PHILIPPINE TELEGRAPH & TELEPHONE CORPORATION and LOUIE CABALIT, petitioners, vs. HON. COURT OF APPEALS and LOLITA SIPE ESCARA,  respondents.

R.M. Lee & Associates  for petitioners.

Office of the Legal Aid  for private respondent.

SYNOPSIS

Private respondent filed a complaint for damages against petitioner's for the delay in the delivery of the remittance sent to her by her sister-in-law through petitioner corporation. On appeal, the Court of Appeals affirmed the decision of the trial court but deleted the award of actual damages. The appellate court, however, sustained the award of moral and exemplary damages in favor of private respondent.

The Supreme Court ruled that the Court of Appeals was correct in deleting the award of actual damages for lack of proof of pecuniary loss. Moral damages cannot also be awarded in the case at bar considering that the delay of less than two months in the remittance to private respondent of the amounts due her could hardly be said as being constitutive of bad faith or gross negligence amounting to bad faith. Neither can exemplary damages be awarded. Exemplary damages are not recoverable as a matter of right. Although such damages need not be proved, plaintiff must first show that he is entitled to moral, temperate, or compensatory damages before a court can favorably consider an award of exemplary damages. Temperate or moderate damages cannot likewise be awarded because private respondent failed to establish that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty.

The Supreme Court awarded nominal damages in favor of private respondent. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant may be vindicated or recognized and not for the purpose of indemnifying the plaintiff for any loss suffered by him. In the instant case, for the violation of the right of private respondent to receive timely delivery of the money transmitted through petitioner corporation an award of nominal damages in the amount of P20,000.00 against petitioner corporation is appropriate. TIESCA

SYLLABUS

1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; BREACH OF OBLIGATION BECAUSE OF FRAUD, NEGLIGENCE OR DELAY OR OF A CONTRAVENTION OF THE TENOR THEREOF OPENS DEFAULTING OBLIGOR TO LIABILITY FOR DAMAGES. — The breach of an obligation because of fraud, negligence or delay or of a contravention by any means of the tenor of that obligation does open the defaulting obligor to possible liability for damages. The right to those damages and the extent of their recovery would depend on the kind and nature of the damages and the manner in which the injury causing it is brought about.

2. ID.; DAMAGES; MORAL DAMAGES; REQUISITES FOR AWARD THEREOF. — In the case of moral damages, recovery is more an exception rather than the rule. Moral damages are not punitive in nature but are designed to compensate and alleviate the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar harm unjustly caused to a person. In order that an award of moral damages can be aptly justified, the claimant must be able to satisfactorily prove that he has suffered such damages and that the injury causing it has sprung from any of the cases listed in Articles 2219 and 2220 of the Civil Code. Then, too, the damages must be shown to be the proximate result of a wrongful act or omission. The claimant must establish the

factual basis of the damages and its causal tie with the acts of the defendant. In fine, an award of moral damages would require,  firstly, evidence of besmirched reputation or physical, mental or psychological suffering sustained by the claimant; secondly, a culpable act or omission factually established; thirdly, proof that the wrongful act or omission of the defendant is the proximate cause of the damages sustained by the claimant; and  fourthly, that the case is predicated on any of the instances expressed or envisioned by Article 2219 and Article 2220 of the Civil Code. In culpa contractual or breach of contract, particularly, moral damages may be recovered when the defendant has acted in bad faith or is found to be guilty of gross negligence (amounting to bad faith) or in wanton disregard of his contractual obligation.

3. ID.; ID.; EXEMPLARY DAMAGES; WHEN RECOVERABLE. — Exemplary damages are not recoverable as a matter of right. Although such damages need not be proved, plaintiff must first show that he is entitled to moral, temperate, or compensatory damages before a court can favorably consider an award of exemplary damages. In contracts and quasi-contracts, specifically, exemplary damages may be justified if the defendant is shown to have acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. Petitioner corporation might have been remiss in the prompt delivery of the sums sent through it to respondent; however, the Court would be hardput to say that such delay under the facts obtaining can be described as being wanton, fraudulent, reckless, or oppressive in character.

