Producers Bank of the Philippines vs. Court of Appeals

A loan of money constitutes a commodatum, not a mutuum, where the parties intend the funds to be used merely for exhibition or to show capitalization, with the exact amount to be returned, rather than for consumption. An employer is solidarily liable for the fraudulent acts of its employee committed within the scope of assigned tasks unless it proves it exercised the diligence of a good father of a family to prevent the damage.

Franklin Vives was requested by his neighbor, Angeles Sanchez, to assist her friend, Col. Arturo Doronilla, in incorporating the latter's business, Sterela Marketing and Services. Vives was asked to deposit ₱200,000 into Sterela's bank account to demonstrate sufficient capitalization for incorporation, with the assurance that the funds would be returned within a month.

• The Deposit: Vives issued a ₱200,000 check to Sterela. Mrs. Vives and Sanchez opened Savings Account No. 10-1567 at the Buendia branch of Producers Bank, with Mrs. Vives and Sanchez as authorized signatories. The passbook was given to Mrs. Vives.
• The Unauthorized Withdrawals: Doronilla, through the facilitation of the bank's assistant manager, Rufo Atienza, opened Current Account No. 10-0320, obtained a ₱175,000 loan, and authorized the debiting of the savings account to cover overdrafts. Atienza allowed these withdrawals without requiring the passbook, which he knew was in Mrs. Vives's possession, and despite Doronilla not being an authorized signatory on the savings account.
• The Fraud Discovery: Upon learning that Sterela had moved offices, Vives verified the account and discovered the unauthorized withdrawals. Atienza informed him that only ₱90,000 remained and that it was being held to cover Doronilla's postdated checks.
• The Dishonored Checks: Doronilla issued a postdated check for ₱212,000 to Vives, which was dishonored upon presentment. Subsequent demands and checks issued by Doronilla were likewise dishonored for insufficiency of funds.

• Nature of the Contract: Petitioner argued the transaction was a mutuum because money was delivered and Doronilla attempted to pay interest, evidenced by the ₱212,000 check.
• Lack of Privity: Petitioner maintained it was not privy to the Vives-Doronilla transaction and thus could not be held liable for the return of the money.
• Validity of Withdrawals: Petitioner asserted that Atienza properly allowed Doronilla to withdraw because Doronilla was the sole proprietor of Sterela and the authorization letter did not restrict his withdrawal rights.
• Absence of Employer Liability: Petitioner claimed no wrongful act was committed by the bank or its employee, precluding liability for actual, moral, and exemplary damages, as well as attorney's fees.

• Nature of the Contract: Respondent countered that the transaction was a commodatum because ownership of the money was not transferred; he retained control through his wife's signatory status and possession of the passbook, and the deposit was merely for exhibition to secure corporate incorporation.
• Employer Liability: Respondent argued that Atienza connived with Doronilla to defraud him by facilitating the current account and the debit authority without the passbook, despite knowing the money belonged to Vives, thus making the bank solidarily liable under Article 2180.

• Nature of the Contract: Whether the transaction between Vives and Doronilla was a mutuum or a commodatum.
• Employer Liability: Whether Producers Bank is solidarily liable for the loss of Vives' money due to the acts of its assistant manager.

• Nature of the Contract: The transaction was classified as a commodatum. While money is a consumable thing, Article 1936 of the Civil Code provides that consumable goods may be the subject of commodatum if the purpose is not consumption but exhibition. The intent of the parties was merely to deposit the money for incorporation purposes and return it after 30 days. The ₱12,000 interest offered by Doronilla constituted the fruits of the loan, which the bailee in commodatum must remit to the bailor under Article 1935.
• Employer Liability: The bank was held solidarily liable under Article 2180. Atienza committed wrongful acts within the scope of his employment by allowing withdrawals without the passbook and by a non-signatory, despite knowing the money belonged to Vives. An employer who entrusts a general duty to an employee is responsible for damages flowing from the employee's wrongful acts done in the course of general authority, even if instructions are disobeyed. The bank failed to prove due diligence in the selection and supervision of Atienza.

• Commodatum of Consumable Goods — Under Article 1936 of the Civil Code, consumable goods may be the subject of commodatum if the purpose of the contract is not the consumption of the object, as when it is merely for exhibition. The intention of the parties is accorded primordial consideration in determining the actual character of the contract; in case of doubt, contemporaneous and subsequent acts are considered.
• Employer's Liability for Quasi-Delicts — Under Article 2180 of the Civil Code, employers are primarily and solidarily liable for damages caused by their employees acting within the scope of their assigned tasks. To hold the employer liable, it must be shown that an employer-employee relationship exists and that the employee was acting within the scope of assigned tasks. The employer can exculpate itself by proving it exercised the diligence of a good father of a family to prevent the damage.

• "Consumable goods may be the subject of commodatum if the purpose of the contract is not the consumption of the object, as when it is merely for exhibition."
• "Under Article 2180 of the Civil Code, employers shall be held primarily and solidarily liable for damages caused by their employees acting within the scope of their assigned tasks."
• "A corporation that entrusts a general duty to its employee is responsible to the injured party for damages flowing from the employee’s wrongful act done in the course of his general authority, even though in doing such act, the employee may have failed in its duty to the employer and disobeyed the latter’s instructions."

• Tanguilig v. Court of Appeals, 266 SCRA 78 (1997) — Followed for the rule that the intention of the parties is accorded primordial consideration in determining the actual character of a contract, and that contemporaneous and subsequent acts are considered in case of doubt.
• Castilex Industrial Corporation v. Vasquez, Jr., 321 SCRA 393 (1999) — Followed for the requisites of employer liability under Article 2180 of the Civil Code.

• Article 1933, Civil Code — Distinguishes between commodatum and mutuum. Applied to determine that while the subject was money, the retention of ownership indicated a commodatum.
• Article 1935, Civil Code — Provides that the bailee in commodatum acquires the use of the thing loaned but not its fruits. Applied to justify Doronilla's remittance of the ₱12,000 interest accruing to Vives' money.
• Article 1936, Civil Code — Provides that consumable goods may be the subject of commodatum if the purpose is not consumption but exhibition. Applied to classify the deposit for incorporation as a commodatum.
• Article 2180, Civil Code — Imposes primary and solidary liability on employers for damages caused by their employees acting within the scope of their assigned tasks. Applied to hold Producers Bank solidarily liable for Atienza's fraudulent acts.

Bellosillo, Mendoza, Quisumbing, Austria-Martinez