SECOND DIVISION

[G.R. No. 115324. February 19, 2003]

PRODUCERS
BANK
OF
THE
PHILIPPINES
(now
FIRST
INTERNATIONAL BANK), petitioner, vs. HON. COURT OF
APPEALS AND FRANKLIN VIVES,respondents.
DECISION
CALLEJO, SR., J.:

This is a petition for review on certiorari of the Decision of the Court of

Appeals dated June 25, 1991 in CA-G.R. CV No. 11791 and of its
Resolution dated May 5, 1994, denying the motion for reconsideration of said
decision filed by petitioner Producers Bank of the Philippines.
[1]

[2]

Sometime in 1979, private respondent Franklin Vives was asked by his

neighbor and friend Angeles Sanchez to help her friend and townmate, Col.
Arturo Doronilla, in incorporating his business, the Sterela Marketing and
Services (Sterela for brevity). Specifically, Sanchez asked private respondent
to deposit in a bank a certain amount of money in the bank account of Sterela
for purposes of its incorporation. She assured private respondent that he
could withdraw his money from said account within a months time. Private
respondent asked Sanchez to bring Doronilla to their house so that they could
discuss Sanchezs request.
[3]

On May 9, 1979, private respondent, Sanchez, Doronilla and a certain

Estrella Dumagpi, Doronillas private secretary, met and discussed the
matter. Thereafter, relying on the assurances and representations of Sanchez
and Doronilla, private respondent issued a check in the amount of Two
Hundred Thousand Pesos (P200,000.00) in favor of Sterela. Private
respondent instructed his wife, Mrs. Inocencia Vives, to accompany Doronilla
and Sanchez in opening a savings account in the name of Sterela in the
Buendia, Makati branch of Producers Bank of the Philippines. However, only
Sanchez, Mrs. Vives and Dumagpi went to the bank to deposit the
check. They had with them an authorization letter from Doronilla authorizing

Sanchez and her companions, in coordination with Mr. Rufo Atienza, to open
an account for Sterela Marketing Services in the amount of P200,000.00. In
opening the account, the authorized signatories were Inocencia Vives and/or
Angeles Sanchez. A passbook for Savings Account No. 10-1567 was
thereafter issued to Mrs. Vives.
[4]

Subsequently, private respondent learned that Sterela was no longer

holding office in the address previously given to him. Alarmed, he and his wife
went to the Bank to verify if their money was still intact. The bank manager
referred them to Mr. Rufo Atienza, the assistant manager, who informed them
that part of the money in Savings Account No. 10-1567 had been withdrawn
by Doronilla, and that only P90,000.00 remained therein. He likewise told
them that Mrs. Vives could not withdraw said remaining amount because it
had to answer for some postdated checks issued by Doronilla. According to
Atienza, after Mrs. Vives and Sanchez opened Savings Account No. 10-1567,
Doronilla opened Current Account No. 10-0320 for Sterela and authorized the
Bank to debit Savings Account No. 10-1567 for the amounts necessary to
cover overdrawings in Current Account No. 10-0320. In opening said current
account, Sterela, through Doronilla, obtained a loan of P175,000.00 from the
Bank. To cover payment thereof, Doronilla issued three postdated checks, all
of which were dishonored. Atienza also said that Doronilla could assign or
withdraw the money in Savings Account No. 10-1567 because he was the
sole proprietor of Sterela.
[5]

Private respondent tried to get in touch with Doronilla through

Sanchez. On June 29, 1979, he received a letter from Doronilla, assuring him
that his money was intact and would be returned to him. On August 13, 1979,
Doronilla issued a postdated check for Two Hundred Twelve Thousand Pesos
(P212,000.00) in favor of private respondent. However, upon presentment
thereof by private respondent to the drawee bank, the check was
dishonored. Doronilla requested private respondent to present the same
check on September 15, 1979 but when the latter presented the check, it was
again dishonored.
[6]

Private respondent referred the matter to a lawyer, who made a written

demand upon Doronilla for the return of his clients money. Doronilla issued

another check for P212,000.00 in private respondents favor but the check was
again dishonored for insufficiency of funds.
[7]

