THIRD DIVISION

[G.R. No. 200635. February 1, 2021.]

ALLIED BANKING CORPORATION * AND GUILLERMO DIMOG,

petitioners, vs. SPOUSES MARIO ANTONIO MACAM ** & ROSE
TRINIDAD MACAM, SPOUSES WILLAR FELIX AND MARIBEL
CAÑA AND SPOUSES MELCHOR AND HELEN GARCIA,
respondents.

DECISION

HERNANDO, J : p

This Petition for Review on Certiorari assails the November 10, 2011
Decision 1 of the Court of Appeals (CA) in CA-G.R. CV No. 91098 which
affirmed in toto the November 12, 2007 Decision 2 of the Regional Trial Court
(RTC) of Makati City, Branch 59 in Civil Case No. 03-850 finding petitioners
Allied Banking Corporation (Allied Bank) and Guillermo Dimog (Dimog)
solidarily liable for damages to the Spouses Mario Antonio and Rose Trinidad
Macam (Spouses Mario Macam).
The facts are not in dispute. 3
Mario Macam (Mario), on the recommendation of his brother Manuel
and facilitation of Elena Valerio (Valerio), invested P1,572,000.00 in the
cellular card business of respondent Helen Garcia (Helen). Valerio was a Unit
Manager in Helen's business, soliciting investments and promising weekly
interest payments of 2.29%.
On November 4, 2002, Mario deposited P1,572,000.00 in Valerio's
Savings Account 4 with Allied Bank-Pasay Road Branch (AB-Pasay). In turn,
Valerio issued Bank of the Philippine Island Check No. 3090-045359 to Mario
covering the principal amount of his investment.
On February 6, 2003, a series of transactions occurred at the Allied
Bank-Alabang Las Piñas Branch (AB-ALP), headed by respondent Maribel
Caña (Caña). At 8:45 a.m., Caña informed bank teller Melissa Berras (Berras)
to anticipate a deposit by Helen in the amount of P46 Million. Caña likewise
instructed the Branch Operating Officer, Milani Mamalayan (Mamalayan), to
arrange for two armored vans to pick up the P46 Million deposit. 5
At 9:45 a.m., Mamalayan informed Caña of the arrival of the armored
vans. Thereupon, Caña gave Berras five filled out and approved fund
transfer receipts 6 in the total amount of P46 Million with the following
details:

NAME ACCOUNT AMOUNT

NO.
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 a. Digna 3680-01407- P6 Million
Gonzales 1

b. Elena Valerio 3090- P10 Million

045359-1

c. Rosite Capili 1840-04249- P10 Million

(Capili) 3

d. Yolanda Lim 1823-00281- P10 Million

5

e. Gilda Tiglao 3090-04535- P10 Million

(Tiglao) 9 7

The fund transfer receipts bore only Caña's signature and ostensibly
indicated Helen's deposit account as the source of the P46 Million fund
transfer. 8
Since Helen had yet to make the promised deposit and her account
balance did not amount to P46 Million, Berras protested to Caña that she
cannot credit the corresponding amounts to the five accounts as indicated in
the fund transfer receipts. Nonetheless, Caña effected a local override and
approved the fund transfer. 9 Consequently, the amounts were credited to
the five deposit accounts, including Valeria's, in the amount of P10 Million.
Meanwhile, at 11:57:23 a.m., Valerio withdrew P1,722,500.00 from her
deposit account at AB-Pasay. At 11:58:35 a.m., via electronic fund transfer.
Valerio deposited P1,590,000.00 to the account of Mario's brother Manuel
and the latter's wife and Sheila Macam. To prove the fund transfer to the
Spouses Manuel Macam's account, Valerio presented the deposit slip with
her handwritten notation 10 addressed to Mario.
On that same date, through Sheila's deposit of P1,590,000.00 by way
of a credit memo, the Spouses Mario Macam opened Savings Account No.
1850-06565-2 at Allied Bank-Pasong Tamo (AB-PT) Branch. In subsequent
and separate instances, the Spouses Mario Macam were able to make
withdrawals in the total amount of P490,000.00, 11 leaving a balance of P1.1
Million in their savings account with AB-PT.
Yet still on February 6, 2003, Caña instructed Berras to reverse the P10
Million fund transfer to Yolanda Lim. Berras again inquired about the P46
Million deposit but was told by Caña to wait.
Later that day, Caña again instructed Berras to debit specific amounts
from different accounts, to wit:
(a) Elena Valerio — P8.3 Million;
(b) Gilda Tiglao — P1.7 Million; and
(c) Rosite Capili — P5.7 Million. 12
Once again, Berras inquired about Helen's promised deposit but Caña
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 told her to just wait. 13

