Bank of the Philippine Islands v. Central Bank of the Philippines (Now Bangko Sentral Ng Pilipinas)

Summary

BPI sued CBP for P4.5 million damages from a bank fraud scheme where CBP clearing house employees pilfered and tampered with checks totaling P9 million. The NBI investigation revealed an organized syndicate involving CBP Bookkeeper Manuel Valentino and Janitor-Messenger Jesus Estacio who intercepted checks, altered clearing documents, and enabled fraudulent withdrawals. The RTC initially ruled for BPI under Civil Code tort liability provisions. However, the Court of Appeals and Supreme Court reversed, holding that CBP's clearing house operations were governmental functions, and while CBP could be sued under its charter, it was not liable because the employees were not 'special agents' and acted outside their authorized duties. The Supreme Court emphasized that CBP's clearing operations were mandated governmental functions, not proprietary activities, and the fraudulent acts were unauthorized personal conduct not attributable to the employer. This case clarifies the distinction between governmental and proprietary functions in determining state liability for employee torts.