THIRDDIVISION

BPIFAMILYBANK,
G.R.No.123498
Petitioner,

Present:

YNARESSANTIAGO,J.,

Chairperson,

AUSTRIAMARTINEZ,
versus
CHICONAZARIO,

NACHURA,and

REYES,JJ.

Promulgated:
AMADOFRANCOandCOURTOF

APPEALS,
November23,2007
Respondents.

xx

DECISION

NACHURA,J.:

Banks are exhorted to treat the accounts of their depositors with meticulous care and
utmostfidelity.Wereiteratethisexhortationinthecaseatbench.

Before us is a Petition for Review on Certiorari seeking the reversal of the Court of
[1]
Appeals(CA)Decision inCAG.R.CVNo.43424whichaffirmedwithmodification
[2]
thejudgment oftheRegionalTrialCourt,Branch55,Manila(ManilaRTC),inCivil
CaseNo.9053295.

ThiscasehasitsgenesisinanostensiblefraudperpetratedonthepetitionerBPIFamily
Bank(BPIFB)allegedlybyrespondentAmadoFranco(Franco)inconspiracywithother
[3]
individuals, some of whom opened and maintained separate accounts with BPIFB,
SanFranciscodelMonte(SFDM)branch,inaseriesoftransactions.

On August 15, 1989, Tevesteco ArrastreStevedoring Co., Inc. (Tevesteco) opened a

savingsandcurrentaccountwithBPIFB.Soonthereafter,oronAugust25,1989,First

MetroInvestmentCorporation(FMIC)alsoopenedatimedepositaccountwiththesame
branchofBPIFBwithadepositofP100,000,000.00,tomatureoneyearthence.

[4]
Subsequently,onAugust31,1989,Francoopenedthreeaccounts,namely,acurrent,
[5]
[6]
savings, and time deposit, with BPIFB. The current and savings accounts were
respectively funded with an initial deposit of P500,000.00 each, while the time deposit
accounthadP1,000,000.00withamaturitydateofAugust31,1990.Thetotalamountof
P2,000,000.00 used to open these accounts is traceable to a check issued by Tevesteco
[7]
allegedlyinconsiderationofFrancosintroductionofEladioTeves, who was looking
foraconduitbanktofacilitateTevestecosbusinesstransactions,toJaimeSebastian,who
was then BPIFB SFDMs Branch Manager. In turn, the funding for the P2,000,000.00
check was part of the P80,000,000.00 debited by BPIFB from FMICs time deposit
account and credited to Tevestecos current account pursuant to an Authority to Debit
purportedlysignedbyFMICsofficers.

Itappears,however,thatthesignaturesofFMICsofficersontheAuthoritytoDebitwere
[8]
[9]
forged. On September 4, 1989, Antonio Ong, upon being shown the Authority to
Debit,personallydeclaredhissignaturethereintobeaforgery.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,includingtheP2,000,000.00paidtoFranco.

On September 8, 1989, impelled by the need to protect its interests in light of

FMICs forgery claim, BPIFB, thru its Senior VicePresident, Severino Coronacion,
[10]
instructed Jesus Arangorin
to debit Francos savings and current accounts for the
[11]
amounts remaining therein.
However, Francos time deposit account could not be
[12]
debitedduetothecapacitylimitationsofBPIFBscomputer.

[13]
In the meantime, two checks
drawn by Franco against his BPIFB current account
were dishonored upon presentment for payment, and stamped with a notation account
under garnishment. Apparently, Francos current account was garnished by virtue of an

OrderofAttachmentissuedbytheRegionalTrialCourtofMakati(MakatiRTC)inCivil
CaseNo.894996(MakatiCase),whichhadbeenfiledbyBPIFBagainstFrancoetal.,
[14]
to recover the P37,455,410.54 representing Tevestecos total withdrawals from its
account.

Notably,thedishonoredcheckswereissuedbyFrancoandpresentedforpayment
at BPIFB prior to Francos receipt of notice that his accounts were under garnishment.
[15]
Infact,atthetimetheNoticeofGarnishmentdatedSeptember27,1989wasserved
on BPIFB, Franco had yet to be impleaded in the Makati case where the writ of
attachmentwasissued.

It was only on May 15, 1990, through the service of a copy of the Second Amended
[16]
ComplaintinCivilCaseNo.894996,thatFrancowasimpleadedintheMakaticase.
Immediately,uponreceiptofsuchcopy,FrancofiledaMotiontoDischargeAttachment
which the Makati RTC granted on May 16, 1990. The Order Lifting the Order of
AttachmentwasservedonBPIFBonevendate,withFrancodemandingthereleaseto
him of the funds in his savings and current accounts. Jesus Arangorin, BPIFBs new
manager,couldnotforthwithcomplywiththedemandasthefunds,aspreviouslystated,
hadalreadybeendebitedbecauseofFMICsforgeryclaim.Assuch,BPIFBscomputerat
theSFDMBranchindicatedthatthecurrentaccountrecordwasnotonfile.