Meanwhile, Mamalayan sent Short Messaging Service (SMS) 14

messages to Caña regarding Helen's deposit and the arrival of the requested
armored vans. Caña's answer to Mamalayan was no different; the latter was
likewise told to wait. 15
Mamalayan learned of the debiting of the three accounts 16 after the
Branch Head of Allied Bank-Imus (AB-I) inquired about the huge debit on
their client's account. Mamalayan told the AB-I Branch Head to contact Caña
as she was unaware of the said debit transactions.
At 3:30 p.m., Mamalayan received an SMS from Caña that the P46
Million deposit had been cancelled. 17 As soon as Berras overheard
Mamalayan telling the Pick-up Tellers and the Cash Center about the
cancellation, Berras approached Mamalayan and told her about the fund
transfer transactions totaling P46 Million which she had expedited. Berras
disclosed to Mamalayan: (1) Caña's specific instructions; (2) Caña's override
and approval of the fund transfer transactions from Helen's account to five
different accounts despite the lack of fund deposit of P46 Million, and (3) the
subsequent credits, debits and reversals made on the accounts of Valerio,
Capili and Tiglao. 18
At 5:50 p.m., Caña instructed Mamalayan to book the amount of P20.3
Million under "Accounts Receivable" corresponding to the unrecovered
amount from the P46 Million which had been earlier transferred to various
deposit accounts. 19
Due to the significant discrepancy, Allied Bank investigated the branch,
AB-ALP, and its transactions on February 6, 2003. Allied Bank was able to
recover more than half of the amount, leaving a balance of P9,800,000.00.
20

