Citibank v. Sps. Cabamongan (G.R. No. 146918)


Respondent spouses opened a joint foreign currency time deposit in trust for their sons at petitioner’s Makati branch. Prior to maturity, a person claiming to be Carmelita Cabamongan pre-terminated the said account upon presenting identification cards. Though not being able to surrender the Original Certificate of Deposit, the money was released to her despite the release and waiver documents not being notarized. Respondent spouses learned of the incident and informed petitioner bank that Carmelita could not have pre-terminated the account since she was in the US at that time. The spouses made a formal demand of payment of the deposit and consequently, filed a complaint when petitioner refused to pay. Petitioner bank insists that it was not negligent of its duties since the deposit was released upon proper identification and verification. RTC ruled in favor of the spouses. CA affirmed.


Whether or not petitioner bank was negligent in its duties as to be liable for damages

Ruling: YES.

The Court has repeatedly emphasized that, since the banking business is impressed with public interest, of paramount importance thereto is the trust and confidence of the public in general. Consequently, the highest degree of diligence is expected, and high standards of integrity and performance are even required, of it. By the nature of its functions, a bank is “under obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship.”

In this case, it has been sufficiently shown that the signatures of Carmelita in the forms for pretermination of deposits are forgeries. Citibank, with its signature verification procedure, failed to detect the forgery. Its negligence consisted in the omission of that degree of diligence required of banks. The Court has held that a bank is “bound to know the signatures of its customers; and if it pays a forged check, it must be considered as making the payment out of its own funds, and cannot ordinarily charge the amount so paid to the account of the depositor whose name was forged.” Such principle equally applies here.

The Court agrees with the observation of the CA that Citibank, thru Account Officer San Pedro, openly courted disaster when despite noticing discrepancies in the signature and photograph of the person claiming to be Carmelita and the failure to surrender the original certificate of time deposit, the pretermination of the account was allowed. Even the waiver document was not notarized, a procedure meant to protect the bank. For not observing the degree of diligence required of banking institutions, whose business is impressed with public interest, Citibank is liable for damages


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