WithrespecttoFrancossavingsaccount,itappearsthatFrancoagreedtoanarrangement,
asafavortoSebastian,wherebyP400,000.00fromhissavingsaccountwastemporarily
transferred to Domingo Quiaoits savings account, subject to its immediate return upon
issuance of a certificate of deposit which Quiaoit needed in connection with his visa
application at the Taiwan Embassy. As part of the arrangement, Sebastian retained
custody of Quiaoits savings account passbook to ensure that no withdrawal would be
effectedtherefrom,andtopreserveFrancosdeposits.

OnMay17,1990,Francopreterminatedhistimedepositaccount.BPIFBdeductedthe
amount of P63,189.00 from the remaining balance of the time deposit account
representingadvanceinterestpaidtohim.

Thesetransactionsspawnedanumberofcases,someofwhichwehadalreadyresolved.


FMICfiledacomplaintagainstBPIFBfortherecoveryoftheamountofP80,000,000.00
[17]
debitedfromitsaccount.
ThecaseeventuallyreachedthisCourt,andinBPIFamily
[18]
SavingsBank,Inc.v.FirstMetroInvestmentCorporation,
weupheldthefindingof
the courts below that BPIFB failed to exercise the degree of diligence required by the
natureofitsobligationtotreattheaccountsofitsdepositorswithmeticulouscare.Thus,
BPIFB was found liable to FMIC for the debited amount in its time deposit. It was
ordered to pay P65,332,321.99 plus interest at 17% per annum from August 29, 1989
untilfullyrestored.Inturn,the17%shallitselfearninterestat12%fromOctober4,1989
untilfullypaid.

In a related case, Edgardo Buenaventura, Myrna Lizardo and Yolanda Tica

[19]
(Buenaventura, et al.),
recipients of a P500,000.00 check proceeding from the
P80,000,000.00mistakenlycreditedtoTevesteco,likewisefiledsuit.Buenaventuraetal.,
[20]
asinthecaseofFranco,werealsopreventedfromeffectingwithdrawals
fromtheir
currentaccountwithBPIFB,BonifacioMarket,Edsa,CaloocanCityBranch.Likewise,
whenthecasewaselevatedtothisCourtdocketedasBPIFamilyBankv.Buenaventura,
[21]
we ruled that BPIFB had no right to freeze Buenaventura, et al.s accounts and
adjudgedBPIFBliabletherefor,inadditiontodamages.

Meanwhile, BPIFB filed separate civil and criminal cases against those believed to be
[22]
theperpetratorsofthemultimillionpesoscam.
In the criminal case, Franco, along
with the other accused, except for Manuel Bienvenida who was still at large, were
acquittedofthecrimeofEstafaasdefinedandpenalizedunderArticle351,par.2(a)of
[23]
[24]
theRevisedPenalCode.
However,thecivilcase
remainsunderlitigationandthe
respectiverightsandliabilitiesofthepartieshaveyettobeadjudicated.

Consequently, in light of BPIFBs refusal to heed Francos demands to unfreeze his

accountsandreleasehisdepositstherein,thelatterfiledonJune4,1990withtheManila
RTC the subject suit. In his complaint, Franco prayed for the following reliefs: (1) the
[25]
interest on the remaining balance
of his current account which was eventually

[26]
released to him on October 31, 1991 (2) the balance
on his savings account, plus
[27]
interestthereon(3)theadvanceinterest
paidtohimwhichhadbeendeductedwhen
he preterminated his time deposit account and (4) the payment of actual, moral and
exemplarydamages,aswellasattorneysfees.

BPIFBtraversedthiscomplaint,insistingthatitwascorrectinfreezingtheaccountsof
Franco and refusing to release his deposits, claiming that it had a better right to the
amountswhichconsistedofpartofthemoneyallegedlyfraudulentlywithdrawnfromit
by Tevesteco and ending up in Francos accounts. BPIFB asseverated that the claimed
considerationofP2,000,000.00fortheintroductionfacilitatedbyFrancobetweenGeorge
Daantos and Eladio Teves, on the one hand, and Jaime Sebastian, on the other, spoke
volumesofFrancosparticipationinthefraudulenttransaction.

OnAugust4,1993,theManilaRTCrenderedjudgment,thedispositiveportionofwhich
readsasfollows:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered in favor of

[Franco] and against [BPIFB], ordering the latter to pay to the former the following
sums:

1.P76,500.00representingthelegalrateofinterestontheamountofP450,000.00 from
May18,1990toOctober31,1991

2. P498,973.23 representing the balance on [Francos] savings account as of May 18,

1990, together with the interest thereon in accordance with the banks guidelines on the
paymenttherefor

3.P30,000.00bywayofattorneysfeesand

4.P10,000.00asnominaldamages.

