CA Simex filed a complaint in CFI of Rizal claiming from the
March 19, 1990 SIMEX INTERNATIONAL (MANILA), bank moral damages of P1M and exemplary damages of INCORPORATED, petitioner, vs. THE HONORABLE COURT OF P500K, plus 25% attorney's fees, and costs. APPEALS and TRADERS ROYAL BANK, respondents. CFI: Moral and exemplary damages were not called for CRUZ, J. under the circumstances. Since Simex right had been violated, the bank should pay nominal damages SUMMARY: Traders bank was negligent in failing to credit Simex P20,000.00 plus P5,000.00 attorney's fees and costs. depoit to its account of P100,000. As a result, several checks CA affirmed CFI issued by Simex were dishonored. Its credit line was canceled and o The bank was guilty of negligence but Simex its order were not acted upon. It filed a complaint for damages was not entitled to moral damages. since its demand for reparation from the bank went unheeded. o The essential ingredient of moral damages is While the lower courts found that the bank was guilty of proof of bad faith (De Aparicio vs. Parogurga). negligence, it did not award moral and exemplary damages. The o There was the omission by the bank to credit SC held that Simex is entitled to P20K moral damages and P50K Simex deposit of P100,000K on May 25, 1981. exemplary damages. The bank was remiss in its duty and violated But the bank rectified its records. It credited the its fiduciary relationship with its depositor. It failed to correct its said amount in favor of Simex in less than a mistake immediately and took almost a month to do so. There was month. The dishonored checks were eventually even no satisfactory reason given to justify the mistakes. paid. o These circumstances negate any imputation or DOCTRINE: As a business affected with public interest and because of the nature of its functions, the bank is under obligation insinuation of malicious, fraudulent, wanton and to treat the accounts of its depositors with meticulous care, always gross bad faith and negligence on the part of the having in mind the fiduciary nature of their relationship. defendant-appellant.
FACTS: ISSUE: W/N Simex is entitled to moral and exemplary damages?
Simex International (Manila), Inc. is a private corporation YES to both. In what amounts? P20K moral, P50K exemplary engaged in the exportation of food products. RATIO: o It buys these products from various local The error should not have been committed in the first suppliers and then sells them abroad, place. particularly in the US, Canada and the Middle The bank has not even explained why it was committed East. o Most of its exports are purchased by it on credit. at all. It is true that the dishonored checks were "eventually" Simex was a depositor of Traders Royal Bank and paid. However, this took almost a month when, properly, maintained a checking account in its branch at Romulo the checks should have been paid immediately upon Avenue, Cubao, Quezon City. presentment. May 25, 1981: Simex deposited to its account in the bank The initial carelessness of the bank, aggravated by the P100,000 thus increasing its balance to P190,380.74. lack of promptitude in repairing its error, justifies the Subsequently, Simex issued several checks against its grant of moral damages. deposit but was suprised to learn later that they had been This rather lackadaisical attitude toward the complaining dishonored for insufficient funds. depositor constituted the gross negligence, if not wanton As a consequence, the California Manufacturing bad faith. Corporation (one of payees) sent on June 9, 1981, a While stressing the rectification made by the respondent letter of demand to Simex, threatening prosecution if the bank, the decision practically ignored the prejudice dishonored check issued to it was not made good. It also suffered by Simex. This was simply glossed over if not, withheld delivery of the order made by the Simex. indeed, disbelieved. o Similar letters were sent to Simex by the The fact is that the Simex credit line was canceled and Malabon Long Life Trading, on June 15, 1981, its orders were not acted upon pending receipt of actual and by the G. and U. Enterprises, on June 10, payment by the suppliers. Its business declined. Its 1981. Malabon also canceled Simex credit line reputation was tarnished. Its standing was reduced in the and demanded that future payments be made business community. All this was due to the fault of the by it in cash or certified check. bank which was undeniably remiss in its duty to the Meantime, action on the pending orders of Simex with Simex. the other suppliers whose checks were dishonored was Article 2205 of the Civil Code provides that actual or also deferred. compensatory damages may be received "(2) for injury to June 10, 1981: Simex complained to the bank the plaintiffs business standing or commercial credit." Investigation disclosed that P100,000.00 deposited had Simex did sustain actual injury as a result of the not been credited to it. dishonored checks and that the existence of the loss o The error was rectified on June 17, 1981, and having been established "absolute certainty as to its the dishonored checks were paid after they amount is not required." Such injury should bolster all the were re-deposited. more the demand of Simex for moral damages and In its letter dated June 20, 1981, Simex demanded justifies the examination by this Court of the validity and reparation from the bank for its "gross and wanton reasonableness of the said claim. negligence." This demand was not met. Moral damages are not awarded to penalize the Art. 2232. In contracts and quasi-contracts, the court defendant but to compensate the plaintiff for the injuries may award exemplary damages if the defendant acted in he may have suffered. a wanton, fraudulent, reckless, oppressive, or In the case at