UNITED COCONUT PLANTERS BANK AND LUIS MA. ONGSIAPCO, PETITIONERS, VS. RUBEN E. BASCO, RESPONDENT.

United Coconut Planters Bank versus Basco

The Case

This is a petition for review on certiorari brought by United Coconut Planters Bank and its First Vice President for Human Resources, Luis Ma. Ongsiapco, against Ruben E. Basco, a former employee of seventeen years, a stockholder, and a depositor of the bank. Basco sued for damages after the bank, through a memorandum issued by Ongsiapco, barred him from access to all bank premises following his dismissal and the filing of a labor complaint against the bank. The case matters because it tests the boundary between a bank's property right to exclude persons from its premises and the abuse of rights rule under Article 19 of the Civil Code, and it fixes the rule that a bank may impose reasonable limitations on access by non-employees but may not act capriciously and arbitrarily against its own stockholders and depositors.

Procedural History

Basco filed a complaint for damages against the bank and Ongsiapco in the Regional Trial Court of Makati City, Branch 146. On May 29, 1998, the trial court rendered judgment in favor of Basco, holding that the petitioners abused their right under Article 19 of the New Civil Code, ordering them to rescind and set aside the memorandum of November 15, 1995, and awarding moral damages, exemplary damages, attorney's fees, and costs of suit, while dismissing the petitioners' counterclaim.

The petitioners appealed to the Court of Appeals. On March 30, 2000, the Court of Appeals affirmed the trial court's decision with modifications: it deleted the awards for moral and exemplary damages and attorney's fees, set aside the order rescinding the memorandum, but ordered the bank to pay nominal damages of 25,000 pesos on its finding that the bank abused its right when its security guards stopped Basco from proceeding to the working area near the automated teller machine section to get a check. The petitioners then elevated the case to the Supreme Court by petition for review on certiorari.

Facts

Ruben E. Basco had been employed with United Coconut Planters Bank for seventeen years. He owned 804 common shares of stock and maintained a checking account with the bank at its Las Piñas Branch. Aside from his employment, he worked as an underwriter for the United Coconut Planters Life Association, a subsidiary of the bank, and solicited insurance policies from bank employees. On June 19, 1995, the bank terminated his employment for grave abuse of discretion and authority and breach of trust in the conduct of his job as Bank Operations Manager of its Olongapo Branch. Basco then filed a complaint for illegal dismissal and damages before the National Labor Relations Commission. Despite this, he continued to frequent the bank's main office in Makati City to solicit insurance policies and to discuss his complaint with employees.

On November 15, 1995, Ongsiapco issued a memorandum to the Vice President of the Security Department stating that Basco had been terminated, that he had filed charges against the bank, and that he should not be allowed access to all bank premises. Security guards were directed to strictly impose the security procedure. Basco's counsel wrote to request reconsideration, stressing that Basco needed access to the premises for his insurance work and that he was a stockholder of record. Ongsiapco replied that the bank, as a banking institution, does not allow non-employees free access to areas where employees work, and that it prohibits solicitation within its premises.

On December 21, 1995, Basco visited an assistant manager at the Makati Branch, and a security guard approached him and reminded him not to stay longer than he should. On January 31, 1996, Basco went to the Makati Branch to receive a check from a bank employee and to deposit money for a friend. While he was seated on a sofa in front of the teller's booth, two security guards showed him the memorandum and told him to leave. He was allowed to finish his transaction. When another employee motioned to him to come and get the check, a security guard tapped his shoulder and prevented him from approaching, so the employee walked over and handed him the check. Basco then asked that his presence be logged, and it was recorded. He thereafter filed the complaint for damages.

Issues

• Whether or not the bank abused its right when it issued, through Ongsiapco, the memorandum barring Basco from access to all bank premises.
• Whether or not the bank is liable for nominal damages in view of the incident where its security guard stopped Basco from proceeding to the working area near the automated teller machine section to get the check.
• Whether or not the bank is entitled to damages on its counterclaim.

Applicable Provisions

Article 429 of the New Civil Code, invoked by the petitioners, provides:

Article 429. The owner or lawful possessor of a thing has the right to exclude any person from the enjoyment and disposal thereof. For this purpose, he may use such force as may be reasonably necessary to repel or prevent an actual or threatened unlawful physical invasion or usurpation of his property.

This is the self-help provision on which the bank rested its claimed right to exclude Basco from its premises.

Article 19 of the New Civil Code, the abuse of rights rule applied by the trial court and discussed by the Court, provides:

Article 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.

This is the standard against which the Court measured the bank's exercise of its property right.

Ruling

On the first issue, the Court held that the bank has the right to exclude certain individuals from its premises or to limit their access thereto as to time, to protect not only its premises and records but also the persons of its personnel and customers. The banking business is impressed with public trust, and banks may impose reasonable conditions or limitations on access by non-employees, such as excluding them from working areas, even absent any imminent or actual unlawful aggression, provided the limitations are not contrary to law. Property rights, the Court stressed, are not absolute and unrestricted dominions but are subject to reasonable limitations in their enjoyment.

However, the Court found that the memorandum, on its face, barred Basco, a stockholder and depositor, from gaining access to all bank premises under all circumstances. It was all-embracing and admitted of no exceptions, and the security guards were enjoined to strictly implement it. Under it, Basco could not encash a check, withdraw from his account, transact business as a depositor, or confer with the corporate secretary about his shares. The Court held that the memorandum, as worded, violated his rights as a stockholder and depositor for being capricious and arbitrary, and even contravened the bank's own Code of Ethics, which allows a person whose employment had been terminated access to bank premises as a client in the transaction of a regular bank-client activity.

On the second issue, the Court agreed that the bank may prohibit non-employees from entering the working area of the automated teller machine section, and upheld the award of nominal damages in the amount of 25,000 pesos in view of the incident. On the third issue, the Court found no basis to grant the petitioners' counterclaim.

Doctrine

A bank, by the very nature of its business, may impose reasonable conditions or limitations on the access of non-employees to its premises and records, including their exclusion from working areas, even absent any imminent or actual unlawful aggression, provided the limitations are not contrary to law. This flows from Article 429 of the New Civil Code, which grants the owner or lawful possessor the right to exclude any person from the enjoyment and disposal of his property.

But that right is not absolute. Under Article 19 of the New Civil Code, every person must, in the exercise of his rights, act with justice, give everyone his due, and observe honesty and good faith. A blanket prohibition that bars a stockholder and depositor from all bank premises under all circumstances, without exception, is capricious and arbitrary and constitutes an abuse of right for which the actor may be held liable.

Disposition

The petition was denied, and the decision of the Court of Appeals was affirmed, with the bank held liable to Basco for nominal damages of 25,000 pesos.

Remember This

The single line to memorize: a bank may reasonably limit access to its premises, but a blanket, all-embracing ban against its own stockholder and depositor is capricious and arbitrary, an abuse of right under Article 19. Examiners use this case to test the interplay of Article 429 property rights and the abuse of rights rule, and the special diligence owed by banks impressed with public trust.