Depositors’ rights and obligations when ATMs go awry

On Wednesday, several bank depositors of a well-known Philippine bank were alarmed after having discovered several unauthorized deposits and withdrawals in their accounts. 

A number have reported that there had been deductions in their accounts, to the point that some accounts have registered negative balances. 

While this has been declared an internal system error and is currently being resolved by the bank, it nonetheless raised concerns and questions among depositors on what are their possible recourses in case of wrongful deposits or withdrawals in their bank accounts. 

For sure, every depositor would want to protect their hard-earned money and would want to know how this could be done. 

Here’s what a depositor should know and do if his account was erroneously debited or credited.

Erroneous Credit in the Bank Account

If an amount is wrongfully credited by the bank to a depositor’s account, the depositor has the obligation to report the same and return the money to the bank. 

The depositor does not become the owner of such amount simply because it has been credited to his bank account. 

By law, an implied trust is created between the depositor and the bank as regards the erroneously credited amount, with the depositor acting as the trustee for the benefit of the bank. 

As trustee, the depositor only holds the amount only in trust and should return the amount to the bank as and when required.

The obligation of a depositor to return the wrongfully credited amount also finds basis under the legal principles of solutio indebiti and unjust enrichment.

Under the principle of solutio indebiti, if something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises.

On the other hand, the principle of unjust enrichment, which is a principle of equity, requires that no person shall be allowed to enrich himself unjustly at the expense of others.  Thus, if a depositor withdraws funds wrongfully credited to his account, the bank has the right to go after such funds and demand for its return.

Erroneous Debit in the Bank Account

On the other hand, if an amount is erroneously debited by the bank from a depositor’s account, the depositor must immediately report it to the bank which has the duty to return the amount as soon as possible. 

Under the law, bank deposits are in the nature of irregular deposits and are actually considered simple loans to the bank.  Hence, the relationship between a depositor and a bank is that of creditor and debtor. 

As a loan, the principle in loans that the person who receives a loan of money is bound to  pay to the creditor an equal amount applies to bank deposits as well.  Thus, a bank is legally obligated to return the same amount of money as that deposited by the depositor.

Banks are obliged to treat the accounts of its depositors with meticulous care, due to its fiduciary relationship with depositors. Therefore, banks must record every transaction accurately, down to the last centavo and as promptly as possible. 

As the Supreme Court has ruled, “[s]ince banks deal with the public’s money, their viability depends largely on their ability to return those deposits on demand, much importance is given to sound lending practices and good corporate governance.”

If, however, the bank refuses or is unable to return the erroneously debited amount notwithstanding demand, the depositor has the right to file a complaint to recover a sum of money equal to the amount that was debited.

Moreover, damages may also be claimed for any resulting injury caused by the erroneous debit, such as when it leads to dishonored checks or payments.

Katrine Paula V. Suyat (Kat) teaches Criminal Law, Statutory Construction, and Legal Research and Legal Writing at San Beda College of Law- Mendiola. She ranked No. 7 in the 2014 bar examinations and is now an associate at yje Gatmaytan Yap Patacsil Gutierrez & Protacio Law Offices.