310 Supreme Court Reports Annotated: Tan vs. Court of Appeals

8/26/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 239
310 SUPREME COURT REPORTS ANNOTATED

Tan vs. Court of Appeals
*
G.R. No. 108555. December 20, 1994.
RAMON TAN, petitioner, vs. THE HONORABLE COURT OF

APPEALS and RIZAL COMMERCIAL BANKING CORPO-
RATION, respondents.
Banks and Banking; Checks; A bank cannot exculpate itself from

liability for the consequences of the use of wrong deposit slip resulting in
the misrouting of a regional check to the Central Bank for clearing.—In the
light of City Trust Corporation v. The Intermediate Appellate Court, G.R.
No. 84281, 27 May 1994 (232 SCRA 559), the respondent bank cannot
exculpate itself from liability by claiming that its depositor
______________
* FIRST DIVISION.
311
VOL. 239, DECEMBER 20, 1994 311
“impliedly instructed” the bank to clear his check with the Central Bank by
filling a local check deposit slip. Such posture is disingenuous, to say the
least. First, why would RCBC follow a patently erroneous act born of
ignorance or inattention or both. Second, bank transactions pass through a
succession of bank personnel whose duty is to check and countercheck
transactions for possible errors. In the instant case, the teller should not have
accepted the local deposit slip with the cashier’s check that on its face was
clearly a regional check without calling the depositor’s attention to the
mistake at the very moment this was presented to her. Neither should
everyone else down the line who processed the same check for clearing
have allowed the check to be sent to Central Bank. Depositors do not
pretend to be past master of banking technicalities, much more of clearing
www.central.com.ph/sfsreader/session/0000016ccbfd317905192a7a003600fb002c009e/t/?o=False 1/15
procedures. As soon as their deposits are accepted by the bank teller, they
wholly repose trust in the bank personnel’s mastery of banking, their and the
bank’s sworn profession of diligence and meticulousness in giving
irreproachable service.
Same; Same; The bank is not expected to be infallible but it must bear
the blame for not discovering the mistake of its teller despite the established
procedure requiring the papers and bank books to pass through a battery of
bank personnel whose duty it is to check and countercheck them for possible
errors.—We do not subscribe to RCBC’s assertion that petitioner’s use of
the wrong deposit slip was the proximate cause of the clearing fiasco and so,
petitioner must bear the consequence. In Pilipinas Bank v. CA, this Court
said: The bank is not expected to be infallible but, as correctly observed by
respondent Appellate Court, in this instance, it must bear the blame for not
discovering the mistake of its teller despite the established procedure
requiring the papers and bank books to pass through a battery of bank
personnel whose duty it is to check and countercheck them for possible
errors. Apparently, the officials and employees tasked to do that did not
perform their duties with due care.
Same; Same; There is an element of certainty or assurance in an
ordinary check that it will be paid upon presentation that is why it is
perceived as a convenient substitute for currency in commercial and
financial transactions.—An ordinary check is not a mere undertaking to pay
an amount of money. There is an element of certainty or assurance that it
will be paid upon presentation that is why it is perceived as a convenient
substitute for currency in commercial and financial transactions. The basis
of the perception being confidence. Any practice that destroys that
confidence will impair the usefulness of the check as a currency substitute
and create havoc in trade circles and
312
the banking community.

