[G.R. No. 132390. December 8, 2004]
BPI vs. FIRST METRO
SPECIAL THIRD DIVISION
Quoted hereunder, for your information, is a resolution of this Court dated DEC 8 2004.
GR No 132390 (BPI Family Savings Bank, Inc. vs. First Metro Investment Corporation.)
Before us for resolution are: (1) motion of BPI Family Savings Bank, Inc., petitioner, seeking a reconsideration/clarification of this Court's Decision dated May 21, 2004 which denied its petition for review on certiorari, (2) comment of First Metro Investment Corporation (FMIC), respondent; and (3) motion of its counsel to fix attorney's fee.
To recapitulate, the facts of this case are:
On August 25, 1989, respondent FMIC, through its Executive Vice
President Antonio Ong, opened current account No. 8401-07473-0 with BPI Family
San Francisco del Monte Branch (Quezon City) and deposited METROBANK check no.
Earlier, the parties, in their written communications, agreed that BPI Family
Bank would guarantee the payment of 17% per annum interest on the P100
million deposited (or P14,667,687.01), provided FMIC would maintain its
deposit for a period of one year. BPI Family Bank then paid in advance FMIC the
amount of P14,667,687.01 representing the 17% interest per annum. Barely
four days after, or on August 29, 1989, BPI Family Bank fraudulently
transferred P80 million from FMIC's deposit to the savings account of Tevesteco
Arrastre - Stevedoring, Inc. (Tevesteco), leaving a deposit of only P20
million. FMIC learned about this and in order to recover immediately its
deposit, it issued BPI Family Bank check No. 129077 for P86,057,646.72 payable to itself and drawn
against its deposit with BPI Family Bank (San Fernando Del Monte Branch). But
upon presentation for payment on September 13, 1989, the bank dishonored the
check as it was "drawn against insufficient funds" since the balance
of FMIC's current account was only P20 million after the transfer of P80
million to Tevesteco. Actually, FMIC was able to recover only the amount of P14,667,687.01
as advanced 17% interest for one year and P20 million, leaving a balance
of P65.332.321.99. Consequently, FMIC filed with the Regional Trial
Court, Branch 146, Makati City Civil Case No. 89-5280 for a sum of money with
damages against BPI Family Bank.
On October 1, 1993, the trial court rendered its Decision in Civil Case No. 89-5280, the dispositive portion of which reads:
“Premises considered, judgment is rendered in favor of plaintiff, ordering defendant to pay:
a. the amount of
P80 million with interest at the legal rate
from the time this complaint was filed less P14,667,678.01 (or P65,332,321.99);
b. the amount of
P100,000.00 as reasonable attorney’s fees;
c. the cost.
On appeal by both parties, the Court of Appeals rendered a Decision affirming the assailed Decision with modification, thus:
“WHEREFORE, considering all the foregoing, this Court hereby
modifies the decision of the trial court and adjudges BPI Family Bank liable to
First Metro Investment Corporation for the amount of
interest at 17% per annum from August 29, 1989 until fully restored. Further,
this 17% interest shall itself earn interest at 12% from October 4, 1989 until
From this Decision, BPI Family Bank filed with this Court a petition for review on certiorari. On May 21, 2004, we rendered a Decision denying the petition, thus, affirming the Decision dated July 4, 1997 of the Court of Appeals.
In the instant motion for
reconsideration, BPI Family Bank contends that we erred (1) in affirming the
Appellate Court's award of 17% interest per annum on the principal amount of
and (2) in imposing 12% legal interest on the 17% stipulated interest, until
the amount of the entire obligation is fully paid. BPI Family Bank prays that
we (a) reduce the interest due from 17% to 12% per annum on the amount of P65,332,321.99;
and (b) compute the rate of interest on the interest in accordance with our
Decisions in Eastern Shipping Lines vs. Court of Appeals and Rizal Commercial Banking
Corporation vs. Alfa RTWManufacturing Corporation.
