G.R. No. L-25414. July 30, 1971.
LEOPOLDO ARANETA, petitioner, vs. BANK OF AMERICA, respondent.

FACTS

Petitioner Leopoldo Araneta, a merchant, maintained a dollar current account with respondent Bank of America. On several occasions in 1961 and 1962, the bank wrongfully dishonored his checks—despite sufficient funds—by stamping them “Account Closed.” The bank admitted these were errors due to incorrect encoding and issued apologies. The first incident involved a $500 check in 1961. The second incident in 1962 involved two checks (for $500 and $150), which were also dishonored. One check was initially paid but then returned, only to be subsequently honored after further bank communication.
Araneta demanded damages. The bank offered P2,000, which he rejected. He filed a complaint seeking various damages totaling P120,000. The trial court awarded all damages prayed for. On appeal, the Court of Appeals eliminated the awards for compensatory and temperate damages, and reduced the awards for moral damages to P8,000, exemplary damages to P1,000, and attorney’s fees to P1,000.

ISSUE

The core issues, as given due course in the petition for review, are: (1) Whether temperate damages for injury to business standing can be awarded without definite proof of actual pecuniary loss; and (2) Whether moral damages for besmirched reputation and mental anguish are recoverable separately from damages for injury to business credit.

RULING

The Supreme Court modified the Court of Appeals decision. On the first issue, the Court held that temperate damages are recoverable for injury to business standing or commercial credit arising from a bank’s wrongful dishonor of checks, even in the absence of definite proof of actual pecuniary loss. The rationale is that such injury naturally flows from the wrongful act, though the precise pecuniary loss may be difficult to prove. Citing analogous American jurisprudence, the Court awarded P5,000 as temperate damages.
On the second issue, the Court affirmed the appellate court’s award of moral damages. It clarified that while “besmirched reputation” is a ground for moral damages under Article 2217 of the Civil Code, this element was already integrated into the P8,000 award granted by the Court of Appeals for the injury to his reputation as a trader and for the mental anguish and wounded feelings he suffered. The Court found no need to award a separate, additional amount for moral damages distinct from the injury to business credit under the circumstances.
Furthermore, the Court motu proprio increased the attorney’s fees from P1,000 to P4,000, pursuant to Article 2208 of the Civil Code, considering the nature and extent of legal services rendered in both trial and appellate courts. The Court declined to review the petitioner’s other assigned errors not raised as grounds for the petition’s allowance or involving factual re-evaluation. The award of exemplary damages was not increased, noting the bank’s attempts to rectify its errors. The decision was affirmed in all other respects.