G.R. No. 132390 - BPI Family Savings Bank vs. 1st Metro Investment Corp.

First Metro Investment Corporation (FMIC) – an investment house organized under Philippine laws, acting as the account holder and depositor.
BPI Family Savings Bank, Inc. (BPI FB) – a banking corporation organized under Philippine laws, acting as the bank where the deposit was made.

On August 25, 1989, FMIC, through its Executive Vice President Antonio Ong, opened a current account (no. 8401-07473-0) with BPI FB San Francisco del Monte Branch (Quezon City).
FMIC deposited a Metrobank check (no. 898679) amounting to P100 million.
Jaime Sebastian, then Branch Manager of BPI FB San Francisco del Monte, facilitated the deposit at the request of his acquaintance, Ador de Asis. His aim was to increase the deposit level of the branch.
An agreement was reached by written communications whereby:

BPI FB guaranteed the payment of interest amounting to P14,667,687.01 (equivalent to 17% per annum on P100 million) payable in advance.
FMIC committed to maintaining the deposit for one year, thus treating the deposit as an interest-earning time deposit rather than a demand deposit.

On August 29, 1989, using an Authority to Debit allegedly signed by Antonio Ong and Senior Manager Ma. Theresa David of FMIC, BPI FB transferred P80 million from FMIC’s current account to Tevesteco Arrastre a Stevedoring, Inc.’s savings account.
FMIC denied authorizing the transfer, alleging that the signatures on the Authority to Debit were falsified.
In reaction, FMIC issued, on September 12, 1989, BPI FB check no. 129077 for P86,057,646.72 to recover its funds; however, the check was dishonored on September 13, 1989 due to insufficient funds.

FMIC filed a complaint in the Regional Trial Court, Branch 146, Makati City (Civil Case No. 89-5280) against BPI FB, and simultaneously, an Information for estafa was filed by the Office of the State Prosecutors against several individuals, which was later dismissed.
On October 1, 1993, the trial court rendered a decision in favor of FMIC awarding:

P80 million (less the pre-paid interest of P14,667,678.01), plus interest at the legal rate from the filing of the complaint.
Additional sums for attorney’s fees and costs.

Adjudging BPI FB liable for P65,332,321.99 plus interest at 17% per annum from August 29, 1989 until full payment, with the 17% interest itself earning interest at 12% per annum from October 4, 1989 until paid.
Denying a motion for reconsideration by BPI FB.

Claimed that the agreement between FMIC and BPI FB was clearly illegal and void because it was based on an unauthorized act committed by an overstepping branch manager.
Asserted that the transaction was misconstrued as a time deposit when it should have been treated as a demand deposit, which traditionally does not earn interest under the relevant Central Bank regulations (i.e., Central Bank Circular 777).
Contended that internal procedures relating to authorizing deposits should have been observed, and that the branch manager had exceeded his authority.
Argued that the unauthorized transfer of the P80 million should have absolved BPI FB from liability, and that the proper consolidation of the pending case involving Tevesteco would have shown that the transferred funds were proceeds of a loan.

Whether the deposit of P100 million was intended by the parties to be a time deposit (interest-bearing and nonwithdrawable for one year) or a demand deposit (withdrawable on demand without interest).
Whether the payment of 17% per annum interest upon the deposit was valid and enforceable despite alleged banking regulations concerning demand deposits.
Whether BPI FB’s Branch Manager, Jaime Sebastian, acted within his apparent authority when entering into the agreement with FMIC’s Executive Vice President, thereby binding the bank.
Whether the unauthorized transfer of P80 million from FMIC’s account to the account of Tevesteco, which FMIC claimed was fraudulent, constitutes a breach of the bank’s fiduciary duty.
Whether internal bank procedures regarding deposit arrangements and interest fixing are relevant to the rights of the depositors and third parties.
Whether the failure to consolidate the case involving the unauthorized transfer with the pending case against Tevesteco affects the adjudication of the issues.