Private respondent instituted an action for recovery of sum of money in the

Regional Trial Court (RTC) in Pasig, Metro Manila against Doronilla, Sanchez,
Dumagpi and petitioner. The case was docketed as Civil Case No. 44485. He
also filed criminal actions against Doronilla, Sanchez and Dumagpi in the
RTC. However, Sanchez passed away on March 16, 1985 while the case was
pending before the trial court. On October 3, 1995, the RTC of Pasig, Branch
157, promulgated its Decision in Civil Case No. 44485, the dispositive portion
of which reads:
IN VIEW OF THE FOREGOING, judgment is hereby rendered sentencing defendants
Arturo J. Doronila, Estrella Dumagpi and Producers Bank of the Philippines to pay
plaintiff Franklin Vives jointly and severally
(a) the amount of P200,000.00, representing the money deposited, with interest at the
legal rate from the filing of the complaint until the same is fully paid;
(b) the sum of P50,000.00 for moral damages and a similar amount for exemplary
damages;
(c) the amount of P40,000.00 for attorneys fees; and
(d) the costs of the suit.
SO ORDERED.

[8]

Petitioner appealed the trial courts decision to the Court of Appeals. In its
Decision dated June 25, 1991, the appellate court affirmed in toto the decision
of the RTC. It likewise denied with finality petitioners motion for
reconsideration in its Resolution dated May 5, 1994.
[9]

[10]

On June 30, 1994, petitioner filed the present petition, arguing that
I.

THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THAT THE

TRANSACTION BETWEEN THE DEFENDANT DORONILLA AND

RESPONDENT VIVES WAS ONE OF SIMPLE LOAN AND NOT

ACCOMMODATION;
II.

THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THAT

PETITIONERS BANK MANAGER, MR. RUFO ATIENZA, CONNIVED WITH
THE OTHER DEFENDANTS IN DEFRAUDING PETITIONER (Sic. Should be
PRIVATE RESPONDENT) AND AS A CONSEQUENCE, THE PETITIONER
SHOULD BE HELD LIABLE UNDER THE PRINCIPLE OF NATURAL JUSTICE;
III.

THE HONORABLE COURT OF APPEALS ERRED IN ADOPTING THE ENTIRE

RECORDS OF THE REGIONAL TRIAL COURT AND AFFIRMING THE
JUDGMENT APPEALED FROM, AS THE FINDINGS OF THE REGIONAL
TRIAL COURT WERE BASED ON A MISAPPREHENSION OF FACTS;
IV.

THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT THE

CITED DECISION IN SALUDARES VS. MARTINEZ, 29 SCRA 745,
UPHOLDING THE LIABILITY OF AN EMPLOYER FOR ACTS COMMITTED
BY AN EMPLOYEE IS APPLICABLE;
V.

THE HONORABLE COURT OF APPEALS ERRED IN UPHOLDING THE

DECISION OF THE LOWER COURT THAT HEREIN PETITIONER BANK IS
JOINTLY AND SEVERALLY LIABLE WITH THE OTHER DEFENDANTS FOR
THE AMOUNT OF P200,000.00 REPRESENTING THE SAVINGS
ACCOUNT DEPOSIT, P50,000.00 FOR MORAL DAMAGES, P50,000.00 FOR
EXEMPLARY DAMAGES, P40,000.00 FOR ATTORNEYS FEES AND THE
COSTS OF SUIT.
[11]

Private respondent filed his Comment on September 23, 1994. Petitioner

filed its Reply thereto on September 25, 1995. The Court then required private
respondent to submit a rejoinder to the reply. However, said rejoinder was filed
only on April 21, 1997, due to petitioners delay in furnishing private

respondent with copy of the reply and several substitutions of counsel on the
part of private respondent. On January 17, 2001, the Court resolved to give
due course to the petition and required the parties to submit their respective
memoranda. Petitioner filed its memorandum on April 16, 2001 while private
respondent submitted his memorandum on March 22, 2001.
[12]

[13]

[14]

Petitioner contends that the transaction between private respondent and

Doronilla is a simple loan (mutuum) since all the elements of a mutuum are
present: first, what was delivered by private respondent to Doronilla was
money, a consumable thing; and second, the transaction was onerous as
Doronilla was obliged to pay interest, as evidenced by the check issued by
Doronilla in the amount of P212,000.00, or P12,000 more than what private
respondent deposited in Sterelas bank account. Moreover, the fact that
private respondent sued his good friend Sanchez for his failure to recover his
money from Doronilla shows that the transaction was not merely gratuitous
but had a business angle to it. Hence, petitioner argues that it cannot be held
liable for the return of private respondents P200,000.00 because it is not privy
to the transaction between the latter and Doronilla.
[15]

[16]

