*

G.R. No. 116181. April 17, 1996.

PHILIPPINE NATIONAL BANK, petitioner, vs. COURT

OF APPEALS and CARMELO H. FLORES, respondents.

Evidence; Receipts; Words and Phrases; ”Receipt,” Defined; A

receipt is merely presumptive evidence and is not conclusive.—A
“receipt” is defined as: A written and signed acknowledgment that
money has been paid or goods have been delivered. A receipt is
merely presumptive evidence and is not conclusive. A written
acknowledgment that money or a thing of value has been
received.

______________

* FIRST DIVISION.

310

310 SUPREME COURT REPORTS ANNOTATED

Philippine National Bank vs. Court of Appeals

Since a receipt is a mere acknowledgment of payment, it may be

subject to explanation or contradiction. A receipt may be used as
evidence against one just as any other declaration or admission. A
simple receipt not under seal is presumptive evidence only and
may be rebutted or explained by other evidence of mistake in
giving it, or of non-payment or of the circumstances under which
it was given.
Same; Same; Best Evidence Rule; Banks and Banking;
Evidence based solely on the testimonies of bank employees who
were the very ones involved in the fiasco, and not on any other
independent evidence, is not sufficient to rebut the contents of the
receipt issued by the bank—the subject receipt remains to be the
primary or best evidence or ”that which affords the greatest
certainty of the fact in question.”—In the instant case, petitioner’s
contention that Flores paid P900,000.00 only instead of
P1,000,000.00 (exclusive of bank charges) in the following
denominations: a manager’s check worth P450,000.00;
P430,000.00 in P100.00 bills; and P20,000.00 in P500.00 bills, was
based solely on the testimonies of petitioner’s bank employees—
the very ones involved in the fiasco, and not on any other
independent evidence. Hence, having failed to adduce sufficient
rebuttal evidence, petitioner is bound by the contents of the
receipt it issued to Flores. The subject receipt remains to be the
primary or best evidence or “that which affords the greatest
certainty of the fact in question.”
Banks and Banking; A bank’s act of issuing manager’s checks
and corresponding receipt before payment thereof is completely
counted is reckless and grossly negligent, an appalling breach of
bank procedures.—Finally, we find petitioner’s act of issuing the
manager’s checks and corresponding receipt before payment
thereof was completely counted reckless and grossly negligent. It
is an appalling breach of bank procedures and must never be
repeated. In Bautista v. Mangaldan Rural Bank, Inc., we stated,
thus: The banking system has become an indispensable
institution in the modern world and plays a vital role in the
economic life of every civilized society. Whether as mere passive
entities for the safe-keeping and saving of money or as active
instruments of business and commerce, banks have attained an
ubiquitous presence among the people, who have come to regard
them with respect and even gratitude and, most of all, confidence.
(Simex International [Manila], Inc. vs. Court of Appeals, G.R. No.
88013, March 19, 1990, 183 SCRA 360).

311

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Philippine National Bank vs. Court of Appeals

Damages; Moral damages must be commensurate with the

loss or injury suffered.—The award of moral damages in the
amount of P1,000,000 is obviously not proportionate to the actual
losses of P100,000.00 sustained by Flores. In other words, the
moral damages awarded must be commensurate with the loss or
injury suffered. It is because of the foregoing reasons that we have
had to constantly remind the courts to desist from awarding
excessive damages disproportionate to the peculiar circumstances
of the case. “Judicial discretion granted to the courts in the
assessment of damages must always be exercised with balanced
restraint and measured objectivity.”
Same; Exemplary damages are imposed not to enrich one
party or impoverish another but to serve as a deterrent against or
as a negative incentive to curb socially deleterious actions.—
However, the award of P1,000,000.00 exemplary damages is also
far too excessive and should likewise be reduced to an equitable
level. Exemplary damages are imposed not to enrich one party or
impoverish another but to serve as a deterrent against or as a
negative incentive to curb socially deleterious actions.

PETITION for review on certiorari of a decision and a

resolution of the Court of Appeals.

The facts are stated in the opinion of the Court.

     The Chief Legal Counsel for petitioner.
          Law Firm of Raymundo A. Armovit for private
respondent.

