ARANETA v BA |G.R. No. L-25414 July 30, 1971 |Makalintal, J deposit. However, before Mrs.

deposit. However, before Mrs. Saldana's reply could be received, the Bank of
Pet: LEOPOLDO ARANETA America recalled the check from the First National City Bank and honored it.
Resp: BANK of AMERICA
 Araneta filed a case for damages against BA
Connection to lesson: if a bank refuses without just reason to honor a check of one of its
depositors although the latter has sufficient funds with it to cover the check, the drawer  TC IFO of Araneta:
may recover from the bank damages for any injury suffered by him, including that of his
credit or reputation. 1. Actual or compensatory damages P30,000.00
 Leopoldo Araneta was engaged in the import and export business. 2. Moral damages 20,000.00
 June 30, 1961 he issued a check for $500 payable to cash and drawn against the San 3. Temperate damages 50,000.00
Francisco main office of the Bank of America, where he had been maintaining a 4. Exemplary damages 10,000.00
dollar current account since 1948. 5. Attorney's fees 10,000.00
o he had a credit balance of $523.81 in his account, confirmed by the bank's
assistant cashier in a letter to Araneta dated September 7, 1961. TOTAL P120,000.00
o However, when the check was received by the bank on September 8, 1961,
a day after the date of the letter, it was dishonored and stamped with the  CA eliminated the award of compensatory and temperate damages and reduced the
notation "Account Closed." moral damages to P8,000.00, the exemplary damages to P1,000.00 and the
 Araneta asked why his check had been dishonored, BA acknowledged that it was an attorney's fees to P1,000.00.
error, that for some reason the check had been encoded with wrong account o As to temperate damages: the plaintiff has not proven his claim that the
number, and promising that "we shall make every effort to see that this does not two checks for $500 each were in partial payment of two orders for jewels
reoccur." worth P50,000 each. He has not proven the actual damage which he
o The bank also sent a letter of apology to the payee of the check, a Mr. Harry claims he has suffered. And in view of the fact that he has not proven the
Gregory of Hongkong, stating that "the check was returned through an existence of the supposed contract for himself to buy jewels at a profit
error on our part and should not reflect adversely upon Mr. Araneta." there is not even an occasion for an award of temperate damages on this
 another incident of a similar nature occurred later score.
o (May 25, and 31, 1962) Araneta issued 2 checks for $500 and $150,
respectively, both payable to cash and drawn against BA and received by  Araneta: CA erred(1) in concluding that the petitioner, on the basis of the evidence,
BA on June 3, 1962. had not sufficiently proven his claim for actual damages, where such evidence, both
o Rufina Saldana, who deposited the first check to her account the First testimonial and documentary, stands uncontradicted on the record; (2) in holding
National City Bank of New York, which in turn cleared it through the Federal that temperate damages cannot be awarded to the petitioner without proof of
Reserve Bank. actual pecuniary loss; (3) in not granting moral damages for mental anguish,
o The second check appeared to have been cleared through the Wells Fargo besmirched reputation, wounded feelings, social humiliation, etc., separate and
Bank. distinct from the damages recoverable for injury to business reputation; (4) in
o Despite the sufficiency of Araneta's deposit balance to cover both checks, reducing, without any ostensible reason, the award of exemplary damages granted
they were again stamped with the notation "Account Closed" and returned by the lower court; and (5) in reducing, without special reason, the award of
to the respective clearing banks. attorney's fees by the lower court.

 The first check was actually paid by the Bank of America to the First National City ISSUES +RULING
Bank but claiming that the payment had been inadvertently made, BA returned the W/N CA erred in disallowing the award of temperate damages yes
check to the First National City Bank with the request that the amount thereof be - Araneta: in an action by a depositor against a bank for damages resulting from the
credited back to BA wrongful dishonor of the depositor's checks, temperate damages for injury to
 FNCB wrote to tRufina Saldana, informing her about its return with the notation business standing or commercial credit may be recovered even in the absence of
"Account Closed" and asking her consent to the deduction of its amount from her definite proof of direct pecuniary loss to the plaintiff, a finding — as it was found by
the Court of Appeals — that the wrongful acts of the respondent had adversely
 affected his credit being sufficient for the purpose. The following provisions of the
Civil Code are invoked:  The financial credit of a businessman is a prized and valuable asset, it being a
ART. 2205. Damages may be recovered: significant part of the foundation of his business.