Same; Same; Cashier’s Checks; Words and Phrases; A cashier’s check
is a primary obligation of the issuing bank and accepted in advance by its
mere issuance, and, by its peculiar character and general use in the
commercial world is regarded substantially to be as good as the money
which it represents.—Now, what was presented for deposit in the instant
case was not just an ordinary check but a cashier’s check payable to the
account of the depositor himself. A cashier’s check is a primary obligation
of the issuing bank and accepted in advance by its mere issuance. By its
very nature, a cashier’s check is the bank’s order to pay drawn upon itself,
committing in effect its total resources, integrity and honor behind the
check. A cashier’s check by its peculiar character and general use in the
commercial world is regarded substantially to be as good as the money
which it represents. In this case, therefore, PCIB by issuing the check
created an unconditional credit in favor of any collecting bank. All these
considered, petitioner’s reliance on the layman’s perception that a cashier’s
check is as good as cash is not entirely misplaced, as it is rooted in practice,
tradition, and principle.
Same; Same; Damages; 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.—We hold that petitioner has the right to
recover moral damages even if the bank’s negligence may not have been
attended with malice and bad faith. In American Express International, Inc.
v. IAC, we held: While petitioner was not in bad faith, its negligence caused
the private respondent to suffer mental anguish, serious anxiety,
embarrassment and humiliation, for which he is entitled to recover,
reasonable moral damages (Art. 2217, Civil Code).
Same; Same; Same; Moral damages are not meant to enrich a
complainant at the expense of defendant; Award of exemplary damages
unjustified in the absence of malice, bad faith or gross negligence.—In
Zenith Insurance Corporation v. CA, we also said that moral damages are
not meant to enrich a complainant at the expense of defendant. It is only
intended to alleviate the moral suffering he has undergone. In the instant
case, we find the award of P700,000.00 as moral damages excessive and,
accordingly, reduce it to one hundred thousand (P100,000.00) pesos. We
find the award of exemplary damages of P200,000.00 unjustified in the
absence of malice, bad faith or gross negligence. The award of reasonable
attorney’s fees is proper for the petitioner was compelled to litigate to
protect his interest.
313
VOL. 239, DECEMBER 20, 1994 313

PETITION for review on certiorari to set aside a decision of the

Court of Appeals.
The facts are stated in the opinion of the Court.

Yulo, Quisumbing, Torres, Ali & Bello Law Offices for
petitioner.
Siguion Reyna, Montecillo & Ongsiako for private
respondent.
KAPUNAN, J.:
This petition seeks to set aside the decision of the Court of Appeals
dated January 12, 1993 in CA-G.R. CV No. 31083, entitled Ramon
Tan, plaintiff-appellee, vs. Rizal Commercial Banking Corporation,
defendant-appellant, reversing the decision of the Regional Trial
Court dated December 28, 1990 ordering respondent bank Rizal
Commercial Banking Corporation (RCBC), Binondo Branch, to pay
petitioner damages and attorney’s fees in the amount of ONE
MILLION THIRTY FIVE THOUSAND (P1,035,000.00) PESOS.
The following are the uncontroverted facts:
Petitioner Ramon Tan, a trader-businessman and community
leader in Puerto Princesa, had maintained since 1976 Current
Account No. 109058068 with respondent bank’s Binondo branch.
On March 11, 1988, to avoid carrying cash while enroute to Manila,
he secured a Cashier’s Check No. L 406000126 from the Philippine
Commercial Industrial Bank (PCIB), Puerto Princesa branch, in the
amount of Thirty Thousand (P30,000.00) Pesos, payable to his
order. He deposited the check in his account with RCBC Binondo on
March 15. On the same day, RCBC erroneously sent the same
cashier’s check for clearing to the Central 1Bank which was returned
for having been “missent” or “misrouted.” The next day, March 16,
RCBC debited the amount covered by the same cashier’s check from
the account of the petitioner. Respondent bank at this time had not
informed the petitioner of its action which the latter claims he
learned of only 42 days after, specifically on March 16, when he
received the bank’s debit
______________
1 Rollo, p. 30.
314

2
memo. Relying on the common knowledge that a cashier’s check
was as good as cash, that the usual banking practice that local
checks are cleared within three (3) working days and regional
checks within seven (7) working days, and the fact that the cashier’s
check was accepted, petitioner issued two (2) personal checks both
dated March 18. Check No. 040719 in the name of Go Lac for Five
Thousand
3
Five Hundred (P5,500.00) Pesos was presented on April
25, more than 30 days from petitioner’s deposit date of the cashier’s
check. Check No. 040718 in the name of MS Development Trading
Corporation for Six Thousand Fifty-Three Pesos and Seventy
Centavos (P6,053.70) was returned twice on March 24, nine (9) days
from his deposit date and again on April 26, twenty-two days after4
the day the cashier’s check was deposited for insufficiency of funds.
Petitioner, alleging to have suffered humiliation and loss of face

