PNB v. PIKE
WON moral and exemplary damages can be
G.R. No. 157845 / September 20, 2005
FACTS:
Complainant Pike opened a U.S Dollar Savings Account
with petitioner PNB Buendia Branch for which he was
issued a passbook. Pike alleged that he left his
passbook inside a locked cabinet before leaving for
Japan. However, when he came back, some of his
valuables including the passbook were missing. He
reported this which lead to the arrest of one Mr. Joy
Manuel Davasol.
Davasol was found to have made 2 unauthorized
withdrawals from Pike’s Savings Account. (31 March ’93
– $3,500 + 5 April ’93 - $4,000)
It was also shown that, Lorenzo Bal, assistant Vice
President of PNB Buendia Branch, approved the
withdrawal transaction without asking for any proof of
identification for the reason that: 1) Davasol was in
possession of a pre-signed withdrawal slip; and 2) the
witness “recognized” the signature of respondent
Pike— even after admitting that he did not bother to
counter check the signature on the slip with the
specimen signature card of respondent Pike and that he
met respondent Pike just once so that he cannot seem
to recall what the latter looks like.
Pike demanded PNB Buendia the return of the $7,500
on the ground that he never authorized anybody to
withdraw from his signatures as the signatures
appearing on the subject withdrawal slips were
forgeries. Defendant PNB refused on stating that it
exercised due diligence in handling the account.
The trial court ruled that the Bank is responsible for the
unauthorized withdrawals. Signatures in the
unauthorized withdrawals slips did not correspond to
the true signature of Pike. Hence, the court was
convinced that the bank was negligent in the
performance of its duties.
The CA affirmed findings of RTC. PNB was negligent in
exercising the diligence required of a business imbued
with public interest. CA modified rate of interest from
6% to 12% per annum from time the judgment becomes
final and executory.
ISSUES:
1. WON PNB exercised the degree of diligence that
it ought to have exercised in dealing with their
clients? – NO.
2.
awarded against a party in good faith? - YES.
RULING:
1. No. PNB did not exercise the degree of diligence
that it ought to have exercised based on the
evidence presented.
The bank admitted that pre-signed withdrawal slips do
not constitute the normal procedure with respect to
withdrawals by representatives. This should have
already put petitioner PNB’s employees on guard.
Rather than readily validating and permitting said
withdrawals, they should have proceeded more
cautiously. Clearly, petitioner bank’s employee, Lorenzo
T. Bal, an Assistant Vice President, was exceedingly
careless in his treatment of respondent Pike’s savings
account.
With banks, the degree of diligence required, contrary
to the position of petitioner PNB, is more than that of a
good father of a family considering that the business of
banking is imbued with public interest due to the nature
of their functions. The stability of banks largely depends
on the confidence of the people in the honesty and
efficiency of banks. Thus, the law imposes on banks a
high degree of obligation to treat the accounts of its
depositors with meticulous care, always having in mind
the fiduciary nature of banking. Section 2 of Republic
Act No. 8791, which took effect on 13 June 2000, makes
a categorical declaration that the State recognizes the
“fiduciary nature of banking that requires high
standards of integrity and performance.
2. WON moral and exemplary damages can be
awarded against a party in good faith? - YES.
The award of moral and exemplary damages is left to
the sound discretion of the court, and if such discretion
is well exercised, as in this case, it will not be disturbed
on appeal.
An award of moral damages would require, firstly,
evidence of besmirched reputation, or physical, mental
or psychological suffering sustained by the claimant;
secondly, a culpable act or omission factually
established; thirdly, proof that the wrongful act or
omission of the defendant is the proximate cause of the
damages sustained by the claimant; and fourthly, that
the case is predicated on any of the instances expressed
or envisioned by Articles 2219 and 2220 of the Civil
Code.
Specifically, in culpa contractual or breach of contract,
as here, moral damages are recoverable only if the
defendant has acted fraudulently or in bad faith, or is
found guilty of gross negligence amounting to bad faith,
or in wanton disregard of his contractual obligations.
Verily, the breach must be wanton, reckless, malicious,
or in bad faith, oppressive or abusive.

The award of exemplary damages is also proper as a

warning to petitioner PNB and all concerned not to
recklessly disregard their obligation to exercise the
highest and strictest diligence in serving their
depositors.