Philippine Commercial International Bank vs Court of Appeals and Ford Philippines (2001)
G.R. No. 121413 – 403 Phil. 361 – 350 SCRA 446 – Mercantile Law – Corporation Law – Liability of a Banking Corporation for Wrongful/Tortuous Acts Committed By Its Employees
In 1977, 1978, and 1979 Ford Philippines was assessed a tax liability in the amounts of P4.7 million, P5.8 million, and P6.3 million respectively. To pay said tax, Ford issued three Citibank checks in the said amounts. The checks’ named payee was the Commissioner of Internal Revenue. The checks are in the nature of payee’s checks which are only supposed to be deposited to the CIR’s bank account which is with Metrobank. However, Ford’s accountant, Godofredo Rivera, deposited said checks with the Philippine Commercial International Bank (then called IBAA). The latter accepted the same and eventually, the checks were cleared by Citibank but the checks never reached the CIR hence the Bureau of Internal Revenue notified Ford of the nonpayment of the tax liabilities. This forced Ford to issue new checks to satisfy its tax liabilities. Ford then sued PCIB and Citibank in order for the two banks to refund them the amounts of the checks earlier issued.
An investigation ensued and it was found out that Godofredo Rivera, Ford’s accountant, was a member of a syndicate. He conspired with other members of the same syndicate who were also ranking employees of PCIB in order to facilitate the fraud. Apparently, a PCIB manager (Remberto Castro) who was also a member of the syndicate, set up a fictitious savings account to help facilitate the fraud. After they successfully carted with the money, they vanished and became fugitives of justice.
ISSUE: Whether or not PCIB and Citibank are liable for the tortuous acts of their employees.
HELD: Yes, but also Ford for its contributory negligence.
Citibank is liable because as per its agreement with Ford, the payee’s checks are only supposed to be deposited with the CIR’s account which is with Metrobank, yet Citibank when PCIB indorsed the said checks, Citibank cleared them without verifying with Ford.
PCIB has no hands in the embezzlement but since it was its employees that mainly facilitated the fraud, it is likewise liable under the above stated principle. PCIB’s and Citibank’s liabilities are fixed on a 50-50 basis, hence they must equally shoulder the paying of the checks’ amounts to Ford with interest.
As a general rule, banking corporations are liable for the wrongful or tortuous acts and declarations of their officers or agents within the course and scope of their employment. A bank will be held liable for the negligence of its officers or agents when acting within the course and scope of their employment. It may be liable for the tortuous acts of its officers even as regards that species of tort of which malice is an essential element.
But since Ford is also negligent, as when it failed to diligently check its books of accounts which could have avoided further loss, the interest rate upon which the two banks are to pay is lowered from 12% to 6% per annum. Ford’s negligence is only contributory because it was not the proximate cause of the embezzlement. Further, it was shown that Rivera’s act of depositing the checks with PCIB was not confirmed by the Board of Directors of Ford.
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Read another version of this digest here: Negotiable Instruments Law; Rights of the Holder