FEBTC v.

Pacilan Digest
Far East Bank vs. Pacilan
G.R. 157314 July 29, 2005

Facts:
Pacilan maintains a current account with petitioner bank (now BPI). He issued several postdated checks, the last one being check no.
2434886 amounting to P680. The said check was presented to petitioner bank for payment on April 4, 1988 but was dishonored. It
appeared that the account of Pacilan has been closed on the evening of April 4 on the ground that it was 'improperly handled'.

It appeared that the plaintiff issued four checks from March 30 - April 4, 1988 amounting in total to P7,410, on one hand, his funds in
the bank only amounted to P6,981.43, thus an overdraft of P 428.57 resulted therefrom. Consequently, the last check was dishonored
despite the fact that plaintiff deposited the amount the following day.

Pacilan wrote a complaint to the bank but after the bank did not reply, he filed an action for damages against it and the employee
(Villadelgado) who closed the account. The plaintiff alleged that the immediate closure of his account was malicious and intended to
embarrass him.

The lower court ruled in favor of the plaintiff and awarded actual damages (P100,000) and exemplary damages (P50,000). The bank
appealed, but the CA affirmed the lower court's decision with modifications and held that the closure of the bank of plaintiff's
account despite its rules and regulation allowing a re-clearing of a check returned for insufficiency of funds, is patently malicious and
unjustifiable. Hence, this appeal.

The petitioner contended that in closing the account, it acted in good faith and in accordance with the pertinent banking rules and
regulations governing the operations of a regular demand deposit, allowing it to close an account if the depositor frequently draws
checks against insufficient funds or uncollected deposits.

Issue: Whether or not the petitioner is liable for damages

NO. The award of damages under Art. 19 of the Civil Code is unjustifiable. The petitioner has the right to close the account of plaintiff
based on the rules and regulations on regular demand deposits. The facts do not show that the petitioner abused its rights in the
exercise of its duties. The evidence negates the existence of bad faith and malice on the part of the petitioner bank, which are the
second and third elements necessary to prove an abuse of right in violation of Art. 19.

The records also showed that indeed plaintiff has mishandled his account by issuing checks previously against insufficient funds not
just once, but more than a hundred times.

Moreover, the acceptance by the bank of the deposit the day after the closure of the account cannot be considered as bad faith nor
done with malice but a mere simple negligence of its personnel.

As a result, whatever damage the plaintiff has suffered (by virtue of the subsequent dishonor of the other checks he issued) should be
borne by him alone as these was the result of his own act in irregularly handling his account. The respondent's case is clearly one
of damnum absque injuria.

WHEREFORE, the petition is GRANTED. The Decision dated August 30, 2002 and Resolution dated January 17, 2003 of the Court of
Appeals in CA-G.R. CV No. 36627 are REVERSED AND SET ASIDE.