G.R. No. 236419 , March 17, 2021
Union Bank of the Philippines, Petitioner, vs. Sy Lian Teng, Emerenciana Sylianteng, Roberto Sylianteng, Lorraine Sylianteng, Cesar Sylianteng, Clarita Tang, Roberto Tang, Margaret Tang, Patrick Tang, Frederick Tang, Gloria Lim, Albert Tang, and Helen Tang, Respondents.

FACTS

The case stemmed from an action for Recovery of Sum of Money with Damages filed by the respondents (the Sylianteng and Tang families) against petitioner Union Bank of the Philippines and its Branch Manager, Raymond Buñag. The respondents, who were acquainted with Buñag from his previous employment at Urban Bank, invested substantial funds in money market placements with Union Bank’s Cubao-Aurora West Branch upon Buñag’s solicitation and after verifying with Union Bank’s Head Office and the branch that Buñag was authorized to offer such placements. From November 1996 to July 1999, the respondents made multiple investments in peso and dollar time deposits, evidenced by Certificates of Time Deposit, Certificates of Participation, and passbooks, which were consistently rolled over upon maturity. The transactions were facilitated by Buñag in his capacity as Branch Manager. However, upon the respondents’ demand for payment of the maturity amounts, Union Bank refused to pay. The respondents later discovered anomalies perpetrated by Buñag and were forced to pre-terminate some placements, receiving deficient payments. The respondents filed a complaint against Union Bank and Buñag. The Regional Trial Court (RTC) ruled in favor of the respondents, ordering Union Bank to pay the claimed amounts. The Court of Appeals (CA) affirmed the RTC decision with modifications. Union Bank filed a Petition for Review on Certiorari before the Supreme Court.

ISSUE

The core issue is whether Union Bank is liable to the respondents for the unpaid money market placements and time deposits facilitated by its Branch Manager, Raymond Buñag, despite the bank’s claim that the transactions were part of a fraudulent scheme orchestrated by Buñag.

RULING

The Supreme Court denied the petition and affirmed the CA’s Amended Decision with modifications. The Court held Union Bank liable to the respondents based on the principle of agency and the doctrine of apparent authority. As Buñag was the Branch Manager, his actions within the scope of his authority bound the bank. The respondents were justified in relying on Buñag’s representations and the bank’s confirmations of his authority. The Court found that the respondents were legitimate bank clients who transacted in the ordinary course of business, and Union Bank failed to prove that the respondents conspired with Buñag in any fraud. The bank’s negligence in supervising its employee could not exonerate it from liability to innocent third parties. The Court ordered Union Bank to pay the respondents the principal amounts due under the specific Certificates of Time Deposit, with legal interest, subject to the deduction of final withholding tax on the interest earnings. The awards for moral and exemplary damages and attorney’s fees were deleted for lack of basis, but nominal damages were awarded.