The award of 17% interest per annum on the principal amount
BPI Family Bank maintains that the principal amount of
should earn interest of 17% only for one year, the term of FMIC's deposit, or
from August 25, 1989 up to August 24, 1990. FMIC's deposit ceased to be a loan
or obligation constituting a forbearance of money immediately after one year,
thus, thereafter, the interest due should be reduced from 17% to 12% per annum
on the amount of P65,332,321.99.
In its comment on the motion, FMIC asserts that when it deposited
its money with BPI Family Bank, their agreement was that the
million is a time deposit for one year, to earn 17% interest per annum.
In fact, the letter dated August 15, 1989 of Jaime Sebastian, then Branch
Manager of BPI Family Bank, addressed to FMIC, confirms the latter's assertion,
"August 15, 1989
FIRST METRO INVESTMENT CORPORATION
Wellington Bldg., Plaza Lorenzo Ruiz
Binondo, Metro Manila
This is to guarantee the payment of interest for your deposit equivalent to 17% per annum of whatever amount deposited.
Very truly yours,
(SGD.) JAIME SEBASTIAN
FMIC further asserts that the terms of payment of interest are very clear - it is interest at 17% per annum, not just for one year, but for each year that the deposited amount remains with BPI Family Bank.
FMIC stresses that to sustain BPI Family Bank's argument is to reward it for deliberately defaulting in its obligation. This bank has delayed payment for 15 long years and now asks this Court "to reward the delay" by reducing the legal rate of interest from 17% per annum to only 12%.
It is elementary that nothing beneficial or lucrative should arise from subterfuge or deception. Records glaringly show that bad faith and fraud obviously characterize the history of this case.
In FGU Insurance Corp. vs. G.P. Sarmiento Trucking Corp., this Court aptly held:
"The law, recognizing the obligatory force of contracts, will not permit a party to be set free from liability for any kind of misperformance of the contractual undertaking or a contravention of the tenor thereof. A breach upon the contract confers upon the injured party a valid cause for recovering that which may have been lost or suffered."
BPI Family Bank cannot feign ignorance of the terms of its agreement with respondent FMIC for these are based on documentary evidence.
We cannot vary the conditions stipulated upon by the parties, unless the stipulation is contrary to law, morals, good customs, public order or public policy, which are not present here. Indeed, that which is agreed to in a contract is the law between the contracting parties, and obligations arising from such contract have the force of law and should be complied with in good faith.
It bears reiterating that it was BPI Family Bank which
breached its duty or obligation when, prior to the one year maturity date, it
P80 million from FMIC's current account to
the savings account of Tevesteco. In fact, until now, or for 15 years, BPI
Family Bank literally "holds on," retains and makes use of the bank
deposit of FMIC to its detriment and prejudice.
Certainly, BPI Family Bank should not be rewarded for its fraudulent and unscrupulous act. Its unauthorized transfer of FMIC's deposit to the savings account of a third party, prior to the one year maturity date, constitutes breach of its duty to treat such deposit account with the highest degree of diligence.
In Bank of Philippine Islands vs. Court of Appeals, this Court, speaking through Mr. Chief Justice Hilario G. Davide, Jr., held that "payment made by the debtor to the wrong party does not extinguish the obligation as to the creditor who is without fault or negligence, even if the debtor acted in utmost good faith and by mistake as to the person of the creditor, or through error induced by fraud of a third person."
In Reyes vs. Court of Appeals, this Court held:
"The degree of diligence required of banks, is more than that of a good father of a family where the fiduciary nature of their relationship with their depositors is concerned. In other words, banks are duty bound to treat the deposit accounts of their depositors with the highest degree of care."
