G.R. No. 132390 ; May 21, 2004
BPI FAMILY SAVINGS BANK, INC., petitioner, vs. FIRST METRO INVESTMENT CORPORATION, respondent.

FACTS

Respondent First Metro Investment Corporation (FMIC) deposited ₱100 million with petitioner BPI Family Savings Bank (BPI FB) at its San Francisco del Monte Branch. The deposit was made upon the request of a friend of FMIC’s Executive Vice President, Antonio Ong, who was acquainted with BPI FB’s Branch Manager, Jaime Sebastian. Sebastian aimed to increase his branch’s deposit level. The parties, through written communications, agreed that BPI FB would pay 17% per annum interest in advance, and FMIC would maintain the deposit for one year. BPI FB paid the interest of ₱14,667,687.01 upon clearance of the check.
Subsequently, BPI FB transferred ₱80 million from FMIC’s account to the account of Tevesteco Arrastre Stevedoring, Inc., based on an Authority to Debit. FMIC denied authorizing this transfer, claiming the signatures were falsified. When FMIC later issued a check to withdraw its remaining balance, BPI FB dishonored it for insufficiency of funds. FMIC filed a civil case for recovery of its deposit.

ISSUE

Whether the Court of Appeals erred in holding BPI FB liable to FMIC for the unauthorized transfer and in awarding interest based on the 17% per annum agreement.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The legal logic is threefold. First, the deposit was a valid time deposit, not an illegal interest-bearing demand deposit. The written agreement between the parties explicitly stipulated the deposit was non-withdrawable for one year in exchange for advance interest, removing it from the prohibition under banking regulations for current accounts. Second, BPI FB is estopped from denying the authority of its Branch Manager. By accepting the deposit and paying the stipulated interest, the bank clothed its manager with apparent authority to bind it in the transaction. The bank’s subsequent failure to exercise the requisite diligence in safeguarding the deposit, leading to the unauthorized transfer, rendered it liable for the loss.
Third, the award of 17% interest as stipulated is proper. The amount represents compensation for the use of FMIC’s money and is consistent with the agreement. The Court further upheld the imposition of legal interest on the unpaid interest from judicial demand, following established jurisprudence on forbearance of money. The Court declined to re-examine factual findings, upholding the lower courts’ conclusion that the transfer was fraudulent and unauthorized, and that consolidation with a separate case against Tevesteco was unnecessary. A bank is held to a high degree of diligence in handling depositor funds, a duty BPI FB breached.