BPI Family Savings Bank Inc v. First Metro Investment Corp : 132390 :
May 21, 2004 : J. Sandoval-Gutierrez : Third Division : Decision
[G.R. NO. 132390 : May
BPI FAMILY SAVINGS BANK, INC., Petitioner, v. FIRST
METRO INVESTMENT CORPORATION, Respondent.
D E C I S I O N
For our resolution is the instant Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the
Decision1 dated July 4, 1997 and
Resolution2 dated January 28, 1998 of
the Court of Appeals in CA-G.R. CV No. 44986, First Metro Investment
Corporation v. BPI Family Bank.
The facts as found by the trial court and affirmed by the Court
of Appeals are as follows:chanroblesvirtua1awlibrary
First Metro Investment Corporation (FMIC),
respondent, is an
investment house organized under Philippine laws.Petitioner, Bank of Philippine Islands Family Savings Bank, Inc.
is a banking corporation also organized under Philippine laws.
On August 25, 1989, FMIC, through its Executive Vice President
Antonio Ong, opened current account no. 8401-07473-0 and deposited METROBANK
check no. 898679 of
P100 million with BPI Family Bank* (BPI FB) San Francisco del Monte Branch (Quezon City). Ong made the deposit upon request of his
friend, Ador de Asis, a close acquaintance of Jaime Sebastian, then Branch
Manager of BPI FB San Francisco del Monte Branch.Sebastians aim was to increase the deposit level in his Branch.
BPI FB, through Sebastian, guaranteed the payment of
representing 17% per annum interest of P100 million deposited by
The latter, in turn, assured BPI
FB that it will maintain its deposit of P100 million for a period of one
year on condition that the interest of 17% per annum is paid in advance.
This agreement between the parties was reached through their
communications in writing.
Subsequently, BPI FB paid FMIC 17% interest or
upon clearance of the latters check deposit.
However, on August 29,
1989, on the basis of an Authority to Debit signed by Ong and Ma.
Theresa David, Senior Manager of FMIC, BPI FB transferred
from FMICs current account to the savings account of Tevesteco Arrastre
Stevedoring, Inc. (Tevesteco).
FMIC denied having authorized the transfer of its funds to
Tevesteco, claiming that the signatures of Ong and David were falsified.
Thereupon, to recover immediately its deposit, FMIC, on September
12, 1989, issued BPI FB check no. 129077 for
payable to itself and drawn on its deposit withBPI FB SFDM branch.
upon presentation for payment on September
13, 1989, BPI FB dishonored the check as it was drawn against
insufficient funds (DAIF).
Consequently, FMIC filed with the Regional Trial Court, Branch
146, Makati City Civil Case No. 89-5280 against BPI FB.
FMIC likewise caused the filing by the
Office of the State Prosecutors of an Information for estafa against Ong, de
Asis, Sebastian and four others.
However, the Information was dismissed on the basis of a demurrer to
evidence filed by the accused.
On October 1, 1993,
the trial court rendered its Decision in Civil Case No. 89-5280, the
dispositive portion of which reads:chanroblesvirtua1awlibrary
Premises considered, judgment is rendered in favor of plaintiff,
ordering defendant to pay:chanroblesvirtua1awlibrary
a.the amount of
million with interest at the legal rate from the time this complaint was filed
b.the amount of
as reasonable attorneys fees; andcralawlibrary
On appeal by both parties, the Court of Appeals rendered a
Decision affirming the assailed Decision with modification, thus:chanroblesvirtua1awlibrary
WHEREFORE, considering all the foregoing, this Court hereby
modifies the decision of the trial court and adjudges BPI Family Bank liable to
First Metro Investment Corporation for the amount of
interest at 17% per annum from August
29, 1989 until fully restored.
Further, this 17% interest shall itself earn interest at 12% from October
4, 1989 until fully paid.
BPI FB then filed a motion for reconsideration but was denied by
the Court of Appeals.
