BPI Family Savings Bank, Inc.

vs First Metro Investment Corporation

Facts: Respondent FMIC, an investment house through its Executive Vice President
Antonio Ong, opened a current account with petitioner BPI. On August 25, 1989, it
deposited 100 million. They agreed to a 17% per annum interest. FMIC also assured
BPI that it will maintain its deposit for a year, provided that the interest must be paid in
advance. The agreement was made in writing.

Four days later (August 29), on the basis of authority to debit signed by the Executive
VP and the David, the Senior Manager of FMIC, PI FB transferred 80 million from
FMICs current account to the savings account of Tevesteco Arrastre Stevedoring, Inc.
leaving only 20 million on the deposit. FMIC denied the authorization of the transfer of
its funds to Tevesteco, and further claimed that the signatures of Ong and David were
falsified. FMIC tried to draw a check to recover it but the check was dishonored for
insufficient funds.

FMIC filed a complaint for a sum of money before the RTC which then ruled in their
favor. CA affirmed.

Issue: Whether petitioner was remiss in its fiduciary duty.

Held: Yes, petitioner maintains that respondent should have first inquired whether the
deposit of 100 Million and the fixing interest rate were pursuant to the petitioner’s
internal procedures. The petitioners stance is a futile attempt to evade an obligation
clearly established by the intent of the parties. What happens in the corporate board
room is entirely an internal matter. Thus, petitioner may not impute negligence on the
part of respondent’s representative in failing to find out the scope of authority of the
petitioner’s Branch manager. The public has the right to rely on the trustworthiness of
the bank managers and their acts. Confidence in the banking system, which necessarily
includes reliance on the bank managers, is vital in the economic life of the society.

Hence, the Supreme Court upholds the finding of the lower courts. Petitioner failed to
exercise the degree of diligence required by the nature of its obligations to its
depositors. BPI’s act of transferring the money constituted breach of contract, The bank
had the duty to treat the deposit account with the highest degree of diligence. Such
degree is more than that of a good father of a family. Petitioner cannot claim it exercised
such degree of care and must therefore bear the consequences.