in the business sector due to the bounced checks, filed a complaint
against RCBC for damages in the Regional Trial Court of Palawan 5
and Puerto Princesa, Branch 47, docketed as Civil Case No. 2101.
During the trial, petitioner sought to prove:
First, that it was RCBC’s responsibility to call his attention there
and then that he had erroneously filled the wrong deposit slip at the
time he deposited the cashier’s check with the respondent bank’s 6
teller and it was negligence on RCBC’s part not to have done so;
Second, that RCBC had been remiss in the performance of its
obligation to the petitioner when it “missent” the cashier’s check to
the Central Bank knowing, as it should, that the source of the check,
PCIB, Puerto Princesa Branch, is not included in the areas required
to be cleared by the Central Bank, 7a fact known to the banking world
and surely to the respondent bank;
Third, that RCBC upon knowing of its error in “missending” the
cashier’s check to the Central Bank did not attempt to rectify
_____________
2 Id., at 78.
3 Id., at 77.
4 Id., at 76.
5 Original Records, pp. 2-6.
6 Id., at 164; TSN, March 26, 1990, pp. 22-26.
7 Original Records, p. 3.
315
VOL. 239, DECEMBER 20, 1994 315

its “misclearing” error by clearing it seasonably with PCIB, Puerto

Princesa, thru its own RCBC
8
Puerto Princesa Branch with whom it
had direct radio contact;
Fourth, that as an old client, with twelve (12) years of good
standing then, RCBC should have given him more consideration by
exerting greater diligence in clearing 9the check with PCIB, Puerto
Princesa, to protect its client’s interest;
Fifth, that RCBC failed to inform petitioner promptly that the
check had not been cleared, despite its debiting without delay the
amount covered by the check from the account of the petitioner and
hastily charging the latter10
service fees immediately after the return
of the “missent checks”; and
Finally, that the bounced checks resulting from RCBC’s
“misclearing” had put in doubt his credibility among his business
peers and sullied his reputation as a community leader which he had
painstakingly cultivated for years. His community standing as a
business-socio-civic leader was a source of pride for him in his old

age of 70. He cited being Chairman of Palawan Boy Scout Council,
2-term President of the Rotary Club of Puerto Princesa, member of
Palawan Chamber of Commerce and Industry, member of the
Monitoring Team of the Palawan Integrated Area Develop-ment
Project, member of Lion’s Club, Philippine Rifle Pistol Association
and the 11Saturday Health Club to justify his claim for moral
damages.
In its defense, RCBC disowning any negligence, put the blame
for the “misrouting” on the petitioner for using the wrong check
deposit slip. It insisted that the misuse of a local check deposit slip,
instead of a regional check deposit slip, triggered the “misrouting”
by RCBC of the cashier’s check to the Central Bank and it was
petitioner’s negligent “misuse” of a local deposit slip which was the
proximate cause
12
of the “misrouting,” thus he should bear the
consequence.
RCBC alleged that it complied strictly with accepted banking
practice when it debited the amount of P30,000.00 against
____________
8 Id., at 4; TSN, March 26, 1990, pp. 32-33.

