Bank of the Philippine Islands v. Central Bank of the Philippines
REITERATIONFacts
The Antecedents: Petitioner Bank of the Philippine Islands (BPI) discovered discrepancies in its inter-bank reconciliation statements with the Central Bank of the Philippines (CBP), now Bangko Sentral ng Pilipinas (BSP), amounting to P9 million. An investigation revealed an organized criminal syndicate used a "pilferage scheme" involving CBP personnel to pilfer "out-of-town" checks, tamper with banking documents, open accounts with BPI and Citibank, N.A. (Citibank), and withdraw funds through checks drawn against BPI and deposited with Citibank. Specifically, CBP employees Manuel Valentino and Jesus Estacio intercepted and pilfered BPI Laoag City Branch checks from the CBP Clearing House, tampered with clearing manifests, and reduced the amounts. This prevented BPI Laoag City Branch from dishonoring the pilfered checks. Citibank, not receiving any notice of dishonor, allowed withdrawals totaling P9 million. Desiderio and Estacio, along with others, were convicted of estafa. Valentino became a state witness. BPI requested CBP to credit back P9 million, but CBP only credited P4.5 million, refusing the remainder. Procedural History: BPI filed a complaint against CBP for sum of money. CBP denied liability, claiming the P4.5 million was held in a "suspense account" and filed a third-party complaint against Citibank. The Regional Trial Court (RTC) ruled in favor of BPI, ordering CBP to credit the remaining P4.5 million plus interest and to remove the "Suspense Account" designation. The Court of Appeals (CA) reversed the RTC decision, dismissing BPI's complaint and ordering the cancellation of the P4.5 million payment, holding that CBP was not liable as Valentino and Estacio were not special agents and their acts were outside the scope of their employment. The CA also found that CBP exercised ordinary diligence. The Petition: BPI filed a Petition for Review on Certiorari before the Supreme Court, challenging the CA's decision.
Issue(s)
Whether or not CBP may be sued on its governmental and/or proprietary functions. Whether or not CBP is performing a proprietary function when it entered into clearing operations of regional checks of its member institutions. Whether or not CBP exercised the diligence of a good father of a family in supervising the two employees involved in the bank fraud. Whether or not Citibank as the sending bank shall bear the damage caused to petitioner BPI as per Central Bank Circular No. 580, Series of 1977, as amended.
Ruling
The Petition for Review on Certiorari is DENIED. The assailed January 26, 2011 Decision and July 8, 2011 Resolution of the Court of Appeals in CA-G.R. CV No. 70699 are AFFIRMED.
Ratio Decidendi
On whether CBP may be sued on its governmental and/or proprietary functions: The Court affirmed that the Bangko Sentral ng Pilipinas (BSP), formerly the Central Bank of the Philippines (CBP), is a government corporation with a separate juridical personality, created under Republic Act No. 265 (RA 265), as amended. Its primary function is to administer the monetary, banking, and credit system of the Philippines, which is governmental in nature. While the principle of state immunity from suit generally applies, this immunity can be waived expressly or impliedly. RA 265, as amended, expressly grants the CBP the authority to sue and be sued, thereby waiving its immunity from suit. However, this waiver does not automatically concede liability; it merely grants the right to bring suit, subject to lawful defenses. The CBP's capacity to sue and be sued does not mean it is generally liable for torts committed in the discharge of its governmental functions; it is only answerable for acts committed in its proprietary capacity. On whether CBP is performing a proprietary function when it entered into clearing operations of regional checks: The Court held that the CBP's operation of a clearing house facility for regional checks is within its governmental functions and duties as the central monetary authority. Section 107 of RA 265, as amended, mandated the CBP to establish nationwide facilities for interbank clearing. This function is considered a necessary incident to its primary governmental function of administering the monetary, banking, and credit system. The subsequent privatization of check clearing by the Philippine Clearing House Corporation (PCHC) does not negate the fact that it was initially the CBP's duty under its charter. Therefore, the clearing of checks, even for regional checks, was not a proprietary function but an integral part of its governmental mandate. On whether CBP exercised the diligence of a good father of a family in supervising the two employees involved in the bank fraud: The Court ruled that CBP is not liable for the torts committed by its employees, Valentino and Estacio, because they were not "special agents" and their fraudulent acts were outside the scope of their assigned tasks. As Valentino was a Bookkeeper and Estacio a Janitor-Messenger, they were regular employees performing tasks pertaining to their offices, not special agents with definite commissions foreign to their duties. Even assuming CBP was performing proprietary functions, it would still not be liable because Valentino and Estacio acted beyond the scope of their duties. Their fraudulent acts of tampering and pilfering were not in furtherance of CBP's interests nor for its account. Furthermore, BPI failed to prove that these acts were performed within the scope of their assigned tasks, which would have triggered a presumption of negligence on CBP's part, compelling CBP to prove its diligence. The Court also noted that the CBP had implemented measures such as mental, psychological, and physical examinations, and required NISA and NBI clearances for its employees, indicating an effort towards due diligence. On whether Citibank as the sending bank shall bear the damage: The Court affirmed the trial court's dismissal of the third-party complaint against Citibank. The subject checks were not returned to Citibank before the lapse of the clearing period. Consequently, Citibank acted within its authority in allowing the withdrawal of said checks after the clearing period without any notice of dishonor from BPI. Therefore, BPI's remedy lies against the parties responsible for the tampering and pilfering of the checks and documents, not against Citibank.
Main Doctrine
The Bangko Sentral ng Pilipinas (BSP), in operating a clearing house facility for regional checks, performs a governmental function. While it may be sued due to an express waiver of immunity in its charter, it is not liable for the tortious acts of its employees, Valentino and Estacio, who were not special agents and whose fraudulent acts were outside the scope of their employment. Even if considered proprietary, the acts were beyond the scope of their assigned tasks, and the BSP exercised the diligence of a good father of a family in their selection and supervision.