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    Central Bank vs. Citytrust Bank G.R. No. 141835, February 4, 2009 Facts

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    Ramon Khalil Erum IV
    The Supreme Court ruled that Citytrust Bank can collect damages from Central Bank of the Philippines, but the damages must be mitigated. While both banks were found negligent, the proximate cause of the loss was Central Bank's lack of due care in verifying the signatures and paying the stolen checks. As a bank, Central Bank is held to high standards of integrity and performance under the law due to the fiduciary nature of banking. Citytrust's contributory negligence in belatedly examining its account and notifying Central Bank of the theft mitigates Central Bank's liability.

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    Central Bank vs. Citytrust Bank G.R. No. 141835, February 4, 2009 Facts

    Uploaded by

    Ramon Khalil Erum IV
    175 views1 page
    The Supreme Court ruled that Citytrust Bank can collect damages from Central Bank of the Philippines, but the damages must be mitigated. While both banks were found negligent, the proximate cause of the loss was Central Bank's lack of due care in verifying the signatures and paying the stolen checks. As a bank, Central Bank is held to high standards of integrity and performance under the law due to the fiduciary nature of banking. Citytrust's contributory negligence in belatedly examining its account and notifying Central Bank of the theft mitigates Central Bank's liability.

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    CENTRAL-BANK-vs-CITYTRUST_ASTI

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    The Supreme Court ruled that Citytrust Bank can collect damages from Central Bank of the Philippines, but the damages must be mitigated. While both banks were found negligent, the proximate cause of the loss was Central Bank's lack of due care in verifying the signatures and paying the stolen checks. As a bank, Central Bank is held to high standards of integrity and performance under the law due to the fiduciary nature of banking. Citytrust's contributory negligence in belatedly examining its account and notifying Central Bank of the theft mitigates Central Bank's liability.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    175 views1 page

    Central Bank vs. Citytrust Bank G.R. No. 141835, February 4, 2009 Facts

    Uploaded by

    Ramon Khalil Erum IV
    The Supreme Court ruled that Citytrust Bank can collect damages from Central Bank of the Philippines, but the damages must be mitigated. While both banks were found negligent, the proximate cause of the loss was Central Bank's lack of due care in verifying the signatures and paying the stolen checks. As a bank, Central Bank is held to high standards of integrity and performance under the law due to the fiduciary nature of banking. Citytrust's contributory negligence in belatedly examining its account and notifying Central Bank of the theft mitigates Central Bank's liability.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    CENTRAL BANK vs.

    CITYTRUST BANK petitioner’s liability, in accordance with Article 2179 of the


    G.R. No. 141835, February 4, 2009 Civil Code which provides that if the plaintiff’s negligence was
    only contributory, the immediate and proximate cause of the
    FACTS: injury being the defendant’s lack of due care, the plaintiff may
    The Citytrust Banking Corporation (Citytrust) gave Central recover damages, but the courts shall mitigate
    Bank of the Philippines a list of signatures of five of its officers the damages to be awarded.
    authorized to sign checks and serve as drawers and indorsers
    for its account, and also the list of the roving tellers
    authorized to perform other transactions on its behalf, one of
    whom was Rounceval Flores (Flores). Flores presented two
    checks to the Central Bank’s Senior Teller Iluminada dela Cruz
    (Dela Cruz) and was subsequently approved. Dela Cruz
    prepared the cash transfer slip where Flores should sign but
    instead he sign as one Rosauro C. Cayabyab. This fact was
    missed by Dela Cruz. It was given to Cash Department and the
    signatures were examined and later on paid Flores for the
    checks. After one year and nine months, the Citytrust
    demanded that the checks be cancelled and the funds taken
    out be returned because the check was stolen before. Central
    Bank did not heed such call. Citytrust filed a complaint to
    collect the sum of money with damages against Central
    Bank to the Regional Trial Court (RTC). RTC found both parties
    negligent and held them equally liable for the loss. Court
    of Appeals affirmed the decision.

    ISSUE:
    Can Citytrust collect sum of money as damages from
    the Central Bank?

    HELD:

    YES.
    If the plaintiff’s negligence was only contributory, the
    immediate and proximate cause of the injury being the
    defendant’s lack of due care, the plaintiff may
    recover damages, but the courts shall mitigate
    the damages to be awarded.

    The law imposes on banks high standards in view of the


    fiduciary nature of banking. Section 2 of Republic Act No.
    8791 (R.A. 8791), which took effect on 13 June 2000, declares
    that the State recognizes the “fiduciary nature of banking that
    requires high standards of integrity and performance.

    This fiduciary relationship means that the bank’s obligation to


    observe “high standards of integrity and performance” is
    deemed written into every deposit agreement between a
    bank and its depositor. The fiduciary nature of banking
    requires banks to assume a degree of diligence higher than
    that of a good father of a family. Article 1172 of the Civil Code
    states that the degree of diligence required of an obligor is
    that prescribed by law or contract, and absent such
    stipulation then the diligence of a good father of a family.
    Section 2 of R.A. 8791 prescribes the
    statutory diligence required from banks – that banks must
    observe “high standards of integrity and performance” in
    servicing their depositors. Citytrust’s failure to
    timely examine its account, cancel the checks and notify
    petitioner of their alleged loss/theft should mitigate

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