ThecounterclaimofthedefendantisDISMISSEDforlackoffactualandlegalanchor.

Costsagainst[BPIFB].

[28]
SOORDERED.

Unsatisfied with the decision, both parties filed their respective appeals before the CA.
Franco confined his appeal to the Manila RTCs denial of his claim for moral and
exemplary damages, and the diminutive award of attorneys fees. In affirming with
modificationthelowercourtsdecision,theappellatecourtdecreed,towit:


WHEREFORE,foregoingconsidered,theappealeddecisionisherebyAFFIRMEDwith
modification ordering [BPIFB] to pay [Franco] P63,189.00 representing the interest
deductedfromthetimedepositofplaintiffappellant.P200,000.00asmoraldamagesand
P100,000.00asexemplarydamages,deletingtheawardofnominaldamages(inviewof
theawardofmoralandexemplarydamages)andincreasingtheawardofattorneysfees
fromP30,000.00toP75,000.00.

Costagainst[BPIFB].

[29]
SOORDERED.

In this recourse, BPIFB ascribes error to the CA when it ruled that: (1) Franco had a
better right to the deposits in the subject accounts which are part of the proceeds of a
forged Authority to Debit (2) Franco is entitled to interest on his current account (3)
FrancocanrecovertheP400,000.00depositinQuiaoitssavingsaccount(4)thedishonor
ofFrancoscheckswasnotlegallyinorder(5)BPIFBisliableforinterestonFrancos
timedeposit,andformoralandexemplarydamagesand(6)BPIFBscounterclaimhas
nofactualandlegalanchor.

Thepetitionispartlymeritorious.

We are in full accord with the common ruling of the lower courts that BPIFB cannot
unilaterally freeze Francos accounts and preclude him from withdrawing his deposits.
However, contrary to the appellate courts ruling, we hold that Franco is not entitled to
unearnedinterestonthetimedepositaswellastomoralandexemplarydamages.

First.OntheissueofwhohasabetterrighttothedepositsinFrancosaccounts,BPIFB
urgesusthatthelegalconsequenceofFMICsforgeryclaimisthatthemoneytransferred
byBPIFBtoTevestecoisitsown,andconsideringthatitwasabletorecoverpossession
of the same when the money was redeposited by Franco, it had the right to set up its
ownershipthereonandfreezeFrancosaccounts.

BPIFBcontendsthatitspositionisnotunlikethatofanownerofpersonalpropertywho
regains possession after it is stolen, and to illustrate this point, BPIFB gives the
followingexample:whereXstelevisionsetisstolenbyYwhothereaftersellsittoZ,and
where Z unwittingly entrusts possession of the TV set to X, the latter would have the
right to keep possession of the property and preclude Z from recovering possession

thereof. To bolster its position, BPIFB cites Article 559 of the Civil Code, which
provides:

Article559.Thepossessionofmovablepropertyacquiredingoodfaithisequivalenttoa
title. Nevertheless, one who has lost any movable or has been unlawfully deprived
thereof,mayrecoveritfromthepersoninpossessionofthesame.

Ifthepossessorofamovablelostorofwhichtheownerhasbeenunlawfullydeprived,
hasacquireditingoodfaithatapublicsale,theownercannotobtainitsreturnwithout
reimbursingthepricepaidtherefor.

BPIFBsargumentisunsound.Tobeginwith,themovablepropertymentionedinArticle
[30]
559 of the Civil Code pertains to a specific or determinate thing.
A determinate or
specific thing is one that is individualized and can be identified or distinguished from
[31]
othersofthesamekind.

In this case, the deposit in Francos accounts consists of money which, albeit
[32]
characterized as a movable, is generic and fungible.
The quality of being fungible
depends upon the possibility of the property, because of its nature or the will of the
parties,beingsubstitutedbyothersofthesamekind,nothavingadistinctindividuality.
[33]

Significantly, while Article 559 permits an owner who has lost or has been
unlawfully deprived of a movable to recover the exact same thing from the current
possessor,BPIFBsimplyclaimsownershipoftheequivalentamountofmoney,i.e.,the
value thereof, which it had mistakenly debited from FMICs account and credited to
Tevestecos,andsubsequentlytracedtoFrancosaccount.Infact,thisiswhatBPIFBdid
in filing the Makati Case against Franco, et al. It staked its claim on the money itself
which passed from one account to another, commencing with the forged Authority to
Debit.

[34]
Itbearsemphasizingthatmoneybearsnoearmarksofpeculiarownership,
and
thischaracteristicisallthemoremanifestintheinstantcasewhichinvolvesmoneyina
banking transaction gone awry. Its primary function is to pass from hand to hand as a
[35]
medium of exchange, without other evidence of its title.
Money, which had passed

through various transactions in the general course of banking business, even if of

traceableorigin,isnoexception.