On February 19, 2003, Angela Barcelona, Region Head, Retail Banking

Group for Allied Bank's South Metro Manila Branches, ordered the debit of
the remaining P1.1 Million from the account of the Spouses Mario Macam
which resulted in the closure thereof. 21
On March 3, 2003, the Spouses Mario Macam learned of the closure
after they were unable to withdraw from their account. Hence, the Spouses
Mario Macam filed the complaint for Damages against the bank and the AB-
PT Branch Head, Dimog. 22
Not unexpectedly, Allied Bank denied any liability for the closure of the
Spouses Mario Macam's account and claimed ownership of the P1.1 Million
deposit. Allied Bank traced its title to the dubious transfers amounting to P46
Million on February 6, 2003 beginning from the crediting of Helen's account
and the ensuing fund transfers to various deposit accounts maintained by
particular individuals with different branches of Allied Bank. 23
Given its allegations in its Answer, 24 Allied Bank subsequently filed a
Third Party Complaint 25 against respondents, the Spouses Willar Felix and
Maribel Caña and the Spouses Melchor and Helen Garcia (Spouses Garcia).
Third party defendants, the Spouses Caña and the Spouses Garcia,
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 renounced liability for the initial P46 Million fund transfer transactions
effected by Caña and all succeeding fund transfer transactions linked thereto
on the ubiquitous date of February 6, 2003. 26
Caña maintained that she did not and has never conspired with Helen
to defraud the bank. Pursuant to the requirements of Republic Act No. 9160
(RA 9160) or the Anti-Money Laundering Act of 2001, 27 Caña conducted an
investigation into the source of Helen's funds and confirmed that Helen was
indeed engaged in the cell card business. 28
According to Caña, Helen was a valued client of Allied Bank,
maintaining another deposit account with the bank's Molino-Cavite Branch.
Helen's transactions with Allied Bank nearly consisted of huge cash inter
branch deposits and/or withdrawals as well as regular fund transfers to
different Allied Bank branches where Helen's business colleagues (including
Valerio) maintained their respective deposit accounts. 29
In prior instances of fund transfers, Helen's account initially lacked
sufficient funds which Helen immediately funded within 20 minutes of the
notice of insufficiency. Thus, as previously practiced, and as a valued client
of Allied Bank, on the date and transaction in question, Caña promptly
approved the request of Helen for an overdraft of P46 Million and the
succeeding transfer of funds to Helen's regular target deposit accounts. 30
The Spouses Garcia, on the other hand, denied any hand and
participation in the P46 Million fund transfer transaction: Helen did not
instruct Caña to credit the said amount to her account nor did she instruct
Caña to approve the subsequent fund transfer to the different deposit
accounts of certain individuals. 31
The Pre-Trial Order contained the following stipulation of facts:
1. That demands were made upon [Allied Bank] for the
return of the said amount attached to the complaint.
2. The bank also admitted the opening of the accounts on
February 6, 2003 with an opening balance of P1,590,000.00.
3. The bank also admitted that this opening balance of
P1,590,000.00 was a transfer from the account of Sheila Marie
Macam with Allied-Bank Pasong Tamo Branch to the opening the
account of plaintiffs Mario Antonio Macam and Rose T. Macam.
4. The bank also admitted that the amount of P10 Million
was remitted from Allied Bank-Alabang Las Piñas Branch to the
account of Elena Valerio with Allied Bank-Pasay Road.
5. The bank also admitted that on the same date of
February 6, 2003 Elena Valerio withdrew the sum of P1,722,500.00
from her account with Allied Bank-Pasay Road Branch and remitted
the sum of P1,590,000.00 to the account Sheila and Manuel Macam
with Allied Bank-Pasong Tamo Branch.
6. The bank also admitted several withdrawals made by the
plaintiff as stated in the complaint particularly on February 6, 2003 in
the amount of P125,000.00, on February 10, 2003 in the amount of
P40,000.00 and on February 12, 2003 in the amount of P325,000.00.
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 7. The bank also admitted that on February 19, 2003 it
withdrew or debited the entire remaining balance of P1,100,000.00
from the subject account, thereby resulting in the closure of the
account without any notice [to] the plaintiff. 32
Ruling of the Regional Trial
Court:
After trial, the RTC issued its Decision, thus:
WHEREFORE, in view of the foregoing, judgment is hereby
rendered as follows:
1. On the main complaint, ordering [petitioners] Allied Bank
and Guillermo P. Dimog jointly and severally, to pay respondents
Mario Antonio Y. Macam and Rose Trinidad T. Macam, the amount of
P1.1 Million with interest thereon at 12% interest per annum,
computed from the date [the accounts of respondents, the Spouses
Mario Macam] had been closed on February 19, 2003 until the full
amount is actually paid;
2. On the third-party complaint, ordering the third-party
defendants [Spouses] Willard Felix and Maribel Caña and Spouses
Melchor and Helen Garcia, jointly and severally to pay defendants and
third-party plaintiffs Allied Bank and Guillermo Dimog, the amount of
P1.1 Million plus interest thereon, which this Court orders said
defendants and third-party plaintiffs to pay [respondents, the Spouses
Mario Macam] in the principal complaint by way of reimbursement
and/or subrogation. 33
Ruling of the Court of Appeals:
Allied Bank and the Spouses Garcia appealed to the CA insisting on
their exculpation from liability. However, the appellate court affirmed in toto
the ruling of the trial court.
