Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=82602:gr-183204-2014&catid=1579&Itemid=566
Timestamp: 2019-04-24 16:36:02+00:00

Document:
G.R. No. 183204, January 13, 2014 - THE METROPOLITAN BANK AND TRUST COMPANY, Petitioner, v. ANA GRACE ROSALES AND YO YUK TO, Respondents.
THE METROPOLITAN BANK AND TRUST COMPANY, Petitioner, v. ANA GRACE ROSALES AND YO YUK TO, Respondents.
This Petition for Review on Certiorari3 under Rule 45 of the Rules of Court assails the April 2, 2008 Decision4 and the May 30, 2008 Resolution5 of he Court of Appeals CA) in CA-G.R. CV No. 89086.
On December 15, 2003, the Office of the City Prosecutor of Manila issued a Resolution dismissing the criminal case for lack of probable cause.43 Unfazed, petitioner moved for reconsideration.
WHEREFORE, premises considered, judgment is hereby rendered ordering [petitioner] METROPOLITAN BANK & TRUST COMPANY to allow [respondents] ANA GRACE ROSALES and YO YUK TO to withdraw their Savings and Time Deposits with the agreed interest, actual damages of P50,000.00, moral damages of P50,000.00, exemplary damages of P30,000.00 and 10% of the amount due [respondents] as and for attorney’s fees plus the cost of suit.
The counterclaim of [petitioner] is hereby DISMISSED for lack of merit.
Aggrieved, petitioner appealed to the CA.
WHEREFORE, premises considered, the Decision dated January 15, 2007 of the RTC, Branch 21, Manila in Civil Case No. 04-110895 is AFFIRMED with MODIFICATION that the award of actual damages to [respondents] Rosales and Yo Yuk To is hereby DELETED.
A. THE [CA] ERRED IN RULING THAT THE "HOLD-OUT" PROVISION IN THE APPLICATION AND AGREEMENT FOR DEPOSIT ACCOUNT DOES NOT APPLY IN THIS CASE.
B. THE [CA] ERRED WHEN IT RULED THAT PETITIONER’S EMPLOYEES WERE NEGLIGENT IN RELEASING LIU CHIU FANG’S FUNDS.
At the outset, the relevant issues in this case are (1) whether petitioner breached its contract with respondents, and (2) if so, whether it is liable for damages. The issue of whether petitioner’s employees were negligent in allowing the withdrawal of Liu Chiu Fang’s dollar deposits has no bearing in the resolution of this case. Thus, we find no need to discuss the same.
The Bank is hereby authorized to withhold as security for any and all obligations with the Bank, all monies, properties or securities of the Depositor now in or which may hereafter come into the possession or under the control of the Bank, whether left with the Bank for safekeeping or otherwise, or coming into the hands of the Bank in any way, for so much thereof as will be sufficient to pay any or all obligations incurred by Depositor under the Account or by reason of any other transactions between the same parties now existing or hereafter contracted, to sell in any public or private sale any of such properties or securities of Depositor, and to apply the proceeds to the payment of any Depositor’s obligations heretofore mentioned.
Petitioner’s reliance on the "Hold Out" clause in the Application and Agreement for Deposit Account is misplaced.
The "Hold Out" clause applies only if there is a valid and existing obligation arising from any of the sources of obligation enumerated in Article 115779 of the Civil Code, to wit: law, contracts, quasi-contracts, delict, and quasi-delict. In this case, petitioner failed to show that respondents have an obligation to it under any law, contract, quasi-contract, delict, or quasi-delict. And although a criminal case was filed by petitioner against respondent Rosales, this is not enough reason for petitioner to issue a "Hold Out" order as the case is still pending and no final judgment of conviction has been rendered against respondent Rosales. In fact, it is significant to note that at the time petitioner issued the "Hold Out" order, the criminal complaint had not yet been filed. Thus, considering that respondent Rosales is not liable under any of the five sources of obligation, there was no legal basis for petitioner to issue the "Hold Out" order. Accordingly, we agree with the findings of the RTC and the CA that the "Hold Out" clause does not apply in the instant case.
