G.R. No.

176434 June 25, 2008 to require its agents to present a validated deposit slip and, on that basis,
LMC would issue to the latter an acknowledgement receipt.
BANK OF THE PHILIPPINE ISLANDS, petitioner,
vs. Alice Laurel, is one of LMC's "Educational Consultants" or agents. On
LIFETIME MARKETING CORPORATION, respondent. various dates covering the period from May, [sic] 1991 up to August, 1992,
Alice Laurel deposited checks to LMC's subject account at different branches
DECISION of BPI, specifically: at the Harrison/Buendia branch-8 checks; at Arrangue
branch-4 checks; at Araneta branch-1 check; at Binondo branch-3 checks; at
TINGA, J.: Ermita branch-5 checks; at Cubao Shopping branch-1 check; at Escolta
branch-4 checks; at the Malate branch-2 checks; at Taft Avenue branch-2
The Bank of the Philippine Islands (BPI) seeks the reversal of the Decision1 checks; at Paseo de Roxas branch-1 check; at J. Ruiz, San Juan branch, at
of the Court of Appeals dated 31 July 2006 in CA-G.R. CV No. 62769 which West Avenue and Commonwealth Quezon City branch- 2 checks; and at Vito
ordered it to pay Lifetime Marketing Corporation (LMC) actual damages in Cruz branch-2 checks.
the amount of P2,075,695.50 on account of its gross negligence in handling
LMC's account. Each check thus deposited were retrieved by Alice Laurel after the deposit
slips were machine-validated, except the following thirteen (13) checks,
The following facts, quoted from the decision of the Court of Appeals, are which bore no machine validation, to wit: CBC Check No. 484004, RCBC
undisputed: Check No. 419818, CBC Check No. 484042, FEBTC Check No. 171857,
RCBC Check No. 419847, CBC Check No. 484053, MBTC Check No.
On October 22, 1981, Lifetime Marketing Corporation (LMC, for brevity), 080726, CBC Check No. 484062, PBC Check No. 158076, CBC Check No.
opened a current account with the Bank of the Philippine Islands (BPI, for 484027, CBC Check No. 484017, CBC Check No. 484023 and CBC Check
brevity), Greenhills-Edsa branch, denominated as Account No. 3101-0680- No. 218190.
63. In this account, the "sales agents" of LMC would have to deposit their
collections or payments to the latter. As a result, LMC and BPI, made a A verification with BPI by LMC showed that Alice Laurel made check deposits
special arrangement that the former's agents will accomplish three (3) copies with the named BPI branches and, after the check deposit slips were
of the deposit slips, the third copy to be retained and held by the teller until machine-validated, requested the teller to reverse the transactions. Based on
LMC's authorized representatives, Mrs. Virginia Mongon and Mrs. Violeta general banking practices, however, the cancellation of deposit or payment
Ancajas, shall retrieve them on the following banking day. transactions upon request by any depositor or payor, requires that all copies
of the deposit slips must be retrieved or surrendered to the bank. This
Sometime in 1986, LMC availed of the BPI's inter-branch banking network practice, in effect, cancels the deposit or payment transaction, thus, it leaves
services in Metro Manila, whereby the former's agents could make [a] deposit no evidence for any subsequent claim or misrepresentation made by any
to any BPI branch in Metro Manila under the same account. Under this innocent third person. Notwithstanding this, the verbal requests of Alice
system, BPI's bank tellers were no longer obliged to retain the extra copy of Laurel and her husband to reverse the deposits even after the deposit slips
the deposit slips instead, they will rely on the machine-validated deposit slip, were already received and consummated were accommodated by BPI
to be submitted by LMC's agents. For its part, BPI would send to LMC a tellers.
monthly bank statement relating to the subject account. This practice was
observed and complied with by the parties. Alice Laurel presented the machine-validated deposit slips to LMC which, on
the strength thereof, considered her account paid. LMC even granted her
As a business practice, the registered sales agents or the Lifetime certain privileges or prizes based on the deposits she made.
