United Coconut Planters Bank vs. Basco

A bank may reasonably restrict non-employees' access to its working areas under Article 429 of the New Civil Code, but an all-embracing ban on a stockholder-depositor's access to all bank premises is capricious and arbitrary under Article 19; no nominal damages lie where security guards politely prevent the depositor from entering a restricted working area and no actionable injury is shown.

Ruben E. Basco was a long-time UCPB employee, a stockholder holding 804 common shares, and a depositor at the bank's Las Piñas Branch; he also worked as an underwriter for Coco Life, a UCPB subsidiary, and solicited insurance policies from UCPB employees. UCPB is a banking institution, and Luis Ma. Ongsiapco was its First Vice-President for Human Resource Division. The dispute implicated the bank's right of exclusion under Article 429 of the New Civil Code and the abuse-of-rights rule under Article 19, as well as the bank's own Code of Ethics on access by terminated employees.

Ruben E. Basco had been employed with UCPB for seventeen (17) years and owned 804 common shares of stock at the par value of ₱1.00. He maintained a checking account with the bank at its Las Piñas Branch under Account No. 117-001520-6, and since December 1992 he also worked as an underwriter at the United Coconut Planters Life Association (Coco Life), a UCPB subsidiary, soliciting insurance policies from UCPB employees. On June 19, 1995, Basco received a letter from UCPB informing him of the termination of 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. He thereafter filed a complaint for illegal dismissal, non-payment of salaries, and damages against the bank with the NLRC, docketed as NLRC Cases Nos. 00-09-05354-92 and 00-09-05354-93. Despite the pending case, Basco still frequented the UCPB main office in Makati City to solicit insurance policies from employees and discussed his complaint with them. He was also employed by All-Asia Life Insurance Company as an underwriter, and at one time UCPB lawyers had an informal conference with him at the bank's head office and offered him money for an amicable settlement, which he revealed to some bank employees.

On November 15, 1995, Luis Ma. Ongsiapco, UCPB First Vice-President for Human Resource Division, issued a Memorandum to Jesus Belanio, Vice-President of the Security Department, stating that Basco had been terminated as of June 19, 1995, that Basco had filed charges against the bank and the case was still ongoing, and that Basco should not be allowed access to all bank premises. A passport-size picture of Basco was attached to the Memorandum, and the next day the security guards on duty were directed to strictly impose the security procedure in conformity with it. On December 7, 1995, Basco, through counsel, wrote Ongsiapco requesting reconsideration of the Memorandum and permission to enter the bank premises, emphasizing that he was connected with Cocolife as an insurance agent, that his seventeen-year tenure had given him good relationships with many UCPB employees who were the main source of his solicitations, that the Memorandum effectively curtailed his livelihood, that he was a stockholder of record of 804 common shares since July 1983, and that denying him access was an abuse of right and an undue restriction on his freedom of movement and right to make a livelihood. In his reply dated December 12, 1995, Ongsiapco informed Basco that his request could not be granted because the bank dealt with matters involving clients' confidences, followed a policy of not allowing non-employees free access to areas where employees work, prohibited solicitation, peddling, and selling of goods and services within its premises, and could not carve exceptions to its policies simply to accommodate Basco's business ventures.

At 5:30 p.m. of December 21, 1995, Basco went to the office of Junne Cacay, Assistant Manager of the Makati Branch, who was then having a conference with Bong Braganza, an officer of the UCPB Sucat Branch. Cacay entertained Basco although the latter had no appointment and even informed him that he had a friend who wanted to procure an insurance policy. Momentarily, a security guard approached Basco and told him that it was already past office hours and reminded him not to stay longer than he should in the bank premises. Cacay told the guard that Basco would be leaving shortly, and Basco, embarrassed, told Cacay that he was already leaving.

