G.R. No. 157049; August 11, 2010
CITYTRUST BANKING CORPORATION (now Bank of the Philippine Islands), Petitioner, vs. CARLOS ROMULO N. CRUZ, Respondent.

FACTS

Respondent Carlos Romulo N. Cruz, an architect and businessman, maintained savings and checking accounts under a check-o-matic arrangement with petitioner Citytrust Banking Corporation’s Loyola Heights Branch. This arrangement automatically transferred funds from his savings account to cover checks drawn on his current account. Due to an oversight by one of the bank’s tellers, his savings account was erroneously closed. Consequently, checks he issued were dishonored despite sufficient funds, causing him extreme embarrassment and humiliation. The respondent sued for damages after the bank’s apologies and account adjustments proved unsatisfactory.
The Regional Trial Court ruled in favor of Cruz, awarding moral damages, exemplary damages, and attorney’s fees. It found the bank negligent in supervising its teller, which directly caused the respondent’s serious anxiety and humiliation. The Court of Appeals affirmed this decision, emphasizing the bank’s fiduciary duty and the proximate cause between its lack of supervision and the damage suffered by its depositor.

ISSUE

Whether the Court of Appeals erred in affirming the award of moral damages, exemplary damages, and attorney’s fees against the petitioner bank.

RULING

The Supreme Court denied the petition and affirmed the assailed decision. Firstly, the petition improperly raised questions of fact, not law, as it essentially challenged the factual findings of the lower courts, which are generally conclusive in a petition for review on certiorari. Secondly, the lower courts’ findings were fully supported by evidence. The Court reiterated that a bank, in its fiduciary relationship with depositors, bears the obligation to exercise the highest degree of diligence in handling accounts and supervising employees. The bank’s failure in this duty, resulting in the erroneous closure of the account, constituted negligence for which it must bear responsibility.
Thirdly, consistent with jurisprudence, moral damages are recoverable for a depositor’s besmirched reputation and mental anguish due to a bank’s negligence, even absent proof of malice or bad faith. The award of ₱100,000.00 in moral damages was justified given the respondent’s social standing as a professional. Lastly, the bank’s failure to meet the exacting standards of the banking industry warranted the awards of exemplary damages and attorney’s fees to serve as a deterrent and to acknowledge the breach of public trust.