KAPUNAN, J.:

This is a Petition for Review on Certiorari under Rule 45 of

the Revised Rules of Court assailing the decision and
resolution of the respondent Court of Appeals in CA-G.R.
CV No. 38281 dated 31 January 1994 and 5 July 1994,
respectively, which affirmed the decision of the Regional
Trial Court in Civil Case No. Q-89-4033 declaring
Philippine National Bank liable to Carmelo H. Flores for
damages.
The facts of the case are as follows:
312

312 SUPREME COURT REPORTS ANNOTATED

Philippine National Bank vs. Court of Appeals

On 11 July 1989, private respondent Carmelo H. Flores

(Flores) purchased from petitioner at its Manila Pavilion
Hotel unit, two (2) manager’s checks worth P500,000.00
each, paying
1
a total of P1,000,040.00, including the service
charge. A2 receipt for said amount was issued by the
petitioner.
On 12 July 1989, Flores presented these checks at the
Baguio Hyatt Casino unit of petitioner. Petitioner refused
to encash the checks but after a lengthy 3 discussion, it
agreed to encash one (1) of the checks. However, it
deferred the payment of the other check until after Flores
agreed that it be broken down to five (5) manager’s checks
of P100,000.00 each. Furthermore, petitioner refused to
encash one of the five checks
4
until after it is cleared by the
Manila Pavilion Hotel unit. Having no other option, Flores
agreed to such an arrangement. However, upon his return
to Manila, he made representations to petitioner through
its Malate5
Branch so that the check may be encashed but to
no avail. Flores, thereafter, wrote a letter to his counsel
6
informing the latter of the aforementioned events. A
Formal Demand was made by private respondent’s counsel 7
but petitioner persisted in its refusal to honor the check.
Left with no other choice, Flores filed a case with the
Regional Trial Court of Quezon8
City, Branch 100, docketed
as Civil Case No. Q-89-4033.
In its Answer with Compulsory Counterclaim, petitioner
insisted that only P900,000.00 and P40.00 bank charges
were actually paid by Flores when he purchased the two (2)
manager’s check worth P1,000,000.00. It alleged that due
to Flores’ “demanding attitude and temper,” petitioner’s
money

_______________

1 TSN, 2 July 1990, p. 5.

2 Annex “A,” Original Records, p. 5.
3 TSN, 2 July 1990, p. 15.
4 Id., at 16.
5 Id., at 18-20.
6 Id., at 21; Annex “D,” Original Records, p. 8.
7 Id., at 23.
8 Original Records, pp. 1-4.

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VOL. 256, APRIL 17, 1996 313

Philippine National Bank vs. Court of Appeals

counter, Rowena Montes, who, at that time was still new at

her job, made an error
9
in good faith in issuing the receipt
for P1,000,040.00. The actuations of Flores 10
allegedly
distracted the personnel manning the unit.
After trial, the court rendered its decision on 5 May
1992, the dispositive portion of which states:

WHEREFORE, premises considered, judgment is hereby rendered

in favor of the plaintiff and against the defendant Philippine
National Bank as follows:

a.) ordering the defendant to pay plaintiff the sum of

P100,000.00 representing the amount of the check
dishonored with interest thereon at the legal rate per
annum from November 16, 1989 until fully paid;
b.) ordering defendant to pay plaintiff for the embarrassment
caused him the amount of P1,000,000.00 as moral
 damages;
c.) ordering defendant to pay plaintiff the amount of
P1,000,000.00 as exemplary damages brought about by
the malevolent and malicious acts of the former;
d.) ordering defendant to pay plaintiff the sum of P50,000.00
as attorney’s fees; and
e.) ordering defendant to pay the costs of the suit.
11
SO ORDERED.

Petitioner interposed an appeal with the respondent court,

docketed as CA-G.R. CV No. 38281 assigning the following
errors, to wit:

THE TRIAL COURT ERRED IN HOLDING ON THE BASIS OF

THE RECEIPT MARKED EXH. “A” THAT IN PURCHASING
THE TWO MANAGER’S CHECKS ON JULY 11, 1989,
APPELLEE FLORES PAID PNB P1,000,040.00 DESPITE (1)
THAT THE SAID RECEIPT DOES NOT SHOW, OR AFFORD
THE BEST PROOF OF

_______________

9 Id., at 22-30.
10 TSN, 28 August 1990, p. 18.
11 Original Records, pp. 172-175.

314

314 SUPREME COURT REPORTS ANNOTATED

Philippine National Bank vs. Court of Appeals

THE CORRECT AMOUNT PAID BY FLORES TO PNB AND (2)

THAT AS SHOWN BY PREPONDERANT AND CONCLUSIVE
EVIDENCE, APPELLEE PAID PNB P900,040 ONLY IN ONE
MANAGER’S CHECK AND MONETARY BILLS.

