Civil Law Review 2

John Dominic T. Buhangin

Justice Carmelita S. Manahan
 Prudential Bank v. Chonney Lim
• G.R. No. 136371
• 11 November 2005
• Summary: The bank’s wrongful act cased injury to the respondent. Credit is
very important to businessmen, and its loss or impairment needs to be
recognized and compensated.
• Ponente: J. Tinga
 Facts:
• Respondent Chonney Lim allegedly made two (2) deposits in the amount of
P34,000 each on the 14th and 15th of March 1988 in his savings account.
• He availed of the petitioner bank’s automatic transfer system where his savings deposit
may be automatically transferred in his checking account in case the latter has
insufficient fund to pay for his issued checks.
• May 1988 – Lim issued two checks in favor of the Paluwagan ng Bayan
Savings Bank (Php2,830.00) and Teodulo Crisologo (Php10,000.00).
• Both checks dishonored by Petitioner Prudential
 Facts:
• Lim protested the dishonor of both checks, with Prudential answering that
the respondent only made one deposit.
• Prudential’s argument was that the March 15 deposit slip was merely a copy of the
March 14 deposit slip.
• Respondent Lim showed two SEPARATE deposit slips indicating identical
amounts deposited on two different dates – March 14 and March 15.
• Prudential countered that it received the March 15 Php 34,000 deposit on March 14,
thus concluding that the March 15 is merely a copy of the first deposit.
 Facts:
• Lim filed a Complaint for Recovery of Sum of Money with Baguio – RTC
for the second deposit, Php300.00 penalty charge, and damages.
• RTC: Lim made TWO deposits; ordered Prudential to pay Lim the
following:
• Php34,000.00 – unposted deposit (2nd deposit; March 15)
• Php600.00 – service charges unjustifiably imposed on Lim, with legal interest
• Php50,000.00 – moral damages
• Php25,000 – exemplary damages
• Php10,000 – attorney’s fees
 Facts:
• CA: Affirmed the RTC decision with modification as to the award of moral
damages, reducing it to Php10,000.00
• The testimony of the bank teller, coupled with the fact that the two deposit slips listed
different denominations of money totaling Php34,000.00 per deposit slip led the
appellate court to conclude that there were indeed Php34,000.00 each, one made in
March 14, and the other on March 15, 1988.
 Issue/s:
• Whether or not there was negligence on the part of the bank to record the
second deposit made on March 15 by Respondent Lim
• Consequentially, whether or not the court a quo’s award of damages to Respondent
Lim is warranted
 Held:
• Yes, there was negligence on the part of Prudential Bank:
• An examination of the deposit slips dated March 14 and March 15 reveals that while
the slips each cover deposits in the amount of Php34,000.00, they list down different
denominations however.
• Evidently, the slips were not prepared simultaneously or concurrently.
• This fact militates against the bank’s claim that one deposit slip is simply the duplicate
of the other.
 Held:
• Article 1172 of the Civil Code ordains that responsibility arising from negligence in
the performance of an obligation is demandable.
• Responsibility arising from negligence in the performance of every kind of obligation is also demandable, but
such liability may be regulated by the courts, according to the circumstances.
• With the attending factual milieu, the imposition of damages on the errant bank is in order.
• The negligence of the bank constitutes a breach of duty to its client. It is worthy of note
that the banking industry is impressed with public interest. As such, it must observe a high
degree of diligence and observe lofty standards of integrity and performance.
 Held:
• By the nature of its functions, a bank is under obligation to treat the
accounts of its depositors with meticulous care and always to have in mind
the fiduciary nature of its relationship with them.
• In every case, the depositor expects the bank to treat his account with the
utmost fidelity, whether such account consists only of a few hundred pesos
or millions. The bank MUST record every single transaction accurately, down
to the last centavo, and as promptly as possible.
 Held:
• A blunder on the part of the bank, such as the dishonor of a check
WITHOUT good reason, can cause the depositor not a little embarrassment
if not also financial loss and perhaps even CIVIL and CIRMINAL litigation.
• The depositor must at all times be confident in his bank of choice to deliver all
obligations (payment) to whomever the former directs
 On Damages:
• The action for damages hinges on the resolution of whether respondent has
sufficient funds in his account when the checks were dishonored.
• Both the RTC and the CA ruled that had the bank credited the Php34,000.00
deposit made by respondent on March 15, 1988, the checks would not have
been dishonored.
• Both courts found that moral damages were in order
 On Moral Damages:
• SC agreed with the award of Moral Damages:
• The concept of moral damages include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and
similar injury. Although incapable of pecuniary estimation, moral damages may be recovered
if they are the proximate result of the defendant’s wrongful act or omission.
• SC: Needless to say , the bank’s wrongful act caused injury to respondent. Credit is very
important to businessmen, and its loss or impairment needs to be recognized and
compensated.
• Moral Damages reverted to Php50,000 – RTC amount, it being in a better position to assess
moral damages.
 On Exemplary Damages:
• SC sustains award of Exemplary Damages:
• Such damages are imposed by way of example or correction for the public good, in
addition to the moral, temperate, liquidated, or compensatory damages.
• The business of the bank is affected with public interest; thus, it makes a sworn
profession of diligence and meticulousness in giving irreproachable service. For this
reason, the bank should guard against injury attributable to negligence or bad faith on
its part.
• The banking sector must at all times maintain a high level of meticulousness.