G.R. No.

158143               September 21, 2011 The SC concluded that these testimonies dispute PCIB's theory that Ramos was involved in the
PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Petitioner, encashment of the checks.
vs.
ANTONIO B. BALMACEDA and ROLANDO N. RAMOS, Respondents. The SC also found that the PCIB was negligent as an employer and as a bank, considering that
DECISION Balmaceda was able to perpetrate the fraud despite the obvious breach of protocol he committed.

BRION, J.: First, he would instruct the Bank staff to prepare the application forms for the purchase of Manager’s
checks, payable to several persons. Then, he would forge the signature of the client’s authorized
Before us is a petition for review on certiorari,  filed by the Philippine Commercial International Bank  (Bank or PCIB), to reverse and set representative on these forms and sign the forms as PCIB’s approving officer. Finally, he would have
aside the decision  dated April 29, 2003 of the Court of Appeals (CA) in CA-G.R. CV No. 69955. The CA overturned the September 22,
2000 decision of the Regional Trial Court (RTC) of Makati City, Branch 148, in Civil Case No. 93-3181, which held respondent Rolando an authorized officer of PCIB issue the Manager’s checks. Balmaceda would subsequently ask his
Ramos liable to PCIB for the amount of ₱895,000.00. subordinates to release the Manager’s checks to him, claiming that the client had requested that he
deliver the checks.  After receiving the Manager’s checks, he encashed them by forging the
SUMMARY: Antonio Balmaceda was the Branch Manager of PCIB’s Sta. Cruz, Manila Branch. signatures of the payees on the checks.
Balmaceda took advantage of his position and fraudulently obtained and encashed 31 Manager’s
Checks. He was able to defraud the bank and its clients of over ₱11 million. He accomplished this by Despite Balmaceda’s gross violations of bank procedures, Balmaceda’s co-employees not only
claiming that he had been instructed by one of the Bank’s corporate clients to purchase Manager’s turned a blind eye to his actions, but actually complied with his instructions. In this way, PCIB’s own
checks on its behalf, with the value of the checks to be debited from the client’s corporate bank employees were unwitting accomplices in Balmaceda’s fraud.
account
The SC also faulted PCIB for having allowed Balmaceda to encash the crossed manager’s checks.
The PCIB also impleaded Balmaceda’s brother-in-law, respondent Rolando Ramos since the latter
was able to receive some of the proceeds of the fraud. Ramos denied being involved in the fraud and When a check is crossed, it is the duty of the collecting bank to ascertain that the check is only
claimed that he was in the business of selling fighting cocks and that Balmaceda was one of its deposited to the payee’s account.  In complete disregard of this duty, PCIB’s systems allowed
clients; he received money from Balmaceda as payment for fighting cocks. Balmaceda to encash 26 Manager’s checks which were all crossed checks, or checks payable to the
"payee’s account only."
The RTC found both Balmaceda and Ramos to be liable to the PCIB and ordered Balmaceda to
return the amount of ₱11 million. The RTC ordered Ramos to return ₱895 thousand. The General Banking Law of 2000  requires of banks the highest standards of integrity and
performance. The banking business is impressed with public interest. Of paramount importance is the
On appeal to the CA, Ramos was absolved of liability because the mere fact that Ramos was the trust and confidence of the public in general in the banking industry. Consequently, the diligence
payee in some of the checks did not necessarily mean that Ramos was involved in Balmaceda’s required of banks is more than that of a Roman pater familias or a good father of a family.  The
fraud. There were other persons who were named as payees by Balmaceda yet PCIB only chose to highest degree of diligence is expected.
go after Ramos.
(2) The SC found PCIB to have acted illegally in freezing and debiting the amount from Ramos’ bank
Furthermore, the CA found the PCIB to be liable to Ramos after the bank illegally froze and debited account.
the amount of ₱251 thousand from Ramos’s bank account.
The Court cited the case of BPI Family Bank v. Franco where it explained that banks do not have the
