The contractual relationship between banks and their depositors is governed by the Civil Code provisions on simple loan . Once a customer deposits money, the bank becomes a debtor , while the depositor becomes a creditor entitled to repayment on demand. Bank-Debtor Relationship and Liability in Transactions 📌 Banks as Debtors to Depositors ✔ A deposit in a bank is legally considered a loan to the financial institution. ✔ The bank is obligated to repay the depositor on demand . 📌 Relevant Case: PNB vs. Santos (G.R. No. 208293, 2014) 📌 Banks’ Primary Liability in Breach of Contract Cases ✔ When a bank breaches its contractual obligations , it cannot invoke due diligence in employee selection as a defense . ✔ The bank’s liability is direct, primary, and sole if loss or damages result from negligence or fraud . 📌 Relevant Case: Citystate Savings Bank vs. Tobias & Valdez (G.R. No. 227990, 2018) Doctrine of Apparent Authority in Banking Law 📌 Banks May Be Liable for ...
Case Digests and Doctrines Simplified