PNB v.
PIKE Evidence clearly showed that the petitioner bank did not exercise the degree of
G.R. No. 157845 / September 20, 2005 / CHICO-NAZARIO, J. / Degree of Diligence
NATURE Petition for Review on Certiorari
PETITIONERS Philippine National Bank – Buendia Branch
RESPONDENTS Norman Y. Pike
SUMMARY. Pike opened a U.S Dollar Savings Account with PNB. After coming home from a
trip to Japan, he found out that his passbook was missing & that there was an unauthorized
withdrawal was made amounting to $7,500. Pike demanded PNB to return the money, but
PNB refused stating that it exercised due diligence in handling the account. RTC ruled in
favor of Pike. PNB appealed– MR was denied. Hence, this petition.
DOCTRINE. With banks, the degree of diligence required 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.
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 + passbook went missing. He
reported this which lead to the arrest of 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)
 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 clearly forgeries. Defendant PNB refused on stating that it
exercised due diligence in handling the account.
 Pike requested that the hold-account be lifted in order to withdraw remaining balanace.
 PNB alleged in its Motion to Dismiss a counterstatement of facts : “1993, Pike & Davasol
wetn to see PNB AVP Lorenzo Bal to withdraw $2k + verbal instructions to honor all
withdrawals transmitted by his Talent Manager and Choreographer Joy Davasol who shall
present pre-signed withdrawal slips bearing Pike’s signature. “
 TC : Bank responsible for unauthorized withdrawals. Signatures in the unauthorized
withdrawals slips did not correspond to the true signature of Pike. From this, court was
convinced that the bank was negligent in the performance of its duties.
 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.
 PNB filed Motion for Reconsideration : CA denied. Hence, this petition.
ISSUES & RATIO.
1. WON PNB exercised the degree of diligence that it ought to have exercised in dealing
with their clients? – NO.
diligence that it ought to have exercised in dealing with their clients.
Having admitted that pre-signed withdrawal slips do not constitute the normal procedure
with respect to withdrawals by representatives 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 at that, 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.
DECISION.
WHEREFORE, the instant petition is DENIED.
NOTES.
 By his own testimony, the witness ( Lorenzo Bal – Assistant Vice President of PNB Buendia
 Branch) negated the very reason for the bank’s bizarre “accommodation” of the alleged
verbal request of respondent Pike—that he was a “valued client.” From the aforequoted, it
appears that the witness, Lorenzo Bal, was not even reasonably familiar with respondent
Pike, yet, he was ready, willing and able to accommodate the verbal request of said
depositor.
 It was also shown that, Lorenzo Bal 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.