4. ID.; ID.; TEMPERATE OR MODERATE DAMAGES; AWARDED WHEN PECUNIARY LOSS HAS BEEN SUFFERED BUT ITS AMOUNT CANNOT, FROM THE NATURE OF THE CASE, BE PROVED WITH CERTAINTY. — Temperate or moderate damages may only be given if the "court finds that some pecuniary loss has been suffered but that its amount cannot, from the nature of the case, be proved with certainty." The factual findings of the appellate court that respondent has failed to establish such pecuniary loss or, if proved, cannot from their nature be precisely quantified precludes the application of the rule on temperate or moderate damages. HaIATC

5. ID.; ID.; NOMINAL DAMAGES; AWARDED IN ORDER TO VINDICATE A RIGHT WHICH HAS BEEN VIOLATED; CASE AT BAR. — Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized and not for the purpose of indemnifying the plaintiff for any loss suffered by him. The court may award nominal damages in every obligation arising from any source enumerated in Article 1157 of the Civil Code or, generally, in every case where property right is invaded.

D E C I S I O N

VITUG, J p:

Assailed in the instant petition of the Philippine Telegraph & Telephone Corporation ("PT&T") and Louie Cabalit is the judgment of the Court of Appeals in CA-G.R. CV No. 48313, promulgated on 15 March 1999, which has affirmed with modification the decision of the Regional Trial Court of Makati awarding damages to respondent Lolita Sipe Escara.

The facts were synthesized by the appellate court in its decision under review.

''On July 13, 1990, Felicitas B. Sipe, a resident of Surralah, South Cotobato, remitted to her sister-in-law, Lolita Sipe Escara, two telegraphic money orders through the facilities of Philippine Telegraph and Telephone Company (PT&T, for brevity). The money orders, one for P2,000.00 and the other for P1,000.00, originated from Marbel, South Cotobato, and were transmitted to the Cubao branch of PT&T. Plaintiff was then studying for a doctoral degree in Education at the University of the Philippines (U.P., for brevity), Diliman, Quezon City and was residing in one of its dormitories, the Ipil Residence Hall. According to the plaintiff, the money was sent for the purpose of paying for her tuition fee for one semester at the U.P.; paying for her fare to go back to

Cotabato to enable her to complete the requirements for a job promotion; and paying for the cost of the medical consultation of her son who is sick of diabetes.

"On July 22, 1990, plaintiff's husband sent her a telegram advising her to inform him if she has received a remittance of P3,000.00. She made several phone calls to PT&T to inquire about the money but was told that no money was transmitted in her favor. On August 10, 1990, plaintiff sent her husband a telegram to inform him of her non-receipt of the money. On August 18, 1990, plaintiff's husband again sent her a telegram instructing her to claim at the PT&T Cubao branch the money transmitted on July 13, 1990.

"On August 20, 1990, plaintiff went to the PT&T office to inquire about the remittance in her favor. Since Louie Cabalit, the branch cashier, was not around, plaintiff was constrained to return the next day. It was only in the afternoon of August 21, 1990, that she was able to talk to Louie Cabalit about the remittance. Cabalit looked into his records, after which, the branch security guard informed plaintiff that no money was transmitted to her. Upon plaintiff's request, Cabalit issued a certification that no telegraphic money order in favor of plaintiff was received from Surralah by PT&T. Nevertheless, Cabalit told her that he would re-examine his records to determine whether a remittance was made in her name.

"Subsequently, Cabalit informed plaintiff that the money being claimed by her did not come from Surralah but from Marbel, South Cotobato. On August 22, 1990, an attempt was made by PT&T to deliver the telegraphic money order at plaintiff's dormitory but she was not around. On September 10, 1990, plaintiff received from PT&T two checks representing the amount remitted to her. However, plaintiff was not able to encash the checks at once because the bank did not have a clearance from PT&T. Finally, on September 14, 1990, plaintiff was able to encash the checks."

"Aggrieved by the delay in the delivery of the remittance, plaintiff filed a complaint for damages against PT&T and Louie Cabalit. In her complaint, she alleged that the delay was the cause of her failure to enroll for one semester at the U.P.; to complete her requirements for a job promotion, and to bring her son to the doctor for medical consultation. On November 29, 1994, the lower court rendered the questioned decision, the dispositive portion of which reads:

 

"'WHEREFORE, this Court renders judgment in favor of the plaintiff and against the defendants, ordering the defendants, jointly and severally, to pay the plaintiff:

'1. The sum of P100,000.00 in actual/compensatory damages;

'2. The sum of P50,000 in moral damages:

'3. The sum of P10,000.00 in exemplary damages;

'4. No attorney's fees awarded being a pro bono publica case; and

'5. To pay costs of suits.'" 1

Petitioners appealed the decision of the trial court to the Court of Appeals. The appellate court affirmed the decision with modification. Finding to be inadequate the evidence submitted by respondent Lolita Sipe Escara to prove pecuniary loss suffered by her, the Court of Appeals deleted the award of actual damages. The appellate court, however, sustained the award of moral and exemplary damages in favor of private respondent, ratiocinating thusly:

"Article 1170 of the Civil Code provides that 'those who in the performance of their obligations are guilty of fraud, negligence, or delay and those who in any manner

contravene the tenor thereof, are liable for damages.' In the case at bar, appellant PT&T, for a fee, undertook to send plaintiff two telegraphic money orders in the sum of P3,000.00. Appellant, however, failed to deliver the money to plaintiff immediately after the money order was transmitted to its Cubao branch. It was only on September 14, 1990, or almost two months from transmittal that plaintiff was finally able to have her money.