As the trial court had done, the appellate court likewise found that
Allied Bank is liable to the Spouses Mario Macam for breach of contract, or
culpa contractual. It held that Allied Bank reneged on its contractual
obligation to the Spouses Mario Macam to pay their money in deposit on
demand. Citing Section 2 34 of RA 8791 35 (The General Banking Law of 2000
or GBL) and jurisprudence, 36 the appellate court held that given the
fiduciary nature of the relationship between a bank and its depositors, a
bank is under obligation to treat the accounts of its depositors with
meticulous care. In the performance of that obligation, the appellate court
found Allied Bank to have failed and thus liable to the Spouses Mario Macam
for damages.
Hence, this appeal by certiorari of Allied Bank positing grave error in
the ruling of the appellate court:
Issues:
I.
THE HONORABLE [CA] ERRED IN AFFIRMING THE RULING OF THE
TRIAL COURT THAT ALLIED BANK IS LIABLE FOR THE ULTRA VIRES
ACTS OF ITS EMPLOYEE, RESPONDENT MARIBEL CAÑA IN ALLOWING
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 THE TRANSFER OF P46,000,000.00 FROM THE ACCOUNT OF
RESPONDENT HELEN GARCIA DESPITE THE ABSENCE OF AN
EQUIVALENT DEPOSIT.
II.
THE HONORABLE [CA] ERRED IN AFFIRMING THE RULING OF THE
TRIAL COURT THAT THE INFIRMITIES WHICH ATTENDED THE
TRANSACTIONS STOPPED WITH ELENA VALERIO, SUCH THAT THE
TRANSFER FROM VALERIO'S ACCOUNT TO SHEILA MACAM AND
FINALLY TO RESPONDENTS SPS. MACAM WERE ALL VALID.
III.
THE HONORABLE [CA] ERRED IN AFFIRMING THE RULING OF THE
TRIAL COURT THAT RESPONDENTS SPS. MACAM ACQUIRED VALID
TITLE TO THE AMOUNT OF P1,590,000.00 DEPOSITED ON FEBRUARY
6, 2003 IN THEIR ACCOUNT AT ALLIED BANK-PASONG TAMO BRANCH.
IV.
THE HONORABLE [CA] ERRED IN AFFIRMING THE RULING OF THE
TRIAL COURT IN ORDERING ALLIED BANK TO PAY THE RESPONDENTS
SPS. MACAM P1,100,000.00 WITH INTEREST THEREON AT 12% PER
ANNUM FROM 19 FEBRUARY 2003 UNTIL FULLY PAID.
V.
THE HONORABLE [CA] ERRED IN AFFIRMING THE RULING OF THE
TRIAL COURT IN NOT ORDERING RESPONDENTS SPS. MACAM TO
RETURN TO ALLIED BANK THE AMOUNT OF P490,000.00
REPRESENTING WITHDRAWALS MADE FROM THE SUBJECT ACCOUNT.
VI.
THE HONORABLE [CA] ERRED IN AFFIRMING THE RULING OF THE
TRIAL COURT IN NOT AWARDING PETITIONERS' COUNTERCLAIMS FOR
DAMAGES. 37
Our Ruling
We make short shrift of Allied Bank's raised errors and condense these
into the sole issue of whether Allied Bank is liable for unilaterally debiting
and closing the deposit account of the Spouses Mario Macam.
Allied Bank remains adamant and persists in its arguments that it holds
valid title not only to the P1.1 Million that it debited from the account of the
Spouses Mario Macam but to the entire P1,590,000.00 used to open the
subject deposit account of the Spouses Mario Macam with AB-PT Branch as
well.
In framing its arguments, Allied Bank defines its banking relationship
with the Spouses Mario Macam in the negative as "not that which is
ordinarily between a bank and its depositor." The bank asseverates that it
owns the funds which inadvertently found its way into the Spouses Mario
Macam's account.
The arguments of Allied Bank are untenable.
RA 8791 enshrines the fiduciary nature of banking that requires high
standards of integrity and performance. 38 The statute now reflects
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 jurisprudential holdings that the banking industry is impressed with public
interest requiring banks to assume a degree of diligence higher than that of
a good father of a family. 39 Thus, all banks are charged with extraordinary
diligence in the handling and care of its deposits as well as the highest
degree of diligence in the selection and supervision of its employees. 40
The foregoing obligation of banks is absolute and deemed written into
every deposit agreement with its depositors. 41
We affirm the lower courts' uniform factual finding that there is a
deposit agreement between Allied Bank and the Spouses Mario Macam. The
savings deposit agreement between the bank and the depositor is the
contract that determines the rights and obligations of the parties as in a
simple loan. 42 In contemplation of the fiduciary nature of a bank-depositor
relationship, the law imposes on the bank a higher standard of integrity
and performance in complying with its obligations under the contract of
simple loan, beyond those required of non-bank debtors under a similar
contract of simple loan. 43
In this case, all the fund transfer transactions which culminated in the
transfer of P1,590,000.00 to the account of the Spouses Mario Macam were
effected through Allied Bank's network of branches nationwide. Section 20 of
the GBL allows universal or commercial banks, upon prior approval of the
Bangko Sentral ng Pilipinas , to open branches or offices within or outside the
Philippines. It further provides that "a bank authorized to establish branches
or other offices shall be responsible for all business conducted in such
branches and offices to the same extent and in the same manner as though
such business had all been conducted in the head office. A bank and its
branches and offices shall be treated as one unit."
Allied Bank cannot obliquely repudiate the resulting banking
relationship with the Spouses Mario Macam and the fiduciary nature thereof
when it accepted the spouses' initial deposit of P1,590,000.00, the very
same funds it now claims as its own. It cannot belatedly claim ignorance of
its performance of a core banking function, i.e., accepting or creating
demand deposits. 44
"A certificate of deposit is defined as a written acknowledgment by a
bank or banker of the receipt of a sum of money on deposit which the bank
or banker promises to pay to the depositor, to the order of the depositor, or
to some other person or his order, whereby the relation of debtor and
