Prudential Bank v. Court of Appeals, 223 SCRA 350 (1993) FACTS
Aurora Cruz invested P200k in Central Bank bills with Prudential Bank. The placement was for 63 days at 13.75% annual interest. For this purpose, the amount of P196,122.88 was withdrawn from her account and applied to the investment. The difference of P3,877.07 represented the pre-paid interest. Susan Quimbo was the employee of the bank to whom Cruz was referred and who was apparently in charge of such transactions. The transaction was evidenced by a Confirmation of Sale delivered to Cruz , together with a Debit Memo in the amount withdrawn and applied to the confirmed sale. Upon maturity of the placement, Cruz returned to the bank to "roll-over" or renew her investment. Quimbo, who again attended to her, prepared a Credit Memo crediting the amount of P200k in Cruz's savings account passbook. She also prepared a Debit Memo for the amount of P196,122.88 to cover the re-investment of P200,000.00 minus the prepaid interest of P3,877.02.This time, Cruz was asked to sign a Withdrawal Slip for P196,122.98, representing the amount to be re-invested after deduction of the prepaid interest. Quimbo explained this was a new requirement of the bank. Several days later, Cruz received another Confirmation of Sale and a
copy of the Debit Memo.
Subsequently, Cruz returned to the bank and sought to withdraw her P200k. However, she was informed that the investment appeared to have been already withdrawn by her (on the same day of the renewal) There was no copy on file of the (2nd) Confirmation of Sale and the Debit Memo allegedly issued to her by Quimbo. Quimbo herself was not available for questioning as she had not been reporting for the past week. Shocked by this information, Cruz became hysterical and burst into tears.
She then filed suit for breach of contract against the bank. The RTC and CA awarded damages in her favor.
ISSUE
Whether or not the bank should be liable (for Quimbo's acts)? HELD
1. "It could not be that plaintiff Aurora F. Cruz withdrew only the amount of P196,122.98 from their savings account, if her only intention was to make such a withdrawal. For, if, indeed, it was the desire of the plaintiffs to withdraw their money from the defendant/third-party plaintiff, they could have withdrawn an amount in round figures. Certainly, it is unbelievable that their withdrawal was in the irregular amount of P196,122.98."
2. "The bank has also not succeeded in impugning the authenticity of the Confirmation of Sale and the Debit Memo which were made on its official, forms...[e]ven assuming that they were not signed by its authorized officials, as it claims, there was no obligation on the part of Cruz to verify their authority because she had the right to presume it. The documents had been issued in the office of the bank itself and by its own employees with whom she had previously dealt. Such dealings had not been questioned before, much leas invalidated. There was absolutely no reason why she should not have accepted their authority to act on behalf of their employer." 3. "The liability of the principal for the acts of the agent is not even debatable. Law and jurisprudence are clearly and absolutely against the petitioner. He who does a thing by an agent is considered as doing it himself. This rule is affirmed by the Civil Code thus:
Art. 1910. The principal must comply with all the obligations which the agent may have contracted within the scope of his authority. Art. 1911. Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers.
Conformably, we have declared in countless decisions that the principal is liable for obligations contracted by the agent. The agent's apparent representation yields to the principal's true representation and the contract
is considered as entered into between the principal and the third person. A bank is liable for wrongful acts of its officers done in the interests of the bank or in the course of dealings of the officers in their representative capacity but not for acts outside the scope of their authority. A bank holding out its officers and agent as worthy of confidence will not be permitted to profit by the frauds they may thus be enabled to perpetrate in the apparent scope of their employment; nor will it be permitted to shirk its responsibility for such frauds, even though no benefit may accrue to the bank therefrom. Accordingly, a banking corporation is liable to innocent third persons where the representation is made in the course of its business by an agent acting within the general scope of his authority even though, in the particular case, the agent is secretly abusing his authority and attempting to perpetrate a fraud upon his principal or some other person, for his own ultimate benefit. First Philippine International Bank v. Court of Appeals, 252 SCRA 259 (1996)
FACTS
Producer Bank (now FPIB) obtained six parcels of land with a size o totaling to 101 hectares. Demetrio Demeteria and Jose Janolo wanted to buy the property, for which they wrote a letter with Mercurio Rivera, Manager of the Property Management Department of the bank, offering P3.5M. Rivera wrote back, making a counter-offer worth P5.5M. Demetria and Janolo made another counter-offer worth P4.25M for which the bank did not reply to. Two weeks later, they met with the majority stockholder, Mr. Co and Rivera, and eventually accepted the P5.5M counter-offer. Two weeks had passed, the bank was put under conservatorship. Demetria and Janolo demanded the compliance for their agreement, which the bank ignored. After multiple demands, they filed a case for specific performance, tendering payment with the court. The bank lost with the RTC and CA level.
