ESTOPACE
DETAILS
Case Title Bank of the Philippine Islands vs. The Subject PFR
Intermediate Appellate Court and Rizaldy
T. Zshornack
Petitioner: Bank of the Philippine Islands (originally Digest Author Estopace, Faye
the Commercial Bank and Trust
Company of the Philippines, referred to
as COMTRUST)
Respondents: The Intermediate Appellate Court (IAC) GR No. | Date G.R. No. 66826
and Rizaldy T. Zshornack August 19, 1988
Topic & Subtopic Effect and Application of Laws – Full Text 10. BPI v. IAC
Act executed against mandatory or
prohibitory laws
Assigned Law New Civil Code Art. 5 Ponente Cortes, J.
SUMMARY
COMTRUST made an unauthorized withdrawal amounting to USD1,000 from the dollar savings account of the
Zshornacks on October 27, 1975.
Quezon City Assistant Branch Manager, Virgilio V. Garcia, on behalf of COMTRUST, signed a document with the
Zshornacks on December 8, 1975, acknowledging the receipt of USD3,000 from the latter for safekeeping.
However, when the Zshornacks requested the return of the money on May 10, 1975, COMTRUST explained that
the sum was already disposed and asserted that the same was properly credited to Zhornack’s current account.
Rizaldy Zshornack initiated proceedings on June 28, 1976. The CFI ruled in favor of Zshornack. COMTRUST then
appealed to the IAC which modified the decision of the CFI. Thereafter, the bank comes to the SC, praying that it be
totally absolved from any liability to Zshornack.
The SC ruled that the decision appealed was MODIFIED. Petitioner was ordered to restore the dollar savings
account of private respondent the amount of USD1,000 to earn interest at the rate by the bank for dollar savings
deposit. Petitioner is further ordered to pay PhP8,000 as damages. Meanwhile, the other causes of action of the
private respondent were dismissed.
DOCTRINE
NEW CIVIL CODE Art. 5. Acts executed against the provisions of mandatory or prohibitory laws shall be void,
except when the law itself authorizes their validity.
FACTS
Petition COMTRUST comes to the Supreme Court praying that it be totally absolved from any liability to
Zshornack
● Rizaldy Zshornack and his wife, Shirley Gorospe maintained in COMTRUST, Quezon City a:
○ Dollar savings account (Acct No. 25-4109); and
○ Peso current account (Acct No. 210-465-29)
● October 27, 1975
○ An application for a dollar draft was accomplished by Virgilio V. Garcia, Assistant Branch
Manager of COMTRUST, Quezon City, payable to a certain Leovigilda D. Dizon in the amount of
USD1,000. The amount was to be charged to the dollar savings account of the Zshornacks.
Meanwhile, the charges for commission, documentary stamp tax, and others totaling PhP17.46
were to be charged to the current account of the Zshornacks. There was no indication of the
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ESTOPACE
name of the purchase of the dollar draft
○ COMTRUST, under the signature of Garcia, issued a check payable to the order of Dizon in the
sum of USD1,000 drawn on the Chase Manhattan Bank, New York, with an indication that it was to
be charged to the dollar savings account of the Zshornacks
● The COMTRUST claimed that the peso value of the withdrawal was given to Atty, Ernesto Zshornack Jr.,
brother of Rizaldy, on October 27, 1975, when he (Ernesto) encashed with COMTRUST a cashier’s check
for PhP8,450 issued by the Manila Banking Corporation payable to Ernesto.
● December 8, 1975 – Zshornack entrusted to COMTRUST, through Garcia, USD3,000 cash (greenbacks)
for safekeeping, and that the agreement was embodied in a document, a copy of which was attached to
and made part of the complaint. COMTRUST did not deny specifically under oath the authenticity and due
execution of the said document.
● May 10, 1976 – Zshornack requested the return of the USD3,000 but COMTRUST explained that the sum
was disposed of in this manner:
○ USD2,000 was sold on December 29, 1975 and USD1,000 was sold on February 3, 1975. The
peso proceeds amounting to PhP14,92 and PhP8,350, respectively, was deposited in Zshornack’s
current account per the deposit slips accomplished by Garcia
ISSUE RULING BASIS
First Cause of Action
W/N the petitioner must be held YES. ● Based on the facts presented, the Court finds no reason to
liable for the unauthorized disturb the ruling of both the trial court and the Appellate Court
withdrawal of USD1,000 from on the first cause of action. Petitioner must be held liable for the
private respondent’s dollar unauthorized withdrawal.
account.
Second Cause of Action
W/N Garcia has the authority to YES. ● The second cause of action was based on an actionable
bind the bank to the document document. It was therefore incumbent upon the bank to
signed with the Zshornacks on specifically deny under oath the due execution of the document,
the USD3,000 cash entrusted to as prescribed under Rule 8, Section 8, if it desired: (1) to
COMTRUST for safekeeping question the authority of Garcia to bind the corporation; and (2)
to deny its capacity to enter into such contract.
● No sworn answer denying the due execution of the document in
question, or questioning the authority of Garcia to bind the
bank, or denying the bank's capacity to enter into the contract,
was ever filed. Hence, the bank is deemed to have admitted not
only Garcia’s authority but also the bank’s power, to enter into
the contract in question.
W/N the USD3,000 transaction NO. ● Since the mere safekeeping of the greenbacks, without selling
is legal them to the Central Bank within one business day from receipt,
is a transaction not authorized by Central Bank Circular No.
(This is the one that refers to 20, it must be considered as one which falls under the general
the topic: NCC Art. 5) class of prohibited transactions. Hence, pursuant to Article 5
of the Civil Code, it is void, having been executed against the
provisions of mandatory/prohibitory law. More importantly, it
affords neither of the parties a cause of action against each
other (Art. 1411 of the NCC). The only remedy is one on behalf
of the State to prosecute the parties violating the law.
● The Court ruled that Zshornack cannot recover under the
second rule of action.
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ESTOPACE
DISPOSITIVE PORTION
WHEREFORE, the decision appealed is hereby MODIFIED, as follows:
● Petitioner is ordered to restore to the dollar savings account of private respondent the amount of USD1,000
as of October 27, 1975 to earn interest at the rate fixed by the bank for dollar savings deposits.
● Petitioner is further ordered to pay private respondent the amount PhP8,000 as damages.
● The other causes of action of private respondent are ordered dismissed.
CLASS NOTES
● Notes during discussion
● Additional information
● Context
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