In view of the foregoing, we find that petitioner is guilty of breach of contract when it unjustifiably refused to release respondents’ deposit despite demand. Having breached its contract with respondents, petitioner is liable for damages.
exemplary damages and attorney’s fees.
In this case, a review of the circumstances surrounding the issuance of the "Hold Out" order reveals that petitioner issued the "Hold Out" order in bad faith. First of all, the order was issued without any legal basis. Second, petitioner did not inform respondents of the reason for the "Hold Out."82 Third, the order was issued prior to the filing of the criminal complaint. Records show that the "Hold Out" order was issued on July 31, 2003,83 while the criminal complaint was filed only on September 3, 2003.84 All these taken together lead us to conclude that petitioner acted in bad faith when it breached its contract with respondents. As we see it then, respondents are entitled to moral damages.
In this case, we find that petitioner indeed acted in a wanton, fraudulent, reckless, oppressive or malevolent manner when it refused to release the deposits of respondents without any legal basis. We need not belabor the fact that the banking industry is impressed with public interest.87 As such, "the highest degree of diligence is expected, and high standards of integrity and performance are even required of it."88 It must therefore "treat the accounts of its depositors with meticulous care and always to have in mind the fiduciary nature of its relationship with them."89 For failing to do this, an award of exemplary damages is justified to set an example.
The award of attorney's fees is likewise proper pursuant to paragraph 1, Article 220890 of the Civil Code.
In closing, it must be stressed that while we recognize that petitioner has the right to protect itself from fraud or suspicions of fraud, the exercise of his right should be done within the bounds of the law and in accordance with due process, and not in bad faith or in a wanton disregard of its contractual obligation to respondents.
WHEREFORE, the Petition is hereby DENIED. The assailed April 2, 2008 Decision and the May 30, 2008 Resolution of the Court of Appeals in CA-G.R. CV No. 89086 are hereby AFFIRMED. SO ORDERED.
1 Allied Banking Corporation v. Lim Sio Wan 573 Phil. 89 102 2008).
2 Bank of the Philippine Islands v. Court of Appeals, G.R. No. 104612, May 10 1994 232 SCRA 302, 309- 310.
4 CA rollo, pp. 125-149; penned by Associate Justice Remedios A. Salazar-Fernando and concurred in by Associate Justices Rosalinda Asuncion-Vicente and Sesinando E. Villon.
7 Sometimes referred to in the records as "China Golden Bridge Travel and Tours, Inc."
10 Joint Peso Account No. 224-322405145-0; Records, Volume I, p. 9.
13 CA rollo, p. 126.
15 Joint Dollar Account No. 0224-01041-0; Records, Volume I, p. 12.
17 CA rollo, p. 126.
18 Records, Volume I, p. 3.
19 CA rollo, pp. 126-127.
21 Records, Volume II, p. 388.
25 CA rollo, p. 127.
26 Id. at unpaged to 140.
27 Records, Volume I, p.223.
54 Records, Volume I, p. 252.
55 Records, Volume II, pp. 502-508; penned by Judge Amor A. Reyes.
60 CA rollo, p. 148.
78 Records, Volume II, p. 346.
80 Article 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith.
81 Bankard, Inc. v. Dr. Feliciano, 529 Phil. 53, 61 (2006).
82 CA rollo, p. 133.
85 Article 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages.
86 Article 2232 of the Civil Code provides that: In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.
87 Solidbank Corporation v. Spouses Arrieta, 492 Phil. 95, 104-105 (2005) and Prudential Bank v. Lim, 511 Phil. 100, 114 (2005).
88 Solidbank Corporation v. Spouses Arrieta, id. at 104.
(1) When exemplary damages are awarded.

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