Educational Consultants of LMC, can get the books from the latter on
consignment basis, then they would go directly to their clients to sell. These The total aggregate amount covered by Alice Laurel's deposit slips was Two
agents or Lifetime Educational Consultants would then pay to LMC, seven (7) Million Seven Hundred Sixty Seven Thousand, Five Hundred Ninety Four
days after they pick up all the books to be sold. Since LMC have several Pesos (P2,767,594.00) and, for which, LMC paid Laurel the total sum of Five
agents around the Philippines, it required to remit their payments through Hundred Sixty Thousand Seven Hundred Twenty Six Pesos (P560,726.00)
BPI, where LMC maintained its current account. It has been LMC's practice by way of "sales discount and promo prizes."
The above fraudulent transactions of Alice Laurel and her husband was of the books and the payment of "sales and promo prizes" to Alice Laurel.
made possible through BPI teller's failure to retrieve the duplicate original Failing this, there was allegedly no basis for the award of actual damages.
copies of the deposit slips from the former, every time they ask for Moreover, the actual damages should not have been increased because the
cancellation or reversal of the deposit or payment transaction. decision of the trial court became conclusive as regards LMC when it did not
appeal the said decision.
Upon discovery of this fraud in early August 1992, LMC made queries from
the BPI branches involved. In reply to said queries, BPI branch managers BPI further avers that LMC's negligence in considering the machine-validated
formally admitted that they cancelled, without the permission of or due notice check deposit slips as evidence of Alice Laurel's payment was the proximate
to LMC, the deposit transactions made by Alice and her husband, and based cause of its own loss. Allegedly, by allowing its agents to make deposits with
only upon the latter's verbal request or representation. other BPI branches, LMC violated its own special arrangement with BPI's
Greenhills-EDSA branch for the latter to hold on to an extra copy of the
Thereafter, LMC immediately instituted a criminal action for Estafa against deposit slip for pick up by LMC's authorized representatives. BPI points out
Alice Laurel and her husband Thomas Limoanco, before the Regional Trial that the deposits were in check and not in cash. As such, LMC should have
Court of Makati, Branch 65, docketed as Criminal Case No. 93-7970 to 71, borne in mind that the machine validation in the deposit slips is still subject to
entitled People of the Philippines v. Thomas Limoanco and Alice Laurel. This the sufficiency of the funds in the drawers' account. Furthermore, LMC
case for estafa, however, was archived because summons could not be allegedly ignored the express notice indicated in its monthly bank statements
served upon the spouses as they have absconded. Thus, the BPI's apparent and consequently failed to check the accuracy of the transactions reflected
reluctance to admit liability and settle LMC's claim for damages, and a therein.
hopeless case of recovery from Alice Laurel and her husband, has left LMC,
with no option but to recover damages from BPI. In its Manifestation of Compliance by Respondent on the Order Dated 20
June 2007 Received on 29 July 2007 to Submit Comment,6 dated 9 August
On July 24, 1995, LMC, through its representative, Miss Consolacion C. 2007, LMC insists that it is indeed entitled to the actual damages awarded to
Rogacion, the President of the company, filed a Complaint for Damages it by the appellate court.
against BPI, docketed as Civil Case No. 95-1106, and was raffled to
Regional Trial Court of Makati City, Branch 141. BPI filed a Reply7 dated 15 January 2008, in reiteration of its submissions.

After trial on the merits, the court a quo rendered a Decision in favor of LMC. We have repeatedly emphasized that the banking industry is impressed with
The dispositive portion of which reads, as follows: public interest. Of paramount importance thereto is the trust and confidence
of the public in general. Accordingly, the highest degree of diligence is
WHEREFORE, decision is hereby rendered ordering defendant bank to pay expected, and high standards of integrity and performance are required of it.
plaintiff actual damages equitably reduced to one (1) million pesos plus By the nature of its functions, a bank is under obligation to treat the accounts
attorney's fees of P100,000.00. of its depositors with meticulous care, always having in mind the fiduciary
nature of its relationship with them.8 The fiduciary nature of banking,
No pronouncement as to costs. previously imposed by case law, is now enshrined in Republic Act No. 8791
or the General Banking Law of 2000. Section 2 thereof specifically says that
SO ORDERED.2 the state recognizes the fiduciary nature of banking that requires high
standards of integrity and performance.9
Only BPI filed an appeal. The Court of Appeals affirmed the decision of the
trial court but increased the award of actual damages to P2,075,695.50 and Whether BPI observed the highest degree of care in handling LMC's account
deleted the award of P100,000.00 as attorney's fees.3 Citing public interest, is the subject of the inquiry in this case.