Issues: (1) Whether or not Ramos was involved in Balmaceda’s fraud; (2) Whether or not the PCIB unilateral right to freeze the accounts of their clients on the mere suspicion that the funds are illegal
acted illegally in freezing and debiting the amount from Ramos’ account proceeds. To grant banks the right to take whatever action they please would open the floodgates of
public distrust in the banking industry.
Held: (1) No. The SC found that the quantum of evidence in civil cases—preponderance of evidence
—was not met by PCIB as the plaintiff in the case below. The SC held that there was no legal compensation here and explained the nature of the relationship
between the bank and its clients. For legal compensation to take place, two persons, in their own
The SC cited the case of Encinas v. National Bookstore, Inc where it defined “preponderance of right, must first be creditors and debtors of each other. While PCIB, as the depositary bank, is
evidence” as the weight, credit, and value of the aggregate evidence on either side and is usually Ramos’ debtor in the amount of his deposits, Ramos is not PCIB’s debtor under the evidence the
considered to be synonymous with the term "greater weight of the evidence" or "greater weight of the PCIB adduced. PCIB thus had no basis, in fact or in law, to automatically debit from Ramos’ bank
credible evidence." Preponderance of evidence is a phrase which, in the last analysis, means account.
probability of the truth. It is evidence which is more convincing to the court as worthy of belief than
that which is offered in opposition thereto. FACTS: On September 10, 1993, PCIB filed an action for recovery of sum of money with
damages before the RTC against Antonio Balmaceda, the Branch Manager of its Sta. Cruz,
The mere fact that Ramos was named payee in some of the checks did not sufficiently support the Manila branch. In its complaint, PCIB alleged that between 1991 and 1993, Balmaceda, by taking
conclusion that Ramos was involved in the fraud. There were other persons named as payees on the advantage of his position as branch manager, fraudulently obtained and encashed 31
other checks yet PCIB never alleged them to be liable. The SC found that PCIB failed to adduce other Manager’s checks in the total amount of Ten Million Seven Hundred Eighty Two Thousand One
evidence to suggest that Ramos participated in the fraud. The SC concluded that the mere fact that Hundred Fifty Pesos (₱10,782,150.00).
the two were brothers-in-law is not sufficient.
On February 28, 1994, PCIB moved to be allowed to file an amended complaint to implead
The commercial account officer of PCIB, Laforteza, testified that Balmaceda forged Ramos' signature Rolando Ramos as one of the recipients of a portion of the proceeds from Balmaceda’s alleged
and that Ramos never went to the PCIB to encash the checks since Balmaceda deposited them into fraud. PCIB also increased the number of fraudulently obtained and encashed Manager’s checks to
Ramos' bank account. 34, in the total amount of Eleven Million Nine Hundred Thirty Seven Thousand One Hundred Fifty
Pesos (₱11,937,150.00). The RTC granted this motion.
Furthermore, PCIB's own witness, Nario, could not testify that Ramos himself presented the
managers' check for deposit in his account. Since Balmaceda did not file an Answer, he was declared in default. On the other hand, Ramos
filed an Answer denying any knowledge of Balmaceda’s scheme. According to Ramos, he is a
reputable businessman engaged in the business of buying and selling fighting cocks, and
Balmaceda was one of his clients. Ramos admitted receiving money from Balmaceda as
payment for the fighting cocks that he sold to Balmaceda, but maintained that he had no SO ORDERED.
knowledge of the source of Balmaceda’s money.
THE PETITION
On September 22, 2000, the RTC issued a decision in favor of PCIB, with the following dispositive
portion: In the present petition, PCIB avers that:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendants as I THE APPELLATE COURT ERRED IN HOLDING THAT THERE IS NO EVIDENCE TO
follows: HOLD THAT RESPONDENT RAMOS ACTED IN COMPLICITY WITH RESPONDENT
1. Ordering defendant Antonio Balmaceda to pay the amount of ₱11,042,150.00 with interest thereon at the legal rate