Similarly, in Far East Bank and Trust Company vs. Querimit, we ruled:
"x x x (t)he business of banks is impressed with public interest, the degree of diligence required of banks is more than that of a good father of the family or of an ordinary business firm. The fiduciary nature of their relationship with their depositors requires them to treat the accounts of their clients with the highest degree of care. A bank is under obligation to treat the accounts of its depositors with meticulous care whether such accounts consist only of a few hundred pesos or of millions of pesos. Responsibility arising from negligence in the performance of every kind of obligation is demandable."
Undoubtedly, BPI Family Bank utterly failed to exercise that degree of diligence required of it in dealing with FMIC, its depositor. We cannot fathom why BPI Family Bank, aware of its breach of duty and obligation and after using for its gain FMIC's deposit, has still the audacity to demand that such deposit should earn only 12% interest per annum. We agree with FMIC that to reduce the 17% to only 12% is to reward BPI Family Bank for its violation of contract and undue delay in holding on to its (FMIC's) money.
Imposing 12% legal interest on the 17% stipulated interest
In relation to the determination and computation of rate of interest on the 17% stipulated interest, this Court, in Rizal Commercial Banking Corporation vs. Alfa RTW Manufacturing Corporation,citing Eastern Shipping Lines, Inc. vs. Court of Appeals, held:
"II. With regard particularly to an award of interest, in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is reached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit."
The instant case involves an obligation arising from a loan. Article 1980 of the Civil Code of the Philippines provides:
"Art. 1980. Fixed, savings, and current deposits of money in banks and similar institutions shall be governed by the provisions concerning loan."
In Consolidated Bank and Trust Corporation vs. Court of Appeals, this Court held:
"The contract between the bank and its depositor is governed by the provisions of the Civil Code on simple loan, x x x. There is a debtor-creditor relationship between the bank and its depositor. The bank is the debtor and the depositor is the creditor. The depositor lends the bank money and the bank agrees to pay the depositor on demand. The savings deposit agreement between the bank and the depositor is the contract that determines the rights and obligations of the parties."
Similarly, in Serrano vs. Central Bank of the Philippines, this Court held that "bank deposits are in the nature of irregular deposits. They are really loans because they earn interest. x x x. The petitioner here in making time deposits that earn interests with respondent Overseas Bank of Manila was in reality a creditor of the respondent Bank and not a depositor. The respondent Bank was in turn a debtor of petitioner. Failure of the respondent Bank to honor the time deposit is failure to pay its obligation as a debtor and not a breach of trust arising from a depositary's failure to return the subject matter of the deposit."
PI00 million deposit herein is also in the
nature of a loan because it does not only earn interest at the stipulated rate
of 17% per annum, but is also subject to payment in legal tender upon its
maturity or after one year from August 25, 1989, the date of the deposit.
Now, applying the above-quoted rulings, the outstanding balance
on the principal amount corresponding to the time deposit of
must earn an interest at the rate of 17% per annum from the date of execution
until finality of this Decision. The formula is: interest = outstanding
balance on the principal x 17% per annum x no. of years from the date of
execution until finality of judgment
or P65,332,321.99 x 17% x 15 = P166,597,421.0745.
Furthermore, the interest of 17% percent per annum, as long as
unpaid, also earns interest, computed from the date of the filing of the
complaint (October 4, 1989) until finality of this Court's Decision. The
formula is: interest on interest = interest of 17% on
x 12% x number of years from the filing of the complaint on October 4, 1989
until finality of judgment or P11,106,494.7383 x 12% x 15 = P19,991,690.52894.
From the date of finality of this Decision, the total
amount due, which is
shall earn interest of 12% per annum until fully paid.
Fixing of Attorney's fee
Anent the motion of FMIC's counsel to fix his attorney's fee, he
claims that the "understanding" between him and FMIC is that the
latter will pay him a contingency fee based on quantum meruit (1)
the amount of interest recoverable over and above 12% per annum on the
principal amount of
P65,332,321.99; and (2) the recoverable 12% interest
on the 17% interest.
The motion of FMIC's counsel to fix his attorney's fee lacks merit. This issue was not contested before the trial court. Consequently, it cannot be raised for the first time on appeal before this Court.
