BPI Family Savings Bank, Inc. v. First Metro Investment Corporation
REITERATIONFacts
The Antecedents: First Metro Investment Corporation (FMIC) opened a current account with BPI Family Bank (BPI FB) and deposited ₱100 million. This deposit was made upon the request of FMIC's Executive Vice President, Antonio Ong, to his friend, Ador de Asis, who was acquainted with Jaime Sebastian, the Branch Manager of BPI FB. Sebastian aimed to increase his branch's deposit level. BPI FB, through Sebastian, guaranteed payment of 17% per annum interest on the ₱100 million deposit, with FMIC agreeing to maintain the deposit for one year, provided the interest was paid in advance. BPI FB paid FMIC ₱14,667,687.01 as advance interest. Subsequently, BPI FB transferred ₱80 million from FMIC's account to the savings account of Tevesteco Arrastre – Stevedoring, Inc. (Tevesteco), based on an Authority to Debit signed by Ong and Ma. Theresa David, Senior Manager of FMIC. FMIC denied authorizing this transfer, claiming the signatures were falsified. To recover its deposit, FMIC issued a check for ₱86,057,646.72 payable to itself, but BPI FB dishonored it for being drawn against insufficient funds (DAIF). Procedural History: FMIC filed a civil case against BPI FB with the Regional Trial Court (RTC) to recover its deposit. An information for estafa was also filed against Ong, de Asis, Sebastian, and others, but it was dismissed based on a demurrer to evidence. The RTC ruled in favor of FMIC, ordering BPI FB to pay the ₱80 million less the interest paid, plus attorney's fees and costs. Both parties appealed. The Court of Appeals (CA) affirmed the RTC decision with modification, ordering BPI FB to pay FMIC ₱65,332,321.99 plus 17% per annum interest from August 29, 1989, until fully restored, with the 17% interest also earning 12% interest from October 4, 1989. BPI FB's motion for reconsideration was denied. The Petition: BPI FB filed a petition for review on certiorari with the Supreme Court, assailing the CA's decision and resolution, raising several assignments of error concerning the validity of the agreement, the apparent authority of the branch manager, and the award of interest.
Issue(s)
Whether the agreement between FMIC and BPI FB for a 17% per annum interest on a ₱100 million deposit, paid in advance, is valid and binding, and whether the deposit constituted a time deposit or a demand deposit, and if it was a demand deposit, whether it could earn interest. Whether BPI FB's Branch Manager, Jaime Sebastian, acted within the scope of his apparent authority in entering into the said agreement. Whether FMIC was negligent in its dealings with BPI FB, contributing to the unauthorized transfer of funds. Whether the Court of Appeals erred in awarding interest beyond what was prayed for in FMIC's complaint. Whether the instant case should have been consolidated with the case involving Tevesteco.
Ruling
The Supreme Court denied the petition and affirmed the Decision of the Court of Appeals. It held that the parties intended the deposit to be a time deposit, not a demand deposit, and that BPI FB was estopped from denying the authority of its branch manager to enter into the agreement. The Court also ruled that even if it were a demand deposit, it could still earn interest under Central Bank regulations, and that the award of interest was proper.
Ratio Decidendi
On the nature of the deposit, the validity of the agreement, and the prohibition of interest on demand deposits: The Court held that the parties did not intend the deposit to be a demand deposit but rather an interest-earning time deposit, non-withdrawable for one year. This was evident from the written communications between BPI FB's Branch Manager, Jaime Sebastian, and FMIC's Executive Vice President, Antonio Ong, wherein they agreed on a 17% per annum interest paid in advance, with the deposit to be maintained for one year. The Court noted that FMIC's time deposit was accepted by BPI FB, as shown by the deposit slip prepared and signed by Ong. Therefore, the agreement was valid and binding between the parties. The Court found the argument that Central Bank regulations prohibit demand deposits from earning interest to be without merit. Citing Central Bank Circular No. 22, Series of 1994, the Court stated that demand deposits are not subject to any interest rate ceiling, implying an open authority to pay interest on them. Furthermore, the Court pointed out that Sections 1244 and 1244.1 of the Manual of Regulations of the Central Bank of the Philippines provide that time deposits are not subject to interest rate ceilings and that interest may be paid in advance, not exceeding the interest for one year. Thus, even if the account were considered a demand deposit, it could still earn interest. On the apparent authority of the Branch Manager: The Court reiterated the doctrine that if a corporation knowingly permits its officer or agent to perform acts within the scope of apparent authority, holding him out as possessing such power, the corporation will be estopped from denying such authority against a person who dealt in good faith. The Court emphasized that a bank is liable to innocent third parties for the acts of its agents acting within the general scope of their authority, even if the agent is secretly abusing that authority. In this case, BPI FB paid FMIC the advance interest, which ratified the agreement and estopped BPI FB from denying its Branch Manager's authority. On FMIC's alleged negligence: The Court dismissed BPI FB's contention that FMIC should have inquired about the branch manager's authority. The Court stated that what transpires within the corporate board room is an internal matter, and the public has the right to rely on the trustworthiness of bank managers and their acts. The Court found BPI FB's stance to be a futile attempt to evade its obligation, as confidence in the banking system relies on such trust. On the award of interest: The Court found the award of interest to be in order, even if not specifically prayed for in the complaint. The rule is that when an obligation is breached and it consists of the payment of a sum of money, the interest due is that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. The Court also noted that courts may grant relief warranted by the allegations and proof even if not specifically prayed for, to achieve a complete resolution of the issues. On the consolidation of cases: The Court found no reversible error in the CA's refusal to consolidate the cases. The Court upheld the findings of the lower courts that BPI FB's transfer of FMIC's funds to Tevesteco was unauthorized and tainted with fraud, and that BPI FB failed to exercise the degree of diligence required of a bank towards its depositors.
Main Doctrine
A bank is estopped from denying the authority of its branch manager to enter into an agreement for a time deposit with a stipulated interest rate, especially when the bank itself paid the interest in advance, and the depositor acted in good faith, relying on the apparent authority of the bank's agent.