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Oliver vs. PSB

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DR. OLIVER VS PHIL SAVINGS BANK; G. R NO.

214567 ; APRIL 4, 2016

FACTS:

Oliver alleged that she made an initial deposit into her PSBank account. During that
time, Castro convinced her to loan out her deposit as interim or bridge financing for the
approved loans of bank borrowers who were waiting for the actual release of their loan
proceeds.

Under this arrangement, Castro would first show the approved loan documents to
Oliver. Thereafter, Castro would withdraw the amount needed from Oliver’s account.

Their arrangement went on smoothly for months. Due to the frequency of bank
transactions, Oliver even entrusted her passbook to Castro. Because Oliver earned
substantial profit, she was further convinced by Castro to avail of an additional credit
line in the amount of P10 million.

Castro stopped rendering an accounting for Oliver. The latter then demanded the return
of her passbook. When Castro showed her the passbook, she noticed several erasures
and superimpositions therein.

When her transaction history register was shown to her, Oliver was surprised to
discover that the amount of estimated at P4.5 million was entered into her account
While a total of P7 million was withdrawn from her account.

Oliver received two collection letters referring to the non-payment of unpaid loans.
Oliver protested that she neither availed of the said loans nor authorized the withdrawal
from her account.

The RTC dismissed the complaint. Oliver seasonably filed her motion for
reconsideration. The RTC resolved the motion and issued an order reversing its earlier
decision.

ISSUES

Whether or not there was an implied agency


between Oliver and Castro.

RULING:

A contract of agency may be inferred from all the dealings between Oliver and Castro.
Agency can be express or implied from the acts of the principal, from his silence or lack
of action, or his failure to repudiate the agency knowing that another person is acting on
his behalf without authority.
The question of whether an agency has been created is ordinarily a question which may
be established in the same way as any other fact, either by direct or circumstantial
evidence. The question is ultimately one of intention. 37

In this case, Oliver and Castro had a business agreement wherein Oliver would obtain
loans from the bank, through the help of Castro as its branch manager; and after
acquiring the loan proceeds, Castro would lend the acquired amount to prospective
borrowers who were waiting for the actual release of their loan proceeds. Oliver would
gain 4% to 5% interest per month from the loan proceeds of her borrowers, while Castro
would earn a commission of 10% from the interests. Clearly, an agency was formed
because Castro bound herself to render some service in representation or on behalf of
Oliver, in the furtherance of their business pursuit.

For months, the agency between Oliver and Castro benefited both parties. Oliver,
through Castro’s representations, was able to obtain loans, relend them to borrowers,
and earn interests; while Castro acquired commissions from the transactions. Oliver
even gave Castro her passbook to facilitate the transactions.

Accordingly, the laws on agency apply to their relationship. Article 1881 of the New Civil
Code provides that the agent must act within the scope of his authority. He may do such
acts as may be conducive to the accomplishment of the purpose of the agency. Thus,
as long as the agent acts within the scope of the authority given by his principal, the
actions of the former shall bind the latter.

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