Allied Banking Corp. vs. Spouses Macam

Factual Background

On recommendation of his brother and through the facilitation of Elena Valerio, Mario Macam invested P1,572,000.00 in the cell card business of Helen Garcia and deposited that amount in Valerio’s savings account with Allied Bank-Pasay Road on November 4, 2002. On February 6, 2003, at Allied Bank‑Alabang Las Pinas Branch headed by Branch Head Maribel Cana, a purported P46 Million deposit by Helen Garcia was anticipated and five fund transfer receipts were prepared and signed by Cana to credit five accounts across branches, including a P10 Million credit to Valerio’s account. Cana effectuated a local override approving the transfers despite the absence of an actual P46 Million deposit and despite a teller’s protest that Helen’s account lacked sufficient funds. The credits to various accounts were followed by subsequent withdrawals, reversals and debits, and a transfer ultimately resulted in P1,590,000.00 being deposited to an account opened by the Spouses Mario Macam at Allied Bank‑Pasong Tamo on February 6, 2003. The bank later recovered part of the disputed funds but, after investigation, debited the remaining P1.1 Million from the Spouses Macam account on February 19, 2003, causing its closure and prompting the Spouses Macam to file a complaint for damages.

Trial Court Proceedings

The Spouses Macam sued Allied Bank and AB‑PT Branch Head Guillermo Dimog for damages resulting from the closure of their deposit account. Allied Bank denied liability, asserted ownership over the disputed funds traced to the allegedly spurious P46 Million credit, and filed a third‑party complaint against the Spouses Cana and the Spouses Garcia. The Pre‑Trial Order recorded stipulations including Allied Bank’s admissions that the Spouses Macam’s account was opened on February 6, 2003 with an opening balance of P1,590,000.00 and that the bank debited and closed the account on February 19, 2003. After trial, the RTC rendered judgment ordering Allied Bank and Dimog jointly and severally to pay respondents the amount of P1.1 Million with twelve percent interest per annum from February 19, 2003 and ordering the third‑party defendants to reimburse Allied Bank and Dimog by way of subrogation.

Court of Appeals Ruling

Allied Bank and the Spouses Garcia appealed. The Court of Appeals affirmed the RTC in toto. The CA held that the bank breached the savings deposit agreement and was liable for culpa contractual because the banking relationship is fiduciary and demands meticulous care; it found that the bank failed to exercise the extraordinary diligence required by law and jurisprudence in handling deposits and supervising employees, and that the apparent authority of the Branch Head to effect the disputed transactions bound the bank.

Issues Presented on Certiorari

Allied Bank condensed its appellate grievances into challenges that the CA erred in: holding the bank liable for the ultra vires acts of its employee Cana; finding that infirmities in the transactions stopped with Valerio and that subsequent transfers to the Spouses Macam were valid; concluding that the Spouses Macam acquired valid title to the P1,590,000.00; affirming the award of P1.1 Million with interest; failing to order return of P490,000.00 withdrawn by the Spouses Macam; and denying Allied Bank’s counterclaims for damages.

Parties’ Contentions

The Spouses Macam contended that Allied Bank accepted their deposit and thus recognized their title and was obligated to pay on demand, and that the bank breached that obligation by debiting and closing their account without notice. Allied Bank maintained that it retained ownership of the funds because they were traceable to a spurious P46 Million credit to Helen Garcia effected by Cana and that the bank therefore could recover those funds. Third‑party defendants Cana and the Spouses Garcia denied collusion or participation in fraud, and Cana asserted customary practices of granting favored clients temporary overdrafts and that she investigated the source of funds consistent with RA 9160.

Legal Basis and Reasoning

The Supreme Court applied RA 8791, emphasizing Section 2’s declaration of the fiduciary nature of banking and the requirement of high standards of integrity and performance. The Court reiterated settled jurisprudence that banks owe depositors extraordinary diligence in handling deposits and the highest degree of diligence in selecting and supervising employees. The Court treated the savings deposit agreement as a contract of simple loan under Article 1980 of the Civil Code and held that deposit acceptance creates the creditor‑debtor relation that presumes ownership of the money by the person in whose name the account is opened. The Court explained that money is generic and fungible under Article 418, such that traceability does not permit the bank to assert title over equivalent sums once a deposit has been accepted and the depositor has relied on the bank’s recognition of ownership. The Court invoked Articles 1172, 2176 and 2180 to fix the bank’s responsibility for negligence and for acts of persons for whom it is responsible, and applied the doctrine of apparent authority to find that Cana’s exercise of authority was clothed with sufficient appearance of power to bind the bank.

Supreme Court Disposition

The Supreme Court denied the Petition for Review on Certiorari and affirmed the Court of Appeals decision with modification. The Court held that Allied Bank was liable for breach of the savings deposit agreement for debiting and closing the Spouses Macam account on February 19, 2003. The Court ruled that Allied Bank had recognized the Spouses Macam’s ownership of the P1,590,000.00 when it accepted the deposit and permitted withdrawals, and that the bank could not disavow that recognition despite the tortuous acts of its Branch Head. The Court concluded that the infirmity in the earlier transactions did not affect the validity of the subsequent transfers once they had been duly executed and accepted by bank personnel, and that Allied Bank’s unilateral recovery violated the deposit agreement.

Modification of Interest and Monetary Awards

The Court modified the lower courts’ interest award in light of Central Bank and BSP circulars and pertinent jurisprudence. The Court ordered Allied Bank to pay respondent Rose Trinidad Macam (as substituted for Guillermo Dimog’s decedent or as substituted party as set in the record) t