Thus, inasmuch as what is involved is not a specific or determinate personal

property,BPIFBsillustrativeexample,ostensiblybasedonArticle559,isinapplicableto
theinstantcase.

There is no doubt that BPIFB owns the deposited monies in the accounts of
Franco,butnotasalegalconsequenceofitsunauthorizedtransferofFMICsdepositsto
Tevestecos account. BPIFB conveniently forgets that the deposit of money in banks is
[36]
governed by the Civil Code provisions on simple loan or mutuum.
As there is a
debtorcreditorrelationshipbetweenabankanditsdepositor,BPIFBultimatelyacquired
ownership of Francos deposits, but such ownership is coupled with a corresponding
[37]
obligation to pay him an equal amount on demand.
Although BPIFB owns the
depositsinFrancosaccounts,itcannotpreventhimfromdemandingpaymentofBPIFBs
obligationbydrawingchecksagainsthiscurrentaccount,oraskingforthereleaseofthe
fundsinhissavingsaccount.Thus,whenFrancoissuedchecksdrawnagainsthiscurrent
account,hehadeveryrightascreditortoexpectthatthosecheckswouldbehonoredby
BPIFBasdebtor.

Moreimportantly,BPIFBdoesnothaveaunilateralrighttofreezetheaccountsof
Franco based on its mere suspicion that the funds therein were proceeds of the multi
millionpesoscamFrancowasallegedlyinvolvedin.TograntBPIFB,oranybankfor
thatmatter,therighttotakewhateveractionitpleasesondepositswhichitsupposesare
derived from shady transactions, would open the floodgates of public distrust in the
bankingindustry.

[38]
OurpronouncementinSimexInternational(Manila),Inc.v.CourtofAppeals
continuestoresonate,thus:

Thebankingsystemisanindispensableinstitutioninthemodernworldandplaysavital
roleintheeconomiclifeofeverycivilizednation.Whetherasmerepassiveentitiesfor
thesafekeepingandsavingofmoneyorasactiveinstrumentsofbusinessandcommerce,
bankshavebecomeanubiquitouspresenceamongthepeople,whohavecometoregard
themwithrespectandevengratitudeand,mostofall,confidence.Thus,eventhehumble
wageearner has not hesitated to entrust his lifes savings to the bank of his choice,

knowing that they will be safe in its custody and will even earn some interest for him.
Theordinaryperson,withequalfaith,usuallymaintainsamodestcheckingaccountfor
securityandconvenienceinthesettlingofhismonthlybillsandthepaymentofordinary
expenses.xxx.

Ineverycase,thedepositorexpectsthebanktotreathisaccountwiththeutmostfidelity,
whethersuchaccountconsistsonlyofafewhundredpesosorofmillions.Thebankmust
recordeverysingletransactionaccurately,downtothelastcentavo,andaspromptlyas
possible.Thishastobedoneiftheaccountistoreflectatanygiventimetheamountof
moneythedepositorcandisposeofasheseesfit,confidentthatthebankwilldeliveritas
andtowhomeverdirects.Ablunderonthepartofthebank,suchasthedishonorofthe
checkwithoutgoodreason,cancausethedepositornotalittleembarrassmentifnotalso
financiallossandperhapsevencivilandcriminallitigation.

Thepointisthatasabusinessaffectedwithpublicinterestandbecauseofthenatureof
its functions, the bank is under obligation to treat the accounts of its depositors with
meticulouscare,alwayshavinginmindthefiduciarynatureoftheirrelationship.xxx.

Ineluctably, BPIFB, as the trustee in the fiduciary relationship, is duty bound to know
the signatures of its customers. Having failed to detect the forgery in the Authority to
Debit and in the process inadvertently facilitate the FMICTevesteco transfer, BPIFB
cannot now shift liability thereon to Franco and the other payees of checks issued by
Tevesteco,orpreventwithdrawalsfromtheirrespectiveaccountswithouttheappropriate
courtwritorafavorablefinaljudgment.

Further, it boggles the mind why BPIFB, even without delving into the
authenticity of the signature in the Authority to Debit, effected the transfer of
P80,000,000.00 from FMICs to Tevestecos account, when FMICs account was a time
depositandithadalreadypaidadvanceinteresttoFMIC.Consideringthatthereisasyet
noindubitableevidenceestablishingFrancosparticipationintheforgery,heremainsan
innocentparty.AsbetweenhimandBPIFB,thelatter,whichmadepossiblethepresent
predicament,mustbeartheresultinglossorinconvenience.

Second.WithrespecttoitsliabilityforinterestonFrancoscurrentaccount,BPIFB
argues that its noncompliance with the Makati RTCs Order Lifting the Order of
Attachmentandthelegalconsequencesthereof,isamatterthatoughttobetakenupin
thatcourt.

