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### Facts:
**June 23, 1986**
– Aurora F. Cruz and her sister invested P200,000 in Central Bank bills through Prudential Bank in Quezon City.
– P196,122.88 was withdrawn from Savings Account No. 2546 and P3,877.07 represented pre-paid interest.
– Transaction evidenced by a Confirmation of Sale and a Debit Memo issued by bank employee Susan Quimbo.
**August 25, 1986**
– Upon maturity, Cruz sought to “roll-over” her investment.
– Quimbo prepared a Credit Memo crediting P200,000 to Cruz’s savings account.
– Also prepared a Debit Memo of P196,122.88 for reinvestment.
– Cruz signed a Withdrawal Slip for P196,122.98, under the new bank requirement for re-investment, as explained by Quimbo.
– Cruz received a new Confirmation of Sale and Debit Memo days later.
**October 27, 1986**
– Cruz attempted to withdraw her investment but was informed it had been withdrawn on August 25, 1986.
– No records of the Confirmation of Sale and Debit Memo she received.
– Bank employee Quimbo was unavailable for questioning.
**Early November 1986**
– Cruz made daily inquiries and wrote a letter to Roman Santos, the branch manager.
– November 12, 1986: Sent a formal demand letter for P200,000 plus interest.
– November 20, 1986: Bank’s Vice President suggested settling the matter amicably.
– Eventually, the bank denied her request, claiming she had already withdrawn the amount.
**December 12, 1986**
– Cruz filed a complaint for breach of contract demanding the return of her investment plus damages and attorney’s fees.
– Bank denied liability, asserted Cruz had withdrawn the investment, and filed a third-party complaint against Quimbo who was declared in default but presented no evidence.
**Trial Court**
– Judge Rodolfo A. Ortiz ruled in favor of Cruz, awarding her P200,000 plus 13.75% interest, P30,000 moral damages, P20,000 exemplary damages, and P25,000 attorney’s fees.
**Court of Appeals**
– Affirmed the trial court’s decision.
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### Issues:
1. **Breach of contract vs. Quasi-delict**
– Whether the bank is liable for breach of contract or quasi-delict.
2. **Responsibility for employee actions**
– Whether Prudential Bank is liable for the actions of its employee Quimbo.
3. **Validity of bank records**
– Whether the Confirmation of Sale and Debit Memo provided by Quimbo should be considered valid and binding on the bank.
4. **Appropriate damages**
– Whether the moral and exemplary damages awarded were justified.
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### Court’s Decision:
**I. Breach of Contract vs. Quasi-delict**
– The Supreme Court ruled that Cruz sued for breach of contract, not quasi-delict.
– The bank was liable for not delivering Cruz’s deposited money upon maturity, as stated in the Confirmation of Sale.
**II. Responsibility for Employee Actions**
– Under Civil Code Art. 1910 and 1911, the principal (bank) is liable for its agents’ actions within the scope of their authority.
– The bank held liable for Quimbo’s actions, as she had apparent authority.
**III. Validity of Bank Records**
– The Court found substantial basis that Cruz did not receive the amount indicated in the withdrawal slip.
– The Confirmation of Sale and Debit Memo were authentic bank documents, and Cruz had no obligation to verify their validity beyond the apparent scope.
**IV. Appropriate Damages**
– The Court upheld the awards of moral and exemplary damages.
– The bank acted in bad faith by denying Cruz’s claim without definitive proof, causing her mental anguish and violating her trust.
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### Doctrine:
1. **Principal’s Liability**:
– *”Qui per alium facit per seipsum facere videtur”* and *Art. 1910, 1911 of Civil Code*: A principal must comply with obligations contracted by an agent within their authority, even if the agent exceeded authority with apparent full powers.
2. **Bank’s Fiduciary Duty**:
– Banks have a fiduciary relationship and must exercise strict care in the selection and supervision of employees, as banks hold out their employees as worthy of confidence.
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### Class Notes:
– **Breach of Contract**: Liability arises from non-performance such as failure to return an investment at maturity.
– **Principal-Agent Relationship**:
– *Art. 1910, 1911 of Civil Code*: Principal liable for agent’s actions within apparent authority.
– **Good Faith in Transactions**:
– Banks must act in good faith and rectify internal anomalies without prejudicing depositors.
– **Damages for Mental Anguish**:
– *Moral and exemplary damages* are warranted in cases of bad faith and mental suffering caused by breach of contract.
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### Historical Background:
– This case illustrates the legal principles developed from Roman law regarding principal-agent liability.
– It underscores the fiduciary duty banks owe to the public, ensuring depositor trust and confidence.
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