creditor between the bank and the depositor is created." 45 It is presumed
that the money deposited in a bank account belongs to the person in whose
name the deposit account is opened. 46
With its acceptance of the Spouses Mario Macam's deposit and their
opening of an account with the bank's Pasong Tamo Branch on February 6,
2003, Allied Bank explicitly recognized the spouses' ownership and title over
the P1,590,000.00. Notably, the bank repeatedly acknowledged the creditor-
debtor relationship and its obligation to pay the Spouses Mario Macam on
demand when the latter withdrew money from the said account on three
separate occasions. Undoubtedly, Allied Bank is liable to the Spouses Mario
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 Macam for the P1.1 Million in their deposit account.
Notwithstanding the foregoing, Allied Bank still insists that the
P1,590,000.00 can be traced to the P10 Million wrongfully credited to
Valerio's account which, in turn, is traced to the P46 Million illegally credited
to Helen's account. Thus, according to Allied Bank, it retained title over the
money, including that traceable and transferred to the Spouses Mario
Macam.
We disagree.
The deposit in the Spouses Mario Macam's account consisting of
money is generic and fungible. 47 The quality of being fungible depends upon
their possibility, because of their nature or the will of the parties, of being
substituted by others of the same kind, not having a distinct individuality. 48
Allied Bank claims ownership of the equivalent amount of money, i.e.,
the value thereof which it ultimately traces to the spurious credit of P46
Million to Helen's account, and part thereof subsequently traced to the
Spouses Mario Macam's account. Indeed, it cannot claim the money itself
which transferred accounts based on the false fund transfer transactions
effected by Caña on February 6, 2003.
It bears emphasizing that "[m]oney bears no earmarks of peculiar
ownership. Its primary purpose is to pass from hand to hand as a medium of
exchange, without other evidence of its title." 49 Money, which had passed
through different transactions of a bank in the general course of business,
even if of traceable origin, is no exception. Clearly therefore, Allied Bank's
unilateral closure of the Spouses Mario Macam's deposit account violated
their savings deposit agreement.
To completely evade liability, Allied Bank ascribes all blame to the acts
of its employee, Caña, beginning with the credit of P46 Million to Helen's
account without an actual deposit of funds. The bank further muddles the
issues, assumes all the injury and damage, but none of the responsibility for
its own negligence and that of its employee. It turns a blind eye on its
contractual obligation to, and the damage suffered by, its depositor.
Allied Bank belabors under a cloud of confusion. Its liability under the
deposit agreement with the Spouses Mario Macam is primary and not
vicarious.
Articles 1172, 50 2176 51 and 2180 52 of the Civil Code lay down the
following principles:
(1) the responsibility of the obligor arising from negligence in the
performance of the obligation is demandable;
(2) the fault or negligence of the obligor causing damage to another
obliges him to pay for the damage done; and
(3) the obligation to pay for the damage is demandable not only for
one's own acts or omission, but also for those of persons for
whom one is responsible.
Paragraph 5 of Article 2180 provides that "employers shall be liable for
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 the damages caused by their employees x x x acting within the scope of
their assigned tasks x x x."
As admitted by the bank, the initial fund transfer transaction approved
by Caña snowballed into a series of unauthorized debit and credit
transactions leading to the closure of the Spouses Mario Macam's subject
deposit account. All the tortuous acts of Caña occurred and transpired within
Allied Bank's network of branches and offices and during banking hours.
Allied Bank's other employees, Berras and even Mamalayan, likewise
participated in the fraudulent acts of their Branch Head, Caña.
From Allied Bank's narration of facts, a regular fund transfer
transaction has a corresponding debit memo and the fund transfer receipts
must bear the signatures of the Branch Head, Caña, the Branch Operating
Officer, Mamalayan, and the teller who effected the transactions, Berras.
However, Allied Bank is quick to admit that Caña overrode the
verification requirements and approved the P46 Million fund transfer
transactions. Although the bank was ultimately prejudiced by Caña's acts, it
is primarily liable to the Spouses Mario Macam for breaching the savings
deposit agreement between them.
We quote with favor the uniform rulings of the appellate and the trial
courts in that regard:
x x x It is likewise noteworthy to mention that numerous lapses which
contributed to the perpetration of Maribel Caña's scheming plans
were committed by other personnel of Allied Bank. First and foremost,
Melissa Berras, one of Allied Bank's teller, who was already aware of
the tortuous and fraudulent act of Maribel Caña in crediting the sum
of P46 Million in favor of x x x Helen Garcia's account notwithstanding
the fact that no debit had been made thereto, failed to take any steps
in forestalling or reporting to the management the said fraudulent
act. Also, Milani Mamalayan, the Branch Operating Officer of Allied
Bank, Alabang, Las Piñas Branch was negligent for not verifying with
Maribel Caña regarding the last minute cancellation of the purported
deposit of Helen Garcia even after the former had already received a
call from the Imus, Cavite Branch inquiring as to why the account of
its client, Rosite Capili, had been debited. Thus, [Allied] Bank must
