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PHILIPPINE NATIONAL BANK v. CARMELITA S. SANTOS

FACTS:

The respondents are the children of Angel C. Santos, who passed away on March 21, 1991. In May 1996, the respondents discovered that their father had a premium savings account and a time deposit account with Philippine National Bank (PNB) totaling P1,759,082.63 and P1,000,000.00, respectively. They went to PNB to withdraw the deposit but were required to submit various documents. By April 26, 1998, the respondents obtained the necessary documents and attempted to withdraw the deposit. However, they were informed that the deposit had already been released to Bernardito Manimbo on April 1, 1997.

PNB and Aguilar denied the existence of two separate accounts and alleged that Aguilar was unaware of Angel C. Santos' death. PNB and Aguilar filed a third-party complaint against Manimbo, Angel P. Santos, and Capital Insurance and Surety Co., Inc.

The trial court held PNB and Aguilar liable for negligence in releasing the deposit to Manimbo, while Manimbo, Angel P. Santos, and Capital Insurance and Surety Co., Inc. were held liable to pay PNB. The trial court found that Angel C. Santos had only one account with PNB, which was originally a time deposit converted into a premium savings account. The trial court also recognized PNB's negligence in failing to notify the depositor about the conversion of the account.

The case involves the negligence of Philippine National Bank (PNB) and Lina B. Aguilar, the Bank Manager, in handling the deposit of Angel C. Santos. PNB failed to notify the depositor about the maturity of the time deposit and the conversion of the deposit into a premium savings account. PNB also failed to cancel the certificate of time deposit despite the conversion. Furthermore, PNB and Aguilar did not require the production of birth certificates to prove the relationship of claimants with the depositor. They relied on an affidavit of self-adjudication even though other claimants had previously approached them.

Aguilar filed a motion for reconsideration of the trial court's decision but it was denied. PNB and Aguilar appealed to the Court of Appeals. The Court of Appeals affirmed the trial court's finding that there was only one account and that the deposit was released to Bernardito Manimbo who did not present all the requirements. The Court of Appeals held that PNB and Aguilar were negligent in handling the deposit and removed the award of exemplary damages.

PNB and Aguilar filed separate petitions for review. The issues in contention were whether PNB was negligent, whether Aguilar is jointly liable with PNB, and whether damages were properly awarded. The trial court and the Court of Appeals found that PNB and Aguilar were negligent in handling the deposit.

The contractual relationship between banks and depositors is governed by the Civil Code provisions on simple loan. The default standard of diligence in the performance of obligations is "diligence of a good father of a family."

The case discusses the standard of diligence required in performing obligations. According to the Civil Code, the level of diligence expected depends on the nature of the obligation, circumstances of the persons, time, and place. If the law or contract does not specify the required diligence, the standard of a "good father of a family" should be followed. This level of diligence is expected of usufructuaries, passengers of common carriers, agents, depositaries, pledgees, officious managers, and individuals responsible for the acts of others. It is described as the diligence an ordinary prudent person would exercise in relation to their own property.

However, certain industries, like common carriers, are legally bound to observe higher standards of diligence due to their nature and public interest. Specifically, common carriers are required to exercise "extraordinary diligence" in ensuring the safety of their passengers and the goods they transport.

ISSUES:

  1. Whether or not the standard of diligence required of banks is that of a good father of a family.

  2. Whether or not petitioners PNB and Aguilar breached their duty of diligence.

  3. Whether petitioners PNB and Aguilar complied with the required standards for the release of their deceased clients' deposits.

  4. Whether petitioners PNB and Aguilar released the deposit of Angel C. Santos without the required certificate of payment of estate tax.

  5. Whether petitioners PNB and Aguilar negligently accepted inadequate documents for the release of the deposit.

  6. Whether or not petitioners PNB and Aguilar were negligent in releasing the deposit to Manimbo without verifying the authenticity of the documents and representations submitted.

  7. Whether or not petitioners PNB and Aguilar should be liable for damages due to their gross negligence.

RULING:

  1. The standard of diligence required of banks is higher than that of a good father of a family. Banks are obligated to treat the accounts of their depositors with meticulous care due to the fiduciary nature of their relationship.

  2. Petitioners PNB and Aguilar breached their duty of diligence when they accepted fraudulent representations and disregarded their own requirements for the release of the deposit to the supposed heirs.

  3. Petitioners PNB and Aguilar did not comply with the required standards for the release of their deceased clients' deposits. They either have no fixed standards or they disregard the standards for convenience or favor.

  4. Petitioners PNB and Aguilar released the deposit of Angel C. Santos without the required certificate of payment of estate tax, which is a legal requirement before the release of a deposit of a decedent.

  5. Petitioners PNB and Aguilar negligently accepted inadequate documents for the release of the deposit, including a mere photocopy of the death certificate, falsified affidavit of self-adjudication and special power of attorney, and the certificate of time deposit.

  6. Yes, petitioners PNB and Aguilar were negligent in releasing the deposit to Manimbo without verifying the authenticity of the documents and representations submitted.

  7. Yes, petitioners PNB and Aguilar should be liable for damages due to their gross negligence.

PRINCIPLES:

  • The standard of diligence required of banks is higher than that of a good father of a family, due to the fiduciary nature of their relationship with depositors.

  • Banks are obligated to treat the accounts of their depositors with meticulous care.

  • The fiduciary nature of banking requires banks to assume a degree of diligence higher than that of a good father of a family.

  • The degree of diligence required of an obligor is that prescribed by law or contract, and absent such stipulation then the diligence of a good father of a family.

  • Banks are required to exercise diligence in releasing the deposits of deceased clients and must have fixed standards for such releases.

  • A bank is not allowed to release the deposit of a decedent unless the required certificate of payment of estate tax is shown.

  • The required certificate of payment of estate tax serves as a guard against the release of deposits to persons who have no sufficient and valid claim over the deposits.

  • Negligently accepting inadequate documents for the release of a deposit violates the required diligence of banks and threatens the safety of depositors' accounts.

  • Diligence of a good father of a family requires a higher standard of care from banks, such as petitioner PNB, when handling transactions involving deposit accounts.

  • Petitioner PNB and its manager, petitioner Aguilar, failed to meet even the standard of diligence of a good father of a family, and their actions and inactions constitute gross negligence.

  • Gross negligence can result in liability for damages, including moral and exemplary damages.

  • Exemplary damages may be awarded to serve as an example for the public good and to maintain the level of meticulousness in the banking sector.

  • In the absence of an express stipulation, the legal interest for loans or forbearance of money shall be 6% per annum from the time it is judicially demanded.

  • Once a judgment awarding a sum of money becomes final and executory, the rate of legal interest shall be 6% per annum from such finality until its satisfaction.