G.R. No. L-25414. July 30, 1971
LEOPOLDO ARANETA, PETITIONER, VS. BANK OF AMERICA, RESPONDENT.
MAKALINTAL, J.:
Petition for review by certiorari of the decision of the Court of
Appeals in CA-G.R. No. L-34508-R modifying that of the Court of First Instance
of Manila in the Civil Case No. 52442.
Leopoldo Araneta,
the petitioner herein, was a local merchant engaged in the import and export
business. On June 30, 1961 he issued a check for $500 payable
to cash and drawn against the San Francisco
main office of the Bank of America,
where he had been maintaining a dollar current account since 1948. At that time he had a credit balance of
$523.81 in his account, confirmed by the bank’s assistant cashier in a letter
to Araneta dated September 7, 1961.
However, when the check was received by the bank on September 8, 1961, a day after the date of the
letter, it was dishonored and stamped with the notation “Account
Closed.”
Upon inquiry by Araneta as to why his
check had been dishonored, the Bank of America acknowledged that it was an
error, explaining that for some reason the check had been encoded with wrong
account number, and promising that “we shall make every effort to see that
this does not reoccur.” The bank sent a letter of apology to the payee of
the check, a Mr. Harry Gregory of Hongkong, stating
that “the check was returned through an error on our part and should not
reflect adversely upon Mr. Araneta.” In all
probability the matter would have been considered closed, but another incident
of a similar nature occurred later.
On May 25 and 31, 1962 Araneta issued
Check No. 110 for $500 and Check No. 111 for $150, respectively, both payable
to cash and drawn against the Bank of America.
These two checks were received by the bank on June 3, 1962.
The first check appeared to have come into the hands of Rufina Saldaña, who deposited it
to her account with the First National City Bank of New
York, which in turn cleared it through the Federal
Reserve Bank. The second check appeared
to have been cleared through the Wells Fargo Bank. Despite the sufficiency of Araneta’s deposit balance to cover both checks, they were
again stamped with the notation “Account Closed” and returned to the
respective clearing banks.
In the particular case of Check No. 110, it was actually paid by
the Bank of America to the First National City Bank. Subsequently, however, the Bank of America,
claiming that the payment had been inadvertently made, returned the check to
the First National City Bank with the request that the amount thereof be
credited back to the Bank of America. In
turn, the First National City Bank wrote to the depositor of the check, Rufina Saldaña, informing her
about its return with the notation “Account Closed” and asking her
consent to the deduction of its amount from her deposit. However, before Mrs. Saldaña’s
reply could be received, the Bank of America recalled the check from the First
National City Bank and honored it.
In view of the foregoing incidents, Araneta,
through counsel, sent a letter to the Bank of America demanding damages in the
sum of $20,000. While admitting
responsibility for the inconvenience caused to Araneta,
the bank claimed that the amount demanded was excessive, and offered to pay the
sum of P2,000.00. The offer was
rejected.
On December 11, 1962
Araneta filed the complaint in this case against the
Bank of America for the recovery of the following:
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The judgment of the trial court awarded all the items prayed for,
but on appeal by the defendant the Court of Appeals eliminated the award of
compensatory and temperate damages and reduced the moral damages to P8,000.00,
the exemplary damages to P1,000.00 and the attorney’s fees to P1,000.00.
Not satisfied with the decision of the appellate court, the
plaintiff filed the instant petition for review, alleging two reasons why it
should be allowed, as follows:
“(1) The Court of Appeals erred in holding that
temperate damages cannot be awarded without proof of actual pecuniary
loss. There is absolutely no legal basis
for this ruling; worse yet, it runs counter to the very provisions of ART.
2216 of the New Civil Code and to the established jurisprudence on the matter;
“(2) The Court of Appeals erred in not holding that
moral damages may be recovered as an item separate and distinct from the
damages recoverable for injury to business standing and commercial
credit. This involves the application of
paragraph (2) of Art. 2205 of the New Civil Code which up to now has not yet received
an authoritative interpretation from the Supreme Court. x x x.”
In his brief, however, the petitioner assigned five (5) errors
committed by the appellate court, namely:
(1) in concluding that the petitioner, on the basis of the evidence, had
not sufficiently proven his claim for actual damages, where such evidence, both
testimonial and documentary, stands uncontradicted on
the record; (2) in holding that temperate damages cannot be awarded to the
petitioner without proof of actual pecuniary loss; (3) in not granting moral
damages for mental anguish, besmirched reputation, wounded feelings, social
humiliation, etc., separate and distinct from the damages recoverable for
injury to business reputation; (4) in reducing, without any ostensible reason,
the award of exemplary damages granted by the lower court; and (5) in reducing,
without special reason, the award of attorney’s fees by the lower court.
