SIMEX INTERNATIONAL (MANILA), INCORPORATED
VS CA AND TRADERS ROYAL BANK
Facts
The petitioner is a private corporation engaged in the
exportation of food products. It buys these products from
various local suppliers and then sells them abroad, particularly
in U.S Canada and the Middle East.
The petitioner was a depositor of the respondent bank and
maintained a checking account in its branch at Cubao, Q.C
And deposited to its account in the said bank the amount of
P100,000.00, thus increasing its balance as of that date to
P190,380.74. Subsequently, the petitioner issued several
checks against its deposit, but it was later dishonored for
insufficient funds
The ff. dishonored checks are the following:
1. C. No. 1 in favor of California Manufacturing Comp, Inc.
for P16,480
2. C. No. 2 in favor of the BIR for P3, 386. 73
3. C. No. 3. in favor of Mr. Greg Pedreño in the amount
P7,080.0
4. C. No. 4 in favor of Malabon Longlife Trading Corporation
in the amount of P42, 906.00
5. C. No. 5 “ “ “ “ mount of 12,953.00
6. C. No. 6 in favor of Sea- Land Services, Inc. in the amount
of P 27, 024. 25.
7. C. No. 7 in favor of Baguio Country Club Corp. in the
amount of P 4, 385. 02
8. C. No. 8 in favor of Enriqueta Bayla in the amount of P
6,275.00.
In relation to Check No. 1 the CMC sent a letter of demand
and threatening prosecution and withheld delivery of the order
made by the petitioner. And similar letters were sent to the
petitioner by Check No. 4&5 and by the G. and U. Enterprises.
The petitioner complained to the respondent bank.
Investigation disclosed that the sum of P100,000.00. deposited
by the petitioner, had not been credited to it. The error was
rectified on, and the dishonored checks were paid after they
were re-deposited.
The petitioner demanded reparation from the respondent bank
for its “gross and wanton negligence” the demand was not
met. Petitioner filed a complaint in the COFI claiming from
the private respondent moral damages in the sum of
P 1,000,000.00 and exemplary damages in the sum of P
500,000.00, plus 25% attorney’s fees and cost.
After trial, Judge Johnico G. Serquinia rendered judgement
holding the defendant liable to pay the nominal damages in the
amount of P 20,000.00 plus 5,000.00.
The respondent court found that the private respondent was
guilty of negligence but agreed that the petitioner was
nevertheless not entitled to moral damages.
The essential ingredient of moral damages is proof of bad
faith. Indeed, there is an omission by the defendant bank to
credit appellant’s deposit of P100,000.00. But the bank
rectified its records and credited the said amount in less than
a month. Dishonored checks were eventually paid. These
circumstances negate any imputation of wanton and gross bad
faith and negligence.
We also note that while stressing the rectification made by the
respondent bank, the decision practically ignored the prejudice
suffered by the petitioner. This was simply glossed over if not,
indeed, disbelieved. The fact is that the petitioner's credit line
was canceled and its orders were not acted upon pending
receipt of actual payment by the suppliers. Its business
declined. Its reputation was tarnished. Its standing was
reduced in the business community. All this was due to the
fault of the respondent bank which was undeniably remiss in
its duty to the petitioner.
**Respondent court sees the amount of moral damages of 1M
is nothing short of preposterous. Its business is certainly not
big and being a corporation is not as a rule entitled to moral
damages because, not being a natural person, it cannot
experience physical suffering. The only exception to this rule
is where the corporation has a good reputation that is debased,
resulting in its social humiliation. It shall recognize that the
petitioner did not suffer injury because of the private
respondent’s negligence that caused the dishonor of the checks
issued by it. Consider all of this, we feel that the award of
nominal damages are adjudicated in order that a right of
plaintiff, which has been violated or invaded by the
respondent.
Issue: W/N the respondent bank is liable for moral damages of
1M
Held.
The depositor expects the bank to treat his account with the
utmost fidelity, whether such account consist only a few
hundred pesos or of millions. A blunder on the part of the
bank, such as the dishonor of a check without good reason,
can cause the depositor not a little embarrassment if not also
financial loss and perhaps even civil and criminal litigation.
After deliberating on this particular matter, the Court, in the
exercise of its discretion, hereby imposes upon the respondent
bank exemplary damages in the amount of P50,000.00, "by
way of example or correction for the public good," in the
words of the law. It is expected that this ruling will serve as a
warning and deterrent against the repetition of the ineptness
and indefference that has been displayed here, lest the
confidence of the public in the banking system be further
impaired.
ACCORDINGLY, the appealed judgment is hereby
MODIFIED and the private respondent is ordered to pay the
petitioner, in lieu of nominal damages, moral damages in the
amount of P20,000.00, and exemplary damages in the amount
of P50,000.00 plus the original award of attorney's fees in the
amount of P5,000.00, and costs.

TEODORO BAÑAS, C. G. DIZON CONSTRUCTION, INC.,

AND CENE DIZON VS ASIA PACIFIC FINANCE CORP.
ALSO KNOWN AS UNION BANK OF THE PHILIPPINES

Facts

Teodoro Bañas, executed a Promissory Note in favor of C. G

Dizon Contruction whereby for value received he promised to
pay to the order of C. G Dizon Cont. the sum of P 390,000.00
in installments of P 32,500.00 every 25 th day of month starting
from Sept. 25, 1980 up to Aug. 25, 1981.

Later, C. G. Dizon Construction endorsed with recourse the

Promissory Note to ASIA PACIFIC, and to secure payment
thereof, C. G. Dizon Construction, through its corporate
officers, Cenen Dizon, President, and Juliette B. Dizon, Vice
President and Treasurer, executed a Deed of Chattel Mortgage
covering three (3) heavy equipment units of Caterpillar
Bulldozer Crawler Tractors with Model Nos. D8-14A, D8-2U
and D8H in favor of ASIA PACIFIC.4 Moreover, Cenen
Dizon executed on 25 August 1980 a Continuing Undertaking
wherein he bound himself to pay the obligation jointly and
severally with C. G. Dizon Construction.5

In compliance with the provisions of the Promissory Note,

C.G made the following installments
1. Sept. 25 1980 – P 32,500.00
2. Oct. 27 1980 – P 32, 500.00
3. Feb. 27 1981 – P 65, 000.00
The total of P 130,000.00. Thereafter C. G. Dizon Cont.
defaulted in the remaining balance installments, prompting
ASIA PACIFIC to sent a Statement of Account to Cenen Dizon
for the unpaid balance of P 267,373. 50. Inclusive of interest
and charges, and P 66,909. 38. As the demanded was
unheeded, ASIA PACIFIC sued Teodoro Bañas, C. G Dizon
Construction and Cenen Dizon.

*While defendants (herein petitioners) admitted the

genuineness and due execution of the Promissory Note, the
Deed of Chattle Mortgage and the Continuing Undertaking,
they nevertheless maintained that these documents were never
intended by the parties to be legal, valid and binding.