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A bank's gross negllgence ln dlshonorlng a well-funded check, aggravaLed by lLs
unreasonable delay ln repalrlng Lhe error, calls for an award of moral and exemplary
damages. 1he resulLlng ln[ury Lo Lhe check wrlLer's repuLaLlon and peace of mlnd needs
Lo be recognlzed and compensaLed.
*H5 (9C5
8efore us ls a eLlLlon for 8evlew
[1]
under 8ule 43 of Lhe 8ules of CourL, seeklng Lo
reverse and seL aslde Lhe March 28, 2001 ueclslon
[2]
and Lhe lebruary 3, 2002
8esoluLlon
[3]
of Lhe CourL of Appeals (CA) ln CA-C8 Cv no. 33002. 1he assalled ueclslon
dlsposed as follows:
IJ%$%4)$%, Lhe appeal ls >=!&=!!%>, wlLh cosLs agalnsL defendanL-
appellanL."
[4]

1he CA denled reconslderaLlon ln lLs lebruary 3, 2002 8esoluLlon.

*H5 49KLC
1he facLs are summarlzed by Lhe CA as follows:
Carmen ArrleLa ls a bank deposlLor of Solldbank CorporaLlon under Checklng
AccounL no. 123-1996. Cn March 1990, Carmen lssued S8C Check no. 0293984
(Lxh. 'A') ln Lhe amounL of330.00 ln Lhe name of Lopue's ueparLmenL SLore ln
paymenL of her purchases from sald sLore. When Lhe check was deposlLed by
Lhe sLore Lo lLs accounL, Lhe same was dlshonored due Lo 'AccounL Closed' (Lxh.
'8') desplLe Lhe facL LhaL aL Lhe Llme Lhe check was presenLed for paymenL,
Carmen's checklng accounL was sLlll acLlve and backed up by a deposlL
of 1,273.20.
As a consequence of Lhe check's dlshonor, Lopue's ueparLmenL SLore senL a
demand leLLer Lo Carmen (Lxh. 'C') LhreaLenlng her wlLh crlmlnal prosecuLlon
unless she redeemed Lhe check wlLhln flve (3) days. 1o avold crlmlnal
prosecuLlon, Carmen pald 330.00 ln cash Lo Lhe sLore, plus a surcharge
of 33.00 for Lhe bounclng check, or a LoLal of 363.00 (Lxh. 'l').
1hereupon, Carmen flled a complalnL agalnsL Solldbank CorporaLlon for
damages alleglng LhaL Lhe bank, by lLs carelessness and recklessness ln cerLlfylng
LhaL her accounL was closed desplLe Lhe facL LhaL lL was sLlll very much acLlve and
sufflclenLly funded, had desLroyed her good name and repuLaLlon and pre[udlced
noL only herself buL also her famlly ln Lhe form of menLal angulsh, sleepless
nlghLs, wounded feellngs and soclal humlllaLlon. She prayed LhaL she be
awarded moral and exemplary damages as well as aLLorney's fees.
ln lLs answer, Lhe bank clalmed LhaL Carmen, conLrary Lo her underLaklng as a
deposlLor, falled Lo malnLaln Lhe requlred balance of aL leasL 1,000.00 on any
day of Lhe monLh. Moreover, she dld noL handle her accounL ln a manner
saLlsfacLory Lo Lhe bank. ln vlew of her vlolaLlons of Lhe general Lerms and
condlLlons governlng Lhe esLabllshmenL and operaLlon of a currenL accounL,
Carmen's accounL was recommended for closure. ln any evenL, Lhe bank
clalmed good falLh ln declarlng her accounL closed slnce one of Lhe clerks, who
subsLlLuLed for Lhe regular clerk, commlLLed an honesL mlsLake when he LhoughL
LhaL Lhe sub[ecL accounL was already closed when Lhe ledger conLalnlng Lhe sald
accounL could noL be found.
AfLer Lrlal, Lhe lower courL rendered lLs declslon holdlng LhaL Solldbank
CorporaLlon was grossly negllgenL ln falllng Lo check wheLher or noL Carmen's
accounL was sLlll open and vlable aL Lhe Llme Lhe LransacLlon ln quesLlon was
made. Pence, Lhe bank was llable Lo Carmen for moral and exemplary damages,
as well as aLLorney's fees. lL held LhaL Lhe bank was remlss ln lLs duLy Lo LreaL
Carmen's accounL wlLh Lhe hlghesL degree of care, conslderlng Lhe flduclary
naLure of Lhelr relaLlonshlp. 1he dlsposlLlve porLlon of Lhe declslon reads:
WPL8LlC8L, Lhe CourL hereby renders [udgmenL ln favor of Lhe plalnLlff as
agalnsL Lhe defendanL-bank, and defendanL-bank ls ordered Lo pay moral
damages of 130,000.00, exemplary damages of 30,000.00, and aLLorney's fees
of 20,000.00, plus cosLs.
SC C8uL8Lu.'"
[3]