Theargumentistenuous.Weagreewiththesuccinctholdingoftheappellatecourt
inthisrespect.TheManilaRTCsordertopayinterestsonFrancoscurrentaccountarose
fromBPIFBsunjustifiedrefusaltocomplywithitsobligationtopayFrancopursuantto

theircontractofmutuum.Inotherwords,fromthetimeBPIFBrefusedFrancosdemand
for the release of the deposits in his current account, specifically, from May 17, 1990,
[39]
interestattherateof12%begantoaccruethereon.

Undeniably, the Makati RTC is vested with the authority to determine the legal
consequences of BPIFBs noncompliance with the Order Lifting the Order of
Attachment.However,suchauthoritydoesnotprecludetheManilaRTCfromrulingon
BPIFBsliabilitytoFrancoforpaymentofinterestbasedonitscontinuedandunjustified
refusaltoperformacontractualobligationupondemand.Afterall,thiswasthecoreissue
raisedbyFrancoinhiscomplaintbeforetheManilaRTC.

Third. As to the award to Franco of the deposits in Quiaoits account, we find no

reasontodepartfromthefactualfindingsofboththeManilaRTCandtheCA.

NoteworthyisthefactthatQuiaoithimselftestifiedthatthedepositsinhisaccount
are actually owned by Franco who simply accommodated Jaime Sebastians request to
[40]
temporarilytransferP400,000.00fromFrancossavingsaccounttoQuiaoitsaccount.
His testimony cannot be characterized as hearsay as the records reveal that he had
[41]
personalknowledgeofthearrangementmadebetweenFranco,Sebastianandhimself.

BPIFB makes capital of Francos belated allegation relative to this particular

arrangement. It insists that the transaction with Quiaoit was not specifically alleged in
Francos complaint before the Manila RTC. However, it appears that BPIFB had
impliedly consented to the trial of this issue given its extensive crossexamination of
Quiaoit.

Section5,Rule10oftheRulesofCourtprovides:

Section5.Amendmenttoconformtoorauthorizepresentationofevidence.Whenissues
not raised by the pleadings are tried with the express or implied consent of the
parties, they shall be treated in all respects as if they had been raised in the
pleadings.Suchamendmentofthepleadingsasmaybenecessarytocausethemto
conformtotheevidenceandtoraisetheseissuesmaybemadeuponmotionofany
party at any time, even after judgment but failure to amend does not affect the
resultofthetrialoftheseissues.Ifevidenceisobjectedtoatthetrialonthegroundthat
itisnowwithintheissuesmadebythepleadings,thecourtmayallowthepleadingstobe
amendedandshalldosowithliberalityifthepresentationofthemeritsoftheactionand

the ends of substantial justice will be subserved thereby. The court may grant a
continuancetoenabletheamendmenttobemade.(Emphasissupplied)

Inall,BPIFBsargumentthatthiscaseisnottherightforumforFrancotorecoverthe
P400,000.00 begs the issue. To reiterate, Quiaoit, testifying during the trial,
unequivocallydisclaimedownershipofthefundsinhisaccount,andpointedtoFrancoas
the actual owner thereof. Clearly, Francos action for the recovery of his deposits
appropriatelycoversthedepositsinQuiaoitsaccount.

Fourth.Notwithstandingalltheforegoing,BPIFBcontinuestoinsistthatthedishonorof
Francos checks respectively dated September 11 and 18, 1989 was legally in order in
viewoftheMakatiRTCssupplementalwritofattachmentissuedonSeptember14,1989.
ItpositsthatasthepartythatappliedforthewritofattachmentbeforetheMakatiRTC,it
neednotbeservedwiththeNoticeofGarnishmentbeforeitcouldplaceFrancosaccounts
undergarnishment.

Theargumentisspecious.Inthisargument,weperceiveBPIFBscleverbuttransparent
[42]
ploytocircumventSection4,
Rule13oftheRulesofCourt.Itshouldbenotedthat
thestrictrequirementonserviceofcourtpapersuponthepartiesaffectedisdesignedto
complywiththeelementaryrequisitesofdueprocess.Francowasentitled,asamatterof
right,tonotice,iftherequirementsofdueprocessaretobeobserved.Yet,hereceiveda
copy of the Notice of Garnishment only on September 27, 1989, several days after the
twochecksheissuedweredishonoredbyBPIFBonSeptember20and21,1989.Verily,
itwasprematureforBPIFBtofreezeFrancosaccountswithoutevenawaitingserviceof
theMakatiRTCsNoticeofGarnishmentonFranco.

Additionally, it should be remembered that the enforcement of a writ of attachment

cannotbemadewithoutincludinginthemainsuittheownerofthepropertyattachedby
virtuethereof.Section5,Rule13oftheRulesofCourtspecificallyprovidesthatnolevy
orattachmentpursuanttothewritissuedxxxshallbeenforcedunlessitispreceded,or
contemporaneously accompanied, by service of summons, together with a copy of the
complaint,theapplicationforattachment,onthedefendantwithinthePhilippines.

