Supreme Court: Banks cannot recover losses caused by their own gross negligence

Abi Sarabia M., Philippine Canadian Inquirer
August 26, 2026

Photo courtesy: ClipartMax/Philippine News Agency

MANILA, Philippines — Banks cannot compel depositors to return money withdrawn in good faith when the financial loss was caused by the bank’s own gross negligence, the Supreme Court has ruled.

In a February 12, 2026 decision penned by Associate Justice Japar Dimaampao, the Supreme Court’s Third Division denied a petition filed by BDO Unibank Inc. seeking to recover money withdrawn by depositor Cristina Barcellano after the bank prematurely made funds from a check available in her account.

The case involved a ₱151,200 check deposited by Barcellano at a BDO branch in Lucena City. The check was issued by a Land Bank of the Philippines branch in Albay.

A BDO teller mistakenly processed the check as a local check instead of a regional check, making the funds available after three banking days rather than the required seven-day clearing period.

Believing the check had cleared, Barcellano withdrew ₱76,000.

BDO later received a stop-payment order for the check and demanded that Barcellano return the amount she had withdrawn. When she refused, the bank withheld the remaining balance in her account and filed an estafa complaint against her.

The Regional Trial Court acquitted Barcellano, finding no evidence of fraud or deceit and ruling that the premature withdrawal resulted from BDO’s error. The Court of Appeals later affirmed the decision.

BDO then brought the civil aspect of the case to the Supreme Court, arguing that Barcellano should return the money under solutio indebiti, a legal principle requiring the return of something mistakenly paid or received, and on the ground of unjust enrichment.

The Supreme Court rejected the bank’s arguments.

The Court found that BDO committed multiple errors, including crediting the check without proper clearing, processing a regional check as a local one, and failing to detect the mistake until it received the stop-payment order.

Taken together, the Court said these failures amounted to gross negligence.

It also found no evidence that Barcellano knew the check would eventually be dishonored or that she knowingly received money to which she was not entitled.

The reason for the stop-payment order was also not established, according to the Court.

The Supreme Court ruled that solutio indebiti did not apply because the erroneous release of the funds resulted from BDO’s own gross negligence rather than the type of mistake contemplated under the doctrine.

It likewise rejected the claim of unjust enrichment, finding no basis to compel Barcellano to return the amount she withdrew in good faith.

The ruling underscores the responsibility of banks to follow their own clearing procedures and safeguards, particularly when their failure to do so directly causes a financial loss.