ISSUES
Whether there was a perfected contract of sale RULING
1. Yes. Although a counter-offer was made for P4.25M and was rejected by the bank, the previous offer of P5.5M was revived when the respondents met with Co and Rivera, to which they acceded two days after. This was evidenced by the letter and their meetings. Since there was meeting of the minds, when the bank offered a price, to which respondents accepted, object, the six parcels of land, and price, worth P5.5M, there was a perfected contract of sale.
***Petitioners contend that Rivera did not have the authority to negotiate as to the property involved in the litigation. There had been an apparent authority when Rivera was the Manager of the Property Management Department; he was the one who talks to potential buyers of such property;
he referred the prices offered to him to the committee that decided the counter-offer worth P5.5M; he was present in all transactions involving the property. The bank cannot feign ignorance to the acts of its Manager that handled the property.
BPI Family Savings Bank, Inc. v. First Metro Investment Corporation, 429 SCRA 30 (2004)
FACTS
Respondent FMIC, through Executive VP Ong, opened an account and deposited P100 million to petitioner BPI FB. Ong made the deposit upon request of his friend who is a close acquaintance of Sebastian, then Branch Manager of the BPI FB branch. Sebastian’s aim was to increase the deposit level in his Branch.
BPI FB, through Sebastian, guaranteed a payment of 17% per annum interest of what was deposited by FMIC. The latter, in turn, assured BPI FB that it will maintain its deposit for a period of one year on condition that the interest of 17% per annum is paid in advance. This agreement between the parties was reached through their communications in writing. BPI FB paid FMIC 17% interest upon clearance of the latter’s check deposit. However, on the basis of an Authority to Debit signed by Ong, BPI FB transferred P80 million from FMIC’s current account to the savings account of Tevesteco. FMIC denied having authorized the transfer of its funds to Tevesteco, claiming that the signatures were falsified. To recover immediately its deposit, FMIC, issued a BPI FB check payable to itself and drawn on its deposit with BPI FB. But upon presentation for payment, BPI FB dishonored the check as it was "drawn against insufficient funds".
FMIC filed with the RTC against BPI FB. The court adjudged BPI FB liable to FMIC for the amount plus interest at 17% per annum, among others. BPI FB then filed a motion for reconsideration which was denied. Petitioner BPI FB contended that the CA erred in awarding the 17% per annum interest corresponding to the amount deposited by respondent FMIC. Petitioner insists that respondent’s deposit is not a special savings account similar to a time deposit, but actually a demand deposit, withdrawable upon demand, proscribed from earning interest. It also contended that the transaction is not valid as its Branch Manager clearly overstepped his authority in entering into such an agreement with Ong.
ISSUE
Whether the deposit is a demand deposit or a time deposit?
(Relevant) Whether the bank was bound by the acts of its Branch Manager?
RULING
It’s a time deposit.While it may be true that barely one month and seven days from the date of deposit, respondent FMIC demanded the withdrawal through the issuance of a check payable to itself, the same was made as a result of the fraudulent and unauthorized transfer by petitioner BPI FB of its P80 million deposit to Tevesteco’s savings account. It was a normal reaction of respondent as a depositor to petitioner’s failure in its fiduciary duty to treat its account with the highest degree of care. Under this circumstance, the withdrawal of deposit by respondent FMIC before the one-year maturity date did not change the nature of its time deposit to one of demand deposit. Petitioner bound by the act of its Branch Manager. Petitioner maintains that respondent should have first inquired whether the deposit of P100 Million and the fixing of the interest rate were pursuant to its internal procedures. Petitioner’s stance is a futile attempt to evade an obligation clearly established by the intent of the parties. What transpires in the corporate board room is entirely an internal matter. Hence, petitioner may not impute negligence on the part of respondent’s representative in failing to find out the scope of authority of Sebastian. Indeed, the public has the right to rely on the trustworthiness of bank managers and their acts.
Significantly, the transaction was actually acknowledged and ratified by petitioner when it paid respondent in advance the interest for one year. Thus, petitioner is estopped from denying that it authorized Sebastian to enter into an agreement with Ong concerning the deposit with the corresponding 17% interest per annum.
Associated Bank v. Pronstroller, 558 SCRA 113 (2008) FACTS
In 1988, Spouses Vaca executed a REM in favor of Associated Bank (now United Overseas Bank) over a parcel of residential land and the house constructed thereon.
