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* FIRST DIVISION.
488
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ruling on this issue when it never raised this matter before the
appellate court or before the trial court. Obviously, this issue is only
an afterthought. An issue raised for the first time on appeal and not
raised timely in the proceedings in the lower court is barred by
estoppel.
Commercial Law; Banks; Banks required to treat the accounts
of its depositors with meticulous care, always having in mind the
fiduciary nature of their relationship.·Section 2 of Republic Act No.
8791 (General Banking Law of 2000) expressly imposes this
fiduciary duty on banks when it declares that the State recognizes
the „fiduciary nature of banking that requires high standards of
integrity and performance.‰ This statutory declaration merely
echoes the earlier pronouncement of the Supreme Court in Simex
International (Manila) Inc. v. Court of Appeals requiring banks to
„treat the accounts of its depositors with meticulous care, always
having in mind the fiduciary nature of their relationship.‰ The
Court reiterated this fiduciary duty of banks in subsequent cases.
Same; Same; The fiduciary relationship means that the bankÊs
obligation to observe high standards of integrity and performance is
deemed written into every deposit agreement between a bank and its
depositor.·Although RA No. 8791 took effect only in the year 2000,
at the time that the BANK transacted with Marcos, jurisprudence
had already imposed on banks the same high standard of diligence
required under RA No. 8791. This fiduciary relationship means that
the bankÊs obligation to observe „high standards of integrity and
performance‰ is deemed written into every deposit agreement
between a bank and its depositor.
Same; Same; A bank is liable for the wrongful acts of its officers
done in the interest of the bank or in their dealings as bank
representatives but not for acts outside the scope of their authority.
·Assuming Pagsaligan was behind the spurious promissory note,
the BANK would still be accountable
489
to Marcos. We have held that a bank is liable for the wrongful acts
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CARPIO, J.:
The Case
1
Before us is a petition for review of the Decision of the
Court of Appeals in CA-G.R. CV No. 2 34382 dated 10
December 1996 modifying the Decision of the Regional
Trial Court, Fourth Judicial
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490
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3 Rollo, p. 204.
4 The case was docketed as Civil Case No. B-3148.
491
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6 Rollo, p. 211.
7 Should be P1,429,795.34. See note 5.
493
8
same to the obligation that is now considered fully paid.
The BANK insisted that the Deed of Assignment
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8 Records, p. 11.
9 Rollo, p. 231.
494
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495
The trial court ruled that the total amount of time deposits
of Marcos was P1,429,795.34 and not only P764,897.67 as
claimed by the BANK. The trial court found that Marcos
made a time deposit on two occasions. The first time
deposit was made on 11 March 1982 for P664,897.67 as
shown by Receipt No. 635743. On 12 March 1982, Marcos
again made a time deposit for P764,897.67 as
acknowledged by Pagsaligan in a letter of certification. The
two time deposits thus amounted to P1,429,795.34.
The trial court pointed out that no receipt was issued for
the 12 March 1982 time deposit because the letter of
certification was sufficient. The trial court made a finding
that the certification letter did not include the time deposit
made on 11 March 1982. The 12 March 1982 deposit was in
cash while the 11 March 1982 deposit was in checks which
still had to clear. The checks were not included in the
certification letter since the BANK could not credit the
amounts of the checks prior to clearing. The trial court
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According
13
to the trial court, a security of only
P4,867.67 for a loan worth P595,875 (less 30% marginal
deposit) is not only preposterous, it is also comical. Worse,
aside from allowing Marcos to have unsecured trust
receipts, the BANK still claimed to have granted Marcos
another loan for P500,000 on 25 October 1983 covered by
Promissory Note No. 20-979-83. The BANK is a commercial
bank engaged in the business of lending money. Allowing a
loan of more than a million pesos without collateral is in
the words of the trial court, „an impossibility and a gross
violation of Central Bank Rules and Regulations, 14
which no
Bank Manager has such authority to grant.‰ Thus, the
trial court held that the BANK could not have granted
Marcos the loan covered by Promissory Note No. 20-979-83
because it was unsecured by any collateral.
The trial court required the BANK to produce the
original copies of the loan application and Promissory Note
No. 20-979-83 so that it could determine who applied for
this loan. However, the BANK presented to the trial court
only the „machine copies of the duplicate‰ of these
documents.
