Bank of the Philippine Island v. Central Bank of the Philippines and Citibank G.R. No. 197593 12 October 2020 Hernando, J.

Bank of the Philippine Island v. Central Bank of the Philippines and Citibank

G.R. No. 197593 12 October 2020 Hernando, J.:

Second Division

 

Nature of the Action: This is a petition for review on certiorari challenges the Court of Appeals’ Decision and Resolution which reversed and set aside the RTC’s Decision.

Facts:

Petitioner BPI and Respondent CitiBank are both members of the Clearing House established and supervised by the CBP. BPI Laoag City Branch discovered outstanding discrepancies in its inter-bank reconciliation statements in CBP in the amount of 9 Million. Hence, petitioner BPI filed a letter-complaint beforethe CBP on the latter’s irregular charging of its demand deposit account in the amount of 9 million. It is also requested CBP to conduct the necessary investigation of the matter. In addition, both CBP and the petitioner BPI agreed to refer the matter to the National Bureau of Investigation to conduct separate investigation.

Thereafter, it showed that a criminal syndicate using a scheme known as “pilferage scheme” committed the bank fraud. 

Upon arrival of the checks at the CBP Clearing House, Manuel Valentino (Valentino), CBP's Bookkeeper, with the assistance of Janitor-Messenger Jesus Estacio (Estacio), intercepted and pilfered the BPI Laoag City Branch checks, and tampered the clearing envelope. They reduced the amounts appearing on the clearing manifest, the BPI clearing statement and the CBP manifest to conceal the fact that the BPI Laoag City Branch checks showing the original amounts were deposited with Citibank Greenhills Branch. Thereafter, the altered CBP manifest and clearing statement, together with the clearing envelope which contained the checks intended for BPI Laoag City Branch but without the pilfered checks deposited with the Citibank Greenhills Branch in the account of MMC and drawn against Bustamante's BPI Laoag City Branch account, were forwarded to CBP Laoag Clearing Center.

As a result of the aforesaid fraud committed against petitioner BPI, Desiderio and Estacio, together with other personalities, were convicted of three (3) counts of Estafa thru Falsification of Public Documents by the Sandiganbayan (SB). On the other hand, Valentino was discharged and utilized as the main witness for the prosecution.

CBP denied any liability to BPI and demanded the latter to return the P4.5 million it earlier credited to BPI as the said amount was allegedly held under a "suspense account" pending the final outcome of the NBI investigation. CBP likewise filed a third-party complaint against Citibank for the latter's negligence which caused the perpetration of the fraud. Citibank, on its part, denied any negligence in the supervision of its employees. CBP further alleged, in its Amended Answer, that the fraud could not have been committed without the connivance and collusion of certain employees of both petitioner BPI and respondent Citibank.

The RTC ruled in favor of BPI. It gave credence to the NBI Investigation Report that the immediate and proximate cause of the defraudation were the criminal acts of CBP employees, Valentino and Estacio. The lower court ruled that CBP, as employer, shall be liable for the damage caused by its employees, Valentino and Estacio, to petitioner BPI under Articles 2176 and 2180 of the Civil Code.

On appeal, the CA the CA reversed and set aside the RTC's Decision. It reasoned that under Article 2180 of the Civil Code, the State is generally liable only for quasi-delicts in case the act complained of was performed by a special agent. Hence, this petition.

Issue

Whether CBP is liable for the torts committed by its employees Valentino and Estacio.

Ruling:

No. CBP is not liable.

The test of liability depends on whether or not the employees, acting in behalf of CBP, were performing governmental or proprietary functions. The State in the performance of its governmental functions is liable only for the tortuous acts of its special agents. On the other hand, the State becomes liable as an ordinary employer when performing its proprietary functions. Thus, Articles 2176 and 2180 of the Civil Code provide that:

Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.

Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is responsible.

x x x x

Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry.

The State is responsible in like manner when it acts through a special agent; but not when the damage has been caused by the official to whom the task done properly pertains, in which case what is provided in Article 2176 shall be applicable. x x x x

The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage.

To reiterate, CBP's establishment of clearing house facilities for its member banks to which Valentino and Estacio were assigned as Bookkeeper and Janitor-Messenger, respectively, is a governmental function. As such, the State or CBP in this case, is liable only for the torts committed by its employee when the latter acts as a special agent but not when the said employee or official performs his or her functions that naturally pertain to his or her office. A special agent is defined as one who receives a definite and fixed order or commission, foreign to the exercise of the duties of his office. Evidently, both Valentino and Estacio are not considered as special agents of CBP during their commission of the fraudulent acts against petitioner BPI as they were regular employees performing tasks pertaining to their offices, namely, bookkeeping and janitorial-messenger. Thus, CBP cannot be held liable for any damage caused to petitioner BPI by reason of Valentino and Estacio's unlawful acts.

Even on the assumption that CBP is performing proprietary functions, still, it cannot be held liable because Valentino and Estacio acted beyond the scope of their duties.

Nonetheless, even assuming that CBP is an ordinary employer, it still cannot be held liable. Article 2180 of the Civil Code provides that an employer shall be liable for the damages caused by their employees acting within the scope of their assigned tasks. An act is deemed an assigned task if it is "done by an employee, in furtherance of the interests of the employer or for the account of the employer at the time of the infliction of the injury or damage." Obviously, Valentino and Estacio's fraudulent acts of tampering with and pilfering of documents are not in furtherance of CBP's interests nor done for its account as the said acts were unauthorized and unlawful. Also, petitioner BPI has the burden to prove that Valentino and Estacio's fraudulent acts were performed within the scope of their assigned tasks, which it failed to do. It is only then that the presumption that CBP, as employer, was negligent would arise which then compels CBP to show evidence that it exercised due diligence in the selection and supervision of its employees.

Thus, where a public officer acts without or in excess of jurisdiction, any injury or damage caused by such acts is his or her own personal liability and cannot be imputed to the State. In Festejo v. Fernando,we ruled that the acts of the Director of Public Works in taking over a private property and constructing thereon an irrigation canal were without authority, hence, the action for the recovery of land or its value filed by the property owner was in his own personal capacity. Applying analogously our ruling in Festejo v. Fernando, the fraudulent acts of CBP's employees Valentino and Estacio, were evidently not pursuant to their functions and were in excess of or without authority; therefore, any injury or damage caused by such acts to petitioner BPI shall be Valentino's and Estacio's own personal liabilities which should not be imputed to CBP as their employer.