CAGUNGUN V.

PLANTERS DEVELOPMENT BANK, 473 SCRA 259 (2005)

Facts: The spouses Cagungun filed a suit against, then, Country Development Bank (after a
merger, known as Planters Development Bank). Vicente Cagungun has since died and was
substituted by their children as plaintiff. Country opened an extension office in Olongapo City
and the Cagungun spouses opened some accounts with them, 2 of which, they were issued
Savings Passbooks, in the name of Purings Dry Goods and Savings and V/L Cagungun.
Cagungun spouses claimed that because of the nature of their businesses, requiring daily deposits
and their trust to Country, they entrusted and left them with said saving passbooks, with the
arrangement that Branch manager, Ruperto Reyes, or a certain Bong and Ding would collect
their funds, round it off and deposit to their account. The remainder of which would then be
applied to their mortgage loan balance. The arrangement went well, when they received a notice
that their loan was past due. Hence, they investigated, finding out that on the dates of October 8,
18, 20 and 31 and November 15, and December 4 and 8, with the use of withdrawal slips, a total
of P220,000.00 was withdrawn from their Savings. These withdrawals were invalid for no such
withdrawal was authorized, made or received by the depositors, and the signatures of Vicente on
the slips were forgeries, as confirmed by the NBI Chief of Questioned Documents Division.
Planters did not cooperate with the investigation made by the Cagungun spouses. Furthermore,
they explained that the October 8 withdrawal of P20,000.00 and the other withdrawals of a total
of P30,000.00, were placed on time deposits by Vicente in 5 accounts held with their children.
And the other withdrawals were also made by Vicente in exchange for Managers Checks made
in the names of payees Santiago Lee, Rosita Saldana, Benito Yap and Joaquin Aganda. Hence
this petition.
Issue: Whether or not was grossly negligent and entitles the plaintiff for damages
Held: YES, the bank was indeed grossly negligent when it allowed the sum of P220,000.00 to be
withdrawn through falsified withdrawal slips without petitioners authority and knowledge and
its failure to comply with petitioners instruction to apply their deposits on their loan. In so
doing, respondent bank breached the trust that petitioners reposed on it.
We agree in the findings of the two courts below that the unauthorized transactions were
committed by one or some of the employees of respondent bank for which it should be liable.
The evidence showed that respondent did not exercise the degree of diligence it ought to have
exercised in dealing with its clients -- diligence higher than that of a good father of a family. If
only respondent exercised such diligence, no anomaly or irregularity would have happened.
Hence the court awards moral damages and exemplary damages The Cagungun spouses are
granted moral damages for the reason that Planters was grossly negligent when it allowed the
P220,000.00 to be withdrawn and its failure to comply with the instructions. As a settled rule, the
gross negligence of the bank in handling the deposit of its clients amounts to bad faith and calls
for an award of moral damages. Moral damages are meant to compensate the claimant for any
physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation and similar injuries unjustly caused. As a bank, it
should have exercised diligence higher than that of a good father of the family. Furthermore, for
the non-cooperation of Planters with the investigation initially made by the Cagungun spouses,
attempting to cover up the misdeeds of its employees, exemplary damages are also to be
awarded.