"We find PT&T negligent when it did not take steps to ensure the prompt delivery of the money to plaintiff from the time the checks were issued in her favor. It is quite clear that PT&T did not act with any sense of urgency but with indifference and nonchalance with respect to plaintiff's case. First of all, after Louie Cabalit endorsed the two checks to the dispatch section of PT&T and subsequently took an emergency leave, the personnel at the Cubao branch did not exert enough effort to effect the delivery of the money. In fact, the Cubao branch wired its Marbel branch only on August 3, 1990 to request for the complete address of the recipient from the sender Apparently, it took them eighteen days to realize that the address of the recipient was insufficient.

"Furthermore, the claim of PT&T that it made several attempts to deliver the money between July 17, 1990 and August 3, 1990 is open to doubt because there is no proof showing to what extent PT&T endeavored to locate the plaintiff. Francisco Dumlao, administrative officer of the Registrar's Office of U.P., testified that the addressee of letters or telegrams labeled only as 'U.P. Diliman,' is located by referring to the records of currently enrolled students under the active file or to the records of its alumni under the inactive file. It appears that PT&T did not attempt to inquire from the Registrar's Office regarding plaintiff's whereabouts since it obviously failed to draw the inference that the University of the Philippines is a school with facilities that can be of assistance in locating its own students." 2

In the instant appeal, petitioners would strongly urge that the appellate court be reversed in awarding moral and exemplary damages to respondent Lolita Escara with the latter's failure to present evidence that she had suffered wounded feelings, serious anxiety, and mental anguish or that the act she had ascribed to petitioners was done in bad faith, or in wanton, fraudulent, oppressive or malevolent manner. Private respondent, however, would insist that the clearly established culpable conduct of petitioners warranted the award of both moral and exemplary damages.

There is merit in the petition.

The breach of an obligation because of fraud, negligence or delay or of a contravention by any means of the tenor of that obligation does open the defaulting obligor to possible liability for damages. The right to those damages and the extent of their recovery would depend on the kind and nature of the damages and the manner in which the injury causing it is brought about.

The Court of Appeals was correct in deleting the award made by the trial court of actual damages where proof of pecuniary loss, in an action based on culpa contractual, is essential. Finding the evidence to be wanting in this respect, the appellate court did not err in its judgment.

In the case of moral damages, recovery is more an exception rather than the rule. Moral damages are not punitive in nature but are designed to compensate and alleviate the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar harm unjustly caused to a person. In order that an award of moral damages can be aptly justified, the claimant must be able to satisfactorily prove that he has suffered such damages and that the injury causing it has sprung from any of the cases listed in Articles 2219 3 and 2220 4 of the Civil Code. 5 Then, too, the damages must be shown to be the proximate result of a wrongful act or omission. The claimant must establish the factual basis of the damages and its causal tie with the acts of the defendant. In fine, an award of moral damages would require,  firstly, evidence of besmirched reputation or physical, mental or psychological suffering sustained by the claimant; secondly, a culpable act or omission factually established; thirdly, proof that the wrongful act or omission of the defendant is the proximate cause of the damages sustained by the claimant; and  fourthly, that the case is predicated on any of the instances

expressed or envisioned by Article 2219 and Article 2220 of the Civil Code. In culpa contractual or breach of contract, particularly, moral damages may be recovered when the defendant has acted in bad faith or is found to be guilty of gross negligence (amounting to bad faith) or in wanton disregard of his obligation. 6

In the case at bar, the appellate court itself did not see any clear indication of bad faith or gross negligence amounting to bad faith on the part of petitioners. It would be error to make an award of moral damages to private respondent merely because petitioner corporation was unable to effect immediate delivery of the money sent through it in two money orders, one for P2,000.00 and the other for P1,000.00. Indeed, it would appear that the address given by the sender was merely and vaguely stated to be "U.P. Diliman Quezon City." So, also, when private respondent went to the office of petitioner PT&T to inquire about the "money order" she erroneously mentioned it to have been sent from Surralah, South Cotabato. It was only upon verification made by petitioners that the latter were able to discover that the money transfers did originate, not, however, from Surralah, but from Marbel, South Cotabato. Given all the circumstances found by the appellate court, the delay of less than two months in the remittance to private respondent of the amounts due her could hardly be said as being constitutive of bad faith or gross negligence amounting to bad faith.