9 Original Records, 153-154.
10 Id., at 4, 167.
11 Id., at 4-5.
12 Id., at 47-48, 62.
316

petitioner’s account since under Resolution No. 2202 dated

December 21, 1979 of the Monetary Board, it is a matter of policy to
prohibit the drawing against uncollected deposits (DAUDS) except
when the drawings are made against uncollected deposits
representing bank manager’s/cashier’s/ treasurer’s checks, treasury
warrants, postal money orders and duly funded “on us” 13
checks
which may be permitted at the discretion of each bank. Without
crediting the P30,000.00 deposit, petitioner’s balance before and
after was Two Thousand Seven Hundred
14
Ninety-Two Pesos and the
(P2,792.88) Eighty-Eight Centavos. Thus, it dishonored the two (2)
checks amounting to P11,553.70 since they were drawn against
insufficient funds. RCBC added that petitioner had no bills purchase
(BP) line which allows a depositor to receive or draw from proceeds
of a check without waiting it to be cleared. Besides, RCBC
maintained, had it forwarded the Cashier’s Check to PCIB Puerto
Princesa, Palawan, it would take at least twenty (20) working days
for the cashier’s check to be cleared and it would take15 the same
length of time to clear the two (2) personal checks of Tan.
RCBC further asseverated it was merely acting as petitioner’s
collecting agent and it assumed no responsibility beyond care in
selecting correspondents under the theory that where a check is
deposited with a collecting bank the relationship created16
is that of
agency and not creditor-debtor, thus it cannot be liable.
Finally, respondent claimed that serious attempts were made to
contact petitioner through the telephone numbers
17
in the signature
specimen card of petitioner but to no avail. The Assistant Branch
Accountant of RCBC Binondo Branch testified that the first
telephone number in the card had been deleted from the phone
company’s list and that when RCBC tried to contact petitioner’s
daughter Evelyn Tan-Banzon thru a certain telephone number and
when they
18
asked for Evelyn Tan, they were told there was no such
person.
______________
13 Id., at 47; TSN, December 18, 1989, p. 155.

14 Rollo, p. 52.
15 Id., at 48-49.
16 Id., at 89.
17 TSN, February 2, 1990, pp. 59-66; Original Records, p. 49.
18 Ibid.
317
VOL. 239, DECEMBER 20, 1994 317

The trial court rendered a decision on 19

December 28, 1990 in
petitioner’s favor, the dispositive portion of which reads:
WHEREFORE, premises considered, plaintiff having proven the allegations

of his verified complaint by preponderance of evidence, the court hereby
renders judgment ordering defendant bank, Binondo Branch, Manila, to pay
him damages and attorney’s fees in the total amount of P1,035,000.00
Philippine Currency, broken down as follows: P700,000.00 as moral
damages, P200,000.00 as exemplary damages; P135,000.00 which is 15%
of the sum herein awarded to plaintiff, as attorney’s fees and to pay costs of
suit.
For having failed to prove by any receipt or writing to underpin it,
plaintiff’s claim for actual damage is denied for lack of merit.
IT IS SO ORDERED.
RCBC appealed to the Court of Appeals contending that the trial

court erred in holding RCBC liable to petitioner on account of its
alleged negligence and in awarding petitioner moral and exemplary

damages and attorney’s fees. 20
The Court of Appeals on January 12, 1993 rendered a decision
with the following decretal portion:
WHEREFORE, and upon all the foregoing, the decision of the court below
is REVERSED and this complaint is DISMISSED without pronouncement
as to cost.
21
The Court of Appeals’ decision is based on the following findings:
What appeared to have caused the unfortunate incident was that the plaintiff
filled up the wrong deposit slip which led to the sending of the check to the
Central Bank when the clearing should have been made elsewhere.
But the claim of the plaintiff that he was not advised that the Cashier’s
check was missent does not seem to be correct. The evidence indicated that
the defendant bank thru its personnel had called him up thru telephone in the
number (No. 60-45-23) which he gave in his
______________
19 Rollo, p. 68.
20 Id., at 29-38.
21 Id., at 36-37.
318