For failure to pay, the property was sold at a public auction with the bank as the highest bidder.
However, Spouses Vaca commenced an action for the nullification of the REM and the foreclosure sale. A writ of possession was granted by the CA, after it was denied by the RTC. This CA decision was questioned by Spouses Vaca before the SC in another case.
Pending these cases, the bank advertised the property for sale for P9.7M. Spouses Pronstroller offered to purchase the property for P7.5M, which was accepted by the bank.
Prior to the expiration of the 90-day period within which to make the escrow deposit (as stipulated in the Letter-Agreement setting forth the terms and conditions of the sale), Spouses Pronstroller requested that the balance of the purchase price be made payable only upon service on them of a final decision of the SC affirming the bank's right to possess the property. Atty. Soluta, acting for the bank, allowed the Spouses' request.
In 1994, the bank reorganized its management. Atty. Dayday replaced Atty. Soluta as Asst. VP and Head of Documentation Section. Atty. Dayday discovered that Spouses Pronstroller failed to pay the balance of the purchase price and that they requested extension of time to pay. Upon referral to ARRMC (Asset Recovery and Remedial Management Committee), it was disapproved. Consequently, this was referred to the bank's Legal Department for rescission of the contract.
Spouses Pronstroller proposed to pay the balance of the purchase price (P3M upon approval and the balance after 6 months). But this was disapproved by the bank's president and will only be allowed if they would pay interest at 24.5% p.a. on the unpaid balance.
For failure to arrive to an agreement, Spouses Pronstroller reiterated that they would enforce their agreement with Atty. Soluta. However, Atty. Soluta's authority to enter into that agreement was denied by the bank. In 1994, Spouses Pronstroller instituted this suit against the bank. The bank countered saying that their contract had already been rescinded because of the Spouses' failure to deposit in escrow the balance of the purchase price. During the pendency of this case, the bank sold the property to Spouses Vaca, who registered the sale.
RTC ruled in favor of Spouses Pronstroller on the ground of the rule of "Apparent Authority" vested upon Atty. Soluta. CA affirmed ruling further that the bank had no right to unilaterally rescind the contract and that the bank were estopped from questioning the efficacy of the Soluta-Pronstroller agreement because of its failure to repudiate the same for 1 year.
ISSUE
Whether the bank is bound by the agreement signed by Atty. Soluta under the doctrine of apparent authority
RULING
YES. The general rule is that, in the absence of authority from the board of directors, no person, not even its officers, can validly bind a corporation. The power and responsibility to decide whether the corporation should enter into a contract that will bind the corporation is lodged in the board of directors. However, just as a natural person may authorize another to do
certain acts for and on his behalf, the board may validly delegate some of its functions and powers to officers, committees and agents. The authority of such individuals to bind the corporation is generally derived from law, corporate bylaws or authorization from the board, either expressly or impliedly, by habit, custom, or acquiescence, in the general course of business.
The authority of a corporate officer or agent in dealing with third persons may be actual or apparent. The doctrine of "apparent authority," with special reference to banks, had long been recognized in this jurisdiction. Apparent authority is derived not merely from practice. Its existence may be ascertained through 1) the general manner in which the corporation holds out an officer or agent as having the power to act, or in other words, the apparent authority to act in general, with which it clothes him; or 2) the
acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof, within or beyond the scope of his ordinary powers.
Accordingly, the authority to act for and to bind a corporation may be presumed from acts of recognition in other instances, wherein the power was exercised without any objection from its board or shareholders. Undoubtedly, petitioner had previously allowed Atty. Soluta to enter into the first agreement without a board resolution expressly authorizing him; thus, it had clothed him with apparent authority to modify the same via the second letter-agreement. It is not the quantity of similar acts which establishes apparent authority, but the vesting of a corporate officer with the power to bind the corporation.
Naturally, the third person has little or no information as to what occurs in corporate meetings; and he must necessarily rely upon the external manifestations of corporate consent. The integrity of commercial transactions can only be maintained by holding the corporation strictly to the liability fixed upon it by its agents in accordance with law. What transpires in the corporate board room is entirely an internal matter. Hence, petitioner may not impute negligence on the part of the respondents in failing to find out the scope of Atty. Soluta's authority. Indeed, the public has the right to rely on the trustworthiness of bank officers and their acts. If a corporation knowingly permits its officer, or any other agent, to perform acts within the scope of an apparent authority, holding him out to the public as possessing power to do those acts, the corporation will, as against any person who has dealt in good faith with the corporation through such agent, be estopped from denying such authority.