It argues further that petitioners Assistant Manager, Mr. Rufo Atienza,

could not be faulted for allowing Doronilla to withdraw from the savings
account of Sterela since the latter was the sole proprietor of said
company. Petitioner asserts that Doronillas May 8, 1979 letter addressed to
the bank, authorizing Mrs. Vives and Sanchez to open a savings account for
Sterela, did not contain any authorization for these two to withdraw from said
account. Hence, the authority to withdraw therefrom remained exclusively with
Doronilla, who was the sole proprietor of Sterela, and who alone had legal title
to the savings account. Petitioner points out that no evidence other than the
testimonies of private respondent and Mrs. Vives was presented during trial to
prove that private respondent deposited his P200,000.00 in Sterelas account
for purposes of its incorporation. Hence, petitioner should not be held liable
for allowing Doronilla to withdraw from Sterelas savings account.
[17]

[18]

Petitioner also asserts that the Court of Appeals erred in affirming the trial
courts decision since the findings of fact therein were not accord with the
evidence presented by petitioner during trial to prove that the transaction
between private respondent and Doronilla was a mutuum, and that it

committed no wrong in allowing Doronilla to withdraw from Sterelas savings

account.
[19]

Finally, petitioner claims that since there is no wrongful act or omission on

its part, it is not liable for the actual damages suffered by private respondent,
and neither may it be held liable for moral and exemplary damages as well as
attorneys fees.
[20]

Private respondent, on the other hand, argues that the transaction

between him and Doronilla is not a mutuum but an accommodation, since he
did not actually part with the ownership of his P200,000.00 and in fact asked
his wife to deposit said amount in the account of Sterela so that a certification
can be issued to the effect that Sterela had sufficient funds for purposes of its
incorporation but at the same time, he retained some degree of control over
his money through his wife who was made a signatory to the savings account
and in whose possession the savings account passbook was given.
[21]

[22]

He likewise asserts that the trial court did not err in finding that petitioner,
Atienzas employer, is liable for the return of his money. He insists that Atienza,
petitioners assistant manager, connived with Doronilla in defrauding private
respondent since it was Atienza who facilitated the opening of Sterelas current
account three days after Mrs. Vives and Sanchez opened a savings account
with petitioner for said company, as well as the approval of the authority to
debit Sterelas savings account to cover any overdrawings in its current
account.
[23]

There is no merit in the petition.

At the outset, it must be emphasized that only questions of law may be
raised in a petition for review filed with this Court. The Court has repeatedly
held that it is not its function to analyze and weigh all over again the evidence
presented by the parties during trial. The Courts jurisdiction is in principle
limited to reviewing errors of law that might have been committed by the Court
of Appeals. Moreover, factual findings of courts, when adopted and
confirmed by the Court of Appeals, are final and conclusive on this Court
unless these findings are not supported by the evidence on record. There is
no showing of any misapprehension of facts on the part of the Court of
[24]

[25]

[26]

Appeals in the case at bar that would require this Court to review and overturn
the factual findings of that court, especially since the conclusions of fact of the
Court of Appeals and the trial court are not only consistent but are also amply
supported by the evidence on record.
No error was committed by the Court of Appeals when it ruled that the
transaction
between
private
respondent
and
Doronilla
was
a commodatum and not a mutuum. A circumspect examination of the records
reveals that the transaction between them was a commodatum. Article 1933
of the Civil Code distinguishes between the two kinds of loans in this wise:
By the contract of loan, one of the parties delivers to another, either something not
consumable so that the latter may use the same for a certain time and return it, in
which case the contract is called a commodatum; or money or other consumable thing,
upon the condition that the same amount of the same kind and quality shall be paid, in
which case the contract is simply called a loan or mutuum.
Commodatum is essentially gratuitous.
Simple loan may be gratuitous or with a stipulation to pay interest.
In commodatum, the bailor retains the ownership of the thing loaned, while in simple
loan, ownership passes to the borrower.
The foregoing provision seems to imply that if the subject of the contract is
a consumable thing, such as money, the contract would be
a mutuum. However, there are some instances where a commodatum may
have for its object a consumable thing. Article 1936 of the Civil Code provides:
Consumable goods may be the subject of commodatum if the purpose of the contract
is not the consumption of the object, as when it is merely for exhibition.
Thus, if consumable goods are loaned only for purposes of exhibition, or
when the intention of the parties is to lend consumable goods and to have the
very same goods returned at the end of the period agreed upon, the loan is
a commodatum and not a mutuum.

