G.R. No. 172720 - Maltos vs. Heirs of Borromeo

Petitioner: Far East Bank and Trust Company (now Bank of the Philippine Islands)
Respondent: Themistocles Pacilan, Jr.
Case Origin: Complaint for damages filed by Pacilan before the Regional Trial Court (RTC) of Negros Occidental, Bacolod City, Branch 54, docketed as Civil Case No. 4908.

Pacilan opened a current account with petitioner bank’s Bacolod Branch on May 23, 1980, identified as Current Account No. 53208 (0052-00407-4).
Respondent issued several postdated checks drawn against the said account.
In March 1988, respondent issued Check No. 2434886 for P680.00, presented for payment on April 4, 1988, which was dishonored by petitioner bank.
On April 5, 1988, respondent deposited P800.00 into the current account, increasing balance to P1,051.43, accepted by petitioner bank.

Petitioner bank closed respondent’s current account on April 4, 1988, citing “improper handling.”
Between March 30 and April 5, 1988, respondent issued four checks totaling P7,410.00, but account only had P6,981.43, resulting in an overdraft of P428.57.
Consequently, Check No. 2434886 was dishonored.

On April 18, 1988, respondent complained in writing to petitioner bank about unjustified account closure; no reply was received.
Respondent claimed:

Bank hastily closed account despite his deposit on April 5, 1988, which should have funded the check.
Under normal banking procedure, a dishonored check due to insufficient funds may be honored if funds are deposited within the next banking day.
Other postdated checks were dishonored due to premature closure.
Closure caused social humiliation, loss of credit standing, and exposure to criminal liability under Batas Pambansa Blg. 22.
Claimed malicious intent by petitioner bank to harm his reputation.

Invoked Rules and Regulations Governing Operation of Regular Demand Deposits, permitting closure if depositor frequently draws checks against insufficient funds.
Noted respondent’s account was overdrawn 156 times in 1986, 117 times in 1987, and 26 times in 1988 due to insufficient funds.
Also alleged respondent issued checks with signatures different from specimen on file.
Stressed the bank has the right to immediately return any checks drawn against insufficient funds.

RTC rendered judgment for respondent, awarding P100,000.00 as moral damages and P50,000.00 as exemplary damages, plus costs.

Held that petitioner bank acted in bad faith by closing account prematurely, violating their own rules allowing checks dishonored for insufficient funds to be recleared once more.
Account closure deprived respondent of opportunity to fund checks, exposing him to dishonor and reputational damage.

Held petitioner bank unjustifiably closed respondent’s account without notification despite its rules allowing once-only reclearing of dishonored checks.
Noted bank accepted respondent’s deposit of April 5 after closure, demonstrating inconsistency.
Reduced damages to P75,000.00 moral damages and P25,000.00 exemplary damages.

Contended account closure was proper under bank’s rules.
Argued no legal right existed for respondent to fund checks after dishonor the next banking day.
Denied acting in bad faith or violating Article 19 of the Civil Code.

Whether petitioner bank acted in bad faith or abused its right in closing respondent’s current account despite respondent’s deposit made shortly after dishonor of a check.
Whether respondent is entitled to moral and exemplary damages due to the closure of his account and consequent dishonor of checks.
Whether petitioner bank’s conduct constituted a violation of Article 19 of the Civil Code requiring the exercise of rights with justice, honesty, and good faith.