Neither can the award of exemplary damages be sustained. Exemplary damages are not recoverable as a matter of right. 7 Although such damages need not be proved, plaintiff must first show that he is entitled to moral, temperate, or compensatory damages before a court can favorably consider an award of exemplary damages. 8 In contracts and quasi-contracts, specifically, exemplary damages may be justified if the defendant is shown to have acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. 9 Petitioner corporation might have been remiss in the prompt delivery of the sums sent through it to respondent; however, the Court would be hardput to say that such delay under the facts obtaining can be described as being wanton, fraudulent, reckless, or oppressive in character.

Still, of course, petitioner corporation is not totally free from liability. It may have had good reasons, but it has not been able to overcome thereby its burden to prove a valid excuse, for the breach of agreement such as by proving, among other possible legal grounds, fortuitous event to account for its failure. The breach would have justified a recovery of actual damages but, there being no adequate proof of pecuniary loss found by the appellate court, such damages cannot be awarded. Neither moral nor exemplary damages have been justified, as hereinbefore explained, as to warrant any recovery thereof. The Court thus is left with two alternative possibilities — an award of temperate or moderate damages or an award of nominal damages.

Temperate or moderate damages may only be given if the "court finds that some pecuniary  loss has been suffered but that its amount cannot, from the nature of the case, be proved with certainty."  10 The factual findings of the appellate court that respondent has failed to establish such pecuniary loss or, if proved, cannot from their nature be precisely quantified precludes the application of the rule on temperate or moderate damages. The result comes down to only a possible award of nominal damages. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized and not for the purpose of indemnifying the plaintiff for any loss suffered by him. 11 The court may award nominal damages in every obligation arising from any source enumerated in article 1157 of the Civil Code or, generally, in every case where property right is invaded.

In the instant case, for the violation of the right of private respondent to receive timely delivery of the money transmitted through petitioner corporation an award of nominal damages is appropriate. An amount of P20,000.00 by way of nominal damages, considering all that private respondent has had to go through, is in the court's view reasonable and fair.

 

There is, however, neither enough factual nor adequate legal basis to hold petitioner Louie Cabalit, PT&T's branch cashier, solidarily liable with petitioner corporation. WHEREFORE, the instant petition is GRANTED. The appealed decision is reversed and set aside and, in its stead, petitioner Philippine Telegraph & Telephone Corporation is ordered to pay respondent Lolita Sipe Escara the sum of P20,000.00 by way of nominal damages. Costs against petitioner corporation.

SO ORDERED.

|||  (Philippine Telegraph & Telephone Corp. v. Court of Appeals, G.R. No. 139268, [September 3, 2002], 437 PHIL 76-87)

EN BANC

[G.R. No. L-25414. July 30, 1971.]

LEOPOLDO ARANETA, petitioner, vs. BANK OF AMERICA,  respondent.

Gatchalian & Sison  for petitioner.

Lichauco, Picazo & Agcaoili  for respondent.

SYLLABUS

1. CIVIL LAW; DAMAGES; TEMPERATE DAMAGES; CONCEPT, EXPLAINED. — 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."

2. ID.; ID.; ID.; MERCHANT OF LONG STANDING AND GOOD REPUTATION ENTITLED THERETO WHERE HIS CHECKS WERE WRONGFULLY DISHONORED. — 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.

3. ID.; ID.; ATTORNEY'S FEES; AMOUNT MAY BE INCREASED MOTU PROPRIO BY THE SUPREME COURT. — 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.

D E C I S I O N

MAKALINTAL, J p:

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:

1. Actual or compensatory damages P30,000.002. Moral damages 20,000.003. Temperate damages 50.000.004. Exemplary damages 10,000.005. Attorney's fees 10,000.00  ___________ T O T A L P120,000.00

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 . . ."

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 . . ." (15 Am. Jur. 400)

". . . 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 . . ." (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 damages 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."

xxx xxx xxx

". . . This incident obviously affected the credit of Araneta with Miss Saldaña.

xxx xxx xxx

"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 relieve 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."

xxx xxx xxx

". . . 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 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 the respondent.

|||  (Araneta v. Bank of America, G.R. No. L-25414, [July 30, 1971], 148-B PHIL 124-133)