The rule is that the intention of the parties thereto shall be accorded
primordial consideration in determining the actual character of a contract. In
case of doubt, the contemporaneous and subsequent acts of the parties shall
be considered in such determination.
[27]

[28]

As correctly pointed out by both the Court of Appeals and the trial court,
the evidence shows that private respondent agreed to deposit his money in
the savings account of Sterela specifically for the purpose of making it appear
that said firm had sufficient capitalization for incorporation, with the promise
that the amount shall be returned within thirty (30) days. Private respondent
merely accommodated Doronilla by lending his money without consideration,
as a favor to his good friend Sanchez. It was however clear to the parties to
the transaction that the money would not be removed from Sterelas savings
account and would be returned to private respondent after thirty (30) days.
[29]

Doronillas attempts to return to private respondent the amount

of P200,000.00 which the latter deposited in Sterelas account together with an
additional P12,000.00, allegedly representing interest on the mutuum, did not
convert the transaction from a commodatum into a mutuum because such
was not the intent of the parties and because the additionalP12,000.00
corresponds to the fruits of the lending of the P200,000.00. Article 1935 of the
Civil Code expressly states that [t]he bailee in commodatum acquires the use
of the thing loaned but not its fruits. Hence, it was only proper for Doronilla to
remit to private respondent the interest accruing to the latters money
deposited with petitioner.
Neither does the Court agree with petitioners contention that it is not
solidarily liable for the return of private respondents money because it was not
privy to the transaction between Doronilla and private respondent. The nature
of said transaction, that is, whether it is a mutuum or a commodatum, has no
bearing on the question of petitioners liability for the return of private
respondents money because the factual circumstances of the case clearly
show that petitioner, through its employee Mr. Atienza, was partly responsible
for the loss of private respondents money and is liable for its restitution.

Petitioners rules for savings deposits written on the passbook it issued

Mrs. Vives on behalf of Sterela for Savings Account No. 10-1567 expressly
states that
2. Deposits and withdrawals must be made by the depositor personally or upon his
written authority duly authenticated, and neither a deposit nor a withdrawal will be
permitted except upon the production of the depositor savings bank book in
which will be entered by the Bank the amount deposited or withdrawn.
[30]

Said rule notwithstanding, Doronilla was permitted by petitioner, through

Atienza, the Assistant Branch Manager for the Buendia Branch of petitioner, to
withdraw therefrom even without presenting the passbook (which Atienza very
well knew was in the possession of Mrs. Vives), not just once, but several
times. Both the Court of Appeals and the trial court found that Atienza allowed
said withdrawals because he was party to Doronillas scheme of defrauding
private respondent:
XXX
But the scheme could not have been executed successfully without the knowledge,
help and cooperation of Rufo Atienza, assistant manager and cashier of the Makati
(Buendia) branch of the defendant bank.Indeed, the evidence indicates that Atienza
had not only facilitated the commission of the fraud but he likewise helped in devising
the means by which it can be done in such manner as to make it appear that the
transaction was in accordance with banking procedure.
To begin with, the deposit was made in defendants Buendia branch precisely because
Atienza was a key officer therein. The records show that plaintiff had suggested that
the P200,000.00 be deposited in his bank, the Manila Banking Corporation, but
Doronilla and Dumagpi insisted that it must be in defendants branch in Makati for it
will be easier for them to get a certification. In fact before he was introduced
toplaintiff, Doronilla had already prepared a letter addressed to the Buendia branch
manager authorizing Angeles B. Sanchez and company to open a savings account for
Sterela in the amount of P200,000.00, as per coordination with Mr. Rufo Atienza,
Assistant Manager of the Bank x x x (Exh. 1). This is a clear manifestation that the
other defendants had been in consultation with Atienza from the inception of the
scheme. Significantly, there were testimonies and admission that Atienza is the