from [the] date of his misappropriation of the said amount until full restitution shall have been made[.] BALMACEDA
2. Ordering defendant Rolando Ramos to pay the amount of ₱895,000.00 with interest at the legal rate from the date of
misappropriation of the said amount until full restitution shall have been made[.] II THE APPELLATE COURT ERRED IN ORDERING THE PETITIONER TO RELEASE
3. Ordering the defendants to pay plaintiff moral damages in the sum of ₱500,000.00 and attorney’s fees in the amount of
ten (10%) percent of the total misappropriated amounts sought to be recovered. THE AMOUNT OF ₱251,910.96 TO RESPONDENT RAMOS AND TO PAY THE LATTER
4. Plus costs of suit. MORAL AND EXEMPLARY DAMAGES AND ATTORNEY’S FEES
SO ORDERED.
PCIB contends that the circumstantial evidence shows that Ramos had knowledge of, and acted in
From the evidence presented, the RTC found that Balmaceda, by taking undue advantage of his complicity with Balmaceda in, the perpetuation of the fraud. Ramos’ explanation that he is a
position and authority as branch manager of the Sta. Cruz, Manila branch of PCIB, successfully businessman and that he received the Manager’s checks as payment for the fighting cocks he sold to
obtained and misappropriated the bank’s funds by falsifying several commercial documents. Balmaceda is unconvincing, given the large sum of money involved. While Ramos presented
He accomplished this by claiming that he had been instructed by one of the Bank’s corporate evidence that he is a reputable businessman, this evidence does not explain why the Manager’s
clients to purchase Manager’s checks on its behalf, with the value of the checks to be debited checks were made payable to him in the first place.
from the client’s corporate bank account. First, he would instruct the Bank staff to prepare the
application forms for the purchase of Manager’s checks, payable to several persons. Then, he would PCIB maintains that it had the right to freeze and debit the amount of ₱251,910.96 from Ramos’ bank
forge the signature of the client’s authorized representative on these forms and sign the forms as account, even without his consent, since legal compensation had taken place between them by
PCIB’s approving officer. Finally, he would have an authorized officer of PCIB issue the Manager’s operation of law. PCIB debited Ramos’ bank account, believing in good faith that Ramos was not
checks. Balmaceda would subsequently ask his subordinates to release the Manager’s checks to entitled to the proceeds of the Manager’s checks and was actually privy to the fraud perpetrated by
him, claiming that the client had requested that he deliver the checks.  After receiving the Manager’s Balmaceda. PCIB cannot thus be held liable for moral and exemplary damages.
checks, he encashed them by forging the signatures of the payees on the checks.
ISSUES:
In ruling that Ramos acted in collusion with Balmaceda, the RTC noted that although the Manager’s 1. WON Ramos was involved in the illegal acts committed by Balmaceda
checks payable to Ramos were crossed checks, Balmaceda was still able to encash the checks. 2. WON it was improper for PCIB to freeze and debit ₱251,910.96 from Ramos’ bank account
After Balmaceda encashed three of these Manager’s checks, he deposited most of the money into
Ramos’ account.  The RTC concluded that from the ₱11,937,150.00 that Balmaceda misappropriated RULING: We partly grant the petition. WHEREFORE, the petition is PARTIALLY GRANTED.
from PCIB, ₱895,000.00 actually went to Ramos. Since the RTC disbelieved Ramos’ allegation that We AFFIRM the decision of the Court of Appeals dated April 29, 2003 in CA-G.R. CV No. 69955 with
the sum of money deposited into his Savings Account (PCIB, Pasig branch) were proceeds from the the MODIFICATION that the award of moral and exemplary damages in favor of Rolando N.
sale of fighting cocks, it held Ramos liable to pay PCIB the amount of ₱895,000.00. Ramos is DELETED, while the award of attorney’s fees is INCREASED to ₱75,000.00. Costs
against the Philippine Commercial International Bank. SO ORDERED.
On appeal, the CA dismissed the complaint against Ramos, holding that no sufficient evidence
existed to prove that Ramos colluded with Balmaceda in the latter’s fraudulent manipulations. RATIO:

