Supreme Court rules banks liable for errors causing wrongful fund withdrawals

The Supreme Court of the Philippines has ruled that banks cannot compel depositors to return funds withdrawn in good faith if the error resulted from the bank’s own gross negligence. The decision, written by Associate Justice Japar Dimaampao, denied a petition by BDO Unibank Inc. regarding a case involving Cristina Barcellano.

The dispute originated when Barcellano deposited a regional check worth ₱151,200 from a Landbank branch. A BDO teller mistakenly processed the check as a local one, allowing it to clear in three days instead of the required seven. Believing the funds were available, Barcellano withdrew ₱76,000 before a stop-payment order was received.

BDO sought to recover the funds, arguing principles of unjust enrichment and 'solutio indebiti' (repayment of money received by mistake). However, the Court rejected these arguments, stating that the bank’s disregard for its own policies constituted gross negligence. The Court emphasized that banking is a business of public trust and that financial institutions must exercise the highest degree of diligence, rather than shifting the burden of their procedural lapses onto customers.