Bank of the Philippine Islands v. Zshornack
REITERATIONFacts
The Antecedents: Rizaldy T. Zshornack (private respondent) filed a complaint against Commercial Bank and Trust Company (COMTRUST) for four causes of action. BPI absorbed COMTRUST and was substituted as party. The Court of First Instance (CFI) ruled in favor of Zshornack, except for the third cause of action. The Intermediate Appellate Court (IAC) modified the CFI decision, absolving COMTRUST from liability on the fourth cause of action. BPI appealed to the Supreme Court, seeking total absolution. Procedural History: The CFI ruled in favor of Zshornack on three causes of action. The IAC modified this, absolving COMTRUST on the fourth cause of action. BPI appealed to the Supreme Court. The Petition: BPI prayed to be totally absolved from any liability to Zshornack. Zshornack did not appeal the IAC decision, limiting the issues before the Supreme Court to BPI's liability on the first and second causes of action and for damages.
Issue(s)
Whether petitioner BPI is liable for the unauthorized withdrawal of US$1,000.00 from private respondent's dollar savings account. Whether petitioner BPI is liable for the US$3,000.00 cash entrusted to COMTRUST for safekeeping. Whether the award of P8,000.00 for damages, litigation expenses, and attorney's fees is proper.
Ruling
The decision of the Intermediate Appellate Court is MODIFIED. Petitioner BPI is ordered to restore US$1,000.00 to the dollar savings account of private respondent, to earn interest. Petitioner is also ordered to pay private respondent P8,000.00 as damages. The other causes of action of private respondent are dismissed.
Ratio Decidendi
On the first issue (unauthorized withdrawal of US$1,000.00): The Court affirmed the rulings of the lower courts, holding BPI liable for the unauthorized withdrawal. The bank's justifications were inconsistent and unsubstantiated. The claim that the peso value was given to Atty. Ernesto Zshornack, Jr. was unproven and payment to him could not be considered payment to Rizaldy Zshornack, as they have distinct legal personalities. The alternative claim that the withdrawal was to fund the peso current account was also unsupported, as the record showed the amount was used to finance a dollar draft for Leovigilda D. Dizon, and there was no proof that the peso equivalent was credited to the Zshornacks' current account. The bank failed to establish any valid basis for the withdrawal from the depositor's account. On the second issue (US$3,000.00 for safekeeping): The Court ruled that Zshornack could not recover under this cause of action. The contract, evidenced by a document acknowledging receipt of US$3,000.00 for safekeeping, was entered into by COMTRUST's Assistant Branch Manager, Virgilio V. Garcia. COMTRUST did not specifically deny under oath the authenticity and due execution of this actionable document, thus admitting Garcia's authority and the bank's capacity to enter into such a contract. However, the safekeeping of foreign exchange without selling it to the Central Bank within one business day, as required by Central Bank Circular No. 20 (and later modified by Circular No. 281), constituted a prohibited transaction. Since the contract was void for being against a mandatory/prohibitory law, and both parties were in pari delicto (equally at fault), neither party had a cause of action against the other. The only recourse would be for the State to prosecute the parties for violating the law. On the third issue (award of damages): The Court found the P8,000.00 awarded as damages, litigation expenses, and attorney's fees to be reasonable and sustained the award.
Main Doctrine
A bank is liable for unauthorized withdrawals from a depositor's account. A contract for safekeeping of foreign currency, if it violates Central Bank regulations, is void and affords no cause of action to either party, especially when both are in pari delicto. However, a bank cannot escape liability for a contract entered into by its agent by claiming the agent exceeded his authority if the bank fails to deny the authenticity and due execution of the actionable document under oath.