FrancowasimpleadedaspartydefendantonlyonMay15,1990. The Makati RTC had

yet to acquire jurisdiction over the person of Franco when BPIFB garnished his

[43]
accounts.
Effectively, therefore, the Makati RTC had no authority yet to bind the
depositsofFrancothroughthewritofattachment,andconsequently,therewasnolegal
basisforBPIFBtodishonorthechecksissuedbyFranco.

Fifth. Anent the CAs finding that BPIFB was in bad faith and as such liable for the
advanceinterestitdeductedfromFrancostimedepositaccount,andformoralaswellas
exemplarydamages,wefinditpropertoreinstatetherulingofthetrialcourt,andallow
onlytherecoveryofnominaldamagesintheamountofP10,000.00.However,weretain
theCAsawardofP75,000.00asattorneysfees.
In granting Francos prayer for interest on his time deposit account and for moral and
exemplary damages, the CA attributed bad faith to BPIFB because it (1) completely
disregardeditsobligationtoFranco(2)misleadinglyclaimedthatFrancosdepositswere
undergarnishment(3)misrepresentedthatFrancoscurrentaccountwasnotonfileand
(4)refusedtoreturntheP400,000.00despitethefactthattheostensibleowner,Quiaoit,
wantedtheamountreturnedtoFranco.

Inthisregard,weareguidedbyArticle2201oftheCivilCodewhichprovides:

Article 2201. In contracts and quasicontracts, the damages for which the obligor who
actedingoodfaithisliableshallbethosethatarethenaturalandprobableconsequences
of the breach of the obligation, and which the parties have foreseen or could have
reasonableforeseenatthetimetheobligationwasconstituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the non
performanceoftheobligation.(Emphasissupplied.)

Wefind,asthetrialcourtdid,thatBPIFBactedoutoftheimpetusofselfprotectionand
not out of malevolence or ill will. BPIFB 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
unearnedinterestonthetimedeposit.

Bad faith does not simply connote bad judgment or negligence it imports a dishonest
purposeorsomemoralobliquityandconsciousdoingofwrongitpartakesofthenature
[44]
offraud.
Wehaveheldthatitisabreachofaknowndutythroughsomemotiveof

[45]
interestorillwill.
Intheinstantcase,wecannotattributetoBPIFBfraudorevena
motive of selfenrichment. As the trial court found, there was no denial whatsoever by
BPIFB of the existence of the accounts. The computergenerated document which
indicatedthatthecurrentaccountwasnotonfileresultedfromthepriordebitbyBPIFB
of the deposits. The remedy of freezing the account, or the garnishment, or even the
outrightrefusaltohonoranytransactionthereonwasresortedtosolelyforthepurposeof
[46]
holdingontothefundsasasecurityforitsintendedcourtaction,
andwithnoother
goalbuttoensuretheintegrityoftheaccounts.

[47]
We have had occasion to hold that in the absence of fraud or bad faith,
moral
damagescannotbeawardedandthattheadverseresultofanactiondoesnotpersemake
theactionwrongful,orthepartyliableforit.Onemayerr,buterroraloneisnotaground
[48]
forgrantingsuchdamages.
An award of moral damages contemplates the existence of the following requisites: (1)
there must be an injury clearly sustained by the claimant, whether physical, mental or
psychological(2)theremustbeaculpableactoromissionfactuallyestablished(3)the
wrongfulactoromissionofthedefendantistheproximatecauseoftheinjurysustained
bytheclaimantand(4)theawardfordamagesispredicatedonanyofthecasesstatedin
[49]
Article2219oftheCivilCode.

Francocouldnotpointto,oridentifyanyparticularcircumstanceinArticle2219ofthe
[50]
CivilCode,
uponwhichtobasehisclaimformoraldamages.

Thus, not having acted in bad faith, BPIFB cannot be held liable for moral damages
[51]
underArticle2220oftheCivilCodeforbreachofcontract.

Wealsodenytheclaimforexemplarydamages.Francoshouldshowthatheisentitledto
moral, temperate, or compensatory damages before the court may even consider the
[52]
question of whether exemplary damages should be awarded to him.
As there is no
basisfortheawardofmoraldamages,neithercanexemplarydamagesbegranted.

[53]
Whileitisasoundpolicynottosetapremiumontherighttolitigate,
we,however,
findthatFrancoisentitledtoreasonableattorneysfeesforhavingbeencompelledtogo
to court in order to assert his right. Thus, we affirm the CAs grant of P75,000.00 as
attorneysfees.

