Facts:

This case involves petitioner Bank of the Philippine Islands (BPI) and respondent Reynald R. Suarez, a lawyer with savings and current accounts at BPI's Ermita Branch from 1988 to 1997. In 1997, Suarez's client decided to purchase land in Tagaytay City without directly dealing with the sellers. Consequently, Suarez acted on behalf of his client, making arrangements for payments related to the purchases through his BPI account. On June 16, 1997, Suarez's client deposited a check from Rizal Commercial Banking Corporation (RCBC), amounting to P19,129,100, into BPI's Pasong Tamo Branch with the intention of this amount being credited to Suarez's current account at BPI Ermita Branch. Following a confirmation from BPI, as relayed by Suarez’s secretary, Petronila Garaygay, that the funds were available, Suarez issued five checks totaling P19,129,100 to the property sellers.

Upon his return from a vacation in the United States, he discovered that these checks had be

...

Facts:

Parties and Account History

• Respondent Reynald R. Suarez, a lawyer, maintained both savings and current accounts with Bank of the Philippine Islands (BPI) Ermita Branch from 1988 to 1997.
• During 1997, Suarez became involved in a real estate transaction involving several parcels of land in Tagaytay City, acting as an intermediary between his client and the sellers.

The Transaction and Check Deposit

• Following his client’s instruction, Suarez arranged a transaction wherein his client deposited a Rizal Commercial Banking Corporation (RCBC) check with a face value of P19,129,100 into his current account at BPI (Pasong Tamo Branch) on 16 June 1997.
• Knowing the banking system’s standard 3-day check clearing policy, Suarez instructed his secretary, Petronila Garaygay, to confirm with BPI that the credited amount was available on the same day.

Issuance and Subsequent Dishonor of Checks

• Based on the confirmation allegedly provided by a BPI employee (through Garaygay), Suarez, on 16 June 1997, issued five checks for varying amounts totaling P19,129,100 to the sellers of the Tagaytay properties.
• The following day, while Suarez was already on vacation in the United States, Garaygay informed him that all five checks had been dishonored due to insufficient funds in his account, and that a total of P57,200 had been debited as penalty charges.

Developments Following the Dishonor

• On 19 June 1997, when the payees presented the checks again, they were honored, as the RCBC check had been cleared by then, ensuring sufficiency of funds in Suarez’s account.
• Suarez demanded an apology and the reversal of the penalty charges from BPI, and met with BPI officials in an attempt to resolve the issue.
• During a meeting, BPI representatives explained that when the original checks were presented for clearing, the deposited check had not yet cleared, hence justifying the dishonor.
• Suarez asserted that the checks had been tampered with—specifically, that they were marked “drawn against insufficient funds (DAIF)” instead of “drawn against uncollected deposit (DAUD).”

Litigation and Procedural History

• Relying on allegations of negligence in handling his account and the tampering with the check markings, Suarez filed a complaint for damages before the Regional Trial Court (RTC) of Makati City, which rendered judgment in his favor, awarding him actual damages (P57,200), moral damages (P3,000,000), exemplary damages (P1,000,000), attorney’s fees, and other costs.
• BPI appealed the RTC decision to the Court of Appeals, which affirmed the trial court’s decision in its 30 November 2004 Decision.
• BPI’s motion for reconsideration was denied on 11 April 2005, prompting the petition for review before the Supreme Court.

Issue:

Negligence in the Handling of the Account

• Whether BPI was negligent in managing Suarez’s account by allegedly confirming the same-day crediting of funds and thereby inducing Suarez to issue checks beyond his available balance.

Service Charges and Account Management

• Whether Suarez is liable to pay the service charges imposed by the Philippine Clearing House Corporation as a consequence of the returned checks.

Damages for Erroneous Check Markings

• Whether BPI’s act of marking the dishonored checks as “DAIF” instead of “DAUD” gives rise to liability for moral and exemplary damages, as well as attorney’s fees and costs of litigation.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)