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10 Rollo, p. 256.
11 The difference between P764,897.67 and P760,000 is P4,897.67, not
P4,867.67.
12 Should be P4,897.67. See note 11.
13 Should be P4,897.67. See note 11.
14 Rollo, p. 257.
497
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15 Rollo, p. 262.
498
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16
IT IS SO ORDERED.‰
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499
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the BANK had waived its right to present its evidence and
had submitted the case for decision. The appellate court
agreed with the grounds relied upon by the trial court in its
Order dated 7 September 1990.
The Court of Appeals, however, differed with the finding
of the trial court as to the total amount of the time
deposits. The appellate court ruled that the total amount of
the time deposits of Marcos is only P764,897.67 and not
P1,429,795.34 as found by the trial court. The certification
letter issued by Pagsaligan showed that Marcos made a
time deposit on 12 March 1982 for P764,897.67. The
certification letter shows that the amount mentioned in the
letter was the aggregate or total amount of the time
deposits of Marcos as of that date. Therefore, the
P764,897.67 already included the P664,897.67 time deposit
made by Marcos on 11 March 1982.
500
Besides, the Official Receipt (Exh. „B‰, p. 32, Records) dated March
11, 1982 covering the sum of P664,987.67 time deposit did not
provide for a maturity date implying clearly that the amount
covered by said receipt forms part of the total sum shown in the
letter-certification which contained a maturity date. Moreover, it
taxes oneÊs credulity to believe that appellee would make a time
deposit on March 12, 1982 in the sum of P764,897.67 which except
for the additional sum of P100,000.00 is practically identical (see
underlined figures) to the sum of P664,897.67 deposited the day
before March 11, 1982.
Additionally, We agree with the contention of the appellant that
the lower court wrongly appreciated the testimony of Mr.
Pagsaligan. Our finding is strengthened when we consider the
alleged application for loan by the appellee with the appellant in
the sum of P500,000.00 dated October 24, 1983. (Exh. „J‰, p. 40,
Records), wherein it was stated that the loan is for additional
working capital versus the various time deposit amounting to
17
P760,000.00. (Emphasis supplied)
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17 Rollo, p. 35.
501
18
SO ORDERED.‰ (Emphasis supplied)
The Issues
Procedural Issues
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18Ibid.,p. 37.
19Ibid., p. 321.
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502
The records show that the BANK did not ask the trial court
to restore its right to cross-examine Marcos when it sought
the lifting of the default order on 9 January 1990. Thus, the
order dated 7 February 1990 setting aside the order of
default did not confer on the BANK the right to cross-
examine Marcos. It was only on 2 March 1990 that the
BANK filed the motion to cross-examine Marcos. During
the 12 March 1990 hearing, the trial court denied the
BANKÊs oral manifestation to grant its motion to cross-
examine Marcos because there was no proof of service on
Marcos. The BANKÊs counsel pleaded for reconsideration
but the trial court denied the plea and ordered the BANK
to present its evidence. Instead of presenting its evidence,
the BANK moved for the resetting of the hearing and when
the trial court denied the same, the BANK informed the
trial court
23
that it was elevating the denial to the „upper
court.‰
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21Ibid.
503
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504
for the first time on appeal and not raised timely28in the
proceedings in the lower court is barred by estoppel.
The BANK cannot claim that Marcos had admitted the
due execution of the documents attached to its answer
because the BANK filed its answer late and even failed to
serve it on Marcos. The BANKÊs answer, including the
actionable documents it pleaded and attached to its answer,
was a mere scrap of paper. There was nothing that Marcos
could specifically deny under oath. Marcos had already
completed the presentation of his evidence when the trial
court lifted the order of default and admitted the BANKÊs
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505
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No. 20-979-83 could have been easily proven had the BANK
presented the original copies of the promissory note and its
supporting evidence. In lieu of the original copies, the
BANK presented the „machine copies of the duplicate‰ of
the documents. These substitute documents have no
evidentiary value. The BANKÊs failure to explain the
absence of the original documents and to maintain a record
of the offsetting of this loan with the time deposits bring to
fore the BANKÊs dismal failure to fulfill its fiduciary duty
to Marcos.