According to the CA, the mere fact that Balmaceda made Ramos the payee in some of the SC NOT A TRIER OF FACTS
Manager’s checks does not suffice to prove that Ramos was complicit in Balmaceda’s
fraudulent scheme. It observed that other persons were also named as payees in the checks that At the outset, we observe that the petition raises mainly questions of fact whose resolution requires the re-
Balmaceda acquired and encashed, and PCIB only chose to go after Ramos. With PCIB’s failure to examination of the evidence on record. As a general rule, petitions for review on certiorari only involve questions of
prove Ramos’ actual participation in Balmaceda’s fraud, no legal and factual basis exists to hold him law.  By way of exception, however, we can delve into evidence and the factual circumstance of the case when the
liable. findings of fact in the tribunals below (in this case between those of the CA and of the RTC) are conflicting. When
the exception applies, we are given latitude to review the evidence on record to decide the case with finality.
The CA also found that PCIB acted illegally in freezing and debiting ₱251,910.96 from Ramos’
bank account. The CA thus decreed: ON RAMOS’ PARTICIPATION WITH THE ILLEGAL ACTS OF BALMACEDA

WHEREFORE, the appeal is granted. The Decision of the trial court rendered on September 22, 2000[,] Ramos’ participation in Balmaceda’s scheme was not proven.
insofar as appellant Ramos is concerned, is SET ASIDE, and the complaint below against him is
DISMISSED. From the testimonial and documentary evidence presented, we find it beyond question that
Balmaceda, by taking advantage of his position as branch manager of PCIB’s Sta. Cruz, Manila
Appellee is hereby ordered to release the amount of ₱251,910.96 to appellant Ramos plus interest at branch, was able to apply for and obtain Manager’s checks drawn against the bank account of
[the] legal rate computed from September 30, 1993 until appellee shall have fully complied therewith. one of PCIB’s clients. The unsettled question is whether Ramos, who received a portion of the
Appellee is likewise ordered to pay appellant Ramos the following:
money that Balmaceda took from PCIB, should also be held liable for the return of this money
to the Bank.
a) ₱50,000.00 as moral damages
b) ₱50,000.00 as exemplary damages, and PCIB insists that it presented sufficient evidence to establish that Ramos colluded with Balmaceda in
c) ₱20,000.00 as attorney’s fees. the scheme to fraudulently secure Manager’s checks and to misappropriate their proceeds. Since
Ramos’ defense – anchored on mere denial of any participation in Balmaceda’s wrongdoing – is an
No costs. intrinsically weak defense, it was error for the CA to exonerate Ramos from any liability.
 A: We found out that he forged the signature of the client.
In civil cases, the party carrying the burden of proof must establish his case by a Q: On that particular application?
preponderance of evidence, or evidence which, to the court, is more worthy of belief than the
evidence offered in opposition.  This Court, in Encinas v. National Bookstore, Inc.,  defined A: Yes sir.
"preponderance of evidence" in the following manner: Q: Showing to you several applications for Manager’s Check previously attached as Annexes "A, B, C, D and E["] of the
complaint. Could you please tell us where is that particular alleged signature of a client applying for the Manager’s check
"Preponderance of evidence" is the weight, credit, and value of the aggregate evidence on which you claimed to have been forged by Mr. Balmaceda?
either side and is usually considered to be synonymous with the term "greater weight of the A: Here sir.
evidence" or "greater weight of the credible evidence." Preponderance of evidence is a
phrase which, in the last analysis, means probability of the truth. It is evidence which is xxxx
more convincing to the court as worthy of belief than that which is offered in opposition Q: After the accomplishment of this application form as you stated Mrs. witness, do you know what happened to the
thereto. application form?

A: Before that application form is processed it goes to several stages. Here for example this was signed supposed to be
The party, whether the plaintiff or the defendant, who asserts the affirmative of an issue has the onus by the client and his signature representing that, he certified the signature based on their records to be authentic.
to prove his assertion in order to obtain a favorable judgment, subject to the overriding rule that the
burden to prove his cause of action never leaves the plaintiff. For the defendant, an affirmative Q: When you said he to whom are you referring to?
defense is one that is not merely a denial of an essential ingredient in the plaintiff's cause of action, A: Mr. Balmaceda. And at the same time he approved the transaction.
but one which, if established, will constitute an "avoidance" of the claim.
xxxx
Thus, PCIB, as plaintiff, had to prove, by preponderance of evidence, its positive assertion that Q: Do you know if the corresponding checks applied for in the application forms were issued?
Ramos conspired with Balmaceda in perpetrating the latter’s scheme to defraud the Bank. In PCIB’s
estimation, it successfully accomplished this through the submission of the following evidence: A: Yes sir.

