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PRODUCERS BANK vs. CA and VIVESFebruary 19, 2003

Petitioner: Producers Bank of the Phils. (now First International Bank)

Respondents: CA and Franklin Vives

FACTS: Sometime in 1979, 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 Services. Specifically, Sanchez asked Vives to deposit in a bank a certainamount 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.

On May 9, 1979, relying on the assurances and representations of Sanchez and Doronilla,

private respondent issued a check in the amount of P200,000 in favor of Sterela. An account

for Sterela Marketing Services was opened. The authorized signatories were Inocencia

Vives and/or Angeles Sanchez. A passbook for Savings Account No. 10-1567 was thereafter

issued to Mrs. Vives.

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 iftheir money was still intact. They were informed that only P90,000 remained in the account.

He likewise told them that Mrs. Vives could not withdraw said remaining amount because ithad to answer for some postdated checks issued by Doronilla.

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 P212,000 in

favor of private respondent, which was dishonored when presented at the bank.

Private respondent instituted an action for recovery of sum of money and filed criminal

actions against Doronilla, Sanchez, Dumagpi and petitioner. RTC held the petitioners liable

for the amount deposited, with interest; moral and exemplary damages, atty's fees and costsof suit. CA affirmed.

Petitioner contends that the transaction between private respondent and Doronilla is asimple loan (mutuum) since all the elements of a mutuum are present:

- first, what was delivered by private respondent to Doronilla was money, a consumablething; 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.

- 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 i t. 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.

ISSUE: WON the transaction was a simple loan and not of accommodation

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.

Art. 1933 CC 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

As correctly pointed out by both the Court of Appeals and the trial court, the evidenceshows 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 capitalizationfor 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.

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 additional

P12,000.00 corresponds to the fruits of the lending of the P200,000.

Bank should be held solidarily liable for the return of private respondent's money

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."

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.

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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) branchof 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 canbe done in such manner as to make it appear that the transaction was in accordance with

banking procedure.

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 assignedtasks. 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.