Attorneysfeesmaybeawardedwhenapartyiscompelledtolitigateorincurexpensesto
[54]
[55]
protecthisinterest,
orwhenthecourtdeemsitjustandequitable.
Inthecaseat
bench,BPIFBrefusedtounfreezethedepositsofFrancodespitetheMakatiRTCsOrder
LiftingtheOrderofAttachmentandQuiaoitsunwaveringassertionthattheP400,000.00
was part of Francos savings account. This refusal constrained Franco to incur expenses
and litigate for almost two (2) decades in order to protect his interests and recover his
deposits.Therefore,thisCourtdeemsitjustandequitabletograntFrancoP75,000.00as
attorneysfees.Theawardisreasonableinviewofthecomplexityoftheissuesandthe
[56]
timeithastakenforthiscasetoberesolved.

Sixth.AsforthedismissalofBPIFBscounterclaim,weupholdtheManilaRTCsruling,
as affirmed by the CA, that BPIFB is not entitled to recover P3,800,000.00 as actual
damages.BPIFBsallegedlossofprofitasaresultofFrancossuitis,asalreadypointed
out,ofitsownmaking.Accordingly,thedenialofitscounterclaimisinorder.

WHEREFORE, the petition is PARTIALLY GRANTED. The Court of Appeals

DecisiondatedNovember29,1995isAFFIRMEDwiththeMODIFICATIONthatthe
awardofunearnedinterestonthetimedepositandofmoralandexemplarydamagesis
DELETED.

Nopronouncementastocosts.

SOORDERED.

WECONCUR:

ANTONIOEDUARDOB.NACHURA
AssociateJustice

CONSUELOYNARESSANTIAGO

CONSUELOYNARESSANTIAGO
AssociateJustice
Chairperson

MA.ALICIAAUSTRIAMARTINEZ
MINITAV.CHICONAZARIO
AssociateJustice
AssociateJustice

RUBENT.REYES
AssociateJustice

ATTESTATION

IattestthattheconclusionsintheaboveDecisionwerereachedinconsultationbeforethe
casewasassignedtothewriteroftheopinionoftheCourtsDivision.

CONSUELOYNARESSANTIAGO
AssociateJustice
Chairperson,ThirdDivision

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's
Attestation, I certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Courts
Division.

REYNATOS.PUNO
ChiefJustice

[1]
PennedbyAssociateJusticeEugenioS.Labitoria,withAssociateJusticesCancioC.Garcia(retiredAssociateJusticeof
theSupremeCourt)andPortiaAlinoHormachuelos,concurringrollo,pp.4055.
[2]
CArollo,pp.7079.
[3]
AntonioT.Ong,ManuelBienvenida,Jr.,MilagrosNayve,JaimeSebastian,AdordeAsis,andEladioTeves.Rollo,pp.
160207.RTC,QuezonCity,Branch85,DecisioninCrim.CaseNo.Q9122386.
[4]
AccountNo.8401074837.
[5]
AccountNo.16682381.

[6]
AccountNo.08523412.
[7]
PresidentofTevesteco.

[8]
BPIFBsMemorandum,rollo,pp.104105.
[9]
ExecutiveVicePresidentofFMIC.
[10]
ThenewBPIFBSFDMbranchmanagerwhoreplacedJaimeSebastian.
[11]
BPIFBsMemorandum,rollo,p.105.
[12]
Id.
[13]
RespectivelydatedSeptember11and18,1989.ThefirstcheckdatedAugust31,1989Francoissuedintheamountof
P50,000.00washonoredbyBPIFB.
[14]
Supranote3.ThenamesofotherdefendantsinCrim.CaseNo.Q9122386.
[15]
FrancoreceivedtheNoticeofGarnishmentonSeptember27,1989,butthe2checkshehadissuedwerepresentedfor
paymentatBPIFBonSeptember20&21,1989,respectively.
[16]
FrancosMemorandum,rollo,p.137.
[17]
DocketedasCivilCaseNo.895280andentitledFirstMetroInvestmentCorporationv.BPIFamilyBank.
[18]
G.R.No.132390,May21,2004,429SCRA30.
[19]
OfficersoftheInternationalBaptistChurchandInternationalBaptistAcademyinMalabon,MetroManila.
[20]
ThechecksissuedbyBuenaventuraetal.weredishonoreduponpresentmentforpayment.
[21]
G.R.No.148196,September30,2005,471SCRA431.
[22]
Supranote3.
[23]
Rollo,pp.160208.
[24]
The Makati Case for recovery of the P37,455,410.54 representing Tevestecos total withdrawals wherein Franco was
belatedlyimpleaded,andaWritofGarnishmentwasissuedonFrancosaccounts.
[25]
P450,000.00.
[26]
ThereflectedamountofP98,973.23plusP400,000.00representingwhatwastransferredtoQuiaoitsaccountundertheir
arrangement
[27]
P63,189.00.

[28]
CArollo,p.79.
[29]
Rollo,p.54.