II

THE TRIAL COURT ERRED IN AWARDING FLORES P1

MILLION MORAL DAMAGES, P1 MILLION EXEMPLARY
DAMAGES, AND P500,000 (sic) ATTORNEY’S FEES DESPITE
(1) THAT PNB’S REFUSAL TO ENCASH THE P100,000
MANAGER’S CHECK (EXH. “B”) WAS JUSTIFIED, AS FLORES
WAS NEVER ENTITLED TO THE MONEY; (2) THAT THERE
IS ABJECT ABSENCE OF EVIDENCE THAT PNB ACTED
FRAUDULENTLY OR MALICIOUSLY, EVEN AS GOOD FAITH
IS PRESUMED; AND (3) THAT FLORES’ ALLEGED
EMBARRASSMENT FOR HIS FAILURE TO PURCHASE A
HOUSE AND LOT DUE TO PNB’S REFUSAL
12
TO ENCASH THE
WHOLE P1 MILLION IS UNFOUNDED.

On 31 January 1994, the Court of Appeals rendered the

questioned decision, the dispositive portion of which reads:

WHEREFORE, the appealed decision of the lower court in Civil

Case No. Q-89-4033 is hereby AFFIRMED by the Court. Costs
against defendant-appellant.
13
SO ORDERED.

A motion for reconsideration was filed but14

it was likewise
denied in a resolution dated 5 July 1994, thus, the present
action with petitioner raising the following issues, to wit:

WHETHER OR NOT THE CA ERRED IN LAW IN HOLDING

THAT, THE BEST EVIDENCE TO SHOW WHETHER MR.
FLORES PAID THE PNB CASINO UNIT P900,040 OR
P1,000,040

_______________

12 Rollo, pp. 37-38.

13 CA Decision, Rollo, pp. 35-45.
14 Rollo, p. 47.

315

VOL. 256, APRIL 17, 1996 315

Philippine National Bank vs. Court of Appeals  

IN PURCHASING THE TWO MANAGER’S CHECKS EACH

WORTH P500,000 IS THE RECEIPT FOR P1,000,040.

II

WHETHER OR NOT PNB CAN PRESENT COMPETENT

AND RELEVANT EVIDENCE TO SUPPORT ITS ALLEGATION
IN THE ANSWER THAT MR. FLORES ACTUALLY PAID
P900,040 AND NOT P1,000,040 FOR THE SUBJECT
MANAGER’S CHECKS.

III

WHETHER OR NOT THE AWARD FOR P1 MILLION

MORAL DAMAGES, P1 MILLION EXEMPLARY DAMAGES,
AND P50,000 ATTORNEY’S FEES, AS COMPARED TO THE
ACTUAL CLAIM OF 15P100,000 IS DISPROPORTIONATE AND
UNCONSCIONABLE.

We shall deal with the first and second issues raised by

petitioner together as they are interrelated.
Petitioner concedes that it issued the subject receipt for
P1,000,040.00 to Flores; yet, in the same breath, it
immediately counters that said receipt is not the best
evidence to prove how much money Flores actually paid for
the purchase of petitioner’s manager’s checks.
Further, petitioner insists that the issue in the instant
case is not the contents of the subject receipt but the exact
amount of money Flores paid to PNB, an inquiry which,
petitioner avers, allows the presentation of evidence
aliunde.
Petitioner’s contentions are unmeritorious.
A “receipt” is defined as:

A written and signed acknowledgment that money has been paid

or goods have been delivered. A receipt is merely presumptive
evidence and is not conclusive.
A written acknowledgment that money or a thing of value has
been received. Since a receipt is a mere acknowledgment of
payment, it may be subject to explanation or contradiction. A
receipt may be

_______________

15 Memorandum of Petitioner, pp. 6-7.

316

316 SUPREME COURT REPORTS ANNOTATED

Philippine National Bank vs. Court of Appeals

used as evidence against one just as any other declaration or

admission. A simple receipt not under seal is presumptive
evidence only and may be rebutted or explained by other evidence
of mistake in giving it, or16of non-payment or of the circumstances
under which it was given. (Italics ours.)