specimen signature card. But it came out, that said telephone number was no
longer active or was already deleted from the list of telephone numbers.
There was an instruction on the part of the plaintiff for the bank to
contact his daughter, Mrs. Evelyn Tan Banzon and according to the plaintiff,
she too, was not contacted as per his instruction. The evidence, however,
indicated that Ms. Evelyn Tan also could not be contacted at the number
supposed to pertain to her as appeared in the specimen signature card. In
other words while there was compliance with the instructions given by the
plaintiff but said instructions were faulty. The plaintiff as a customer of the
bank is under obligation to inform the defendant of any changes in the
telephone numbers to be contacted in the event of any exigency.
All in all, the facts indicate that the refusal of RCBC to credit the amount
of P30,000.00 to the plaintiff’s current account is consistent with the
accepted banking practice. As the defendant bank had claimed, under
Resolution No. 2202 dated December 21, 1979 of the Monetary Board, it
had been emphatically declared as a matter of policy that no drawings
should be made against uncollected deposits except when the drawings are
made against uncollected deposits representing bank
manager’s/cashier’s/treasurer’s checks, treasury warrants, postal money
orders, and duly funded ‘on-us’ checks as may be permitted at the discretion
of each bank.
It is clear that immediate payment without awaiting clearance of a
cashier’s check is discretionary with the bank to whom the check is
presented and such being the case, the refusal to allow it as in this case is
not to be equated with negligence in the basic perception that discretion is
not demandable as a right. In the instant case, prior to the deposit of
P30,000.00, the plaintiff’s account appeared to be only in the amount of
P2,792.98. So the two (2) checks issued by the plaintiff amounting to
P11,553.70 had to be dishonored since they were drawn against insufficient
funds.
What the plaintiff should have done, before issuing the two (2) checks,
was to await the clearance of the Cashier’s check and his failure to do so is a
fault not ascribable to the defendant who appeared under the circumstance
merely to have followed the usual banking practice.
Petitioner now seeks to reverse the decision of the Court of Appeals

and affirm that of the lower court. He raises the following errors:
1. THE HONORABLE COURT OF APPEALS

COMMITTED GROSS AND MANIFEST ERROR IN
CONCLUDING THAT THE NEGLIGENCE WAS
ASCRIBABLE TO HEREIN PETITIONER.
319
VOL. 239, DECEMBER 20, 1994 319

2. THE HONORABLE COURT OF APPEALS GRAVELY

ABUSED ITS DISCRETION IN FINDING THAT THE
RESPONDENT BANK HAD NOT BEEN REMISS IN
THE PERFORMANCE OF ITS OBLIGATIONS TO
HEREIN PETITIONER.
COMMITTED GROSS AND MANIFEST ERROR AND
GRAVE ABUSE OF DISCRETION IN REVERSING THE
AWARD OF MORAL AND EXEMPLARY DAMAGES
TO THE PETITIONER.
COMMITTED GROSS AND MANIFEST ERROR AND
GRAVE ABUSE OF DISCRETION IN NOT AWARDING
ATTORNEY’S FEES TO PETITIONER.
In a most recent case decided by this Court,

22
City Trust Corporation
v. The Intermediate Appellate Court, involving damages against
City Trust Banking Corporation, the depositor, instead of stating her
correct account number 29000823 inaccurately wrote 2900823.

Because of this error, six postdated checks amounting to P20,209.00
she issued were dishonored for insufficiency of funds. The Regional
Trial Court dismissed the complaint for lack of merit. The Court of
Appeals, however, found the appeal meritorious and ordered the
bank to pay nominal damages of P2,000.00, temperate and moderate
damages of P5,000.00 and attorney’s fees of P4,000.00. Upon
review, this Court quoted with favor the disquisition of the appellate
court:
We cannot uphold the position of defendant. For, even if it be true that there
was error on the part of the plaintiff in omitting a zero in her account
number, yet, it is a fact that her name, Emma E. Herrero, is clearly written
on said deposit slip (Exh. B). This is controlling in determining in whose
account the deposit is made or should be posted. This is so because it is not
likely to commit an error in one’s name than merely relying on numbers
which are difficult to remember, especially a number with eight (8) digits as
the account numbers of defendant’s depositors. We view the use of numbers
as simply for the convenience of the bank but was never intended to
disregard the real name of its depositors. The bank is engaged in business
impressed with public interest, and it is its duty to protect in return its many
clients and depositors who transact business with it. It should not be a
matter of the bank alone receiving deposits, lending out money and
collecting
______________
22 G.R. No. 84281 promulgated May 27, 1994.
320