Q: Could you please show us where these checks are now, the one applied for in Exhibit "A" which is in the amount of
[1] Exhibits "A," "D," "PPPP," "QQQQ," and "RRRR" and their submarkings, the application ₱150,000.00, where is the corresponding check?
forms for MCs, show that [these MCs were applied for in favor of Ramos;]
A: Rolando Ramos dated December 26, 1991 and one of the signatories with higher authority, this is Mr. Balmaceda’s
signature.
[2] Exhibits "K," "N," "SSSS," "TTTT," and "UUUU" and their submarkings prove that the
MCs were issued in favor of x x x Ramos[; and] Q: In other words he is likewise approving signatory to the Manager’s check?

A: Yes sir. This is an authority that the check [has] been encashed.
[3] [T]estimonies of the witness for [PCIB].
Q: In other words this check issued to Rolando Ramos dated December 26, 1991 is a cross check but nonetheless he
allowed to encash by granting it.
We cannot accept these submitted pieces of evidence as sufficient to satisfy the burden of proof that
PCIB carries as plaintiff. Could you please show us?

ATTY. PACES: Witness pointing to an initial of the defendant Antonio Balmaceda, the notation cross check.
On its face, all that PCIB’s evidence proves is that Balmaceda used Ramos’ name as a payee when
he filled up the application forms for the Manager’s checks. But, as the CA correctly observed, the A: And this is his signature.
mere fact that Balmaceda made Ramos the payee on some of the Manager’s checks is not
xxxx
enough basis to conclude that Ramos was complicit in Balmaceda’s fraud; a number of other
people were made payees on the other Manager’s checks yet PCIB never alleged them to be Q: How about the check corresponding to Exhibit E-2 which is an application for ₱125,000.00 for a certain Rolando
liable, nor did the Bank adduce any other evidence pointing to Ramos’ participation that would justify Ramos. Do you have the check?
his separate treatment from the others. Also, while Ramos is Balmaceda’s brother-in-law, their A: Yes sir.
relationship is not sufficient, by itself, to render Ramos liable, absent concrete proof of his
actual participation in the fraudulent scheme. ATTY. PACES: Witness producing a check dated December 19, 1991 the amount of ₱125,000.00 payable to certain
Rolando Ramos.

Moreover, the evidence on record clearly shows that Balmaceda acted on his own when he applied Q: Can you tell us whether the same modus operandi was ad[o]pted by Mr. Balmaceda in so far as he is concerned?
for the Manager’s checks against the bank account of one of PCIB’s clients, as well as when he
A: Yes sir he is also the right signer and he authorized the cancellation of the cross check.  (emphasis ours)
encashed the fraudulently acquired Manager’s checks.
xxxx
Balmaceda Acted Alone
Q: These particular checks [Mrs.] witness in your findings, do you know if Mr. Balmaceda [has] again any participation in
these checks?
Mrs. Elizabeth Costes, the Area Manager of PCIB at the time of the relevant events, testified that
Balmaceda committed all the acts necessary to obtain the unauthorized Manager’s checks – A: He is also the right signer and approved officer and he was authorized to debit on file.
from filling up the application form by forging the signature of the client’s representative, to forging the xxxx
signatures of the payees in order to encash the checks. As Mrs. Costes stated in her testimony:
Q: And do you know if these particular checks marked as Exhibit G-2 to triple FFF were subsequently encashed?
Q: I am going into [these] particular instances where you said that Mr. Balmaceda [has] been making unauthorized
withdrawals from particular account of a client or a client of yours at Sta. Cruz branch. Would you tell us how he effected A: Yes sir.
his unauthorized withdrawals?
Q: Were you able to find out who encashed?
A: He prevailed upon the domestic remittance clerk to prepare the application of a Manager’s check which [has] been
debited to a client’s account. This particular Manager’s check will be payable to a certain individual thru his account as the A: Mr. Balmaceda himself and besides he approved the encashment because of the signature that he allowed the
instruction of the client. encashment of the check.