In Lim vs. Queensland Tokyo Commodities, Inc., we held:
"This Court cannot now, for the first time on appeal, pass upon this issue. For an issue cannot be raised for the first time on appeal. It must be raised seasonably in the proceedings before the lower court. Questions raised on appeal must be within the issues framed by the parties and, consequently, issues not raised in the trial court cannot be raised for the first time on appeal."
Moreover, the matter of fixing attorney's fee is addressed to FMIC and its counsel. If they cannot agree on the amount, the latter can avail of an appropriate legal remedy.
WHEREFORE, the motion for reconsideration is DENIED.
BPI Family Bank is hereby ordered to pay FMIC the following amounts:
(outstanding balance of the total deposit)
(17% stipulated interest on the above outstanding balance for 15 years)
P19,991,690.52894 (12% interest on the
stipulated interest of 17% for 15 years)
(the total amount due as of the date of the finality of judgment).
This amount of
P251,921,433.59344 shall earn an interest
of 12% per annum until fully paid by BPI Family Bank.
Very truly yours,
(Sgd.) LUCITA ABJELINA-SORIANO
Asst. Division Clerk of Court
* Owned by petitioner BPI Family Savings Bank, Inc.
 Ong made the deposit upon request of his friend, Ador de Asis, a close acquaintance of Jaime Sebastian, then Branch Manager of BPI Family Bank San Francisco del Monte Branch. Sebastian’s aim was to increase the deposit level in his Branch.
This amount is the balance after subtracting
(corresponding to the 17% interest) from P80 million transferred by BPI
Family Bank to Tevesteco.
 This case was later assigned to Branch 65 of the same court.
 G.R. No. 97412, July 17, 1994, 234 SCRA 78.
 G.R. No. 133877, November 14, 2001, 368 SCRA 611.
 Ramnani vs. Court of Appeals, G.R. No. 85494, July 10, 2001, 360 SCRA 645, 653.
 G.R. No. 141910, August 6, 2002, 386 SCRA 312, 320, citing Anson on Contracts, 1939, p. 424; 17A Am Jur 2d 728; and Parks vs. Parks, 187 P2d 145.
 See Rizal Commercial Banking Corporation vs. Alfa RTW Manufacturing Corporation, supra, citing Cuizon vs. Court of Appeals, 260 SCRA 654 (1996); and Article 1306, Civil Code of the Philippines.
 G.R. No. 104612, May 10, 1994, 232 SCRA 302, 309-310, citing Serrano vs. Central Bank of the Philippines, G.R. No. L-30511, February 14, 1980, 96 SCRA, 102-103.
 G.R. No. 118492, August 15, 2001, 363 SCRA 51, 60, citing Philippine Bank of Commerce vs. Court of Appeals, 269 SCRA 695, 708-709 (1997).
 G.R. No. 148582, January 16, 2002, 373 SCRA 665, 672, citing Canlas vs. Court of Appeals, 326 SCRA 415 (2000); Ibaan Rural Bank vs. Court of Appeals, 321 SCRA 88 (1999); Philippine Bank of Commerce vs. Court of Appeals, 269 SCRA 695 (1997); Metropolitan Bank and Trust Company vs. Court of Appeals, 237 SCRA 761 (1994); and Bank of Philippine Islands vs. Court of Appeals, 216 SCRA 51 (1992).
 Supra at 619.
 Supra at 95-97.
 G.R. No. 138569, September 11, 2003, 410 SCRA 562, 574.
 Supra, cited in Bank of Philippine Islands vs. Court of Appeals, supra.
 More or less this year considering that a second motion for reconsideration is prohibited.
The formula is
P65,332,321.99 + P166,597,421.0745
+ P19,991,690.52894 = P251,921,433.59344.
 G.R. No. 136031, January 4, 2002, 373 SCRA 31, 41, citing Sanchez vs. CA, 279 SCRA 647, 649 (1997).