BPI

VS.

CASA

MONTESSORI

INTERNATIONAL

FACTS: On November 8, 1982, CASA Montessori International opened Current AccounT with BPI with CASAs President Lebron as one of its authorized signatories. In 1991, after conducting an investigation, plaintiff discovered that nine of its checks had been encashed by a certain Sonny D. Santos since 1990 in the total amount of P782,000.00. It turned out that Santos with account at BPI Greenbelt Branch was a fictitious name used by third party defendant Leonardo T. Yabut who worked as external auditor of CASA. Third party defendant voluntarily admitted that he forged the signature of Lebron and encashed the checks. In 1991, plaintiff filed Complaint for Collection with Damages against defendant bank praying that the latter be ordered to reinstate the amount of P782,500.00 with interest. RTC rendered decision in favor of the plaintiff. CA modified decision holding CASA as contributory negligent hence ordered Yabut to reimburse BPI half the total amount claimed and CASA, the other half. It also disallowed attorneys fees and moral and exemplary damages. ISSUE: W/N moral and exemplary damages and attorneys fees should be awarded. RULING: Moral and exemplary damages denied but atty.s fees granted. In the absence of a wrongful act or omission, or of fraud or bad faith, moral damages cannot be awarded. The adverse result of an action does not per se make the action wrongful, or the party liable for it.CASA was unable to identify the particular instance upon which its claim for moral damages is predicated. Neither bad faith nor negligence so gross that it amounts to malice can be imputed to BPI. Imposed by way of correction for the public good, exemplary damages cannot be recovered as a matter of right. There is no bad faith on the part of BPI for paying the checks of CASA upon forged signatures. Therefore, the former cannot be said to have acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. The latter, having no right to moral damages, cannot demand exemplary damages. When the act or omission of the defendant has compelled the plaintiff to incur expenses to protect the latters interest, or where the court deems it just and equitable, attorneys fees may be recovered. In the present case, BPI persistently denied the claim of CASA under the NIL to recredit the latters account for the value of the forged checks. This denial constrained CASA to incur expenses and exert effort for more than ten years in order to protect its corporate interest in its bank account.