$8MNEO .P LH5 (.87L .P @DD59MC
1he CA debunked Lhe conLenLlon of Lhe bank LhaL Lhe laLLer was noL llable. Accordlng Lo
peLlLloner, Lhe dlshonor of Lhe check by reason of AccounL Closed" was an honesL
mlsLake of lLs employee. 1he appellaLe courL held LhaL Lhe error commlLLed by Lhe bank
employee was lmpuLable Lo Lhe bank. 8anks are obllged Lo LreaL Lhe accounLs of Lhelr
deposlLors wlLh meLlculous care, regardless of Lhe amounL of Lhe deposlL. lalllng ln Lhls
duLy, peLlLloner was found grossly negllgenL. 1he fallure of Lhe bank Lo lmmedlaLely
noLlfy 8espondenL Carmen ArrleLa of lLs unllaLeral closure of her accounL manlfesLed
bad falLh, added Lhe CA.
1he appellaLe courL llkewlse afflrmed Lhe award of moral damages. lL held LhaL Lhe
bank's wrongful acL was Lhe proxlmaLe cause of Carmen's moral sufferlng. 1he CA ruled
LhaL Lhe lack of mallce and bad falLh on Lhe parL of peLlLloner dld noL sufflce Lo
exculpaLe Lhe laLLer from llablllLy, Lhe bank's gross negllgence amounLed Lo a wllful acL.
1he Lrlal courL's award of exemplary damages and aLLorney's fees was susLalned ln vlew
of respondenL's enLlLlemenL Lo moral damages.
Pence, Lhls eLlLlon.
[6]


=CC85C
eLlLloner ralses Lhe followlng lssues for our conslderaLlon:
Q=,
WheLher or noL x x x respondenLs are enLlLled Lo recovery of moral and exemplary
damages and aLLorney's fees.
Q==,
WheLher or noL Lhe award of moral and exemplary damages and aLLorney's fees ls
excesslve, arblLrary and conLrary Lo prevalllng [urlsprudence."
[7]


*H5 (.87LRC $8MNEO
1he eLlLlon ls parLly merlLorlous.

&9NE =CC85G
$%&'&'()%*+, -'./'0'&1 2(* 3.4.5%,
eLlLloner conLends LhaL Lhe award of moral damages was erroneous because of Lhe
fallure of 8espondenL Carmen Lo esLabllsh LhaL Lhe dlshonor of Check no. 0293984 on
March 30, 1990 was Lhe dlrecL and only cause of Lhe soclal humlllaLlon, exLreme
menLal angulsh, sleepless nlghLs, and wounded feellngs suffered by [her]." lL referred Lo
an occaslon flfLeen days before, on March 13, 1990, durlng whlch anoLher check (Check
no. 0293983) she had lssued had llkewlse been dlshonored.
Accordlng Lo peLlLloner, hlghly llloglcal was her clalm LhaL exLreme menLal angulsh and
soclal humlllaLlon resulLed from Lhe dlshonor of Check no. 0293984, as she clalmed
none from LhaL of her prlor Check no. 0293983, whlch had allegedly been deposlLed by
mlsLake by Lhe payee's wlfe. Clven Lhe clrcumsLances, peLlLloner adds LhaL Lhe dlshonor
of Lhe check -- sub[ecL of Lhe presenL case -- dld noL really cause respondenL menLal
angulsh, sleepless nlghLs and besmlrched repuLaLlon, and LhaL her lnsLlLuLlon of Lhls case
was clearly moLlvaLed by opporLunlsm.
We are noL persuaded.
1he facL LhaL anoLher check Carmen had lssued was prevlously dlshonored does noL
necessarlly lmply LhaL Lhe dlshonor of a succeedlng check can no longer cause moral
ln[ury and personal hurL for whlch Lhe aggrleved parLy may clalm damages. Such prlor
occurrence does noL prove LhaL respondenL does noL have a good repuLaLlon LhaL can
be besmlrched.
[8]

