FACTS:

The Philippine Commercial International Bank (PCIB) filed an action for recovery of a sum of money against Antonio Balmaceda, the branch manager of its Sta. Cruz, Manila branch. PCIB alleged that Balmaceda fraudulently obtained and encashed 31 Manager's checks in the total amount of P10,782,150.00 using his position as branch manager. PCIB later filed an amended complaint to implead Rolando Ramos as one of the recipients of a portion of the proceeds from Balmaceda's fraud. Ramos denied any knowledge of Balmaceda's scheme and claimed that he had no knowledge of the source of Balmaceda's money.

The RTC rendered a decision in favor of PCIB, holding both Balmaceda and Ramos liable for the amount misappropriated. The RTC found that Balmaceda successfully obtained and misappropriated the bank's funds by falsifying commercial documents, including Manager's checks. It also ruled that Ramos acted in collusion with Balmaceda as he received money from Balmaceda and deposited most of it into his account. The RTC ordered Balmaceda to pay P11,042,150.00 and Ramos to pay P895,000.00, with interest and additional damages.

On appeal, the CA dismissed the complaint against Ramos, stating that there was insufficient evidence to prove his collusion with Balmaceda. The CA also found that PCIB acted illegally in freezing and debiting money from Ramos' bank account. It ordered PCIB to release the frozen amount to Ramos, as well as pay moral and exemplary damages and attorney's fees.

PCIB filed a petition for review, arguing that Ramos had knowledge of and acted in complicity with Balmaceda in perpetuating the fraud. PCIB contended that it had the right to freeze and debit the amount from Ramos' bank account and should not be held liable for damages.

ISSUES:

1. Whether there is sufficient evidence to hold respondent Ramos liable for his complicity in Balmaceda's fraudulent manipulation.

2. Whether the bank had the right to freeze and debit the amount from Ramos' bank account.

RULING:

1. The Court of Appeals erred in holding that there is no evidence to hold Ramos liable for his complicity with Balmaceda. The circumstantial evidence shows that Ramos had knowledge of and acted in collusion with Balmaceda. The explanation provided by Ramos that he received the Manager's checks as payment for the fighting cocks he sold to Balmaceda is unconvincing given the large sum of money involved. Ramos' defense does not provide an explanation as to why the Manager's checks were made payable to him.

2. The Court of Appeals correctly ruled that the bank's freezing and debiting of the amount from Ramos' bank account was illegal. The bank did not have the right to freeze and debit the amount without Ramos' consent. Therefore, the bank is liable to release the amount to Ramos and pay him moral and exemplary damages and attorney's fees.

PRINCIPLES:

• Circumstantial evidence may be sufficient to establish liability and guilt in a case. (ISSUE 1)

• The bank cannot freeze and debit an individual's bank account without consent or legal basis. (ISSUE 2)