Being a banking institution, it should exercise the highest degree of diligence, as well as to observe the high standards of integrity and performance in all its transactions because its business is imbued with public interest.The stability of banks largely depends on the confidence of the people in the honesty and efficiency of banks.
Facts:
Guariña Corp. applied for a loan from DBP to finance the development of its resort complex which was approved.Guariñaexecuted a promissory note and a real estate mortgage in favor of DBP as security for the repayment of the loan, and also executed a chattel mortgage. Prior to the release of the loan, DBP required Guariña Corporation to put up a cash equity for the construction of the buildings and other improvements.Guariña used the proceeds of the loan to defray the cost of additional improvements in the resort complex and later demanded the release of the balance of the loan, but DBP refused and directly paid some suppliers ofGuariña. DBP found out that Guariña had not completed the construction works hence demanding to expedite the completion. However, such was not made so DBP initiated extrajudicial foreclosure proceedings and a notice of foreclosure was sent and published. Guariñafiled for specific performance of DBP’s obligations under the loan
agreement, and to stop the foreclosure of the mortgages. However, DBP moved for the dismissal stating that the mortgaged properties were already sold. Thus, Guariñasought to nullify the foreclosure proceedings and the cancellation of the certificate of sale.
Issue:
Whether DBP’s foreclosure and sale of the mortgaged properties were premature and therefore void and ineffectual.
Ruling:
YES. Being a banking institution, DBP owed it to Guariña Corporation to exercise the highest degree of diligence, as well as to observe the high standards of integrity and performance in all its transactions because its business was imbued with public interest. The high standards were also necessary to ensure public confidence in the banking system, for, according to Philippine National Bank v. Pike (G.R. No. 157845, September 20, 2005): “The stability of banks largely depends on the confidence of the people in the honesty and efficiency of banks.” Thus, DBP had to act with great care in applying the stipulations of its agreement with Guariña Corporation, lest it erodes such public confidence. Yet, DBP failed in its duty to exercise the highest degree of diligence by prematurely foreclosing the mortgages and unwarrantedly causing the foreclosure sale of the mortgaged properties despite Guariña Corporation not being yet in default. DBP wrongly relied on Stipulation No. 26 as its basis to accelerate the obligation of Guariña Corporation, for the stipulation was relevant to an Omnibus Agricultural Loan, to Guariña Corporation’s loan which was intended for a project other than agricultural in nature.
Nature of Bank Funds and Deposit
THE CONSOLIDATED BANK AND TRUST CORP. v. CA AND L.C. DIAZ AND COMPANY G.R. No. 138569, September 11, 2003, Carpio, J.
Article 1980 of the Civil Code expressly provides that "savings, deposits of money in banks and similar institutions shall be governed by the provisions concerning simple loan." There is a debtor-creditor relationship between the bank and its depositor.
Facts:
L.C. Diaz opened a savings account with Solidbank. L.C. Diaz through its cashier, Macaraya, filled up a savings cash deposit slip and a savings checks deposit slip. Macaraya instructed Calapre to deposit the money with Solidbank and was given the Solidbank passbook. Calapre went to Solidbank and presented to Teller No. 6 the deposit slips and the passbook which acknowledged receipt of the deposit by returning to Calapre the duplicate copies of the two deposit slips. Since the transaction took time, Calapre left the passbook with Solidbank and went to Allied Bank to make a deposit. When Calapre returned, Teller No. 6 informed him that "somebody got the passbook." Calapre reported the incident. Macaraya immediately prepared a deposit slip in duplicate copies with a check of P200,000. Macaraya, together with Calapre, went to Solidbank and presented to Teller No. 6 the deposit slip and check. When Macaraya asked for the passbook, Teller No. 6 told Macaraya that someone got the passbook but she could not remember to whom she gave the passbook. Teller No. 6 handed to Macaraya a deposit slip for the deposit of a check for P90,000 drawn on Philippine Banking Corporation (PBC) which is a check of L.C. Diaz that it had "long closed."PBC dishonored the check because of insufficient funds and because the signature in the check
differed from PBC's specimen signature. Failing to get back the passbook, Macaraya went back to her office and reported the matter to the Personnel Manager Emmanuel Alvarez.
Luis Diaz called up and wrote to Solidbank to stop any transaction using the same passbook until L.C. Diaz could open a new account. Diaz learned of the unauthorized withdrawal of P300,000 from its savings account. The withdrawal slip for the P300,000 bore the signatures of the authorized signatories of L.C. Diaz, namely Diaz and Murillo. The signatories, however, denied signing the withdrawal slip.
Issue:
Whether or not Solidbank is liable for breach of contract due to negligence. Ruling:
YES. The contract between the bank and its depositor is governed by the provisions of the Civil Code on simple loan. Article 1980 of the Civil Code expressly provides that "savings deposits of money in banks and similar institutions shall be governed by the provisions concerning simple loan." There is a debtor-creditor relationship between the bank and its depositor. The bank is the debtor and the depositor is the creditor. The depositor lends the bank money and the bank agrees to pay the depositor on demand. The savings deposit agreement between the bank and the depositor is the contract that determines the rights and obligations of the parties.
However, the fiduciary nature of a bank-depositor relationship does not convert the contract between the bank and its depositors from a simple loan to a trust agreement, whether express or implied. Failure by the bank to pay the depositor is failure to pay a simple loan, and not a breach of trust. The law simply imposes on the bank a higher standard of integrity and performance in complying with its obligations under the contract of simple loan, beyond those required of non-bank debtors under a similar contract of simple loan.
Stipulation on Interests
FIDELITY SAVING AND MORTGAGE BANK v. HON. PEDRO D. CENZON, in his capacity as Presiding Judge of the Court of First Instance of Manila (Branch XL) and
SPOUSES TIMOTEO AND OLIMPIA SANTIAGO