At 1:30 p.m. of January 31, 1996, Basco went to the UCPB Makati Branch to receive a check from Rene Jolo, a bank employee, and to deposit money with the bank for a friend. He seated himself on a sofa fronting the teller's booth where other people were also seated. Two security guards approached him, showed him Ongsiapco's Memorandum, and told him to leave the bank premises. Basco pleaded that he be allowed to finish his transaction, and one of the guards contacted the management and was told to allow Basco to finish his transaction with the bank. Meanwhile, Jose Regino Casil, a bank employee on the seventh floor, was asked by Rene Jolo to bring a check to Basco, who was waiting in the lobby in front of the teller's booth. Casil agreed and went down to the ground floor through the elevator; he was standing in the working area near the Automated Teller Machine (ATM) Section when he saw Basco standing near the sofa near the two security guards. Casil motioned Basco to come and get the check, but the security guard tapped Basco on the shoulder and prevented him from approaching Casil. Casil then walked towards Basco and handed him the check from Jolo. Before leaving, Basco requested the security guard to log his presence in the logbook, and the guard did as requested.

On March 11, 1996, Basco filed a complaint for damages against UCPB and Ongsiapco in the RTC of Manila, alleging that the Memorandum and the acts of the security guards were discriminatory, malicious, and in bad faith, and that they caused him humiliation and embarrassment; he prayed for rescission of the November 15, 1995 Memorandum and for moral damages, exemplary damages, and attorney's fees. In the proceedings below, the CA noted that Basco was still in the depositing area when the guards approached him on January 31, 1996, while the record showed that Casil was in the working area of the ATM section when he motioned to Basco and that Basco stood and walked toward him before the guards intervened.

• Right of Exclusion under Article 429: Petitioners argued that UCPB had the right to prohibit Basco from access to all bank premises under Article 429 of the New Civil Code, because the provision allows self-help to prevent actual or threatened unlawful invasion or usurpation of property, records, personnel, and customers; Ongsiapco issued the Memorandum because Basco had been dismissed for grave offenses and his presence posed a threat to records and personnel, and he discussed his labor case and settlement negotiations with bank employees.
• No Nominal Damages: Petitioners argued that Basco was not entitled to nominal damages because he failed to prove any violation of his rights, did not suffer humiliation from the guards' overt acts, and the guards politely asked him not to proceed to the restricted working area pursuant to the Memorandum; under Article 429, the incident was damnum absque injuria; Basco staged the incident to create evidence.
• Counterclaim: Petitioners argued that the CA erred in not awarding their valid and lawful counterclaim for damages.

• Article 429 Not Absolute: Respondent averred that Article 429 of the New Civil Code does not give the bank an absolute right to exclude him, a stockholder and depositor, from access to bank premises absent clear and convincing evidence that his presence posed an imminent threat or peril to bank property and records and the persons of customers/clients.
• Abuse of Right and Discrimination: Respondent alleged in his complaint that the Memorandum was a pretense for vindictive intent to prevent him from soliciting insurance among bank employees, was discriminatory, curtailed his livelihood, and caused him humiliation; he prayed for rescission and damages.

• Validity of the Access Ban: Whether the petitioner bank abused its right when it issued, through petitioner Ongsiapco, the Memorandum barring respondent access to all bank premises.
• Nominal Damages: Whether the petitioner bank is liable for nominal damages for the January 31, 1996 incident in which its security guard stopped respondent from proceeding to the working area of the ATM section to get a check from Casil.
• Counterclaim: Whether the petitioner bank is entitled to damages on its counterclaim.

• Validity of the Access Ban: Yes, in part. The bank may restrict access to working areas, but the Memorandum was capricious and arbitrary because it barred Basco, a stockholder and depositor, from all bank premises without exception; the complaint was nevertheless dismissed for lack of actionable damages.
• Nominal Damages: No. The guards did not violate Basco's rights; they politely stopped him before he entered the restricted working area, and any inconvenience was damnum absque injuria.
• Counterclaim: No. There was no evidence of bad faith or malice in Basco's filing of the complaint; the commencement of an action does not per se make it wrongful.

