Far East Bank v. Themistocles Pacilan, Jr.

Summary

Themistocles Pacilan, Jr., a bank officer, sued Far East Bank for damages after it closed his current account and dishonored his check due to overdraft. Pacilan claimed the bank acted maliciously in closing his account immediately without allowing him to deposit funds the next day to cover the overdraft, as supposedly permitted by banking practice. The RTC and Court of Appeals initially awarded damages, finding the bank violated Article 19 of the Civil Code through abuse of rights. However, the Supreme Court reversed, ruling the bank acted in good faith and in accordance with its rules and regulations. The Court found no abuse of rights, noting Pacilan had chronically overdrawn his account hundreds of times over several years, justifying the closure. The case established that while banks have contractual rights to close problematic accounts, customers bear the consequences of their own improper conduct under the principle of damnum absque injuria.