answer for the damages incurred by [the Spouses Mario Macam] for
the tortuous and negligent acts of its employees. [Allied] Bank
breached its contractual obligation with [the Spouses Mario Macam]
and such degree of culpability contributed to the damage caused to
the latter. 53
As correctly pointed out by the [Spouses Mario Macam], the
infirmities attended the funds transfer from Helen Garcia down the
line, the defect stopped with Elena Valerio, such that the subsequent
transfer from Valerio to Sheila Macam and finally to [the Spouses
Mario Macam], was not affected thereby. [The Spouses Mario Macam]
had nothing to do with the P10 Million transferred from Helen Garcia
to Elena Valerio on February 6, 2003 and that the matter was solely
between and among Garcia, Caña and Valerio. Had the amount
transferred to Valerio remained in her account, the reversal would
have been correct because of the general rule that a bank can
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 compensate or set off the deposit in its hands for the payment of any
indebtedness to it on the part of the depositor. However, it was
already a different matter the moment Valerio transferred said funds
to the accounts of Sheila and Manuel Macam because said transfer
already had the proper approval of the Branch Head. The same goes
for the transfer from Sheila and Manuel Macam to their account. In
the latter instances, the depositor is entitled to the protection and
meticulous care of the bank. 54
As previously pointed out, Allied Bank already recognized the
ownership of the Spouses Mario Macam over the P1,590,000.00 when it
accepted the amount as their initial deposit in their newly opened demand
deposit. The bank cannot simply disavow the deposit agreement after
unraveling the tortuous acts of its employee.
Allied Bank is expected to act with extraordinary diligence required of
banks. We cannot overemphasize that the highest degree of diligence
required of banks likewise contemplates such diligence in the selection and
supervision of its employees. The very nature of their work which involves
handling millions of pesos in daily transactions requires a degree of
responsibility, care and trustworthiness that is far greater than those
expected from ordinary clerks and employees. 55 The bank must not only
exercise "high standards of integrity and performance," it must also insure
that its employees do likewise because this is the only way to insure that the
bank will comply with its fiduciary duty. 56
We thus agree with the trial court's holding that Allied Bank clothed
Caña with sufficient authority to effect the ostensible crediting of Helen's
account and approve the subsequent fund transfers to five different
accounts in the total amount of P46 Million. The trial court found that in
previous instances, Caña had extended Helen the same credit arrangement
via a temporary overdraft line.
This is consistent with Caña's testimony that, on other occasions when
Helen's account lacked sufficient funds for transfer, the latter would be
allowed a temporary overdraft which was immediately settled upon notice of
the insufficient funds.
In this case, AB-ALP Branch, headed by Caña, held the top spot in
terms of low cost deposit within the Metro Manila South area for the year
2002, which Caña partly attributed to the business transactions Helen
conducted with their branch. In year 2002 alone, Helen's deposit balance
ranged from P20 to P80 Million, with the highest deposits made in October
but declined significantly in December. Evidently, Caña was intent to retain
the deposit account of Helen for Allied Bank.
The RTC correctly observed, thus:
It may be worthy to mention the fact that banks accord
overdraft line to their favored clients. These fund transfers to and
credits to accounts as against overdraft account to debit from,
constitutes valid transactions.
It is admitted that third-party defendant Caña is the Bank
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 Manager of Allied Bank who authorized the debiting of the
P46,000,000.00 funds from the current account of third-party
defendant Helen Garcia. The act of Caña albeit unauthorized by the
bank still binds the bank. One thing clear from the record is that the
unauthorized acts of Caña may have been a practice in the past,
where favored clients are accorded Temporary Over Draft Line. This is
manifested in the treatment of the unrecovered amount after the
reversals made, where Third-Party Defendants Sps. Melchor and
Helen Garcia were made to execute a Real Estate Mortgage to secure
payment for the unrecovered amount of P9.8 Million. It is a policy
practiced by banking institutions wherein the bank's loan committee
approves in the form of loan the amount constituting the overdraft
balance for the purpose of regularizing the temporary overdraft (TOD)
granted the depositors against Chattel or Real Estate Mortgages.
It appears that in the previous instances, there were
[occasions] of promised belated deposits of Helen Garcia that have
always materialized hence, the practice went on.
It is true that it was Caña who facilitated the transactions by
making an override and through the use of fund transfer tickets which
she accomplished and which did not bear the required validation of
the teller and the Branch Operations Officer. It is inconceivable that
the bank would not have known the unauthorized transaction it
appearing to involve too huge an amount to have [gone] unnoticed.
For this reason, [Allied Bank] had indeed failed to perform what was
incumbent upon it, which is to ensure regularity in the banking
transactions. x x x 57
The authority of a corporate officer or agent in dealing with third
persons may be actual or apparent. 58 The apparent 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. 59 Caña's act of approving the P46 Million fund
