Dear Atty. Joji,

We found out that unauthorized withdrawals from our company bank account were made by one of our former employees through over the counter transactions. She represented herself as our authorized representative and the bank accepted such fact, even though she is not listed as an account holder or signatory. While we would make the said employee liable, can the bank that authorized the said withdrawals be held liable for allowing such without proper verification?

Sebastian

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Dear Sebastian,

In a decided case by the Supreme Court, it was held that a certain bank was liable for allowing unauthorized withdrawals. In the case of Banco De Oro Universal Bank Inc. v. Liza A. Seastres, 13 February 2023, that BDO, through its employees, failed to fulfill its obligation to treat the accounts of its customers, with meticulous care and extraordinary diligence, to wit:

“Base on current jurisprudence, banks are required to exercise the highest standard of diligence. As explained in Philippine Commercial International Bank v. Court of Appeals, the banking business is one affected with public interest so that banks are expected to exercise the highest degree of diligence:

Time and again, we have stressed that banking business is so impressed with public interest where the trust and confidence of the public in general is of paramount importance such that the appropriate standard of diligence must be very high, if not the highest, degree of diligence. A bank’s liability as obligor is not merely vicarious but primary, wherein the defense of exercise of due diligence in the selection and supervision of its employees is of no moment.

Banks handle daily transactions involving millions of pesos. By the very nature of their work the degree of responsibility, care and trustworthiness expected of their employees and officials is far greater than those of ordinary clerks and employees. Banks are expected to exercise the highest degree of diligence in the selection and supervision of their employees.

As a business affected with public interest and because of the nature of its functions, banks are under obligation to treat the accounts of their depositors with meticulous care always having in mind the fiduciary nature of their relationship.” As such, the Supreme Court thus ruled that BDO is solely liable for over P8,000,000 in actual and moral damages, attorney’s fees, and cost of suit, to earn legal interest of six percent per annum from finality of judgment until fully paid.

Hope this helps.

Atty. Joji Alonso