1he reasons for and Lhe clrcumsLances surroundlng Lhe prevlous lssuance and evenLual
dlshonor of Check no. 0293983 are LoLally separaLe -- Lhe payee of Lhe prlor check was
dlfferenL -- from LhaL of Check no. 0293984, sub[ecL of presenL case. Carmen had lssued
Lhe earller check Lo accommodaLe a relaLlve,
[9]
and Lhe succeedlng one Lo pay for goods
purchased from Lopue's ueparLmenL SLore. 1haL she mlghL noL have suffered damages
as a resulL of Lhe flrsL dlshonored check does noL necessarlly hold Lrue for Lhe second.
ln Lhe llghL of sufflclenL evldence showlng LhaL she lndeed suffered damages as a resulL
of Lhe dlshonor of Check no. 0293984, peLlLloner may noL be exoneraLed from llablllLy.
Case law
[10]
lays ouL Lhe followlng condlLlons for Lhe award of moral damages: (1) Lhere
ls an ln[ury -- wheLher physlcal, menLal or psychologlcal -- clearly susLalned by Lhe
clalmanL, (2) Lhe culpable acL or omlsslon ls facLually esLabllshed, (3) Lhe wrongful acL or
omlsslon of Lhe defendanL ls Lhe proxlmaLe cause of Lhe ln[ury susLalned by Lhe
clalmanL, and (4) Lhe award of damages ls predlcaLed on any of Lhe cases sLaLed ln
ArLlcle 2219
[11]
of Lhe Clvll Code.
ln Lhe lnsLanL case, all four requlslLes have been esLabllshed. *$'(#, Lhese were Lhe
flndlngs of Lhe appellaLe courL: Carmen ArrleLa ls a bank deposlLor of Solldbank
CorporaLlon of long sLandlng. She works wlLh Lhe CenLral negros LlecLrlc CooperaLlve,
lnc. (CLnLCC), as an execuLlve secreLary and laLer as deparLmenL secreLary. She ls a
deaconess of Lhe ChrlsLlan Alllance Church ln 8acolod ClLy. 1hese are poslLlons whlch no
doubL elevaLe her soclal sLandlng ln Lhe communlLy." undersLandably -- and as
sufflclenLly proven by her LesLlmony -- she suffered menLal angulsh, serlous anxleLy,
besmlrched repuLaLlon, wounded feellngs and soclal humlllaLlon, and she suffered Lhus
when Lhe people she worked wlLh -- her frlends, her famlly and even her daughLer's
classmaLes -- learned and Lalked abouL her bounced check.
+",%&), lL ls undlspuLed LhaL Lhe sub[ecL check was adequaLely funded, buL LhaL
peLlLloner wrongfully dlshonored lL.
-.$'), 8espondenL Carmen was able Lo prove LhaL peLlLloner's wrongful dlshonor of her
check was Lhe proxlmaLe cause of her embarrassmenL and humlllaLlon ln her workplace,
ln her own home, and ln Lhe church where she served as deaconess.
roxlmaLe cause has been deflned as any cause whlch, ln naLural and conLlnuous
sequence, unbroken by any efflclenL lnLervenlng cause, produces Lhe resulL complalned
of and wlLhouL whlch would noL have occurred x x x."
[12]
lL ls deLermlned from Lhe facLs
of each case upon comblned conslderaLlons of loglc, common sense, pollcy and
precedenL.
[13]
Clearly, had Lhe bank accepLed and honored Lhe check, Carmen would noL
have had Lo face Lhe quesLlons of -- and explaln her predlcamenL Lo -- her offlce maLes,
her daughLers, and Lhe leaders and members of her church.
lurLhermore, Lhe CA was ln agreemenL wlLh Lhe Lrlal courL ln rullng LhaL her ln[ury arose
from Lhe gross negllgence of peLlLloner ln dlshonorlng her well-funded check.
unanlmlLy of Lhe CA and Lhe Lrlal courL ln Lhelr facLual ascerLalnmenL of Lhls polnL bars
us from supplanLlng Lhelr flndlng and subsLlLuLlng lL wlLh our own. SeLLled ls Lhe
docLrlne LhaL Lhe facLual deLermlnaLlons of Lhe lower courLs are concluslve and blndlng
upon Lhls CourL.
[14]
verlly, Lhe revlew of cases broughL before Lhe Supreme CourL from
Lhe CourL of Appeals ls llmlLed Lo errors of law.
[13]
none of Lhe recognlzed excepLlons Lo
Lhls prlnclple has been shown Lo exlsL.
*%/'#., LreaLlng Carmen's accounL as closed, merely because Lhe ledger could noL be
found was a reckless acL LhaL could noL slmply be brushed off as an honesL mlsLake. We
have repeaLedly emphaslzed LhaL Lhe banklng lndusLry ls lmpressed wlLh publlc lnLeresL.
ConsequenLly, Lhe hlghesL degree of dlllgence ls expecLed, and hlgh sLandards of
lnLegrlLy and performance are even requlred of lL. 8y Lhe naLure of lLs funcLlons, a bank
ls under obllgaLlon Lo LreaL Lhe accounLs of lLs deposlLors wlLh meLlculous care and
always Lo have ln mlnd Lhe flduclary naLure of lLs relaLlonshlp wlLh Lhem.
[16]