interests. It is also its obligation to see to it that all funds invested with it are
properly accounted for and duly posted in its ledgers.
In the case before Us, we are not persuaded that defendant bank was not
free from blame for the fiasco. In the first place, the teller should not have
accepted plaintiff’s deposit without correcting the account number on the
deposit slip which, obviously, was erroneous because, as pointed out by
defendant, it contained only seven (7) digits instead of eight (8). Second, the
complete name of plaintiff depositor appears in bold letters on the deposit
slip (Exh. B). There could be no mistaking in her name, and that the deposit
was made in her name, Emma E. Herrero. In fact, defendant’s teller should
not have fed her deposit slip to the computer knowing that her account
number written thereon was wrong as it contained only seven (7) digits. As
it happened, according to defendant, plaintiff’s deposit had to be consigned
to the suspense accounts pending verification. This, indeed, could have been
avoided at the first instance had the teller of defendant bank performed her
duties efficiently and well. For then she could have readily detected that the
account number in the name of Emma E. Herrero was erroneous and would
be rejected by the computer. That is, or should be, part of the training and
standard operating procedure of the bank’s employees. On the other hand,
the depositors are not concerned with banking procedure. That is the
responsibility of the bank and its employees. Depositors are only concerned
with the facility of depositing their money, earning interest thereon, if any,
and withdrawing therefrom, particularly businessmen, like plaintiff, who are
supposed to be always on-the-go. Plaintiff’s account is a current account
which should immediately be posted. After all, it does not earn interest. At
least, the forbearance should be commensurated with prompt, efficient and
satisfactory service.
Bank clients are supposed to rely on the services extended by the bank,
including the assurance that their deposits will be duly credited them as
soon as they are made. For, any delay in crediting their account can be
embarrassing to them as in the case of plaintiff.
The point is that as a business affected with public interest and because
of the nature of its functions, the bank is under obligation to treat the
accounts of its depositors with meticulous care, always having in mind the
fiduciary nature of their relationship. (Italics supplied).
In the light of the above-cited case, the respondent bank cannot

exculpate itself from liability by claiming that its depositor
“impliedly instructed” the bank to clear his check with the Central
Bank by filling a local check deposit slip. Such posture is
disingenuous, to say the least. First, why would RCBC follow a
patently erroneous act born of ignorance or inattention or both.
321
VOL. 239, DECEMBER 20, 1994 321

Second, bank transactions pass through a succession of bank

personnel whose duty is to check and countercheck transactions for
possible errors. In the instant case, the teller should not have
accepted the local deposit slip with the cashier’s check that on its
face was clearly a regional check without calling the depositor’s
attention to the mistake at the very moment this was presented to
her. Neither should everyone else down the line who processed the
same check for clearing have allowed the check to be sent to Central
Bank. Depositors do not pretend to be past master of banking
technicalities, much more of clearing procedures. As soon as their
deposits are accepted by the bank teller, they wholly repose trust in
the bank personnel’s mastery of banking, their and the bank’s sworn
profession of diligence and meticulousness in giving irreproachable
service.
We do not subscribe to RCBC’s assertion that petitioner’s use of

the wrong deposit slip was the proximate cause of the clearing fiasco
and 23so, petitioner must bear the consequence. In Pilipinas Bank v.
CA, this Court said:
The bank is not expected to be infallible but, as correctly observed by

respondent Appellate Court, in this instance, it must bear the blame for not
discovering the mistake of its teller despite the established procedure
requiring the papers and bank books to pass through a battery of bank
personnel whose duty it is to check and countercheck them for possible
errors. Apparently, the officials and employees tasked to do that did not
perform their duties with due care, . . .
So it is in the instant case, where the conclusion is inevitable that

respondent RCBC had been remiss in the performance of its duty
and obligation to its client, as well as to itself. We draw attention to
the fact that the two dishonored checks issued by petitioner, Check 24
No. 040719 and Check No. 040718 were presented for payment
more than 45 days from the day the cashier’s check was deposited.
This gave RCBC more than ample time to have cleared the cashier’s
check had it corrected its “missending” the same upon return from
Central Bank using the
_______________
23 G.R. 105410, promulgated July 25, 1994, citing Bank of Philippine Island v.
IAC, 206 SCRA 408, (February 21, 1992) 413.
24 See Notes 1-2, supra.
322