Although a receipt is not conclusive evidence, in the case at

bench, an exhaustive review of the records fails to disclose
any other evidence sufficient and strong enough to
overturn the acknowledgment embodied in petitioner’s own
receipt (as to the amount of money it actually received).
Petitioner contends that it offered in court evidence of
the particulars or the actual denominations of the money it
received from Flores in exchange for its managerial checks.
However, aside from the self-serving testimonies of
petitioner’s witnesses, we fail to discover any such evidence
in the records. In the words of the trial court:

After having thoroughly evaluated the evidences (sic) on record,

the Court finds and so believes that plaintiff indeed paid
defendant the amount of P1,000,040.00 when he purchased the
two (2) manager’s checks woth (sic) P1,000,000.00. This is clearly
manifested from the receipt issued by the defendant wherein it
explicitly admits that the amount stated therein is what plaintiff
actually paid. While the defendant does not dispute the receipt it
issued to the plaintiff, it endeavored to prove that the actual
amount involved in the entire transaction is only P900,000.00 that
is P450,000.00 manager’s check and P450,000.00 cash by
submitting in evidence, the application forms filled up by the
plaintiff, Exhibits ”1, 2, 3 and 4.” As may be readily seen, these
application forms relied upon by the defendant have no probative
value for they do not yield any direct proof of payment. Besides
defendant even failed to adduce concrete evidence showing that
these forms which were crumpled and retrieved from the waste
basket were made the basis of the approval of the purchased (sic)
made. At any rate, the Court finds such pieces of evidence not
only unconvincing but also self-defeating in the light of the
receipt, the accuracy, correctness and due

_______________

16 Sibal, Jose Agaton R., Philippine Legal Encyclopedia, 1986, pp. 829-830.

317

VOL. 256, APRIL 17, 1996 317

Philippine National Bank vs. Court of Appeals

execution of which was indubitably established. It is a cardinal

rule in 17the law on evidence that the best proof of payment is the
receipt. (Italics ours.)
18
In Monfort v. Aguinaldo, the receipts of payment,
although not exclusive, were deemed to be the best
evidence. Thus:

That the best evidence for proving payment is by the evidence of

receipts showing the same is also admitted. What respondents
claim is that there is no rule which provides that payment can
only be proved by receipts. While receipts are deemed to be the
best evidence, they are not exclusive. Other evidence may be
presented in lieu thereof if they are not available, as in case of
loss, destruction or disappearance. The fact of payment may be
established not only by documentary evidence, but also by parol
evidence (48 C.J. 727; Greenleaf, Law of Evidence, Vol. II, p. 486;
Jones on Evidence [1913] Vol. II, p. 193), specially in civil cases
where preponderance of evidence is the rule. Here respondents
presented documentary as well as oral evidence which the Court
of Appeals found to be sufficient, and this finding is final.

In the instant case, petitioner’s contention that Flores paid

P900,000.00 only instead of P1,000,000.00 (exclusive of
bank charges) in the following denominations: a manager’s
check worth P450,000.00; P430,000.00 in P100.00 bills; and
P20,000.00 in P500.00 bills, was based solely on the
testimonies of petitioner’s
19
bank employees—the very ones
involved in the fiasco, and not on any other independent
evidence. Hence, having failed to adduce sufficient rebuttal
evidence, petitioner is bound by the contents of the receipt
it issued to Flores. The subject receipt remains to be the
primary or best evidence or “that20which affords the greatest
certainty of the fact in question.”

_______________

17 Original Records, p 173.

18 G.R. No. L-4104, 2 May 1952.
19 TSN, 28 August 1990, p. 29; TSN, 13 May 1991, p. 7.
20 Francisco, Ricardo, J., Evidence, Rules of Court in the Philippines,
Rules 128-134, 1993 Edition, p. 2.

