Torts and Damages    1

Attorney’s Fees

BPI Family Bank v. Franco and CA

November 23, 2007 | J. Nachura

Petitioner: BPI Family Bank

Respondent: Amado Franco and Court of Appeals

Doctrine: Attorney’s fees are awarded when a party is compelled to litigate or incur expenses to
protect his interest, or when the Court deems it equitable.

CASE SUMMARY
Trigger Word(s): BPI-FB scam, P80k debited, “Funds not on file”, Freeze order
FACTS: Tevesteco facilitated an illegal transfer of P80M from BPI-FB which it achieved with a forged
Authority to Debit. The funds were traced to Amado Franco’s account; hence, when BPI-FB filed suit
to garnish the accounts of all connected to the scam, it freezed Amado Franco’s account despite him
not being impleaded in the judicial suit until the following year. Hence, Franco wasn’t able to withdraw
from his account, and he filed a recovery suit which he won. Despite that, BPI-FB refused to unfreeze
his account, prompting another suit which he again won. Franco felt that the grant of attorney’s fees
he won was too small; hence he appealed.

HELD: BPI-FB does not have the power to unilaterally freeze Franco’s account on mere suspicion of
the source of the funds; it should’ve complied with the commonly-accepted procedure for enforcing a
judicial writ of garnishment. Its failure to do so robbed Franco of due process and forced Franco to
litigate his right for two years at his expense. Because of the length of time and funds it took to win the
case, Franco deserves a larger grant of attorney’s fees.

FACTS
● Amado Franco was accused of perpetrating fraud on BPI-FB due to several anomalous
transactions which he facilitated, in conspiracy with several other individuals.
○ First Metro Investment Corporation (FMIC) opened a time-deposit account with a
deposit of P100M and Tevesteco opened a savings and current account.
○ Franco opened a savings, current and time-deposit account in the meantime. He
deposited P500k each in the first 2 accounts while the time-deposit account had P1M.
○ The P2M used to open these accounts came from a Tevesteco check given to
Franco. Tevesteco got the P2M in turn from FMIC’s time deposit of P80M.
○ That P80M was debited by BPI-FB and credited to Tevesteco with an Authority to
Debit.
○ The signatures on the Authority were found to have been forged; unfortunately,
Tevesteco had already withdrawn around P37,455,410.54. BPI-FB then debited the
remainder of Franco’s savings and current accounts, although due to computer
limitations they couldn’t touch his time-deposit.
○ BPI-FB then filed a suit to recover the funds in Sept a1989, resulting in the
garnishment of Franco’s account and the dishonoring of his checks.
● It was only on May 15 1990 that Franco was impleaded in the case. Franco filed a motion to
lift the attachment on his account, but due to its pending forgery case with FMIC, BPI-FB were
unable to unfreeze the account.
● In the meantime, FMIC won its suit against BPI-FB, others filed suit because they were also
affected by the freezing of their accounts in connection with the P80M. Their accounts were
ordered unfreezed except Franco’s.
● BPI-FB filed suit against Franco and his associates for estafa, but they were acquitted.
Nonetheless, BPI-FB refused to unfreeze the accounts, which resulted in the present suit.
● The RTC ruled in Franco’s favor and he was awarded P30,000 in attorney’s fees. Both parties
were unsatisfied and appealed, Franco’s reason being that he deserved moral and exemplary
damages and that the P30k attorney’s fee grant was insufficient.

ISSUES + HELD
ISSUE #1: W/N BPI could unilaterally freeze Franco’s account -> NO
● BPI-FB claims that since Tevesteco had unlawfully gained the P80M from BPI-FB and Franco
re-deposited it, the P80M was lawfully theirs and they had the right to freeze the account to
regain ownership, under Art 559 of the Civil Code.

Dizon | A2022
Aug 16, 2019
Torts and Damages    1
Attorney’s Fees

○ However, Art 559 refers to specific and determinate things. The 80M here is a generic
and fungible thing.
○ Moreover, just because the P80M was eventually traced to Franco’s account, this
doesn’t mean they immediately owned the money. Money passes from place to place
and doesn’t have any particular earmarks of ownership.
○ BPI-FB owns the funds in Franco’s accounts as part of a debtor-creditor relationship,
but this imposes a corresponding obligation on BPI-FB to pay Franco on demand;
Franco does not lose his right to ask for his money.
○ BPI-FB can’t freeze Franco’s account on mere suspicion alone that the funds were
proceeds of a multi-million dollar scam; such a policy would result in widespread
distrust in the banking industry.
● BPI-FB should’ve been more careful in ascertaining the authenticity of the signatures on the
Authority to Debit before it debited the P80M to Tevesteco, as the trustee in a fiduciary
relationship.
● The SC agrees with the RTC’s ruling that since the suit arose from BPI-FB’s unjust refusal to
release Franco’s funds, their liability for interest at 12% accrued from that point.
● BPI-FB can’t now claim that its freezing of Franco’s account was in order because it was the
one who’d originally filed for a writ of garnishment in the first place. They never gave Franco
notice that his account was garnished, which is a critical element in procedural due process.
○ Moreover, Franco was only impleaded as defendant the year after the notice of
garnishment. The enforcement of a writ of attachment has to include the party whose
property is being attached, with notice served to him (Sec 5 Rule 13 ROC)

ISSUE #2: W/N Franco is entitled to unearned interest, moral damages and exemplary
damages -> NO
● Anent the CA’s finding that BPI-FB was in bad faith, the SC reinstates the RTC’s grant of
P10,000 in nominal damages to Franco, while retaining the CA’s award of P75,000 in
attorney’s fees.
● It cannot grant moral damages or exemplary damages, however, as bad faith and culpable
acts are necessary compoment in granting them (Art 2201 CC)
○ The CA found bad faith because of BPI-FB’s abject refusal to comply with its
obligation to Franco and misleadingly claimed his funds were garnished and not on
file.
○ However, it is clear that BPI-FB did not act out of the corrupt state of mind
contemplated in Art 2201 CC, but acted in self-preservation. Bad faith connotes fraud
and dishonest purpose.
○ In this case, BPI-FB did not misrepresent the facts; it admitted the existence of the
fraudulent accounts. The funds were not on file because of BPI-FB’s prior debit of the
P80M.
● Because he is not entitled to moral damages, he is also not entitled to exemplary damages.

ISSUE #3: W/N Franco is entitled to a greater amount of attorney’s fees? -> YES
● The CA increased its grant of attorney’s fees to Franco to P75,000, from the RTC’s original
P30,000. The SC affirms the CA’s ruling because Franco was compelled to go to court and
protect his rights.
● Attorney’s fees are awarded when a party is compelled to litigate or incur expenses to protect
his interest, or when the Court deems it equitable.
● Because BPI-FB’s actions caused Franco to incur expenses for 2 decades to protect his right,
the Court deems it just and necessary to award him P75,000. It is a reasonable award due to
the complexity of the issues and the time it took to resolve the case.

DAMAGES AWARDED – ATTORNEY’S FEES (YES), MORAL & EXEMPLARY (NO)

1. Nominal Damages - P10,000
2. Attorney’s Fees - P75,000

RULING: Petition partially granted. Award of unearned interest on the time deposit and of
moral and exemplary damages is DELETED.

Dizon | A2022
Aug 16, 2019