• Validity of the Access Ban: Article 429 of the New Civil Code gives the owner or lawful possessor the right to exclude any person from the enjoyment and disposal of a thing and to use reasonable force to repel or prevent actual or threatened unlawful physical invasion or usurpation. The SC recognized that banks, by the nature of their business, are impressed with public trust and may impose reasonable conditions or limitations on non-employees' access to their premises and records, including excluding non-employees from working areas, even absent imminent or actual unlawful aggression, provided the limitations are not contrary to law. Property rights, however, are not absolute; under Article 19, every person must act with justice, give everyone his due, and observe honesty and good faith, and an exercise of right that discards these norms and causes damage to another is a legal wrong. The November 15, 1995 Memorandum, on its face, barred Basco, a stockholder and depositor, from access to all bank premises under all circumstances and admitted no exceptions, and the guards were enjoined to strictly implement it. As worded, it would prevent Basco from encashing a check, withdrawing from his account, transacting business with the bank, or conferring with the corporate secretary about his shares; it also contravened the bank's own Code of Ethics, Article XII, paragraphs 4.1 and 4.2, which allowed a terminated employee access as a client in regular bank-client activity and for official business with prior approval and supervision, and it was contrary to Ongsiapco's own testimony that terminated employees could be allowed access under certain conditions. The SC thus held the Memorandum capricious and arbitrary as to Basco's rights as a stockholder and depositor, although the bank retained the right to prohibit non-employees from restricted working areas.
• Nominal Damages: The CA awarded nominal damages on the theory that the guards should have waited until they were sure Basco had entered the restricted area before enforcing the Memorandum. The SC disagreed. The evidence showed that Casil was in the working area of the ATM section when he motioned Basco to approach him; Basco stood up and walked toward Casil, and was set to enter the working area where non-employees were prohibited, from which he could go up to the upper floors. The guards had no other recourse but to prevent him from going to and entering that working area, and they need not have waited for him to actually commence entering it before stopping him; it would have been more embarrassing for Basco to have started walking into the working area only to be halted by two uniformed guards in full view of bank customers. The guards were polite and even apologized for any inconvenience, and Basco could have motioned Casil to give him the check at the lobby near the teller's booth instead of proceeding to the restricted area himself. Basco failed to adduce evidence, other than his own testimony, that people in the ground floor saw him being stopped; he did not suffer embarrassment, inconvenience, or discomfort that amounted to a violation of a legal right. Any such inconvenience was damnum absque injuria, damage without injury or damage inflicted without injustice, or loss without violation of legal rights, for which the law provides no remedy. Nominal damages are adjudicated to vindicate or recognize a violated right, not to indemnify loss, and since no right was violated, the award was deleted.
• Counterclaim: The SC held that the bank was not entitled to damages and attorney's fees on its counterclaim. There was no evidence that Basco acted in bad faith or with malice in filing his complaint against the petitioners. The commencement of an action does not per se make the action wrongful and subject the action to damages, because the law could not have meant to impose a penalty on the right to litigate. If damages result from a party's exercise of a right, it is damnum absque injuria. Thus, the counterclaim was dismissed.