318

318 SUPREME COURT REPORTS ANNOTATED

Philippine National Bank vs. Court of Appeals

On the issue of damages, we concur with the findings of the

trial court and the Court of Appeals, respectively:

Since there is no doubt as to the fact that the plaintiff purchased

from the defendant bank two (2) manager’s check worth
P500,000.00 each as this was evidenced by an official receipt
(Exhibit “A”), then, following the above jurisprudential ruling, the
existence of the manager’s check (sic) created as (sic) fiduciary
relationship between the defendant bank and the plaintiff and
therefore any breach thereof must be borne by the negligent
party. In this case, the money counter who, among her other
duties, is in charge of counting the money received from a client
purchasing a manager’s check did not perform her duty with
diligence and due care. This may be gathered from her testimony
that she did not wait for the counting machine to finish counting
the money for the plaintiff is a VIP client and he was in a hurry
as he was tapping the window (p. 37, T.S.N., August 28, 1990).
Equally negligent is Reynaldo Castor for not doing anything when
he noticed that their money counters who entertained the plaintiff
were rattled. From these unfolded facts, the so-called honest
mistake pleaded is therefore misplaced and perforced, defendant
must suffer the consequences of its own negligent acts.
The records further show that plaintiff is a prominent
businessman, licensed and engaged in the real estate business,
buying and selling houses and lots under the business name and
style CMS Commercial. He is at the same time a consultant of
Dizon-Esguerra Real Estate Company. Defendant treated him as
a valued and VIP client. Because of the bank’s refusal to encash
the entire one million face amount of his manager’s checks, he
was so embarrassed for he was not able to purchase a house and
lot in Monterroza Subdivision, Baguio City. Significantly, the
foregoing undisputed facts made even more untenable defendant’s
implicit supposition that the subject manager’s checks were not
intended for the purchase of a house or for any business
transaction but for gambling. Finally, since plaintiff was
compelled to litigate to protect its interest due to the non-
compliance of defendant’s obligation, he is therefore entitled to
attorney’s fees 21
(par. 5, Article 2208, Civil Code of the
Philippines).
x x x      x x x      x x x.

_______________

21 Original Records, pp. 174-175.

319

VOL. 256, APRIL 17, 1996 319

Philippine National Bank vs. Court of Appeals

Appellee Flores narrated his woes to the lower court when

appellant bank refused to honor his Manager’s Checks worth P1
Million because of the alleged shortage in appellee’s payment to
the effect that he had to go back and forth the bank to encash said
checks (pp. 16-18, t.s.n., July 2, 1990), and that he lost a deal of
(sic) a house for sale in Baguio City worth P1 Million as he could
not produce said amount withheld by the appellant bank (p. 22,
id.).
Appellee Flores further testified as to the effect of the incident
on his integrity as a businessman as follows:

“Yes, my integrity and dependability as a businessman is highly doubted

in Baguio because of the PNB refusal to honor the two (2) manager’s
checks inspite of them issuing me the receipt. So, whenever I make a deal
in house and they would now even doubt whether I have the money to
buy the house that I am buying, it greatly affected my integrity as a
businessman in Baguio.” (p. 25, t.s.n., Id.)

In the case of Makabali v. C.A., 157 SCRA 253, the Supreme

Court reiterated the doctrine on the grant of moral and exemplary
damages, as follows:

“To begin with, there is no hard and fast rule in the determination of
what would be a fair amount of moral damages, since each case must be
governed by its own peculiar circumstances.
“Article 2217 of the Civil Code recognizes that moral damages which
include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation
and similar injury, are incapable of pecuniary estimation.
“As to exemplary damages, Article 2229 of the Civil Code provides that
such damages may be imposed by way of example or correction for the
public good. While exemplary damages cannot be recovered as a matter of
right, they need not be proved, although plaintiff must show that he is
entitled to moral, temperate or compensatory damages before the court
may consider the question of whether or not exemplary damages should
22

be awarded.”