transfer and the subsequent transfers to different accounts in various
branches of Allied Bank leading to the P1,590,000.00 transfer to the account
of the Spouses Mario Macam all appear to have been clothed with authority.
Indeed, the subsequent transfers (of funds) were approved by several
Branch Heads.
The doctrine of "apparent authority," with special reference to
banks, has 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. 60
Prescinding from all the foregoing, the lower courts were correct in
sustaining Allied Bank's liability to the Spouses Mario Macam for culpa
contractual.
The liability for damages of those who are negligent in the
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 performance of their obligation is laid down in Article 1170 61 of the Civil
Code.
As ruled by the lower courts, the date of default in this case is February
19, 2003 when Allied Bank simultaneously debited the P1.1 Million funds
from, and closed, the account of the Spouses Mario Macam. Article 2209 of
the Civil Code solidifies the consequence of payment of interest as an
indemnity for damages when the obligor incurs in delay:
Art. 2209. If the obligation consists in the payment of
a sum of money, and the debtor incurs in delay, the
indemnity for damages, there being no stipulation to the contrary,
shall be the payment of the interest agreed upon, and in the absence
of stipulation, the legal interest, which is six percent per annum.
In this case, at the time the interest accrued on the deposit of the
Spouses Mario Macam on February 19, 2003, the date of default when the
account was closed, the then prevailing rate of legal interest was twelve
percent (12%) per annum under Central Bank (CB) Circular No. 416 in cases
involving the loan or forbearance of money.
However, the twelve percent (12%) per annum rate of legal interest is
only applicable until June 30, 2013, before the advent and effectivity of
Bangko Sentral ng Pilipinas (BSP) Circular No. 799, Series of 2013 reducing
the rate of legal interest to six percent (6%) per annum. Pursuant to our
ruling in Nacar v. Gallery Frames , 62 BSP Circular No. 799 is prospectively
applied from July 1, 2013.
Thus we modify the lower courts' ruling on the applicable rate of legal
interest, to wit: (1) twelve percent (12%) per annum from February 19, 2003
to June 30, 2013; and (2) six percent (6%) per annum from July 1, 2013 to
date when this Decision becomes final and executory.
We likewise impose interest on interest due based on Article 2212 of
the Civil Code which provides that "interest due shall earn legal interest from
the time it is judicially demanded, although the obligation may be silent
upon this point." 63 Consequently, interest on interest due is imposed at the
rate of (1) twelve percent (12%) per annum from July 17, 2003 to June 30,
2013; and (2) six percent (6%) per annum from July 1, 2013 until this
Decision becomes final and executory.
The total amount owing the Spouses Mario Macam set forth in this
Decision shall further earn legal interest at the rate of six percent (6%) per
annum computed from its finality until full payment thereof, the interim
period being deemed to be a forbearance of credit.
In addition, we award attorney's fees of P50,000.00 since the Spouses
Mario Macam were compelled to litigate and incur expenses to protect their
interests. 64
Lastly, we exclude Dimog from liability to pay damages to the Spouses
Mario Macam, albeit his defense and subsequent appeals had been joined
with that of his co-defendant, Allied Bank. It must be stressed, Dimog never
raised as an issue his liability, separate from that of Allied Bank, to the
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 Spouses Macam.
Well-settled is the rule that when a case is on appeal, the Court has the
authority to review matters not specifically raised or assigned as error if their
consideration is necessary in reaching a just conclusion of the case. 65
In this regard, apart from Dimog's position as AB-PT Branch Head,
there is no evidence pointing to an even miniscule participation in the debit
of P1.1 Million from the Spouses Mario Macam's account. The factual findings
of the lower courts show that it was Barcelona, Retail Banking Group for
Allied Bank's South Metro Manila Branches, who ordered the debit of the
remaining P1.1 Million which led to the closure of the Spouses Mario
Macam's account. On the whole, Dimog's participation in the breach of
contract by Allied Bank was never established and proven.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The
November 10, 2011 Decision of the Court of Appeals in CA-G.R. CV No.
91098 is AFFIRMED with MODIFICATION in that petitioner Allied Banking
Corporation is solely liable to pay respondent Rose Trinidad Macam the
following:
(1) the principal amount of P1.1 Million;
(2) legal interest of twelve percent (12%) per annum on the
principal amount of P1.1 Million reckoned from February 19, 2003 until June
30, 2013;
(3) legal interest of six percent (6%) per annum on the principal
amount of P1.1 Million from July 1, 2013 to date when this Decision becomes
final and executory;
(4) legal interest of twelve percent (12%) per annum on the total of
paragraphs 2 & 3 from July 17, 2003, date of judicial demand, to June 30,
2013, as interest on interest due;
(5) legal interest of six percent (6%) per annum on the total of
paragraphs 2 & 3 from July 1, 2013 to date when this Decision becomes final
and executory, as interest on interest due;
(6) six percent (6%) per annum interest on the total of the
monetary awards from the finality of this Decision until full payment thereof;
and
(7) Attorney's fees in the amount of P50,000.00.
SO ORDERED.
Leonen, Inting, Delos Santos and J.Y. Lopez, JJ., concur.