correct slip this time so it can be cleared properly. Instead, RCBC

promptly debited the amount of P30,000.00 against petitioner’s
account and left it at that.
We observe, likewise, that RCBC inquired about an Evelyn Tan
but no Evelyn Tan-Banzon as 25specifically instructed in the same
signature card. (Italics supplied)
RCBC insists that immediate payment without awaiting
clearance of a cashier’s check is discretionary with the bank to
whom the check is presented and such being the case, its refusal to
immediately pay the cashier’s check in this case is not to be equated
with negligence on its part. We find this disturbing and unfortunate.
An ordinary check is not a mere undertaking to pay an amount of
money. There is an element of certainty or assurance that it will be
paid upon presentation that is why it is perceived as a convenient
substitute for currency in commercial and financial transactions. The

basis of the perception being confidence. Any practice that destroys
that confidence will impair the usefulness of the check as a currency
substitute and
26
create havoc in trade circles and the banking
community.
Now, what was presented for deposit in the instant case was not
just an ordinary check but a cashier’s check payable to the account
of the depositor himself. A cashier’s check is a primary obligation27
of
the issuing bank and accepted in advance by its mere issuance. By
its very nature, a cashier’s check is the bank’s order to pay drawn
upon itself, committing in effect its total resources, integrity and
honor behind the check. A cashier’s check by its peculiar character
and general use in the commercial world is regarded
28
substantially to
be as good as the money which it represents. In this case, therefore,
PCIB by issuing the check created an unconditional credit in favor
of any collecting bank.
All these considered, petitioner’s reliance on the layman’s
perception that a cashier’s check is as good as cash is not entirely
______________
25 Rollo, pp. 91-93.

26 Agbayani, Commentaries and Jurisprudence on the Commercial Laws of the
Philippines, Vol. I, 474 (1992).
27 State v. Bengtson, 367 P 2d 365.
28 Ibid.
323
VOL. 239, DECEMBER 20, 1994 323

misplaced, as it is rooted in practice, tradition, and principle. We see

no reason thus why this so-called discretion was not exercised in
favor of petitioner, specially since PCIB and RCBC are members of
the same clearing house group relying on each other’s solvency.
RCBC could surely rely on the solvency of PCIB when the latter
issued its cashier’s check.
On the third and fourth issue, RCBC contends that moral
damages cannot be recovered in an action for breach of contract
since under Article 2219 of the New Civil Code, the instant case is
not among those enumerated. For an award of moral damages in a
breach of contract, it is imperative that the party acted in bad faith or
fraudulently as provided for in Art. 2220 of the Civil Code, to wit:
ART. 2220. Willful injury to property may be a legal ground for awarding
moral damages if the court should find that, under the circumstances, such
damages are justly due. The same rule applies to breaches of contract where
the defendant acted fraudulently or in bad faith.
In the absence of moral damages, RCBC argues, exemplary damages

cannot be awarded under Art. 2225 of the same Code which states:
Exemplary damages or corrective damages are imposed, by way of example

or correction for the public good, in addition to the moral, temperate,
liquidated or compensatory damages.
We hold that petitioner has the right to recover moral damages even
if the bank’s negligence may not have been attended with29malice and
bad faith. In American Express International, Inc. v. IAC, we held:
While petitioner was not in bad faith, its negligence caused the private
respondent to suffer mental anguish, serious anxiety, embarrassment and
humiliation, for which he is entitled to recover, reasonable moral damages
(Art. 2217, Civil Code).
_____________
29 167 SCRA 209.
324

30
In Zenith Insurance Corporation v. CA, we also said that moral
damages are not meant to enrich a complainant at the expense of
defendant. It is only intended to alleviate the moral suffering he has
undergone. In the instant case, we find the award of P700,000.00 as
moral damages excessive and, accordingly, reduce it to one hundred
thousand (P100,000.00) pesos. We find the award of exemplary
damages of P200,000.00 31unjustified in the absence of malice, bad
faith or gross negligence. The award of reasonable attorney’s fees
is proper32 for the petitioner was compelled to litigate to protect his
interest.
IN VIEW WHEREOF, we REVERSE the decision of respondent
Court of Appeals and hereby order private respondent RCBC,
Binondo Branch, to pay petitioner the amount of one hundred
thousand (P100,000.00) pesos as moral damages and the sum of fifty
thousand (P50,000.00) pesos as attorney’s fees, plus costs.
SO ORDERED.
Padilla (Chairman), Davide, Jr., Bellosillo and Quiason, JJ.,

