G.R. No. 111584 September 17, 2001
PRODUCERS BANK OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS and SPOUSES SALVADOR Y. CHUA and EMILIA U. CHUA, respondents.

FACTS

Respondent spouses maintained substantial deposits with petitioner Producers Bank and obtained various loans, including a P2,000,000.00 loan secured by a real estate mortgage. On January 20, 1984, they deposited P960,000.00, which was entered in their passbook. The bank, however, failed to credit this amount because its branch manager absconded with depositors’ funds. The bank also dishonored the spouses’ checks despite sufficient funds and refused their request for account ledgers. This prompted the spouses to file an action for damages.
During the pendency of that case, the bank filed a petition for the extrajudicial foreclosure of the real estate mortgage. The spouses then filed a separate complaint for injunction and damages, alleging the foreclosure was baseless and malicious. The trial court ruled in favor of the spouses, awarding substantial damages and allowing the offsetting of their deposit and accrued damages against their loan obligations. The Court of Appeals affirmed with modifications, reducing some awards.

ISSUE

Whether the Court of Appeals erred in affirming the award of damages and attorney’s fees to the respondent spouses.

RULING

The Supreme Court modified the damages but affirmed the award of attorney’s fees. The bank’s failure to credit the valid deposit constituted gross negligence, making it liable for damages. However, the award of P18,000.00 monthly for unrealized profits from the gasoline station business was deleted for being speculative and unsupported by independent evidence like financial statements. Actual damages cannot be based on mere allegations.
The awards for moral and exemplary damages were reduced to P300,000.00 and P150,000.00, respectively, as the original amounts were excessive. The bank’s actions—withholding the deposit, dishonoring checks without cause, refusing to provide ledgers, and initiating a premature foreclosure—were unjustified and in bad faith, warranting these temperate damages.
The award of P100,000.00 as attorney’s fees was sustained. The bank’s unjustified acts compelled the spouses to litigate to protect their interests, which is a valid ground under Article 2208 of the Civil Code. The Court affirmed the appellate decision’s directive for the bank to render an accounting and to allow the offsetting of the spouses’ obligations with the damages awarded.