brother-in-law of a certain Romeo Mirasol, a friend and business associate of

Doronilla.
Then there is the matter of the ownership of the fund. Because of the coordination
between Doronilla and Atienza, the latter knew before hand that the money deposited
did not belong to Doronilla nor to Sterela. Aside from such foreknowledge, he was
explicitly told by Inocencia Vives that the money belonged to her and her husband and
the deposit was merely to accommodate Doronilla. Atienza even declared that the
money came from Mrs. Vives.
Although the savings account was in the name of Sterela, the bank records disclose
that the only ones empowered to withdraw the same were Inocencia Vives and
Angeles B. Sanchez. In the signature card pertaining to this account (Exh. J), the
authorized signatories were Inocencia Vives &/or Angeles B. Sanchez. Atienza stated
that it is the usual banking procedure that withdrawals of savings deposits could only
be made by persons whose authorized signatures are in the signature cards on file with
the bank. He, however, said that this procedure was not followed here because Sterela
was owned by Doronilla. He explained that Doronilla had the full authority to
withdraw by virtue of such ownership. The Court is not inclined to agree with
Atienza. In the first place, he was all the time aware that the money came from Vives
and did not belong to Sterela. He was also told by Mrs. Vives that they were only
accommodating Doronilla so that a certification can be issued to the effect that Sterela
had a deposit of so much amount to be sued in the incorporation of the firm. In the
second place, the signature of Doronilla was not authorized in so far as that account is
concerned inasmuch as he had not signed the signature card provided by the bank
whenever a deposit is opened. In the third place, neither Mrs. Vives nor Sanchez had
given Doronilla the authority to withdraw.
Moreover, the transfer of fund was done without the passbook having been
presented. It is an accepted practice that whenever a withdrawal is made in a savings
deposit, the bank requires the presentation of the passbook. In this case, such
recognized practice was dispensed with. The transfer from the savings account to the
current account was without the submission of the passbook which Atienza had given
to Mrs. Vives. Instead, it was made to appear in a certification signed by Estrella
Dumagpi that a duplicate passbook was issued to Sterela because the original
passbook had been surrendered to the Makati branch in view of a loan
accommodation assigning the savings account (Exh. C). Atienza, who undoubtedly

had a hand in the execution of this certification, was aware that the contents of the
same are not true. He knew that the passbook was in the hands of Mrs. Vives for he
was the one who gave it to her. Besides, as assistant manager of the branch and the
bank official servicing the savings and current accounts in question, he also was aware
that the original passbook was never surrendered. He was also cognizant that Estrella
Dumagpi was not among those authorized to withdraw so her certification had no
effect whatsoever.
The circumstance surrounding the opening of the current account also demonstrate
that Atienzas active participation in the perpetration of the fraud and deception that
caused the loss. The records indicate that this account was opened three days later
after the P200,000.00 was deposited. In spite of his disclaimer, the Court believes that
Atienza was mindful and posted regarding the opening of the current account
considering that Doronilla was all the while in coordination with him. That it was he
who facilitated the approval of the authority to debit the savings account to cover any
overdrawings in the current account (Exh. 2) is not hard to comprehend.
Clearly Atienza had committed wrongful acts that had resulted to the loss subject of
this case. x x x.
[31]

Under Article 2180 of the Civil Code, employers shall be held primarily and
solidarily liable for damages caused by their employees acting within the
scope of their assigned tasks. To hold the employer liable under this provision,
it must be shown that an employer-employee relationship exists, and that the
employee was acting within the scope of his assigned task when the act
complained of was committed. Case law in the United States of America has
it that a corporation that entrusts a general duty to its employee is responsible
to the injured party for damages flowing from the employees wrongful act
done in the course of his general authority, even though in doing such act, the
employee may have failed in its duty to the employer and disobeyed the
latters instructions.
[32]

[33]

There is no dispute that Atienza was an employee of

petitioner. Furthermore, petitioner did not deny that Atienza was acting within
the scope of his authority as Assistant Branch Manager when he assisted
Doronilla in withdrawing funds from Sterelas Savings Account No. 10-1567, in
which account private respondents money was deposited, and in transferring

the money withdrawn to Sterelas Current Account with petitioner. Atienzas

acts of helping Doronilla, a customer of the petitioner, were obviously done in
furtherance of petitioners interests even though in the process, Atienza
violated some of petitioners rules such as those stipulated in its savings
account passbook. It was established that the transfer of funds from Sterelas
savings account to its current account could not have been accomplished by
Doronilla without the invaluable assistance of Atienza, and that it was their
connivance which was the cause of private respondents loss.
[34]

[35]

The foregoing shows that the Court of Appeals correctly held that under
Article 2180 of the Civil Code, petitioner is liable for private respondents loss
and is solidarily liable with Doronilla and Dumagpi for the return of
the P200,000.00 since it is clear that petitioner failed to prove that it exercised
due diligence to prevent the unauthorized withdrawals from Sterelas savings
account, and that it was not negligent in the selection and supervision of
Atienza. Accordingly, no error was committed by the appellate court in the
award of actual, moral and exemplary damages, attorneys fees and costs of
suit to private respondent.
WHEREFORE, the petition is hereby DENIED. The assailed Decision and
Resolution of the Court of Appeals are AFFIRMED.
SO ORDERED.