Footnotes

* Merged with Philippine National Bank on February 9, 2013 with the latter as the
surviving entity.

** Filed a Notice of Death and accordingly substituted by his wife, Rose Trinidad
Macam.
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 1. Rollo , pp. 13-30; penned by Associate Justice Franchito N. Diamante and
concurred in by Associate Justices Mariflor P. Punzalan-Castillo and Marlene
Gonzales-Sison.
2. CA rollo, pp. 30-38; penned by Judge Winlove M. Dumayas.

3. Rollo , pp. 15-19; cited in the CA's Decision which quoted Allied Bank's narration
of facts in its Appellant's Brief.
4. Id. at 15; No. 3090-045359.

5. Id. at 16.

6. The CA and RTC refer to the receipts as tickets in their respective Decisions.
7. Rollo p. 16.

8. Id.
9. Id. at 17; The approval was made between 9:45 a.m. and 10:03 a.m.

10. Id.; "Bong, ito yong withdrawal slip ko na ginamit kong pinandeposit ko sa inyo
under Sheila Macam so pakihingi nalang."
11. Id.; P125,000.00 on February 6, 2003; P40,000.00 on February 10, 2003; and
P325,000.00 on February 12, 2003.

12. Id. at 18.

13. Id.
14. More popularly known as mobile phone text messages.

15. Rollo , p. 18.

16. Valerio's, Tiglao's and Capili's.

17. The SMS reads: "Cancel na ang deposit."

18. Rollo , p. 18.

19. Id. at 18-19.

20. Id. at 19.

21. Id.

22. Records, Vol. 1, pp. 1-6.

23. Id. at 4.
24. Id. at 25-37.

25. Id. at 71-77.

26. Id. at 94-99; 100-109.

27. Approved: September 29, 2001.

28. Records, Vol. 1, pp. 100-109.

29. Rollo p. 154; See Answer to Third Party Complaint with Counterclaim and Cross-
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 Claim.

30. See note 7.

31. Records, Vol. 1, pp. 94-95.

32. Rollo , pp. 174-175.

33. Id. at 14-15.

34. SEC. 2. Declaration of Policy. — The State recognizes the vital role of banks in
providing an environment conducive to the sustained development of the
national economy and the fiduciary nature of banking that requires high
standards of integrity and performance. In furtherance thereof, the State
shall promote and maintain a stable and efficient banking and financial
system that is globally competitive, dynamic and responsive to the demands
of a developing economy.
35. Approved: May 23, 2000.

36. See Simex International (Manila) v. Court of Appeals, 262 Phil. 387 (1990).
37. Rollo pp. 45-46.

38. REPUBLIC ACT NO. 8791, Section 2.

39. See Simex International (Manila) v. Court of Appeals, supra note 21; The
Consolidated Bank and Trust Company v. Court of Appeals, 457 Phil. 688,
705-707 (2003).

40. Id.

41. The Consolidated Bank & Trust Company v. Court of Appeals, supra, at 706.
42. CIVIL CODE, Article 1980.

43. The Consolidated Bank & Trust Company v. Court of Appeals, supra, at 707.
44. REPUBLIC ACT NO. 8791, Section 29.

45. Far East Bank & Trust Co. v. Querimit, 424 Phil. 721, 730 (2002).

46. Fulton Iron Works Co. v. China Banking Corporation, 55 Phil. 208, 212 (1930).
47. See Article 418 of the Civil Code, taken from Article 337 of the Old Civil Code
which used the words "fungible or non-fungible" and Bank of the Philippine
Islands v. Franco, 563 Phil. 495 (2007).
48. A.M. Tolentino, Civil Code of the Philippines Commentaries and Jurisprudence,
Vol. II, 1983 Ed., p. 26, 1983.

49. United States v. Sotelo , 28 Phil. 147, 158 (1914).

50. Art. 1172. Responsibility arising from negligence in the performance of every
kind of obligation is also demandable, but such liability may be regulated by
the courts, according to the circumstances.

51. Art. 2176. Whoever by act or omission causes damage to another, there being
fault or negligence, is obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual relation between the
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 parties, is called a quasi-delict and is governed by the provisions of this
Chapter.
52. Art. 2180. The obligation imposed by article 2176 is demandable not only for
one's own acts or omissions, but also for those of persons for whom one is
responsible.

The father and, in case of his death or incapacity, the mother, are responsible
for the damages caused by the minor children who live in their company.

xxx xxx xxx

Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even
though the former are not engaged in any business or industry.

xxx xxx xxx

The responsibility treated of in this article shall cease when the persons
herein mentioned prove that they observed all the diligence of a good father
of a family to prevent damage.

53. Rollo pp. 24-25.

54. Id. at 27.

55. The Consolidated Bank & Trust Corporation v. Court of Appeals, supra, note 24
at 704-707.

56. Id. at 706 & 709.

57. CA rollo pp. 36-37.

58. Associated Bank v. Spouses Pronstroller, 580 Phil. 104, 118 (2008).
59. Id.

60. Id. at 118-119.

61. Art. 1170. Those who in the performance of their obligations are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor
thereof, are liable for damages.

62. 716 Phil. 267 (2013).

63. See Rivera v. Spouses Chua, 750 Phil. 663 (2015).

64. Art. 2208 of the CIVIL CODE: In the absence of stipulation, attorney's fees, and
expenses of litigation, other than judicial costs, cannot be recovered, except:

xxx xxx xxx

(2) when the defendant's act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest.

65. Silicon Philippines, Inc. (formerly Intel Philippines Manufacturing, Inc.) v. CIR,
757 Phil. 54, 69 (2015), citing Silicon Philippines, Inc. (formerly Intel
Philippines Manufacturing, Inc.) v. CIR, 727 Phil. 487, 499 (2014).

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