(1) For loss or impairment of earning capacity in cases of temporary or permanent personal injury
(2) For injury to the plaintiff's business standing or commercial credit.
 Any adverse reflection thereon constitutes some material loss to him.
 Atlanta National Bank vs. Davis : it can hardly be possible that a customer's check
ART. 2216. No proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or can be wrongfully refused payment without some impeachment of his credit, which
exemplary damages may be adjudicated. The assessment of such damages, except liquidated ones, is left to must in fact be an actual injury, though he cannot, from the nature of the case,
the discretion of the court, according to the circumstances of each case.
furnish independent, distinct proof thereof."
o Atlanta National Bank vs. Davis,: "temperate damages" are allowed in
 Code commiss on temperate damages: There are cases where from the nature of
certain classes of cases, without proof of actual or special damages, where
the case, definite proof of pecuniary loss cannot be offered, although the court is
the wrong done must in fact have caused actual damage to the plaintiff,
convinced that there has been such loss. For instance, injury to one's commercial
though from the nature of the case, he cannot furnish independent, distinct
credit or to the goodwill of a business firm is often hard to show with certainty in
proof thereof. Temperate damages are more than nominal damages, and,
terms of money. Should damages be denied for that reason? The judge should be
rather, are such as would be a reasonable compensation for the injury
empowered to calculate moderate damages in such cases, rather than that the
sustained. .
plaintiff should suffer, without redress from the defendant's wrongful act.
o It has been generally held, in an action based upon the wrongful act of a
bank dishonoring checks of a merchant or trader having sufficient funds
on deposit with the bank, that substantial damages will be presumed to  Araneta, is a merchant of long standing and good reputation in the Philippines.
follow such act as a necessary and natural consequence, and accordingly,
that special damages need not be shown. One of the reasons given for this  his claim for temperate damages is legally justified.
rule is that the dishonor of a merchant's or trader's check is tantamount or
analogous, to a slander of his trade or business, imputing to him  Considering all the circumstances, including the rather small size of the petitioner's
insolvency or bad faith. account with the respondent, the amounts of the checks which were wrongfully
- CA: The Article 2224, provides that "temperate or moderate damages, which are dishonored, and the fact that the respondent tried to rectify the error soon after it
more than nominal but less than compensatory damages may be recovered when was discovered, although the rectification came after the damage had been caused,
the court finds that some pecuniary loss has been suffered but its amount cannot, we believe that an award of P5,000 by way of temperate damages is sufficient.
from the nature of the case, proved with certainty,"
o the petitioner failed to show any such loss in this case. Disposition: judgment of the Court of Appeals is modified by awarding temperate
Court: damages to the petitioner in the sum of P5,000.
- In rejecting the claim for temperate damages the CA referred specifically to the
petitioner's failure to prove "the existence of a supposed contract for him to buy
jewels at a profit," in connection with which he issued the two checks which were
dishonored by the respondent. This may be true with particular reference to the
alleged loss in that particular transaction. But it does not detract from the finding
of the CA that actual damages had been suffered: (Basically, sinabi na harm ung
credit ni Araneta at Miss Saldana)
o The adverse reflection against the credit of Araneta with said banks was not
cured nor explained by the letter of apology to Mr. Gregory.
o This incident obviously affected the credit of Araneta with Miss Saldana.
o However, in so far as the credit of Araneta with the First National City Bank,
with Miss Rufina Saldana and with any other persons who may have come
to know about the refusal of the defendant to honor said checks, the harm
was done ...