In the instant petition, BPI FB ascribes to the Appellate Court
the following assignments of error:chanroblesvirtua1awlibrary
A. IN VALIDATING A CLEARLY ILLEGAL AND VOID AGREEMENT BETWEEN
FMIC AND AN OVERSTEPPING BRANCH MANAGER OF BPI FB, THE COURT OF APPEALS DECIDED
THE APPEALED CASE IN A MANNER NOT IN ACCORDANCE WITH LAW OR THE APPLICAPLE
DECISIONS OF THE HONORABLE COURT.
B.THE COURT OF APPEALS
TOTALLY IGNORED THE JUDICIAL ADMISSIONS MADE BY FMIC WHEN IT CHARACTERIZED THE
TRANSACTION BETWEEN FMIC AND BPI FB AS A TIME DEPOSIT WHEN IN FACT IT WAS AN
INTEREST-BEARING CURRENT ACCOUNT WHICH, UNDER THE EXISTING BANK REGULATIONS, WAS
AN ILLEGAL TRANSACTION.
C.THE COURT OF APPEALS
COMMITTED AN EGREGIOUS ERROR IN RULING THAT BPI FB CLOTHED ITS BRANCH MANAGER
WITH APPARENT AUTHORITY TO ENTER INTO SUCH A PATENTLY ILLEGAL ARRANGEMENT.
D.THE COURT OF APPEALS
COMMITTED REVERSIBLE ERROR WHEN IT REFUSED TO CONSIDER THE NEGLIGENT ACTS
COMMITTED BY FMIC ITSELF WHICH LED TO THE TRANSFER OF THE
FROM THE FMIC ACCOUNT TO THE TEVESTECO ACCOUNT.
E.THE COURT OF APPEALS DID
NOT ADHERE TO SETTLED JURISPRUDENCE WHEN IT
ADJUDGED BPI FB LIABLE TO FMIC FOR AN AMOUNT WHICH WAS MORE THAN WHAT
WAS CONTEMPLATED OR PRAYED FOR IN FMICS COMPLAINT, MOTION FOR RECONSIDERATION
OF THE TRIAL COURTS DECISION AND APPEAL BRIEF.
F.IN SUPPORT OF ITS
ALTERNATIVE PRAYER, PETITIONER SUBMITS THAT THE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR IN NOT ORDERING THE CONSOLIDATION OF THE INSTANT CASE WITH THE
TEVESTECO CASE WHICH IS STILL PENDING BEFORE THE MAKATI
REGIONAL TRIAL COURT.
Petitioner BPI FB contends that the Court of Appeals erred in awarding
the 17% per annum interest corresponding to the amount deposited by respondent
Petitioner insists that
respondents deposit is not a special savings account similar to a time
deposit, but actually a demand deposit, withdrawable upon demand, proscribed from earning interest under
Central Bank Circular 777.
further contends that the transaction is not valid as its Branch Manager, Jaime
Sebastian, clearly overstepped his authority in entering into such an agreement
with respondents Executive Vice President.
We hold that the parties did not intend the deposit to be treated
as a demand deposit but rather as an interest-earning time deposit not
withdrawable any time.
This is quite
obvious from the communications between Jaime Sebastian, petitioners Branch
Manager, and Antonio Ong, respondents Executive Vice President.
Both agreed that the deposit of
million was non-withdrawable for one
year upon payment in advance of the 17% per annum interest.
Respondents time deposit of P100
million was accepted by petitioner as shown by a deposit slip prepared and
signed by Ong himself who indicated therein the account number to which the
deposit is to be credited, the name of FMIC as depositor or account holder, the
date of deposit, and the amount of P100 million as deposit in
Clearly, when respondent FMIC
invested its money with petitioner BPI FB, they intended the P100
million as a time deposit, to earn 17% per annum interest and to remain intact
until its maturity date one year thereafter.
Ordinarily, a time deposit
is defined as one the payment of which cannot legally be required within such
a specified number of days.3 cralawred
In contrast, demand
deposits are all those liabilities of the Bangko Sentral and of other banks which are denominated in
Philippine currency and are subject to payment in legal tender upon demand
by the presentation of (depositors) checks.4 cralawred
While it may be true that barely one month and seven days from
the date of deposit, respondent FMIC demanded the withdrawal of
through the issuance of a check payable to itself, the same was made as a
result of the fraudulent and unauthorized transfer by petitioner BPI FB of its P80
million deposit to Tevestecos savings account.Certainly, such was a normal reaction of respondent as a
depositor to petitioners failure in its fiduciary duty to treat its account
with the highest degree of care.
