GR 116181; (January, 1997) (Digest)
G.R. No. 116181 January 6, 1997
Philippine National Bank vs. Court of Appeals and Carmelo H. Flores
FACTS
Carmelo H. Flores, a businessman, purchased two manager’s checks from the Philippine National Bank (PNB) totaling one million pesos. PNB subsequently refused to honor and encash the full amount of these checks, alleging a shortage in Flores’s initial cash payment. This refusal compelled Flores to engage in protracted negotiations with the bank and caused him to lose a significant real estate transaction in Baguio City, damaging his business reputation.
During the litigation, PNB, in its pleadings before the Court of Appeals and the Supreme Court, attacked Flores’s character by alleging without sufficient proof that he was a “gambler and big time casino player” and that he used the proceeds of the checks for gambling. Flores moved for the reconsideration of a prior Supreme Court decision which had reduced his awards for moral and exemplary damages, arguing the amounts were too small and highlighting the bank’s unfounded character assassination.
ISSUE
Whether the Supreme Court should reconsider and increase the awards of moral and exemplary damages granted to Carmelo H. Flores.
RULING
Yes, the awards for damages are increased. The Court found PNB’s defense, which included baseless attacks on Flores’s character, to be without merit and aggravating. The legal logic proceeds from the established negligence of PNB. The bank’s employees failed to exercise due diligence in counting the money received from Flores, creating a fiduciary relationship it subsequently breached. This breach directly caused Flores financial loss, embarrassment, and injury to his business integrity, which are valid grounds for moral damages under Article 2217 of the Civil Code.
Crucially, the Court emphasized that PNB’s allegations regarding Flores’s gambling were mere unsubstantiated claims, constituting character assassination that caused him undue humiliation. Since moral damages had been rightfully awarded, the Court could also consider exemplary damages under Article 2229, intended for correction and public good. The bank’s combination of actionable negligence and its malicious litigation tactics warranted a higher corrective penalty. Consequently, the Court increased the moral damages from One Hundred Thousand Pesos (P100,000.00) to Two Hundred Thousand Pesos (P200,000.00) and the exemplary damages from Twenty-Five Thousand Pesos (P25,000.00) to Fifty Thousand Pesos (P50,000.00).