Q: What was your findings in so far as the particular alleged instruction of a client is concerned? xxxx
 Q: Do you know if this particular person having in fact withdraw of received the proceeds of [these] particular checks, the the evidence adduced by the plaintiff appears stronger than that presented by the defendant, a
payee?
judgment cannot be entered in the plaintiff’s favor if his evidence still does not suffice to sustain his
A: No sir. cause of action;  to reiterate, a preponderance of evidence as defined must be established to achieve
this result.
Q: It was all Mr. Balmaceda dealing with you?

A: Yes sir. PCIB itself at fault as employer

Q: In other words it would be possible that Mr. Balmaceda himself gotten the proceeds of the checks by forging the
payees signature? In considering this case, one point that cannot be disregarded is the significant role that PCIB played
which contributed to the perpetration of the fraud. We cannot ignore that Balmaceda managed to
A: Yes sir.  (emphases ours) carry out his fraudulent scheme primarily because other PCIB employees failed to carry out
their assigned tasks – flaws imputable to PCIB itself as the employer.
Mrs. Nilda Laforteza, the Commercial Account Officer of PCIB’s Sta. Cruz, Manila branch at the
time the events of this case occurred, confirmed Mrs. Costes’ testimony by stating that it was Ms. Analiza Vega, an accounting clerk, teller and domestic remittance clerk working at the PCIB, Sta.
Balmaceda who forged Ramos’ signature on the Manager’s checks where Ramos was the Cruz, Manila branch at the time of the incident, testified that Balmaceda broke the Bank’s protocol
payee, so as to encash the amounts indicated on the checks.  Mrs. Laforteza also testified that when he ordered the Bank’s employees to fill up the application forms for the Manager’s
Ramos never went to the PCIB, Sta. Cruz, Manila branch to encash the checks since Balmaceda checks, to be debited from the bank account of one of the bank’s clients, without providing
was the one who deposited the checks into Ramos’ bank account. As revealed during Mrs. the necessary Authority to Debit from the client.  PCIB also admitted that these Manager’s
Laforteza’s cross-examination: checks were subsequently released to Balmaceda, and not to the client’s representative,
based solely on Balmaceda’s word that the client had tasked him to deliver these checks.
Q: Mrs. Laforteza, these checks that were applied for by Mr. Balmaceda, did you ever see my client go to the bank to
encash these checks?
Despite Balmaceda’s gross violations of bank procedures – mainly in the processing of the
A: No it is Balmaceda who is depositing in his behalf. applications for Manager’s checks and in the releasing of the Manager’s checks –
Q: Did my client ever call up the bank concerning this amount? Balmaceda’s co-employees not only turned a blind eye to his actions, but actually complied
with his instructions. In this way, PCIB’s own employees were unwitting accomplices in
A: Yes he is not going to call PCIBank Sta. Cruz branch because his account is maintained at Pasig. Balmaceda’s fraud.
Q: So Mr. Balmaceda was the one who just remitted or transmitted the amount that you claimed [was sent] to the
account of my client? Another telling indicator of PCIB’s negligence is the fact that it allowed Balmaceda to encash
the Manager’s checks that were plainly crossed checks. A crossed check is one where two
A: Yes.  (emphases ours)
parallel lines are drawn across its face or across its corner.  Based on jurisprudence, the
Even Mrs. Rodelia Nario, presented by PCIB as its rebuttal witness to prove that Ramos encashed crossing of a check has the following effects: (a) the check may not be encashed but only
a Manager’s check for ₱480,000.00, could only testify that the money was deposited into deposited in the bank; (b) the check may be negotiated only once — to the one who has an
Ramos’ PCIB bank account. She could not attest that Ramos himself presented the Manager’s account with the bank; and (c) the act of crossing the check serves as a warning to the holder
check for deposit in his bank account.  These testimonies clearly dispute PCIB’s theory that that the check has been issued for a definite purpose and he must inquire if he received the
Ramos was instrumental in the encashment of the Manager’s checks. check pursuant to this purpose; otherwise, he is not a holder in due course .  In other words, the
crossing of a check is a warning that the check should be deposited only in the account of the payee.