_______________

22 Rollo, pp. 42-43.

320

320 SUPREME COURT REPORTS ANNOTATED

Philippine National Bank vs. Court of Appeals

However, we give consideration to petitioner’s allegation

that the award of P1,000,000.00 moral damages and
P1,000,000.00 exemplary damages in addition to Flores’
actual claim of P100,000.00 23 is “inordinately
disproportionate and unconscionable.”
Under the circumstances obtaining in the case at bench,
we rule that the award of moral and exemplary damages is
patently excessive and should be reduced to a reasonable
amount. We take into consideration the following factors:
First, Flores’ contention that he lost the opportunity to
purchase a house and lot in Baguio City due to petitioner’s
gross negligence is based solely on his own testimony and a
mere general statement at that. The broker he named
during his cross-examination on 10 July 1990, a Mr. Nick
Buendia was not even presented to confirm the
aforementioned allegation:
  xxx
Q. You also stated that this amount was intended for the
purchase of the real estate property in Baguio, is that
right?
A. Yes.
Q. Can you tell this Honorable Court where is this specific
property located in Baguio?
A. It is located in Monterosa Subdivision.
Q. Can you tell us the number of the street?
A. It is within the Monterosa.
Q. Can you identify the name of the person with whom
you transacted?
A. Your Honor, I have the papers and during the next
hearing I will bring it.
ATTY. D. VALDEZ:
  Is that meant, Your Honor that we are continuing the
cross examination on the next hearing considering that
he will show a certain document.
Q. Can you not reveal to us the name of the person with
whom you transacted?
A. As I have said I could not be guessing because it was

_______________

23 Rollo, p. 8.

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VOL. 256, APRIL 17, 1996 321

Philippine National Bank vs. Court of Appeals

  coursed through another broker.

  And, this broker usually did not tell you who is the
owner.
Q. What I am asking you is the person whom you
transacted and not necessarily the owner? We are
supposed to know, Your Honor.
COURT:
  The name of the broker.
A. The name of the broker, Your Honor is Nick Buendia.
Q. Do you know what subsequently happened if there was
anything happened to that property that was being
 sold?
A. It was sold.
Q. To someone else?
A. Yes.
Q. At the time you were purchasing the manager’s checks
for one (1M) million you intended this as a payment for
the property?
24
A. Yes.
  x x x      x x x      x x x.

Second, the award of moral damages in the amount of

P1,000,000.00 is obviously not proportionate to the actual
losses of P100,000.00
25
sustained by Flores. In RCPI v.
Rodriguez, we ruled thus:

x x x. Nevertheless, we find the award of P100,000.00 as moral

damages in favor of respondent Rodriguez excessive and
unconscionable. In the case of Prudenciado v. Alliance Transport
System, Inc. (148 SCRA 440 [1987]) we said: “x x x [I]t is
undisputed that the trial courts are given discretion to determine
the amount of moral damages (Alcantara v. Surro, 93 Phil. 472)
and that the Court of Appeals can only modify or change the
amount awarded when they are palpably and scandalously
excessive ‘so as to indicate that it was the result of passion,
prejudice or corruption on the part of the trial court’ (Gellada v.
Warner Barnes & Co., Inc., 57 O.G. [4] 7347, 7358; Sadie v.
Bachrach Motors Co., Inc., 57 O.G. [4] 636 and Adone v. Bachrach
Motor Co., Inc., 57 O.G. 656). But in more recent cases

_______________

24 TSN, 10 July 1990, pp. 10-11.

25 182 SCRA 899 (1990); see also De Leon v. CA, 165 SCRA 166 (1988).

322

322 SUPREME COURT REPORTS ANNOTATED

Philippine National Bank vs. Court of Appeals

where the awards of moral and exemplary damages are far too
excessive compared to the actual losses sustained by the aggrieved
party, this Court ruled that they should be reduced to more
reasonable amounts. x x x.” (Italics ours.)

In other words, the moral damages awarded must be

commensurate with the loss or injury suffered.
Similarly, we have consistently declared that:
Moral damages though incapable of pecuniary estimations, are in
the category of an award designed to compensate the claimant for
actual injury suffered and not to impose a penalty on the
wrongdoer (San Andres v. Court of Appeals, 116 SCRA 85 [1982] 26
cited in Prudenciado v. Alliance Transport System, Inc. supra).