We consider the second and third errors, as they present the
issues raised in the petition for review and on the basis of which it was given
due course.
In disallowing the award of temperate damages, the Court of
Appeals ruled:
“In view of all the foregoing considerations we hold that the
plaintiff has not proven his claim that the two checks for $500 each were in
partial payment of two orders for jewels worth P50,000 each. He has likewise not proven the actual damage
which he claims he has suffered. And in
view of the fact that he has not proven the existence of the supposed contract
for him to buy jewels at a profit there is not even an occasion for an award of
temperate damages on this score.”
This ruling is now assailed as erroneous
and without legal basis. The petitioner
maintains that in an action by a depositor against a bank for damages resulting
from the wrongful dishonor of the depositor’s checks, temperate damages for
injury to business standing or commercial credit may be recovered even in the
absence of definite proof of direct pecuniary loss to the plaintiff, a finding
– as it was found by the Court of Appeals – that the wrongful acts of the
respondent had adversely affected his credit being sufficient for the
purpose. The following provisions of the
Civil Code are invoked:
“ART. 2205. Damages may
be recovered:
(1)
For loss or impairment of earning
capacity in cases of temporary or permanent personal injury;
(2)
For injury to the plaintiff’s
business standing or commercial credit.”
“ART. 2216. No proof of
pecuniary loss is necessary in order that moral, nominal, temperate,
liquidated or exemplary damages may be adjudicated. The assessment of such damages, except
liquidated ones, is left to the discretion of the court, according to the
circumstances of each case.”
Also invoked by the petitioner is the case of Atlanta National
Bank vs. Davis, 96 Ga 334, 23 SE 190,[1]
and the following citations in American Jurisprudence:
“In some states what are called ‘temperate damages’ are allowed
in certain classes of cases, without proof of actual or special damages, where
the wrong done must in fact have caused actual damage to the plaintiff, though
from the nature of the case, he cannot furnish independent, distinct proof
thereof. Temperate damages are more than
nominal damages, and, rather, are such as would be a reasonable compensation
for the injury sustained. x x x.” (15 Am. Jur. 400)
“x x x. It has been generally, although not
universally, held, in an action based upon the wrongful act of a bank in
dishonoring checks of a merchant or trader having sufficient funds on deposit
with the bank, that substantial damages will be presumed to follow such act as
a necessary and natural consequence, and accordingly, that special damages need
not be shown. One of the reasons given
for this rule is that the dishonor of a merchant’s or trader’s check is
tantamount or analogous, to a slander of his trade or business, imputing to him
insolvency or bad faith. x x x.” (10 Am. Jur. 2d. 545)
On the other hand the respondent argues that since the petitioner
invokes Article 2205 of the Civil Code, which speaks of actual or compensatory
damages for injury to business standing or commercial credit, he may not claim
them as temperate damages and thereby dispense with proof of pecuniary loss
under Article 2216. The respondent cites
Article 2224, which provides that “temperate or moderate damages, which
are more than nominal but less than compensatory damages may be recovered when
the court finds that some pecuniary loss has been suffered but its amount
cannot, from the nature of the case, be proved with certainty,” and
contends that the petitioner failed to show any such loss in this case.
The question, therefore, is whether or not on the basis of the
findings of the Court of Appeals, there is reason to conclude that the
petitioner did sustain some pecuniary loss although no sufficient proof of the
amount thereof has been adduced. In
rejecting the claim for temperate damages the said Court referred specifically
to the petitioner’s failure to prove “the existence of a supposed contract
for him to buy jewels at a profit,” in connection with which he issued the
two checks which were dishonored by the respondent. This may be true as far as it goes, that is,
with particular reference to the alleged loss in that particular transaction. But it does not detract from the finding of
the same Court that actual damage had been suffered, thus:
“… Obviously, the check passed the hands of other banks
since it was cleared in the United States. The adverse reflection against the credit of Araneta with said banks was not cured nor explained by the
letter of apology to Mr. Gregory.”
x x x
“… This incident obviously affected the credit of Araneta with Miss Saldaña.
x x x
“However, in so far as the credit of Araneta
with the First National City Bank, with Miss Rufina Saldaña and with any other persons who may have come to
know about the refusal of the defendant to honor said checks, the harm was
done…”
The financial credit of a businessman is a prized and valuable
asset, it being a significant part of the foundation of his business. Any adverse reflection thereon constitutes
some material loss to him. As stated in
the case Atlanta National Bank vs. Davis, supra, citing 2 Morse Banks, Sec.