eLlLloner's negllgence here was so gross as Lo amounL Lo a wllful ln[ury Lo 8espondenL
Carmen. ArLlcle 21 of Lhe Clvll Code sLaLes LhaL any person who wllfully causes loss or
ln[ury Lo anoLher ln a manner LhaL ls conLrary Lo morals, good cusLoms or publlc pollcy
shall compensaLe Lhe laLLer for Lhe damage." lurLher, ArLlcle 2219 provldes for Lhe
recovery of moral damages for acLs referred Lo ln Lhe aforemenLloned ArLlcle 21.
Pence, Lhe bank ls llable for moral damages Lo respondenL.
[17]

1he foregolng noLwlLhsLandlng, we flnd Lhe sum of 130,000 awarded by Lhe lower
courLs excesslve. Moral damages are noL lnLended Lo enrlch Lhe complalnanL aL Lhe
expense of Lhe defendanL.
[18]
8aLher, Lhese are awarded only Lo enable Lhe ln[ured parLy
Lo obLaln means, dlverslons or amusemenLs" LhaL wlll serve Lo allevlaLe Lhe moral
sufferlng LhaL resulLed by reason of Lhe defendanL's culpable acLlon.
[19]
1he purpose of
such damages ls essenLlally lndemnlLy or reparaLlon, noL punlshmenL or correcLlon.
[20]
ln
oLher words, Lhe award Lhereof ls almed aL a resLoraLlon wlLhln Lhe llmlLs of Lhe
posslble, of Lhe splrlLual (#0#/( 2/% 0&#",
[21]
Lherefore, lL musL always reasonably
approxlmaLe Lhe exLenL of ln[ury and be proporLlonal Lo Lhe wrong commlLLed.
[22]

Accordlngly, Lhe award of moral damages musL be reduced Lo 20,000,
[23]
an amounL
commensuraLe wlLh Lhe allevlaLlon of Lhe sufferlng caused by Lhe dlshonored check LhaL
was lssued for Lhe amounL of 330.
1he law allows Lhe granL of exemplary damages Lo seL an example for Lhe publlc
good.
[24]
1he buslness of a bank ls affecLed wlLh publlc lnLeresL, Lhus, lL makes a sworn
professlon of dlllgence and meLlculousness ln glvlng lrreproachable servlce.
[23]
lor Lhls
reason, Lhe bank should guard agalnsL ln[ury aLLrlbuLable Lo negllgence or bad falLh on
lLs parL.
[26]
1he banklng secLor musL aL all Llmes malnLaln a hlgh level of meLlculousness.
1he granL of exemplary damages ls [usLlfled
[27]
by Lhe lnlLlal carelessness of peLlLloner,
aggravaLed by lLs lack of prompLness ln repalrlng lLs error. lL was only on AugusL 30,
1990, or a perlod of flve monLhs from Lhe erroneous dlshonor of Lhe check, when lL
wroLe Lopue's ueparLmenL SLore a leLLer acknowledglng Lhe bank's mlsLake.
[28]
ln our
vlew, however, Lhe award of 30,000 ls excesslve and should accordlngly be reduced
Lo 20,000.
[29]

1he award of aLLorney's fees ln Lhe amounL of 20,000 ls proper, for respondenLs were
compelled Lo llLlgaLe Lo proLecL Lhelr rlghLs.
[30]

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