We, likewise, take this opportunity to stress that:

. . . [M]oral damages are emphatically not intended to enrich a

complainant at the expense of the defendant. They are awarded
only to enable the injured party to obtain means, diversion or
amusements that will serve to obviate the moral suffering he has
undergone, by reason of the defendant’s culpable action. Its award
is aimed at the restoration, within the limits of the possible, of the
spiritual status quo27
ante, and it must be proportional to the
suffering inflicted. (Italics ours)

It is because of the foregoing reasons that we have had to

constantly remind the courts to desist from awarding
excessive damages disproportionate to the peculiar
circumstances of the case. “Judicial discretion granted to
the courts in the assessment of damages must always be
exercised with

_______________

26 De Leon v. CA, 165 SCRA 166 (1988). The same rule was reiterated
in Simex International (Manila), Inc. v. CA, 183 SCRA 360 (1990) and
Bautista v. Mangaldan Rural Bank, Inc., 230 SCRA 16 (1994).
27 Visayan Sawmill Co., Inc. v. CA, 219 SCRA 378 (1993); see also PAL
v. CA, 226 SCRA 423 (1993); De Leon vs. CA, supra; RCPI v. Rodriguez,
supra.

323

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Philippine National Bank vs. Court of Appeals

28
balanced restraint and measured objectivity.”
Finally, we find petitioner’s act of issuing the manager’s
checks and corresponding receipt before payment thereof
was completely counted reckless and grossly negligent. It is
an appalling breach of bank procedures and must never be
repeated. 29
In Bautista v. Mangaldan Rural Bank, Inc., we stated,
thus:

The banking system has become an indispensable institution in

the modern world and plays a vital role in the economic life of
every civilized society. Whether as mere passive entities for the
safekeeping and saving of money or as active instruments of
business and commerce, banks have attained an ubiquitous
presence among the people, who have come to regard them with
respect and even gratitude and, most of all, confidence. (Simex
International [Manila], Inc. vs. Court of Appeals, G.R. No. 88013,
March 19, 1990, 183 SCRA 360).

However, the award of P1,000,000.00 exemplary damages

is also far too excessive and should likewise be reduced to
an equitable level. Exemplary damages are imposed not to
enrich one party or impoverish another but to serve as a
deterrent against or30 as a negative incentive to curb socially
deleterious actions.
Therefore, based on the foregoing discussion, the award
of moral damages is reduced to P100,000.00 and the
exemplary damages is likewise reduced to P25,000.00.
We see no reason to disturb the award of attorney’s fees
in the amount of P50,000.00. We concur with the findings
of the Court of Appeals on this matter:

As for the award of attorney’s fees, We find the same in order

considering that “defendant acted in gross and evident bad faith
in

_______________

28 Visayan Sawmill Co., Inc. v. CA, supra, citing Inhelder Corp. v. CA, 122
SCRA 576 (1983).
29 230 SCRA 16 (1994).
30 Mecenas v. Court of Appeals, 180 SCRA 83 (1989).

324

324 SUPREME COURT REPORTS ANNOTATED

Philippine National Bank vs. Court of Appeals

refusing to satisfy the plaintiff’s plainly valid, just and

demandable claim” (Art. 2208 [5], New Civil Code), and it is just
and equitable 31to award plaintiff-appellee his attorney’s fees (Art.
2208 [11], id.).

WHEREFORE, premises considered, the assailed decision

is hereby MODIFIED as follows:

1. The award of moral damages is reduced from

P1,000,000.00 to P100,000.00; and
2. The award of exemplary damages is reduced from
P1,000,000.00 to P25,000.00.
 In all other respects, the assailed decision is hereby
AFFIRMED.
SO ORDERED.

          Padilla (Chairman), Bellosillo, Vitug and

Hermosisima, Jr., JJ., concur.

Judgment affirmed with modifications.

Notes.—Failure of a bank to pay the check of a

merchant or a trader, when the deposit is sufficient,
entitles the drawer to substantial damages without any
proof of actual damages. (Moran vs. Court of Appeals, 230
SCRA 799 [1994])
A depositor has the right to recover moral damages even
if the bank’s negligence may not have been attended with
malice and bad faith if the former suffered mental anguish,
serious anxiety, embarrassment and humiliation. (Tan vs.
Court of Appeals, 239 SCRA 310 [1994])

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31 Rollo, pp. 44-45.

325

VOL. 256, APRIL 18, 1996 325

People vs. Cuizon

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