BPI FAMILY BANK, Petitioner, vs.
AMADO FRANCO and COURT OF APPEALS,
Respondents
G.R. No. 123498
November 23, 2007
FACTS:
- A Petition for Review on Certiorari seeking the reversal of the Court of Appeals (CA)
Decision1 in CAG.R. CV No. 43424 which affirmed with modification the judgment2 of
the Regional Trial Court, Branch 55, Manila (Manila RTC), in Civil Case No. 90-53295.
- An ostensible fraud perpetrated on the petitioner BPI Family Bank (BPI-FB) allegedly by
respondent Amado Franco in conspiracy with other individuals, some of whom opened
and maintained separate accounts with BPI-FB, San Francisco del Monte (SFDM)
branch, in a series of transactions.
TIMELINE:
August 15, 1989, Tevesteco Arrastre-Stevedoring Co., Inc. (Tevesteco)
opened a savings and current account with BPI-FB.
August 25, 1989, First Metro Investment Corporation (FMIC) also opened a
time deposit account with the same branch of BPI-FB with a deposit of
₱100,000,000.00, to mature one year thence.
August 31, 1989, Franco opened three accounts with BPI-FB, namely
1. Current 500K initial deposit
2. Savings 500K initial deposit
3. time deposit - ₱1,000,000.00 with a maturity date of August 31, 1990
NOTE: The total amount of ₱2,000,000.00 used to open these accounts is
traceable to a check issued by Tevesteco allegedly in consideration of
Franco’s introduction of Eladio Teves,
On September 4, 1989, Antonio Ong, upon being shown the Authority to
Debit, personally declared his signature therein to be a forgery. Unfortunately,
Tevesteco had already effected several withdrawals from its current account
(to which had been credited the P80,000,000.00 covered by the forged
Authority to Debit) amounting to P37,455,410.54, including the
P2,000,000.00 paid to Franco.
September 8, 1989, impelled by the need to protect its interests in light of
FMIC's forgery claim, BPI-FB, thru its Senior Vice-President, Severino
Coronacion, instructed Jesus Arangorin to debit Franco's savings and current
accounts for the amounts remaining therein. However, Franco's time deposit
account could not be debited due to the capacity limitations of BPI-FB's
computer.
September 11 and 18, 1989 two checks drawn by Franco against his BPI-FB
current account were dishonored upon presentment for payment, and stamped
with a notation "account under garnishment." Apparently, Franco's current
account was garnished by virtue of an Order of Attachment issued by the
Regional Trial Court of Makati (Makati RTC) in Civil Case No. 89-4996
(Makati Case), which had been filed by BPI-FB against Franco et al.,[14] to
recover the P37,455,410.54 representing Tevesteco's total withdrawals from
its account.
Issue:
1. WON Franco had a better right in the deposits in the subject accounts which are part of
the proceeds of a forged Authority to Debit
2. WON Franco is entitled to interest on his current account;
3. WON the dishonor of Franco’s checks was not legally in order
4. WON BPI-FB was acting on bad faith
DECISION:
SUPREME COURT
Banks are exhorted to treat the accounts of their depositors with meticulous care and utmost
fidelity. We reiterate this exhortation in the case at bench.
WHEREFORE, the petition is PARTIALLY GRANTED. The Court of Appeals Decision dated
November 29, 1995 is AFFIRMED with the MODIFICATION that the award of unearned
interest on the time deposit and of moral and exemplary damages is DELETED.
1. On the issue of who has a better right to the deposits in Franco’s accounts
- Article 559 of the Civil Code as argued by BPI-FB is for Determinate things and not on
money, a generic thing.
- More importantly, BPI-FB does not have a unilateral right to freeze the accounts of
Franco based on its mere suspicion that the funds therein were proceeds of the multi-
million peso scam Franco was allegedly involved in. To grant BPI-FB, or any bank for
that matter, the right to take whatever action it pleases on deposits which it supposes are
derived from shady transactions, would open the floodgates of public distrust in the
banking industry.
2. With respect to its liability for interest on Franco’s current account
- BPI-FB’s liability to Franco for payment of interest based on its continued and
unjustified refusal to perform a contractual obligation upon demand.
3. Makati RTC’s supplemental writ of attachment issued on September 14, 1989 and the
freezing of Franco’s accounts
- Franco was impleaded as party-defendant only on May 15, 1990. The Makati RTC had
yet to acquire jurisdiction over the person of Franco when BPI-FB garnished his
accounts.43 Effectively, therefore, the Makati RTC had no authority yet to bind the
deposits of Franco through the writ of attachment, and consequently, there was no legal
basis for BPI-FB to dishonor the checks issued by Franco.
4. BPI-FB was in bad faith and as such liable for the advance interest it deducted from
Franco’s time deposit account, and for moral as well as exemplary damages, we find it
proper to reinstate the ruling of the trial court, and allow only the recovery of nominal
damages in the amount of ₱10,000.00.
- BPI-FB did not act in bad faith but rather on the impetus of self-protection and not out of
malevolence or ill will. BPI-FB was not in the corrupt state of mind contemplated in
Article 2201 and should not be held liable for all damages now being imputed to it for its
breach of obligation. For the same reason, it is not liable for the unearned interest on the
time deposit.
MANILA RTC
1. ₱76,500.00 representing the legal rate of interest on the amount of ₱450,000.00 from May 18,
1990 to October 31, 1991;
2. ₱498,973.23 representing the balance on [Franco’s] savings account as of May 18, 1990,
together with the interest thereon in accordance with the bank’s guidelines on the payment
therefor;
3. ₱30,000.00 by way of attorney’s fees; and 4. ₱10,000.00 as nominal damages.
The counterclaim of the defendant is DISMISSED for lack of factual and legal anchor.
COURT OF APPEALS
AFFIRMED with modification ordering [BPI-FB] to pay [Franco] ₱63,189.00 representing the
interest deducted from the time deposit of plaintiff-appellant. ₱200,000.00 as moral damages and
₱100,000.00 as exemplary damages, deleting the award of nominal damages (in view of the
award of moral and exemplary damages) and increasing the award of attorney’s fees from
₱30,000.00 to ₱75,000.00. Cost against [BPI-FB]
