Bank of the Philippine Islands v. Central Bank of the Philippines

 Bank of the Philippine Islands v. Central Bank of the Philippines, 

G.R. No. 197593, 

October 12, 2020

DOCTRINES:

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.

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.

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."

FACTS:

Petitioner BPI and respondent Citibank are both members of the Clearing House

established and supervised by the Central Bank of the Philippines (CBP). Both banks

maintained demand deposit balances with the CBP for their clearing transactions with

other commercial banks coursed through the said clearing facilities. Sometime in

January 1982, BPI-Laoag Branch discovered outstanding discrepancies in its inter-bank

reconciliation statements in CBP in the amount of PhP9 million. Hence, in February

1982, petitioner BPI filed a letter-complaint before the CBP on the latter’s irregular

charging of its demand deposit account. It also requested the CBP to conduct the

necessary investigation of the matter. In addition, both CBP and petitioner BPI agreed to

refer the matter to the National Bureau of Investigation (NBI).

The NBI results showed that an organized criminal syndicate using a scheme

known as “pilferage scheme” committed the bank fraud in the following manner:

a) the infiltration of the Clearing Division of the CBP with the connivance of some

personnel of the CBP Clearing House;

b) the pilferage of "out-of-town" checks;

c) the tampering of vital banking documents, such as clearing manifests and

clearing statements;

d) the opening of Current Accounts by members of the syndicate with the BPI

Laoag City Branch and Citibank, Greenhills Branch in Mandaluyong City; and

e) the withdrawal of funds through checks deposited with Citibank and drawn

against BPI.

As a result of the aforesaid fraud committed against petitioner BPI, Marcelo

Desiderio and Jesus Estacio (Janitor-Messenger of the CBP) together with other

personalities were convicted of 3 counts of Estafa thru Falsification of Public Documents

by the Sandiganbayan. On the other hand, Manuel Valentino (CBP’s Bookkeeper), was

discharged and utilized as the main witness for the prosecution.

Thereafter, petitioner BPI requested CBP, through a letter, to credit back to its

demand deposit account the amount of PhP9 million with interest. Despite several

requests made by BPI, CBP refused to credit back the remaining amount of PhP4.5

million plus interest. Hence, in January 1988, petitioner BPI filed a complaint for sum of

money against CBP.

RTC: rendered a decision in favor of the 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 RTC 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.

CA: reversed and set aside the RTC's Decision. The CA dismissed the complaint

filed by petitioner BPI and ordered the cancellation of the payment made by CBP in the

amount of P4.5 million to BPI. 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. Both Valentino and Estacio were not special agents as

neither of them was duly empowered by a definite order or commission to perform some

act or were charged with some definite purpose which gives rise to the claim. They were

employed in accordance with ordinary rules and regulations governing civil service and

assigned to carry out tasks naturally related to their employment. The CA found that the

CBP met the standard of ordinary diligence in determining both Valentino's and

Estacio's respective qualifications prior to their employment through the conduct of

mental, psychological, and physical examinations as required by the Civil Service

Commission. They were also required to obtain National Intelligence and Security

Authority (NISA) and NBI clearances prior to their employment.

A motion for reconsideration was filed by petitioner BPI which was denied by the

CA. Hence, petitioner BPI filed this Petition for Review on Certiorari under Rule 45

before the Supreme Court.

ISSUES:

1. Whether or not CBP is performing a proprietary function when it entered into

clearing operations of regional checks of its member institutions.

2. Whether or not CBP is immune to suit although it performed governmental

functions.

3. Whether or not CBP is liable for the acts of its employees (Valentino and

Estacio).

HELD:

1. No. CBP is a corporate body performing governmental functions. Operating a

clearing house facility for regional checks is within CBP's governmental functions

and duties as the central monetary authority. In 1948, the CBP was created

under RA 265, as amended, with a separate and distinct juridical personality.

Undeniably, the function of the CBP and its predecessors of supervising the

monetary and the banking systems of the Philippines is a governmental function.

While at present, the Philippine Clearing House Corporation (PCHC) handles the

clearing of all checks issued by its member banks, this does not necessarily

mean that CBP was performing a proprietary function during that time by

providing a clearing house facility for regional checks. It bears stressing that

establishing clearing house facilities for the member banks is a necessary

incident to its primary governmental function of administering monetary, banking

and credit system of the Philippines as per Section 107 of RA 265, as amended.

The subsequent privatization of the clearing of checks did not negate the fact that

it was CBP's duty to establish nationwide facilities to provide interbank clearing at

no cost to the banks as per RA 265 as amended.

2. No. While the CBP performed a governmental function in providing clearing

house facilities, it is not immune from suit as its Charter, by express provision,

waived its immunity from suit. However, although the CBP allowed itself to be

sued, it did not necessarily mean that it conceded its liability. Petitioner BPI had

been given the right to bring suit against CBP, such as in this case, to obtain

compensation in damages arising from torts, subject, however, to the right of

CBP to interpose any lawful defense.

3. No. Pursuant to Articles 2176 and 2180 of the Civil Code, 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. Evidently, both Valentino and Estacio

(Bookkeeper and Janitor-Messenger, respectively) 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. The remedy, therefore, of petitioner BPI lies

against the parties responsible for the tampering with and pilfering of the subject

checks and other bank documents which resulted in the total damage of PhP9

million. Petition for certiorari was denied.