Commercial Law Review | Divina | 2nd Sem AY 2014-2015

Philippine Savings Bank v.

Chowking
3 July 2008
Reyes, R.T., J.
Manzano

12

1989

074631

P159,634.
13

08
1989

017096

P 60,036.7
4

10
August
19892

August

Theaccounting
total
amount ofof
the
subject
checks
SUMMARY: Joe Kuan Food Corp issued 5 check in favor Chowking. The
manager
Chowking,
Rino
Manzano,
encashed
reached
P556,981.86.
the checks with PSB through Bustos Branchs Head Erlinda Santos. Santos encashed the checks even without the signature of the
2. On the respective due dates of each check, Chowking's
authorized officers of Chowking. It contained only Manzanos indorsement.
Chowking
filed manager,
a complaint
for sum
of money
against, PSB,
acting
accounting
Rino
Manzano,
endorsed
its president, and Santos. PSB, et al. claim that Chowkings own negligence
is
the
proximate
cause
of
the
loss.
SC
ruled
that
are
and encashed said checks with the Bustos branch banks
of
required the highest degree of diligence. This, PSB, et al. failed to observe.
PSBank.
3. All the five checks were honored by PSB Bustos Branch
Head Erlinda Santos, even with only the endorsement of
Manzano importance
approving them.
The signatures
of the
other
DOCTRINE: Banking business is impressed with public interest. Of paramount
is the trust
and confidence
of the
public in
authorized
officers
of
Chowking
were
absent
in
the
five
general in the banking industry. Consequently, the diligence required of banks is more than that of a Roman
(5) checks, contrary to usual banking practice. Manzano
father of a family. The highest degree of diligence is expected.
absconded with and misappropriated the check
In its declaration of policy, the General Banking Law of 2000 requiresproceeds.
of banks the highest standards of integrity and performance.
When
Chowking
found outcare."
Manzano's scheme, it
Needless to say, a bank is "under obligation to treat the accounts 4.
of its
depositors
with meticulous
demandedconcern.
reimbursement from PSBank. When PSBank
relationship between the bank and the depositors must always be of paramount
refused to pay, Chowking filed a complaint for a sum of
money with damages before the RTC. Likewise
FACTS:
impleaded were PSBank's president, Antonio S. Abacan,
1. Between March 15, 1989 and August 10, 1989, Joe Kuan
and Bustos branch head, Santos.
Food Corporation issued in favor of Chowking five (5)
PSB: It exercised due diligence in the supervision of all
PSBank checks with the following numbers, dates and
its employees. It even dismissed defendant Santos after
denominations:
she was found guilty of negligence in the performance of
Check
Amount
Date
her duties.
No.
Santos: She merely followed the bank's practice of
honoring respondent's checks even if accompanied only
017069
P 44,120.0
15
March
by Manzano's endorsement. She is not negligent of her
0
1989
duties.
Abacan: As president and officer of petitioner bank, he
053528
P135,052.
09 May 1989
played no role in the transactions complained of. Thus,
87
Chowking has no cause of action against him.
All of them: The proximate cause of Chowking's loss
074602
P160,138.
08
August
was its own negligence.

Commercial Law Review | Divina | 2nd Sem AY 2014-2015

5. After MR, RTC reversered itself and ruled in favor of
Philippine Savings Bank.
6. CA reversed RTC and ruled in favor of Chowking.
ISSUE:
1. WON Chowkings negligence is the proximate
cause of its loss? No!
Banking business is impressed with public
interest. Of paramount importance is the trust
and confidence of the public in general in the
banking industry. Consequently, the diligence
required of banks is more than that of a
Roman pater familias or a good father of a
family. The highest degree of diligence is
expected.
In its declaration of policy, the General Banking
Law of 2000 requires of banks the highest
standards of integrity and performance. Needless
to say, a bank is "under obligation to treat the
accounts of its depositors with meticulous
care." The fiduciary nature of the relationship

between the bank and the depositors must always

be of paramount concern.
PSB, through Santos, was clearly negligent when it
honored respondent's checks with the lone endorsement
of Manzano. In the similar case of Philippine Bank of
Commerce v. Court of Appeals, an employee of
Rommel's Marketing Corporation (RMC) was able to
illegally deposit in a different account the checks of the
corporation. This Court found that it was the bank teller's
failure to exercise extraordinary diligence to validate the
deposit slips that caused the crime to be perpetrated.
The proximate cause of the loss is not Chowking's
alleged negligence in allowing Manzano to take hold and
encash its checks. It is PSB's own negligence in the
supervision of its employees when it overlooked the
irregular practice of encashing checks even without the
requisite endorsements.
DISPOSITIVE: CA affirmed. PSBs negligence is the
proximate cause of the loss to Chowking.