concur.
Judgment reversed.
Notes.—A bank is guilty of negligence and therefore liable for

damages for failure to send deposited check for clearing at the
appointed time. (Bank of the Philippine Islands vs. Intermediate
Appellate Court, 219 SCRA 644 [1993])
A bank, being greatly affected with public interest, should
exercise even a higher degree of diligence in the handling of its
affairs than that expected of an ordinary business firm. (Lim Sio Bio
vs. Court of Appeals, 221 SCRA 307 [1993])
——o0o——
____________
30 185 SCRA 402.

31 Globe Mackay Cable and Radio Corporation v. CA, 176 SCRA 778.
32 Civil Code, Art. 2208.
325
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310 Supreme Court Reports Annotated: Tan vs. Court of Appeals

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8/26/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 239

310 SUPREME COURT REPORTS ANNOTATED

RAMON TAN, petitioner, vs. THE HONORABLE COURT OF

Banks and Banking; Checks; A bank cannot exculpate itself from

VOL. 239, DECEMBER 20, 1994 311

Tan vs. Court of Appeals

312 SUPREME COURT REPORTS ANNOTATED

Tan vs. Court of Appeals

the banking community.

VOL. 239, DECEMBER 20, 1994 313

PETITION for review on certiorari to set aside a decision of the

The facts are stated in the opinion of the Court.

314 SUPREME COURT REPORTS ANNOTATED

Petitioner, alleging to have suffered humiliation and loss of face

VOL. 239, DECEMBER 20, 1994 315

its “misclearing” error by clearing it seasonably with PCIB, Puerto

business-socio-civic leader was a source of pride for him in his old

8 Id., at 4; TSN, March 26, 1990, pp. 32-33.

316 SUPREME COURT REPORTS ANNOTATED

petitioner’s account since under Resolution No. 2202 dated

13 Id., at 47; TSN, December 18, 1989, p. 155.

VOL. 239, DECEMBER 20, 1994 317

The trial court rendered a decision on 19

WHEREFORE, premises considered, plaintiff having proven the allegations

RCBC appealed to the Court of Appeals contending that the trial

alleged negligence and in awarding petitioner moral and exemplary

318 SUPREME COURT REPORTS ANNOTATED

Petitioner now seeks to reverse the decision of the Court of Appeals

1. THE HONORABLE COURT OF APPEALS

VOL. 239, DECEMBER 20, 1994 319

2. THE HONORABLE COURT OF APPEALS GRAVELY

In a most recent case decided by this Court,

correct account number 29000823 inaccurately wrote 2900823.

22 G.R. No. 84281 promulgated May 27, 1994.

320 SUPREME COURT REPORTS ANNOTATED

In the light of the above-cited case, the respondent bank cannot

VOL. 239, DECEMBER 20, 1994 321

Second, bank transactions pass through a succession of bank

We do not subscribe to RCBC’s assertion that petitioner’s use of

The bank is not expected to be infallible but, as correctly observed by

So it is in the instant case, where the conclusion is inevitable that

322 SUPREME COURT REPORTS ANNOTATED

correct slip this time so it can be cleared properly. Instead, RCBC

substitute for currency in commercial and financial transactions. The

25 Rollo, pp. 91-93.

VOL. 239, DECEMBER 20, 1994 323

misplaced, as it is rooted in practice, tradition, and principle. We see

In the absence of moral damages, RCBC argues, exemplary damages

Exemplary damages or corrective damages are imposed, by way of example

29 167 SCRA 209.

324 SUPREME COURT REPORTS ANNOTATED

Padilla (Chairman), Davide, Jr., Bellosillo and Quiason, JJ.,

Notes.—A bank is guilty of negligence and therefore liable for

30 185 SCRA 402.

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