the appellate court denied reconsideration in a Resolution4 dated 30 January
2007. LMC sought recovery from BPI on a cause of action based on tort. Article
2176 of the Civil Code provides, "Whoever by act or omission causes
In this Petition for Review5 dated 19 March 2007, BPI insists that LMC damage to another, there being fault or negligence, is obliged to pay for the
should have presented evidence to prove not only the amount of the checks damage done. Such fault or negligence if there is no pre-existing contractual
that were deposited and subsequently reversed, but also the actual delivery relation between the parties, is called a quasi-delict and is governed by the
provisions of this Chapter." There are three elements of quasi-delict: (a) fault prizes to Alice Laurel. The evidence presented by LMC in the form of BPI's
or negligence of the defendant, or some other person for whose acts he must own admission that the deposit transactions were
respond; (b) damages suffered by the plaintiff; and (c) the connection of
cause and effect between the fault or negligence of the defendant and the reversed at the instance of Alice Laurel and her husband, coupled with the
damages incurred by the plaintiff.10 machine-validated deposit slips16 which were supposed to have been
deposited to LMC's account but were cancelled without its knowledge and
In this case, both the trial court and the Court of Appeals found that the consent, sufficiently form the bases for the actual damages claimed because
reversal of the transactions in question was unilaterally undertaken by BPI's they are the very same documents relied upon by LMC in considering Alice
tellers without following normal banking procedure which requires them to Laurel's account paid and in granting her monetary privileges and prizes.
ensure that all copies of the deposit slips are surrendered by the depositor.
The machine-validated deposit slips do not show that the transactions have Be that as it may, we find the appellate court's decision increasing the award
been cancelled, leading LMC to rely on these slips and to consider Alice of actual damages in favor of LMC improper since the latter did not appeal
Laurel's account as already paid. from the decision of the trial court. It is well-settled that a party who does not
appeal from the decision may not obtain any affirmative relief from the
Negligence is the omission to do something which a reasonable man, guided appellate court other than what he has obtained from the lower court whose
by those considerations which ordinarily regulate the conduct of human decision is brought up on appeal. The exceptions to this rule, such as where
affairs, would do, or the doing of something which a prudent and reasonable there are (1) errors affecting the lower court's jurisdiction over the subject
man would not do.11 Negligence in this case lies in the tellers' disregard of matter, (2) plain errors not specified, and (3) clerical errors, do not apply in
the validation procedures in place and BPI's utter failure to supervise its this case.17
employees. Notably, BPI's managers admitted in several correspondences
with LMC that the deposit transactions were cancelled without LMC's WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No.
knowledge and consent and based only upon the request of Alice Laurel and 62769 dated 31 July 2006 and its Resolution dated January 30, 2007 are
her husband.12 AFFIRMED with the MODIFICATION that the Bank of the Philippine Islands
is ordered to pay actual damages to Lifetime
It is well to reiterate that the degree of diligence required of banks is more
than that of a reasonable man or a good father of a family. In view of the Marketing Corporation in the amount of One Million Pesos (P1,000,000.00).
fiduciary nature of their relationship with their depositors, banks are duty- No pronouncement as to costs.
bound to treat the accounts of their clients with the highest degree of care.13
SO ORDERED.
BPI cannot escape liability because of LMC's failure to scrutinize the monthly
statements sent to it by the bank. This omission does not change the fact that
were it not for the wanton and reckless negligence of BPI's tellers in failing to
require the surrender of the machine-validated deposit slips before reversing
the deposit transactions, the loss would not have occurred. BPI's negligence
is undoubtedly the proximate cause of the loss. Proximate cause is that
cause which, in a natural and continuous sequence, unbroken by any
efficient intervening cause, produces the injury, and without which the result
would not have occurred.14

It is also true, however, that LMC should have been more vigilant in
managing and overseeing its own financial affairs. The damages awarded to
it were correctly reduced on account of its own contributory negligence in
accordance with Article 1172 of the Civil Code.15

Parenthetically, we find no merit in BPI's allegation that LMC should have