This Supreme Court decision clarifies that acquittal in a criminal case does not automatically absolve a person of civil liability. The ruling emphasizes that even when an accused is acquitted due to the prosecution’s failure to prove guilt beyond reasonable doubt, civil liability may still be established through preponderance of evidence. Specifically, the Court found a bank manager civilly liable for gross negligence, despite being acquitted of violating the Anti-Graft and Corrupt Practices Act. This case underscores the importance of diligence and adherence to banking regulations, especially for bank officers, and illustrates how civil liability can arise from the same set of facts as a criminal charge, even when the latter fails.

From Acquittal to Accountability: When Banking Oversight Leads to Civil Liability

The case revolves around Pablo V. Raymundo, a former Department Manager of Philippine National Bank (PNB) San Pedro Branch, who was charged with violating Section 3(e) of Republic Act (RA) No. 3019, the Anti-Graft and Corrupt Practices Act. The charge stemmed from Raymundo’s approval of the encashment of six checks drawn against an uncleared foreign check. While Raymundo was acquitted in the criminal case, PNB pursued the civil aspect, seeking to recover the financial losses it incurred as a result of Raymundo’s actions. The central legal question is whether Raymundo can be held civilly liable for negligence, despite his acquittal in the criminal case.

The Supreme Court addressed the issue by distinguishing between two types of acquittals: one based on the finding that the accused did not commit the act, and another based on reasonable doubt. The Court explained:

Our law recognizes two kinds of acquittal, with different effects on the civil liability of the accused. First is an acquittal on the ground that the accused is not the author of the act or omission complained of. This instance closes the door to civil liability, for a person who has been found to be not the perpetrator of any act or omission cannot and can never be held liable for such act or omission. There being no delict, civil liability ex delicto is out of the question… The second instance is an acquittal based on reasonable doubt on the guilt of the accused. In this case, even if the guilt of the accused has not been satisfactorily established, he is not exempt from civil liability which may be proved by preponderance of evidence only.

In Raymundo’s case, the acquittal was based on reasonable doubt. Therefore, the Court proceeded to evaluate whether he could be held civilly liable based on preponderance of evidence. The Court found that Raymundo was indeed grossly negligent in approving the payment of the six checks without waiting for the foreign draft check to clear.

The Court emphasized that factual findings of the appellate court are generally conclusive. However, this rule does not apply when the lower courts have ignored crucial testimonial and documentary evidence. In this instance, the Supreme Court found that both the Regional Trial Court (RTC) and the Court of Appeals (CA) failed to consider evidence demonstrating Raymundo’s negligence.

The Court highlighted Raymundo’s own admissions in previous complaints and affidavits, where he acknowledged relying on the assurances of the account holder, Ms. Juan, and her associates. Specifically, Raymundo admitted that he allowed the issuance of the six checks based on their promise that they would not be negotiated until the foreign check had cleared.

4. That at first, plaintiff herein [Raymundo] was a bit hesitant to immediately accommodate the seemingly hasty manner of opening a current account not only on the fact that the amount involved was quite big but also on account that he was dealing with a foreign check. But when the group, particularly defendant “Cleo” Tan, showed to him the record of a just-concluded overseas call confirming that the said Morgan Guaranty Company check was good, plaintiff allowed the issuance of six (6) checks bearing different dates in the total amount of P4,000,000.00 all payable to herein defendant corporation upon the undertaking of the group that the same would not be “traded” or negotiated until the said Morgan Guaranty Trust Co. check has been finally cleared;

The Court reasoned that these admissions revealed Raymundo’s gross negligence in disregarding the bank’s foreign check clearing policy. By allowing the peso conversion of the foreign check and issuing a check booklet on the same day the account was opened, Raymundo created the opportunity for the fraudulent encashment of the six checks.

The Court also emphasized the high standard of diligence required of banks, given the public interest nature of their business. The Court stated:

Since their business and industry are imbued with public interest, banks are required to exercise extraordinary diligence, which is more than that of a Roman pater familias or a good father of a family, in handling their transactions. Banks are also expected to exercise the highest degree of diligence in the selection and supervision of their employees.

Furthermore, the Court highlighted that a bank’s disregard of its own banking policy constitutes gross negligence. It described gross negligence as:

negligence characterized by the want of even slight care, acting or omitting to act in a situation where there is duty to act, not inadvertently but willfully and unintentionally with a conscious indifference to consequences insofar as other persons may be affected.

In light of these principles, the Court concluded that Raymundo’s actions were the proximate cause of PNB’s losses. The Court found that had Raymundo adhered to the bank’s foreign check clearing policy, the fraudulent encashment of the checks would not have occurred.

While PNB claimed damages of P4,000,000.00, the Court found that the actual losses proven with certainty amounted to P2,100,882.87. This amount was based on the accounts receivable ledger and PNB’s letter, which showed that Raymundo’s account receivable was reduced to this amount after the application of certain check payments.

Finally, the Court addressed the issue of legal interest. It determined that PNB was entitled to legal interest on the damages awarded, calculated from the filing of the criminal information until full payment, in accordance with prevailing jurisprudence.

FAQs

What was the central issue in this case?	The central issue was whether a bank manager could be held civilly liable for negligence, even after being acquitted in a criminal case related to the same actions. The case hinged on the difference between the standards of proof required for criminal and civil liability.
What is the difference between acquittal based on reasonable doubt and acquittal based on the accused not committing the act?	An acquittal based on reasonable doubt means the prosecution failed to prove guilt beyond a reasonable doubt, but civil liability may still exist. An acquittal based on the accused not committing the act means there is no basis for either criminal or civil liability.
What standard of diligence is expected of banks?	Banks are expected to exercise extraordinary diligence, which is more than that of a good father of a family. This high standard is due to the public interest nature of the banking industry.
What constitutes gross negligence in the context of banking?	Gross negligence in banking involves a disregard for even slight care, acting or failing to act with conscious indifference to the consequences. This includes disregarding established banking policies and procedures.
What is proximate cause?	Proximate cause is the direct cause that produces an injury, without which the injury would not have occurred. In this case, the bank manager’s approval of the deposit before clearance was deemed the proximate cause of the bank’s losses.
How did the Court determine the amount of damages?	The Court relied on the accounts receivable ledger and PNB’s letter, which showed the actual losses incurred after applying certain check payments. The Court only awarded damages that were proven with a reasonable degree of certainty.
What is the significance of extra-judicial admissions in this case?	The bank manager’s own complaints and affidavits in previous cases, where he admitted relying on assurances regarding the foreign check, were used as evidence of his negligence. These admissions undermined his defense in the civil case.
What interest rates apply to the damages awarded in this case?	The Court applied a 12% per annum interest rate from the filing of the criminal information until June 30, 2013, and a 6% per annum rate from July 1, 2013, until the finality of the decision. Additionally, a 6% per annum interest rate applies from the finality of the decision until full payment.

This decision serves as a reminder that even in cases where criminal charges do not result in a conviction, civil liability can still arise from negligent acts. Bank officers, in particular, must exercise a high degree of diligence and adhere to established banking policies to avoid potential liability for financial losses.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Philippine National Bank vs. Pablo V. Raymundo, G.R. No. 208672, December 7, 2016