FACTS:
The case involves a dispute between Mercedes Oliver (petitioner), Philippine Savings Bank (PSBank), and Lilia Castro (respondents). Oliver alleged that Castro convinced her to loan out her deposit as interim financing for approved bank loans. Under this arrangement, Castro would show Oliver the approved loan documents, withdraw the required amount from Oliver's account, charge monthly interest from the loan proceeds, and deposit the principal amount back to Oliver's account. Castro would earn a commission from the interest. However, Castro stopped rendering accounting for Oliver and refused to return her passbook. When Oliver finally saw her passbook, she noticed erasures and alterations in the entries and discovered unauthorized withdrawals and additional loans from her account. Oliver filed a complaint against PSBank and Castro.
In defense, Castro admitted the agreement for Oliver to lend out money to borrowers while she screens them. She also admitted being instructed by Oliver to pay a certain amount monthly to settle the credit line. Castro made alterations and erasures in Oliver's passbook to reconcile it with the bank's computer printout. She denied hiding the passbook and the allegations of deceit. Castro claimed that the loans were new and distinct from the credit line granted by PSBank and that Oliver applied for the additional loans.
The Regional Trial Court (RTC) initially ruled in favor of PSBank and Castro, but upon Oliver's motion for reconsideration, the RTC reversed its decision, finding that the withdrawal of P7 million was made without Oliver's consent and that PSBank failed to exercise utmost diligence in safekeeping Oliver's deposit.
PSBank and Castro appealed to the Court of Appeals (CA), which granted their appeal and reversed the RTC's decision. The CA held that there was no compelling evidence of fraud and that PSBank exercised extraordinary diligence in handling Oliver's account, deleting the awards of damages.
Oliver now appeals to the Supreme Court, arguing that there was no evidence to prove that she availed of a loan or authorized the withdrawal from her account. She also claimed that there were erasures and alterations in her passbook, indicating manipulation by Castro to hide the loan release and cash withdrawal.
ISSUES:
I. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE PETITIONER FAILED TO SHOW COMPELLING EVIDENCE TO PROVE THAT FRAUD ATTENDED THE PROCESSING AND RELEASE OF THE LOAN OF P4.5 MILLION AS WELL AS THE WITHDRAWAL OF P7 MILLION PESOS FROM HER ACCOUNT.
II. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT RULED THAT THERE WAS NO EVIDENCE TO PROVE THAT THE SUM OF P7 MILLION WAS DEBITED FROM THE ACCOUNT OF PETITIONER SANS HER AUTHORIZATION.
III. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT RULED THAT THE RESPONDENTS TREATED THE PETITIONER'S ACCOUNT WITH EXTRAORDINARY DILIGENCE.
IV. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO HOLD THAT THE RESPONDENTS ARE JOINTLY AND SEVERALLY LIABLE TO THE PETITIONER FOR DAMAGES.
RULING:
The petition is impressed with merit.
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Re: P4.5 Million Loan
The Supreme Court found that the loans in the aggregate amount of P5,888,149.33 were acquired with Oliver's authority pursuant to the business agreement where Oliver obtained loans from the bank, and Castro would facilitate and process these loans.
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Re: P7 Million Withdrawal
It was determined that there was insufficient evidence to prove that Oliver authorized the withdrawal. Testimonies and the lack of a withdrawal slip establishing Oliver's authorization corroborated her claim. Consequently, the Court ruled that the P7 million was improperly withdrawn from Oliver's account.
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Re: Extraordinary Diligence by Respondents
The respondents, particularly PSBank, failed to exercise the utmost diligence required of banks in their handling of the withdrawal, as they could not establish that the withdrawal was authorized by Oliver.
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Re: Respondents' Joint and Several Liability
Both Castro and PSBank were found liable for the unauthorized withdrawal. As a result, they were held solidarily liable to Oliver for damages due to their failure to safeguard her account and ensure the legitimacy of the transactions performed.
PRINCIPLES:
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Implied Agency
An agency relationship can be formed through the conduct of parties and may be inferred from the dealings between the principal and the agent.
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Burden of Proof
In civil cases, the burden rests on the plaintiff to establish the case by a preponderance of evidence, and shifts to the defendant to present a defense once the plaintiff establishes a prima facie case.
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Extraordinary Diligence in Banking
Due to their fiduciary nature, banks are obliged to exercise the highest degree of care in handling the accounts and transactions of their clients.
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Solidary Liability of Employers
Employers are held primarily and solidarily liable for the damages caused by their employees acting within the scope of their authority.
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Award of Damages in Culpa Contractual
Moral and exemplary damages may be awarded in cases of breach of contract where fraud, bad faith, gross negligence, or wanton disregard for obligations is evidenced.
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Requirement for Documentary Proof of Withdrawal Authorization
The party asserting the validity of a transaction bears the burden of presenting proper documentation, such as a withdrawal slip, to establish the depositor's authorization.