Facts:

The case involves the Philippine National Bank (PNB) as the petitioner and Spouses Pedro Caguimbal and Vivian Caguimbal as the respondents. The events leading to the case began in 2010 when Vivian Caguimbal, a subcontractor of logs for the SAMMILIA Federation of People's Forest Development Cooperative, delivered logs to Baganga Plywood Corporation (Baganga Ply). In return, Baganga Ply issued six checks totaling PHP 3,494,129.50 to Vivian, which were drawn on PNB-Mati. On August 9, 2010, Vivian's daughter, Faith Caguimbal, visited the PNB-Butuan Branch to verify the status of these checks. She was informed by Sales and Service Officer Grace Besa that a Stop Payment Order (SPO) had been issued on the checks by Baganga Ply.

Despite this, on August 12, 2010, Faith presented the checks for deposit at the same branch, where they were accepted by Sales and Service Head Carlos S. Lim, Jr., who was unaware of the prior inquiry regarding the checks. On August 16, five of the...

Facts:

Background of the Case:
Respondent Vivian Caguimbal was a sub-contractor for SAMMILIA Federation of People's Forest Development Cooperative (SAMMILIA), which supplied logs to Baganga Plywood Corporation (Baganga Ply). In 2010, Vivian delivered logs to Baganga Ply and received six PNB-Mati checks totaling P3,494,129.50.

Verification of Checks:
On August 9, 2010, Vivian’s daughter, Faith Caguimbal, inquired with PNB-Butuan Branch about the status of the checks. Grace Besa, a PNB officer, informed her that a Stop Payment Order (SPO) had been issued by Baganga Ply.

Deposit of Checks:
On August 12, 2010, the checks were presented for deposit by Jill Martirez, Faith’s cousin, to Carlos Lim, PNB-Butuan’s Sales and Service Head. Unaware of the SPO, Lim accepted the checks for clearing. Five checks were later returned with “SPO-funded” stamps, but one check (Check No. 42399 for P1,000,000.00) remained credited to the account.

Inquiries and Actions:
From August 16 to August 31, 2010, respondents observed that the P1,000,000.00 remained in their account, leading them to believe the SPO had been lifted. However, on September 1, 2010, the amount was abruptly debited without prior notice.

Dispute and Complaint:
Respondents filed a complaint for sum of money, damages, and attorney’s fees against PNB, alleging negligence in handling the SPO and the abrupt debit of P1,000,000.00.

Issue:

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Ruling:

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Ratio:

1. Duty of Banks: Banks are held to the highest degree of diligence in handling clients’ accounts due to the fiduciary nature of their relationship. PNB failed to meet this standard by delaying the discovery of its mistake and debiting the account without prior notice.
2. Negligence: PNB’s failure to promptly rectify the error and inform respondents constituted gross negligence, justifying the award of damages.
3. Damages: Moral damages were awarded for the anxiety and humiliation suffered by respondents, while exemplary damages were imposed to serve as a warning to banks. Attorney’s fees were granted as respondents were compelled to litigate.