• Abuse of Rights (Article 19, New Civil Code) — Every person must act with justice, give everyone his due, and observe honesty and good faith; when a right is exercised in a manner that discards these norms and results in damage to another, a legal wrong is committed for which the actor can be held accountable. The SC applied this to hold that the all-embracing Memorandum barring Basco, a stockholder and depositor, from all bank premises was capricious and arbitrary, even though the bank had a right to restrict access to working areas.
• Right of Exclusion and Self-Help (Article 429, New Civil Code) — The owner or lawful possessor of a thing has the right to exclude any person from its enjoyment and disposal and may use such force as may be reasonably necessary to repel or prevent an actual or threatened unlawful physical invasion or usurpation of the property. The SC applied this to recognize the bank's right to prohibit non-employees from entering restricted working areas and to allow its guards to stop Basco before he actually entered the ATM working area.
• Damnum Absque Injuria — Damage without injury, damage inflicted without injustice, or loss or damage without violation of legal rights, or a wrong due to a pain for which the law provides no remedy. The SC applied this to Basco's claimed embarrassment or inconvenience from being stopped by the guards and to the bank's counterclaim, holding that no actionable injury arose from the exercise of a right.
• Nominal Damages — Nominal damages are adjudicated so that a right of a plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying any loss suffered by him. The SC applied this by deleting the CA's award because Basco's rights were not violated.
• Banks' Public Trust and Higher Diligence — Banks are mandated to exercise a higher degree of diligence in handling their affairs than an ordinary business enterprise because their business is impressed with public trust; they may impose reasonable conditions or limitations on non-employees' access to their premises and records to protect the integrity of records and the safety of personnel and clients. The SC applied this to uphold the bank's right to restrict access to working areas.

• "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." — Article 429 of the New Civil Code, quoted as the basis for the bank's right to exclude and for the guards' authority to prevent Basco from entering the restricted working area.
• "The said Memorandum, as worded, violates the right of the respondent as a stockholder or a depositor of the petitioner bank, for being capricious and arbitrary." — The SC's holding on the all-embracing scope of the November 15, 1995 Memorandum.
• "The security guards need not have waited for the respondent to actually commence entering the working area before stopping the latter." — The SC's rejection of the CA's rationale for awarding nominal damages.
• "Well-settled is the rule that the commencement of an action does not per se make the action wrongful and subject the action to damages, for the law could not have meant to impose a penalty on the right to litigate." — The SC's basis for denying the bank's counterclaim for damages.

• Rellosa vs. Pellosis, 362 SCRA 486 (2001) — Quoted for the rule that property rights are subject to reasonable limitations and that the abuse-of-rights rule under Article 19 requires every person to act with justice, give everyone his due, and observe honesty and good faith; relied on to qualify the bank's right of exclusion.
• Lim Sio Bio vs. Court of Appeals, 221 SCRA 307 (1993) — Cited for the principle that the banking business is impressed with public trust and that banks are mandated to exercise a higher degree of diligence than an ordinary business enterprise.
• Philippine Commercial and International Bank vs. Court of Appeals, 350 SCRA 446 (2001) — Cited for the higher degree of responsibility, care, and trustworthiness expected of bank officials and employees.
• Atlas Banking Corporation vs. Williams, 361 SCRA 446 (2001) — Cited for the definition of damnum absque injuria as damage without injury or damage inflicted without injustice, or loss or damage without violation of legal rights, or a wrong for which the law provides no remedy; relied on to deny nominal damages.
• ABS-CBN Broadcasting Corporation vs. Court of Appeals, 301 SCRA 572 (1999) — Cited for the rule that if damages result from a party's exercise of a right, it is damnum absque injuria; relied on to deny the bank's counterclaim.

• Article 429, New Civil Code — Provides that the owner or lawful possessor of a thing has the right to exclude any person from its enjoyment and disposal and may use such force as may be reasonably necessary to repel or prevent an actual or threatened unlawful physical invasion or usurpation; applied to recognize the bank's right to restrict non-employees from working areas and the guards' authority to stop Basco before he entered the restricted ATM working area.
• Article 19, New Civil Code — Requires every person to act with justice, give everyone his due, and observe honesty and good faith; applied to hold the all-embracing Memorandum capricious and arbitrary as to Basco's rights as a stockholder and depositor.
• UCPB Code of Ethics, Article XII, paragraphs 4.1 and 4.2 — Allows a person whose employment was terminated by the bank access to bank premises as a client in the transaction of a regular bank-client activity and when on official business concerning his employment with prior approval and supervision; applied to show that the Memorandum, as worded, contravened the bank's own policy.