We also find no reason to doubt Ramos’ claim that Balmaceda deposited these large sums of money When a check is crossed, it is the duty of the collecting bank to ascertain that the check is only
into his bank account as payment for the fighting cocks that Balmaceda purchased from him. Ramos deposited to the payee’s account.  In complete disregard of this duty, PCIB’s systems allowed
presented two witnesses – Vicente Cosculluela and Crispin Gadapan – who testified that Ramos Balmaceda to encash 26 Manager’s checks which were all crossed checks, or checks payable to the
previously engaged in the business of buying and selling fighting cocks, and that Balmaceda was one "payee’s account only."
of Ramos’ biggest clients.
The General Banking Law of 2000  requires of banks the highest standards of integrity and
Quoting from the RTC decision, PCIB stresses that Ramos’ own witness and business partner, performance. The banking business is impressed with public interest. Of paramount
Cosculluela, testified that the biggest net profit he and Ramos earned from a single importance is the trust and confidence of the public in general in the banking industry.
transaction with Balmaceda amounted to no more than ₱100,000.00, for the sale of Consequently, the diligence required of banks is more than that of a Roman pater familias or a
approximately 45 fighting cocks.  In PCIB’s view, this testimony directly contradicts Ramos’ good father of a family.  The highest degree of diligence is expected.
assertion that he received approximately ₱400,000.00 from his biggest transaction with
Balmaceda. To PCIB, the testimony also renders questionable Ramos’ assertion that Balmaceda While we appreciate that Balmaceda took advantage of his authority and position as the
deposited large amounts of money into his bank account as payment for the fighting cocks. branch manager to commit these acts, this circumstance cannot be used to excuse the
manner the Bank – through its employees –handled its clients’ bank accounts and thereby
On this point, we find that PCIB misunderstood Cosculluela’s testimony. A review of the ignored established bank procedures at the branch manager’s mere order. This lapse is made
testimony shows that Cosculluela specifically referred to the net profit that they earned from the all the more glaring by Balmaceda’s repetition of his modus operandi 33 more times in a period of
sale of the fighting cocks;  PCIB apparently did not take into account the capital, transportation and over one year by the Bank’s own estimation. With this kind of record, blame must be imputed on the
other expenses that are components of these transactions. Obviously, in sales transactions, the Bank itself and its systems, not solely on the weakness or lapses of individual employees.
buyer has to pay not only for the value of the thing sold, but also for the shipping costs and other
incidental costs that accompany the acquisition of the thing sold. Thus, while the biggest net profit Principle of unjust enrichment not applicable
that Ramos and Cosculluela earned in a single transaction amounted to no more than ₱100,000.00,
the inclusion of the actual acquisition costs of the fighting cocks, the transportation expenses (i.e., PCIB maintains that even if Ramos did not collude with Balmaceda, it still has the right to
airplane tickets from Bacolod or Zamboanga to Manila) and other attendant expenses could account recover the amounts unjustly received by Ramos pursuant to the principle of unjust
for the ₱400,000.00 that Balmaceda deposited into Ramos’ bank account. enrichment. This principle is embodied in Article 22 of the Civil Code which provides:

Given that PCIB failed to establish Ramos’ participation in Balmaceda’s scheme, it was not even
necessary for Ramos to provide an explanation for the money he received from Balmaceda. Even if
 Article 22. Every person who through an act of performance by another, or any other due. The same rule applies to breaches of contract where the defendant acted
means, acquires or comes into possession of something at the expense of the latter fraudulently or in bad faith. [emphasis ours]
without just or legal ground, shall return the same to him.
Bad faith does not simply connote bad judgment or negligence; it imports a dishonest
To have a cause of action based on unjust enrichment, we explained in University of the purpose or some moral obliquity and conscious commission of a wrong; it partakes of the
Philippines v. Philab Industries, Inc.  that: nature of fraud.

