GR 137148; (January, 2002) (Digest)
G.R. No. 137148; January 30, 2002
BANK OF THE PHILIPPINE ISLANDS, petitioner, vs. CARLO S. LEOBRERA AND COURT OF APPEALS, respondents.
FACTS
Sometime in 1979, BPI unintentionally failed to deliver on time three letters of credit for respondent Carlo Leobrera, an exporter, causing damage. Leobrera demanded P500,000.00. In a meeting, BPI officers explained the incident and agreed to send letters of apology to his foreign buyers, shoulder P10,000.00 in legal expenses, and assist him in obtaining loans. Leobrera claimed there was a further agreement that loans would continue for years until he recovered his P500,000.00 damages, which BPI vehemently denied. From 1980 to 1985, BPI granted Leobrera various loans and credit lines, which were repeatedly renewed and restructured with fluctuating interest rates and secured by real estate mortgages.
Leobrera filed a complaint. The trial court awarded him P1,300,000.00 as actual damages with legal interest, P10,000,000.00 as moral damages, P100,000.00 as exemplary damages, P200,000.00 as attorney’s fees, and costs. The Court of Appeals affirmed this decision. BPI appealed to the Supreme Court via certiorari.
ISSUE
The issues were: (1) whether the trial court erred in awarding P10,000,000.00 in moral damages not specified in the complaint; (2) whether it erred in awarding interest on actual damages not prayed for; (3) whether the damages awarded were excessive; and (4) whether the Court of Appeals erred in finding BPI negligent.
RULING
The Supreme Court modified the decision. It held that the award of moral damages had no basis. Moral damages are not intended to enrich a plaintiff and are recoverable in breach of contract only if the defendant acted in bad faith, gross negligence amounting to bad faith, or in wanton disregard of its obligation. The complaint did not specify an amount for moral damages, and no docket fees were paid for such a claim. The exorbitant award of P10,000,000.00 was unjustified.
The award of legal interest on the actual damages was also erroneous, as it was not prayed for in the complaint. Regarding negligence, the Court found that Leobrera was not the real party in interest to complain about the specific letter of credit transactions, as he was merely a beneficiary. Thus, the finding of negligence was incorrect.
The Court affirmed the lower court decisions with modifications: BPI was ordered to pay Leobrera P98,975.00 as actual damages and P30,000.00 as attorney’s fees and costs. All awards for moral and exemplary damages were deleted.