Under this circumstance, the withdrawal of deposit by respondent
FMIC before the one-year maturity date did not change the nature of its time
deposit to one of demand deposit.
On another tack, petitioners argument that Central Bank
regulations prohibit demand deposit from earning interest is bereft of merit.
Under Central Bank Circular No. 22, Series of 1994, demand deposits
shall not be subject to any interest rate ceiling. This, in effect, is an
open authority to pay interest on demand deposits, such interest not being
subject to any rate ceiling.
Likewise, time deposits are not subject to interest rate
In fact, the rate ceiling was
abolished and even allowed to float depending on the market conditions.
Sections 1244 and 1244.1 of the Manual of
Regulations of the Central Bank of the Philippines
Time deposits shall
not be subject to any interest rate ceiling.
Interest on time deposit
may be paid at maturity or upon withdrawal or in advance.
Provided, however, That interest paid in
advance shall not exceed the interest for one year.
Thus, even assuming that respondents account with petitioner is
a demand deposit, still it would earn interest.
Going back to the unauthorized transfer of respondents funds to
Tevesteco, in its attempt to evade any liability therefor, petitioner now
impugns the validity of the subject agreement on the ground that its Branch
Manager, Jaime Sebastian, overstepped the limits of his authority in accepting
respondents deposit with 17% interest per annum.We have held that if a corporation knowingly permits its officer,
or any other agent, to perform acts within the scope of an apparent authority,
holding him out to the public as possessing power to do those acts, the
corporation will, as against any person who has dealt in good faith with the
corporation through such agent, be estopped from denying such authority.5 We reiterated this doctrine in Prudential
Bank v. Court of Appeals,6 thus:chanroblesvirtua1awlibrary
A bank holding out its officers and agent as worthy of confidence
will not be permitted to profit by the frauds they may thus be enabled to
perpetrate in the apparent scope of their employment; nor will it be permitted
to shirk its responsibility for such frauds, even though no benefit may accrue
to the bank therefrom.
banking corporation is liable to innocent third persons where the
representation is made in the course of its business by an agent acting within
the general scope of his authority even though the agent is secretly abusing
his authority and attempting to perpetrate a fraud upon his principal or some
other person for his own ultimate benefit.
In Francisco v. Government Service Insurance System,7 we ruled:chanroblesvirtua1awlibrary
Corporate transactions would speedily come to a standstill were
every person dealing with a corporation held duty-bound to disbelieve every act
of its responsible officers, no matter how regular they should appear on their
This Court has observed in Ramirez v. Orientalist Co., 38 Phil.
634, 654-655, that
In passing upon the liability of a corporation in cases of this
kind it is always well to keep in mind the situation as it presents itself to
the third party with whom the contract is made.Naturally he can have little or no information as to what occurs
in corporate meetings; and he must necessarily rely upon the external manifestations
of corporate consent.
The integrity of
commercial transactions can only be maintained by holding the corporation
strictly to the liability fixed upon it by its agents in accordance with law;
and we would be sorry to announce a doctrine which would permit the property of
a man in the city of Paris to be whisked out of his hands and carried into a
remote quarter of the earth without recourse against the corporation whose name
and authority had been used in the manner disclosed in this case.
As already observed, it is familiar doctrine
that if a corporation knowingly permits one of its officers, or any other
agent, to do acts within the scope of an apparent authority, and thus holds him
out to the public as possessing power to do those acts, the corporation will,
as against any one who has in good faith dealt with the corporation through
such agent, be estopped from denying his authority; and where it is said if
the corporation permits, this means the same as if the thing is permitted by
the directing power of the corporation.
Petitioner maintains that respondent should have first inquired
whether the deposit of
P100 Million and the fixing of the interest rate
were pursuant to its (petitioners) internal procedures.