Section 2 of Republic Act No. 8791 (General Banking
Law of 2000) expressly imposes this fiduciary duty on
banks when it declares that the State recognizes the
„fiduciary nature of banking that requires high standards
of integrity and performance.‰ This statutory declaration
merely echoes the earlier pronouncement of the Supreme
Court in 31
Simex International (Manila) Inc. v. Court of
Appeals requiring banks to „treat the accounts of its
depositors with meticulous care, always having32
in mind the
fiduciary nature of their relationship.‰ The Court
reiterated
33
this fiduciary duty of banks in subsequent
cases. 34
Although RA No. 8791 took effect only in the year 2000,
at the time that the BANK transacted with Marcos,
jurisprudence had already imposed on banks the same35high
standard of diligence required under RA No. 8791. This
fiduciary relationship means that the bankÊs obligation to
observe „high standards of integrity and performance‰ is
deemed written into every deposit agreement between a
bank and its depositor.
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(1997); Firestone v. Court of Appeals, G.R. No. 113236, 5 March 2001, 353
SCRA 601.
34 RA No. 8791 was approved on 3 May 2000.
35 The Consolidated Bank and Trust Corporation v. Court of Appeals,
G.R. No. 138569, 11 September 2003, 410 SCRA 562.
506
In every case, the depositor expects the bank to treat his account
with the utmost fidelity, whether such account consists only of a few
hundred pesos or of millions. The bank must record every single
transaction accurately, down to the last centavo, and as promptly as
possible. This has to be done if the account is to reflect at any given
time the amount of money the depositor can dispose of as he sees
fit, confident that the bank will deliver it as and to whomever he
directs.
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36Supra,note 31.
507
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39 San Pedro v. Court of Appeals, 333 Phil. 597; 265 SCRA 733 (1996).
508
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The BANK and Marcos do not now dispute the ruling of the
Court of Appeals that the total amount of time deposits
that Marcos placed with the BANK is only P764,897.67 and
not P1,429,795.34 as found by the trial court. The BANK
has always argued
43
that MarcosÊ time deposits only totalled
P764,897.67. What the BANK insists on in this petition is
the trial courtÊs violation of its right to procedural due
process and the absence of any obligation to pay or return
anything to Marcos. Marcos, on the other hand, merely
prays for the affirmation of either the trial
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40Ibid.
43 Rollo, p. 21.
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509
44
court or appellate court decision. We uphold the finding of
the Court of Appeals as to the amount of the time deposits
as such finding is in accord with the evidence on record.
Marcos claimed that the certificates of time deposit were
with Pagsaligan for safekeeping. Marcos was only able to
present the receipt dated 11 March 1982 and the letter-
certification dated 12 March 1982 to prove the total
amount of his time deposits with the BANK. The letter-
certification issued by Pagsaligan reads:
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44Ibid., p. 373.
45Ibid., pp. 34-35.
510
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511
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The courts shall also fix the duration of the period when it depends on
the will of the debtor.
In every case, the courts shall determine such period as may under
the circumstances have been probably contemplated by the parties. Once
fixed by the courts, the period cannot be changed by them.‰
51 Rate of Legal Interest = 12% per annum
Period from 8 March 1983 (Date Trust Receipt No. CD 83.7 was
issued) to 6 March 1987 (date when Trust Receipt No. CD 83.7 became
due) = 1,459 days
Interest Due = (Value of Trust Receipt No. CD 83.7 after payment of
the marginal deposit) (12%) (Number of Days)/ 365 days
Interest Due = (P210,618.75) (12%) (1,459)/365
Interest Due = P101,027.76
52 Rate of Legal Interest = 12% per annum
Period from 15 March 1983 (Date Trust Receipt No. CD 83.9 was
issued) to 6 March 1987 (date when Trust Receipt No. CD 83.9 became
due) = 1,452 days
Interest Due = (Value of Trust Receipt No. CD 83.9 after payment of
the marginal deposit) (12%) (Number of Days)/ 365 days
Interest Due = (P210,618.75) (12%) (1,452)/365
Interest Due = P100,543.04
53 Rate of Legal Interest = 12% per annum
Period from 15 March 1983 (Date Trust Receipt No. CD 83.10 was
issued) to 6 March 1987 (date when Trust Receipt No. CD 83.10 became
due) = 1,452 days
Interest Due = (Value of Trust Receipt No. CD 83.10 after payment of
the marginal deposit) (12%) (Number of Days)/ 365 days
512
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513
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514
··o0o··
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