Unjust enrichment claims do not lie simply because one party benefits from the efforts or As the facts of this case bear out, PCIB did not act out of malice or bad faith when it froze
obligations of others, but instead it must be shown that a party was unjustly enriched in the Ramos’ bank account and subsequently debited the amount of ₱251,910.96 therefrom. While
sense that the term unjustly could mean illegally or unlawfully. PCIB may have acted hastily and without regard to its primary duty to treat the accounts of its
depositors with meticulous care and utmost fidelity,  we find that its actions were propelled
Moreover, to substantiate a claim for unjust enrichment, the claimant must unequivocally prove more by the need to protect itself, and not out of malevolence or ill will. One may err, but error
that another party knowingly received something of value to which he was not entitled  and alone is not a ground for granting moral damages.
that the state of affairs are such that it would be unjust for the person to keep the benefit.
Unjust enrichment is a term used to depict result or effect of failure to make remuneration of or for We also disallow the award of exemplary damages. Article 2234 of the Civil Code requires a
property or benefits received under circumstances that give rise to legal or equitable obligation to party to first prove that he is entitled to moral, temperate or compensatory damages before he
account for them; to be entitled to remuneration, one must confer benefit by mistake, fraud, coercion, can be awarded exemplary damages. Since no reason exists to award moral damages, so too can
or request. Unjust enrichment is not itself a theory of reconvey. Rather, it is a prerequisite for the there be no reason to award exemplary damages.
enforcement of the doctrine of restitution.  (emphasis ours)
We deem it just and equitable, however, to uphold the award of attorney’s fees in Ramos’ favor.
Ramos cannot be held liable to PCIB on account of unjust enrichment simply because he Taking into consideration the time and efforts involved that went into this case, we increase the award
received payments out of money secured by fraud from PCIB. To hold Ramos accountable, it of attorney’s fees from ₱20,000.00 to ₱75,000.00.
is necessary to prove that he received the money from Balmaceda, knowing that he (Ramos)
was not entitled to it. PCIB must also prove that Ramos, at the time that he received the money
from Balmaceda, knew that the money was acquired through fraud. Knowledge of the fraud is the link
between Ramos and PCIB that would obligate Ramos to return the money based on the principle of
unjust enrichment.

However, as the evidence on record indicates, Ramos accepted the deposits that Balmaceda made
directly into his bank account, believing that these deposits were payments for the fighting cocks that
Balmaceda had purchased. Significantly, PCIB has not presented any evidence proving that Ramos
participated in, or that he even knew of, the fraudulent sources of Balmaceda’s funds.

PCIB illegally froze and debited Ramos’ assets

We also find that PCIB acted illegally in freezing and debiting Ramos’ bank account. In BPI
Family Bank v. Franco,  we cautioned against the unilateral freezing of bank accounts by banks,
noting that:

More importantly, [BPI Family Bank] 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 Family
Bank], 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.

We see no legal merit in PCIB’s claim that legal compensation took place between it and
Ramos, thereby warranting the automatic deduction from Ramos’ bank account. For legal
compensation to take place, two persons, in their own right, must first be creditors and
debtors of each other.  While PCIB, as the depositary bank, is Ramos’ debtor in the amount of
his deposits, Ramos is not PCIB’s debtor under the evidence the PCIB adduced. PCIB thus had
no basis, in fact or in law, to automatically debit from Ramos’ bank account.

On the award of damages

Although PCIB’s act of freezing and debiting Ramos’ account is unlawful, we cannot hold
PCIB liable for moral and exemplary damages. Since a contractual relationship existed between
Ramos and PCIB as the depositor and the depositary bank, respectively, the award of moral
damages depends on the applicability of Article 2220 of the Civil Code, which provides:

Article 2220. Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under the circumstances, such damages are justly