Petitioners stance is a futile attempt to
evade an obligation clearly established by the intent of the parties.
What transpires in the corporate board room
is entirely an internal matter.
petitioner may not impute negligence on the part of respondents representative
in failing to find out the scope of authority of petitioners Branch
Indeed, the public has the
right to rely on the trustworthiness of bank managers and their acts.
Obviously, confidence in the banking system,
which necessarily includes reliance on bank managers, is vital in the economic
life of our society.
Significantly, the transaction was actually acknowledged and
ratified by petitioner when it paid respondent in advance the interest for one
Thus, petitioner is estopped from
denying that it authorized its Branch Manager to enter into an agreement with
respondents Executive Vice President concerning the deposit with the
corresponding 17% interest per annum.
Anent the award of interest, petitioner contends that such award
is not in order as it had not been prayed for by respondent in its complaint
nor was it an issue agreed upon by the parties during the pre-trial of the
Nonetheless, the rule is well
settled that when the obligation is breached, and it consists in the payment of
a sum of money, i.e., a loan or
forbearance of money, the interest due should be that which may have been
stipulated in writing, as in this case.
Furthermore, the interest due shall itself earn legal interest from
the time it is judicially demanded.8 Besides, the matter of how much interest respondent is entitled to falls
squarely within the issues framed by the parties in their respective pleadings
filed with the court a quo.
At any rate, courts may indeed grant the
relief warranted by the allegations and proof even if no such specific
relief is prayed for if only to conclude a complete and thorough resolution
of the issues involved.9 cralawred
Finally, petitioner faults the Court of Appeals in not ordering
the consolidation of Civil Case No. 89-4996 (filed by petitioner against
Tevesteco) with Civil Case No. 89-5280 (the instant case). According to petitioner, had there been
consolidation of these two cases, it would have been shown that the
Million transferred to Tevestecos account were proceeds of a loan extended by
respondent FMIC to Tevesteco.
it to state that as found by both the trial court and the Appellate Court,
petitioners transfer of respondents P80M to Tevesteco was unauthorized
and tainted with fraud.
At this point, we must emphasize that this Court is not a trier
Thus, we uphold the finding
of both lower courts that petitioner failed to exercise that degree of
diligence required by the nature of its obligations to its depositors.
A bank is under obligation to treat the
accounts of its depositors with meticulous care, whether such account consists
only of a few hundred pesos or of million of pesos.10 Here, petitioner cannot claim it exercised such a degree of care required of it
and must, therefore, bear the consequence.
WHEREFORE, the petition is DENIED.
The assailed Decision dated July
4, 1997 and the Resolution dated January
28, 1998 of the Court of Appeals in CA-G.R. CV No. 44986 are hereby
Costs against petitioner.
Vitug, (Chairman), Corona, and Carpio-Morales, JJ., concur.
1 Annex A, Petition for Review on Certiorari, Rollo at 67-79.
* Owned by petitioner BPI Family Savings Bank, Inc.
3 10 Am Jur 2d 652, citing 12 CFR 204.2 (c) (1).
4 See Section 58, Republic Act No. 7653 The New Central Bank Act.
5 Francisco v. GSIS, G.R. No. L-18287,
March 30, 1963, 117 Phil
6 G.R. No. 108957, June 14, 1993,
223 SCRA 350.
8 Eastern Shipping Lines, Inc. v. Court of
Appeals, G.R. No. 97412, July 17, 1994, 234 SCRA 78; Eastern Assurance and Surety
Corporation v. Court of Appeals, G.R. No.
127135, January 18, 2000, 322 SCRA 73, cited in Rizal
Commercial Banking Corporation v. Alfa RTW Manufacturing Corporation, G.R. No. 133877, November 14, 2001,
368 SCRA 611, 619.
9 Robleza v. Court of Appeals, G.R.
No. 80364, June 28, 1989,
174 SCRA 354.
10 Firestone Tire & Rubber Company of
the Philippines v. Court of Appeals, G.R. No. 113236, March 5, 2001, 353
SCRA 601, 609, citing Philippine Bank of
Commerce v. Court of Appeals, 269 SCRA 695, 699 (1997).
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