2 Araneta v Bank of America

ARANETA V BANK OF AMERICA G.R. No. L-25414; July 30, 1971; Makalintal, J. FACTS 1. [June 30, 1961] Araneta issued a check for $500 payable to cash and drawn against Bank of America (BOA). a. At the time he had a credit balance of $532.81 in his account. However when the check was received by the bank on September 8, 1961,it was dishonored and stamped “Account Closed”. b. Upon inquiry by Araneta, BOA admitted that it was an error, and sent an apology to the payee of said check Harry Gregory of Hongkong. 2. [May 25 and 31, 1962] Araneta issued check 110 for $500 and check 111 for $150 both payable to cash, both drawn against BOA. a. Despite the sufficiency of Araneta’s funds, both checks were also dishonored and stamped “Account Closed”. 3. Araneta thus sent a letter to BOA demanding damages in the sum of $20,000. The bank, while admitting responsibility offered to pay only P2,000. 4. [December 11, 1962] Araneta filed a complaint against bank of America for P120,000: a. Actual or compensatory Damages – P30,000 b. Moral damages – P20,000 c. Temperate damages – P50,000 d. Exemplary Damages – P10,000 e. Atty’s fees –P10,000 5. TC awarded all items prayed for, but CA eliminated the award of compensatory and temperate damages and reduce moral damages to P8,000, exemplary damages to P1,000 and atty’s fees to P1,000. ISSUES W/N Temperate damages can be awarded without proof of actual pecuniary loss? YES  In rejecting the claim for temperate damages, the CA referred specifically to Araneta’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. o 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 same court that actual damages have been suffered:  “The adverse reflection against the credit of Araneta with said banks was not cured nor explained by the letter of apology to Mr. Gregory.”  “the incident obviously affectd the credit of Araneta with Miss Saldana (the payee of Check 110)”. o The financial credit of a businessman is a prized and valuable asset, it being a significant part of the foundation of his business. o And it can hardly be possible that a customer’s check can be wrongfully refused payment without some impeachment of his credit, which must in fact be an actual injury, though he cannot […] furnish distinct proof thereof. o The code commission in explaining Temperate damages under Art 2224 comments that temperate damages apply in “cases where definite proof of pecuniary loss cannot be offered, although the court is convinced that there is such loss.”  As found by the CA, Araneta is a merchant of long standing and good reputation in the Philippines. His claim for temperate damages is justified.

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W/N the claim for a higher award of Moral damages should have been granted? NO It is true that under Article 2217 (NCC) “besmirched reputation” is a ground upon which moral damages can be claimed. But the CA did take this emlement into consideration when adjudging the sum of P8,000 in his favor.

Held Judgment modified. Temparate damage is increased to P5,000, atty’s fees increased to P4,000