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G.R. No. 116181 April 17, 1996

Petition for Review on Certiorar assailing the decision and resolution of the respondent Court of
Appeals 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.

Flores purchased from PNB two (2) manager's checks worth P500,000.00 each, paying a total of
P1,000,040.00, including the service charge. A receipt for said amount was issued by the PNB.

On 12 July 1989, Flores presented these checks at the Baguio Hyatt Casino unit of PNB. But
PNB refused to encash the checks but after a lengthy discussion, it agreed to encash one (1) of
the checks but the payment was deferred until after Flores agrees that it be broken down into five
manager’s checks. PNB also refused to encash one of the five checks until after it is cleared by
the Manila Pavilion Hotel unit. Having no other option, Flores agreed to such an arrangement.

Upon his return to Manila, he tried to encash the checks through its Malate Branch but to no
avail. A Formal Demand was made by Flores’ counsel but PNB persisted in its refusal to honor
the check.

Left with no other choice, Flores filed a case with the RCT of Quezon City against PNB. In its
answer PNB insisted that only P900,000.00 and P40.00 bank charges were actually paid by
Flores when he purchased the two checks. That it was dues to Flores’ demanding attitude and
temper that Montes, a money counter, made an error in good faith in issuing a receipt for

After trial, the court rendered its decision in favor of Flores, ordering PNB to pay 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; as well as ordering PNB to pay Flores
P1,000,000.00 moral damages, P1,000,000.00 exemplary damages as well as attorney’s fees and
costs of the suit.

PNB appealed to the CA, to which the court affirmed the decision of the lower court. Their
subsequent motion for reconsideration was denied. Hence this petition.

Is the award of P1,000,000.00 moral and exemplary damages in addition to actual claim of
inordinately disproportionate and unconscionable?

YES. We concur with the findings of the trial court and the Court of Appeals, however, we give
consideration to PNB’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 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, Mr. Nick
Buendia was not even presented to confirm the aforementioned allegation.

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 sustained by Flores. In RCPI v.
Rodriguez, SC ruled that: “it is undisputed that the trial courts are given discretion to
determine the amount of moral damages and that the Court of Appeals can only modify
of 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. But in more recent cases where the amount of moral and exemplary
damages are far too excessice compared to the actual losses sustained by the aggrieved
party, this Court ruled that they should be reduces to more reasonable amounts.”

In other words, the moral damages awarded must be commensurate with the loss or injury
suffered. 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. It is 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 quo ante, and it must be proportional to the suffering inflicted.

PNB’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 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.

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.