2,658.50. De Jesus offered his BANKARD credit card to the waiter for payment. Minutes later, the waiter
returned and audibly informed that said credit card had expired. De Jesus demonstrated that the card had yet to expire
on Sept 1990, as embossed on its face. De Jesus approached the cashier who again dishonored such card. De Jesus
offered his BPI express credit card instead and this was accepted, honored and verified. The trial court and CA held
petitioner to be negligent.

Issues: WON petitioner was negligent; If negligent, WON such negligence was the proximate cause of private
respondent’s damage.

Ruling: Petition dismissed. The test for determining the existence of negligence in a case may be stated as follows: did
the defendant in doing the alleged negligent act use the reasonable care and caution which an ordinary prudent person
would have used in the same situation? If not, then he is guilty of negligence. In the case at bar, the Point of Sale
Guidelines which outlined the steps that petitioner must follow under the circumstances reveals that whenever the
words CARD EXPIRED flashes on screen, petitioner should check card’s expiry date as embossed in the card itself. If
unexpired, petitioner should honor the card. Clearly, it has not yet expired in 19 Oct 1989 when the same was
dishonored by petitioner. Hence, petitioner did not use the reasonable care and caution which an ordinary prudent
person would have used in the same situation and as such, petitioner is guilty of negligence.
The humiliation and embarrassment of private respondent was brought about by the fact of dishonor by petitioner of
private respondent’s valid BANKARD. Hence, petitioner’s negligence is the proximate cause of private respondent’s
damage.