bar, Simex is seeking such damages for malevolent manner. the prejudice sustained by it as a result of the bank's The banking system is an indispensable institution in the fault. modern world and plays a vital role in the economic life of The CA said that the claimed losses are purely every civilized nation. Whether as mere passive entities speculative and are not supported by substantial for the safekeeping and saving of money or as active evidence, but if failed to consider that the amount of such instruments of business and commerce, banks have losses need not be established with exactitude precisely become an ubiquitous presence among the people, who because of their nature. have come to regard them with respect and even Moral damages are not susceptible of pecuniary gratitude and, most of all, confidence. Thus, even the estimation. humble wage-earner has not hesitated to entrust his life's Article 2216 of the Civil Code specifically provides that savings to the bank of his choice, knowing that they will "no proof of pecuniary loss is necessary in order that be safe in its custody and will even earn some interest for moral, nominal, temperate, liquidated or exemplary him. The ordinary person, with equal faith, usually damages may be adjudicated." maintains a modest checking account for security and o That is why the determination of the amount to convenience in the settling of his monthly bills and the be awarded (except liquidated damages) is left payment of ordinary expenses. As for business entities to the sound discretion of the court, according to like Simex, the bank is a trusted and active associate that "the circumstances of each case." can help in the running of their affairs, not only in the From every viewpoint except that of Simex, its claim of form of loans when needed but more often in the conduct moral damages in the amount of P1,000,000.00 is of their day-to-day transactions like the issuance or nothing short of preposterous. encashment of checks. Its business certainly is not that big, or its name that In every case, the depositor expects the bank to treat his prestigious, to sustain such an extravagant pretense. account with the utmost fidelity, whether such account Moreover, a corporation is not as a rule entitled to moral consists only of a few hundred pesos or of millions. The damages because, not being a natural person, it cannot bank must record every single transaction accurately, experience physical suffering or such sentiments as down to the last centavo, and as promptly as possible. wounded feelings, serious anxiety, mental anguish and This has to be done if the account is to reflect at any moral shock. given time the amount of money the depositor can The only exception to this rule is where the corporation dispose of as he sees fit, confident that the bank will has a good reputation that is debased, resulting in its deliver it as and to whomever he directs. A blunder on the social humiliation. part of the bank, such as the dishonor of a check without Simex did suffer injury because of the banks negligence good reason, can cause the depositor not a little embarrassment if not also financial loss and perhaps that caused the dishonor of the checks issued by it. even civil and criminal litigation. The immediate consequence was that its prestige was As a business affected with public interest and impaired because of the bouncing checks and confidence because of the nature of its functions, the bank is in it as a reliable debtor was diminished. under obligation to treat the accounts of its The bank makes much of the one instance when the depositors with meticulous care, always having in Simex was sued in a collection case, but that did not mind the fiduciary nature of their relationship. prove that it did not have a good reputation that could not The bank was remiss in that duty and violated that be marred, more so since that case was ultimately relationship. What is especially deplorable is that, having settled. been informed of its error in not crediting the deposit in It does not appear that Simex is an unsavory and question to Simex, the bank did not immediately correct it disreputable entity that has no good name to protect. but did so only one week later or twenty-three days after The award of nominal damages in the sum of P20,000.00 the deposit was made. The record does not contain any was not the proper relief to which Simex was entitled. satisfactory explanation of why the error was made in the Under Article 2221 of the Civil Code, "nominal damages first place and why it was not corrected immediately after are adjudicated in order that a right of the plaintiff, which its discovery. has been violated or invaded by the defendant, may be o Such ineptness comes under the concept of the vindicated or recognized, and not for the purpose of wanton manner contemplated in the Civil Code indemnifying the plaintiff for any loss suffered by him." that calls for the imposition of exemplary As we have found that Simex has indeed incurred loss damages. through the fault of the bank, the proper remedy is the The Court, in the exercise of its discretion, hereby award to it of moral damages, which we impose, in our imposes upon the r bank exemplary damages in the discretion, in the same amount of P20,000.00. amount of P50,000.00, "by way of example or correction for the public good," in the words of the law. EXEMPLARY DAMAGES Art. 2229. Exemplary or corrective damages are DISPOSITIVE: Bank is ordered to pay Simex, in lieu of nominal imposed, by way of example or correction for the public damages, moral damages in the amount of P20,000.00, and good, in addition to the moral, temperate, liquidated or exemplary damages in the amount of P50,000.00 plus the original compensatory damages. award of attorney's fees in the amount of P5,000.00, and costs.