458, “it can hardly be possible that a customer’s check can be wrongfully
refused payment without some impeachment of his credit, which must in fact be
an actual injury, though he cannot, from the nature of the case, furnish
independent, distinct proof thereof.”
The Code Commission, in explaining the concept of temperate
damages under Article 2224, makes the following comment:
“In some States of the American Union, temperate damages are
allowed. There are cases where from the
nature of the case, definite proof of pecuniary loss cannot be offered,
although the court is convinced that there has been such loss. For instance, injury to one’s commercial
credit or to the goodwill of a business firm is often hard to show with
certainty in terms of money. Should
damages be denied for that reason? The
judge should be empowered to calculate moderate damages in such cases, rather
than that the plaintiff should suffer, without redress from the defendant’s
wrongful act.”
The petitioner, as found by the Court of Appeals, is a merchant
of long standing and good reputation in the Philippines. Some of his record is cited in the decision
appealed from. We are of the opinion
that his claim for temperate damages is legally justified. Considering all the circumstances, including
the rather small size of the petitioner’s account with the respondent, the
amounts of the checks which were wrongfully dishonored, and the fact that the
respondent tried to rectify the error soon after it was discovered, although
the rectification came after the damage had been caused, we believe that an
award of P5,000 by way of temperate damages is sufficient.
Under the third error assigned by the petitioner in his brief,
which is the second of the two reasons relied upon in his petition for review,
he contends that moral damages should have been granted for the injury to his
business standing or commercial credit, separately from his wounded feelings
and mental anguish. It is true that
under Article 2217 of the Civil Code, “besmirched reputation” is a
ground upon which moral damages may be claimed, but the Court of Appeals did
take this element into consideration in adjudging the sum of P8,000 in his
favor. We quote from the decision:
“… the damages to his reputation as an established and well
known international trader entitled him to recover moral damages.”
x x x
“… It was likewise established that when plaintiff learned
that his checks were not honored by the drawee Bank,
his wounded feelings and the mental anguish suffered by him caused his blood
pressure to rise beyond normal limits, thereby necessitating medical attendance
for an extended period.”
The trial court awarded attorney’s fees in the amount of
P10,000. This was reduced by the Court
of Appeals to only P1,000. Considering
the nature and extent of the services rendered by the petitioner’s counsel both
in the trial and appellate courts, the amount should be increased to
P4,000. This may be done motu proprio by
this Court under Article 2208 of the Civil Code, which provides that attorney’s
fees may be recovered in the instances therein enumerated and “in any
other case where the Court deems it first and equitable that attorney’s fees…
should be recovered,” provided the amount thereof be reasonable in all
cases.
We do not entertain the first and fourth errors assigned by the
petitioner. Neither of them was raised
and ruled upon as reasons for the allowance of his petition for review, as
required by Section 2 of Rule 45.
Besides, the first error involves a question of fact and calls for a
review of the evidence and a reappraisal of its probative value – a task not within
the appellate jurisdiction of this Court in this case. And with respect to the fourth error, while
there was gross negligence on the part of the respondent, the record shows, as
hereinbefore observed, that it tried to rectify its error soon after the same
was discovered, although not in time to prevent the damage to the petitioner.
Wherefore, the judgment of the Court of Appeals is
modified by awarding temperate damages to the petitioner in the sum of P5,000
and increasing the attorney’s fees to P4,000; and is affirmed in all other
respects. Costs against respondent.
Concepcion, C.J., Reyes, J.B.L., Zaldivar, Ruiz Castro, Fernando, Teehankee,
Barredo, Villamor, and Makasiar, JJ., concur.
Dizon, J., on leave.
[1]
In this case the plaintiff, whose check was wrongfully dishonored by the bank,
was not required to prove special damages in order to recover substantial
damages since, the court observed, such damages would naturally follow the
dishonor of a check by a bank, although they were probably not susceptible of
independent distinct proof. The
plaintiff was awarded $200 as temperate damages.