[30]
SeeArticle1460,paragraph1oftheCivilCode.Athingisdeterminatewhenitisparticularlydesignatedorphysically
segregatedfromallothersofthesameclass.
[31]
Tolentino,CivilCodeofthePhilippinesCommentariesandJurisprudence,Vol.IV,1985,p.90.
[32]
SeeArticle418oftheCivilCode,takenfromArticle337oftheOldCivilCodewhichusedthewordsfungibleornon
fungible.
[33]
Tolentino,CivilCodeofthePhilippinesCommentariesandJurisprudence,Vol.II,1983,p.26.
[34]
UnitedStatesv.Sotelo,28Phil.147,158(1914).
[35]
Id.
[36]
Article1980oftheCivilCode:Fixed,savings,andcurrentdepositsofmoneyinbanksandsimilarinstitutionsshallbe
governedbytheprovisionsconcerningloan.SeeArticle1933oftheCivilCode.

[37]
Article 1953 of the Civil Code: A person who receives a loan of money or any other fungible thing acquires the
ownershipthereof,andisboundtopaythecreditoranequalamountofthesamekindandquality.

[38]
G.R.No.88013,March19,1990,183SCRA360,366367.
[39]
SeeEasternShippingLines,Inc.v.CourtofAppeals,G.R.No.97412,July12,1994,234SCRA78,95.
[40]
TSN,July30,1991,p.5.
[41]
Id.at511.
[42]
SEC.4.Papersrequiredtobefiledandserved.Everyjudgment,resolution,order,pleadingsubsequenttothecomplaint,
writtenmotion,notice,appearance,demand,offerofjudgmentorsimilarpapersshallbefiledwiththecourt,andservedupon
thepartiesaffected.
[43]
SeeSievertv.CourtofAppeals,G.R.No.L84034,December22,1988,168SCRA692,696.
[44]
BoardofLiquidatorsv.HeirsofMaximoKalaw,etal.,127Phil.399,421(1967).
[45]
Lopez,etal.v.PanAmericanWorldAirways,123Phil.256,264265(1966).
[46]
CArollo,p.74.
[47]
Suariov.BankofthePhilippineIslands,G.R.No.50459,August25,1989,176SCRA688,696citingGuitav.Courtof
Appeals,139SCRA576,580(1985).
[48]
BankofthePhilippineIslandsv.CasaMontessoriInternationale,G.R.No.149454,May28,2004,430SCRA261,293
294.
[49]
United Coconut Planters Bank v. Ramos, 461 Phil. 277, 298 (2003) citing Cathay Pacific Airways, Ltd. v. Spouses
Vazquez,447Phil.306(2003).

[50]
Art.2219.Moraldamagesmayberecoveredinthefollowingandanalogouscases:
(1)Acriminaloffenseresultinginphysicalinjuries
(2)Quasidelictscausingphysicalinjuries
(3)Seduction,abduction,rape,orotherlasciviousacts
(4)Adulteryorconcubinage
(5)Illegalorarbitrarydetentionorarrest
(6)Illegalsearch
(7)Libel,slanderoranyotherformofdefamation
(8)Maliciousprosecution
(9)ActsmentionedinArticle309
(10)ActsandactionsreferredtoinArticles21,26,27,28,29,30,32,34,and35.
Theparentsofthefemaleseduced,abducted,raped,orabused,referredtoinNo.3ofthisarticle,mayalsorecovermoral
damages.
Thespouse,descendants,ascendants,andbrotherandsistersmaybringtheactionmentionedinNo.9ofthisarticle,inthe
ordernamed.
[51]
Art.2220.Willfulinjurytopropertymaybealegalgroundforawardingmoraldamagesifthecourtshouldfindthat,
under the circumstances, such damages are justly due.The same rule applies to breaches of contract where the defendant
actedfraudulentlyorinbadfaith.
[52]
Article2234oftheCivilCode.
Art.2234.While the amount of the exemplary damages need not be proved, the plaintiff must show that he is entitled to
moral,temperateorcompensatorydamagesbeforethecourtmayconsiderthequestionofwhetherornotexemplarydamages
shouldbeawarded.Incaseliquidateddamageshavebeenagreedupon,althoughnoproofoflossisnecessaryinorderthat
suchliquidateddamagesmayberecovered,nevertheless,beforethecourtmayconsiderthequestionofgrantingexemplaryin
addition to the liquidated damages, the plaintiff must show that he would be entitled to moral, temperate or compensatory
damageswereitnotforthestipulationforliquidateddamages.
[53]
BankofthePhilippineIslandsv.CasaMontessoriInternationale,supranote48,at296.
[54]
CIVILCODE,Art.2208,par.(2).
[55]
CIVILCODE,Art.2208,par.(11).
[56]
ChingSenBenv.CourtofAppeals,373Phil.544,555(1999).