G.R. No. 141011 & 141028; July 19, 2001
CITYTRUST BANKING CORPORATION (now Bank of the Philippine Islands) vs. ISAGANI C. VILLANUEVA; and ISAGANI C. VILLANUEVA vs. CITYTRUST BANKING CORPORATION

FACTS

In February 1984, Isagani C. Villanueva opened a savings account and a current account with Citytrust Banking Corporation (the Bank), with an automatic transfer arrangement. On May 21, 1986, Villanueva, having run out of blank checks, requested a new checkbook from the Bank’s Legaspi Village Branch. He filled out a checkbook requisition slip but could not remember his current account number. A customer service representative assured him she could supply the information from the Bank’s records. Another representative, Pia Rempillo, later saw the slip and, upon checking the Bank’s checkbook register which listed an “Isagani Villanueva — Account No. 33-00446-3,” copied that account number onto Villanueva’s requisition slip. This account number belonged to a different depositor with the same name but a different middle initial.
On June 17, 1986, Villanueva received the new checkbook and issued Check No. 396701 for P50,000 payable to Kingly Commodities Traders and Multi Resources, Inc. On June 20, he deposited P31,600 into his savings account, making his total deposits P51,304.91. However, on June 23, the check was dishonored for “insufficiency of funds and disparity in the signature.” Villanueva contacted the Bank’s operations manager, Maritess Gamboa, who advised re-depositing the check and assured it would be honored. On June 26, the check was dishonored again for insufficiency of funds and an alleged stop-payment order (which Villanueva never issued). Villanueva went to the Bank, where Branch Manager Marilou Genuino explained the error: the checkbook bore another Isagani Villanueva’s account number. Genuino promised to send a manager’s check for P50,000 to Kingly Commodities before 5:30 p.m. that day, which she did.
Villanueva demanded indemnification from the Bank for actual damages (lost profits) and moral damages. The Bank apologized but noted Villanueva’s failure to state his account number contributed to the error. Villanueva filed a complaint for damages based on breach of contract and/or quasi-delict. The trial court dismissed the complaint, finding Villanueva’s negligence the proximate cause of his alleged damages. The Court of Appeals reversed, awarding actual, moral, and exemplary damages plus attorney’s fees. Both parties filed petitions before the Supreme Court.

ISSUE

Whether the repeated dishonor of a check drawn against a well-funded account but bearing the wrong account number due to the Bank’s error entitles the drawer to compensatory and moral damages and attorney’s fees.

RULING

The Supreme Court partially granted the petitions. It affirmed the Court of Appeals’ finding of the Bank’s negligence as the proximate cause of the dishonor but modified the awarded damages.
1. On Liability: The Bank was negligent. Its employee, Pia Rempillo, failed to exercise due diligence in verifying account details. She merely copied the first “Isagani Villanueva” entry she found without checking other identifying particulars (like middle initial or address), despite knowing multiple clients could share the same name. This negligence directly caused the issuance of a checkbook with the wrong account number and the subsequent dishonors. The Bank, as an obligor in a contract of deposit, is bound by the diligence of a good father of a family. Villanueva’s contributory negligence (not remembering his account number) did not absolve the Bank; at most, it mitigated the Bank’s liability.
2. On Actual/Compensatory Damages: The claim for P240,000 in lost profits was denied. Villanueva failed to prove these alleged losses with reasonable certainty. His claim was based on a missed trading opportunity, but no evidence showed a specific, favorable trade was actually available and lost due to the dishonor. Speculative profits are not recoverable.
3. On Moral Damages: The award of P500,000 in moral damages was deleted. Moral damages are not intended to enrich the complainant. While the dishonor caused embarrassment and anxiety, the Bank’s negligence was not attended by bad faith, malice, or wanton disregard of Villanueva’s rights. The Bank acted promptly to rectify the error by issuing a manager’s check. The situation did not fall under the cases enumerated in Article 2219 of the Civil Code where moral damages are recoverable, nor was it a quasi-delict causing physical injury. The shock, embarrassment, and humiliation, while real, were not so severe as to warrant moral damages under the circumstances.
4. On Exemplary Damages and Attorney’s Fees: The award of P100,000 in exemplary damages was deleted. Exemplary damages are imposed only when the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. The Bank’s error was a result of simple negligence, not gross negligence or bad faith. However, the award of P50,000 in attorney’s fees was sustained. The Bank’s negligence compelled Villanueva to litigate to protect his interests, making the award justified.
Dispositive: The Bank was held liable for nominal damages (set at P25,000) for the breach of its contractual obligation to Villanueva as a depositor, and for attorney’s fees of P50,000. All other awards were deleted.