CASE DIGEST: City Trust Banking Corp. v. Villanueva

 

Citytrust Banking Corporation vs. Villanueva

G.R. No. 141011. July 19, 2001.

 

DOCTRINE(S):

Attorney’s Fees; Even when a claimant is compelled to litigate with third persons or to incur expenses to protect his rights, still attorney’s fees may not be awarded where there is no sufficient showing of bad faith in the parties’ persistence of a case other than an erroneous conviction of the righteousness of his cause.—The award of attorney’s fees should likewise be deleted. The general rule is that attorney’s fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. They are not to be awarded every time a party wins a suit. The power of the court to award attorney’s fees under Article 2208 of the Civil Code demands factual, legal and equitable justification. Even when a claimant is compelled to litigate with third persons or to incur expenses to protect his rights, still attorney’s fees may not be awarded where there is no sufficient showing of bad faith in the parties’ persistence of a case other than an erroneous conviction of the righteousness of his cause.

 

FACTS:

Sometime in February 1984, Isagani C. Villanueva opened a savings account and a current account with Citytrust, which were assigned account numbers 1-033-02337-1 and 33-00977-5, respectively, with an automatic transfer arrangement.  

On 21 May 1986, VILLANUEVA deposited some money in his savings account with the BANK’s Legaspi Village Branch in Makati, Metro Manila. Realizing that he had run out of blank checks, VILLANUEVA requested a new checkbook from one of the BANK’s customer service representatives. He then filled up a checkbook requisition slip with the obligatory particulars, except for his current account number which he could not remember. He expressed his predicament to a lady customer service representative of the BANK, who in turn assured him that she could supply the information from the BANK’s account records. After signing the requisition slip, he gave it to her.

Pia Rempillo, another customer service representative of the BANK, saw VILLANUEVA’s checkbook requisition slip. She took it and proceeded to check the BANK’s checkbook register which contained all the names and account numbers of the BANK’s clients who were issued checkbooks. Upon seeing the name “Isagani Villanueva—Account No. 33-00446-3” in the checkbook register, Rempillo copied the aforesaid account number on the space intended for it in VILLANUEVA’s requisition slip.

On 17 June 1986, VILLANUEVA received from the BANK his requested checkbook. On the same day, he immediately signed Check No. 396701 bearing the amount of P50,000 payable to the order of Kingly Commodities Traders and Multi Resources, Inc.. VILLANUEVA thereafter delivered the check to Helen Chu, his investment consultant at Kingly Commodities, with his express instruction to use said check in placing a trading order at Kingly Commodities’ future trading business as soon as a favorable opportunity presented itself.

Two days later, or on 19 June 1986, VILLANUEVA received a call from Helen Chu, informing him that she had already placed a trading order in his behalf and delivered the check to Kingly Commodities. The check was deposited with the China Banking Corporation. The next day, he deposited P31,600 in cash to his savings account to cover the full amount of the check he issued. His deposits in both accounts totalled P51,304.91.

However, on 23 June 1986, VILLANUEVA’s Check No. 396701 was dishonored due to insufficiency of funds and disparity in the signature. VILLANUEVA called Kingly Commodities and explained that there was a mistake in the dishonor of the check because he had sufficient funds. Forthwith on the same day, VILLANUEVA called up the BANK’S Legaspi Village Branch Operations Manager, Maritess Gamboa, and inquired about the dishonor of his well-funded check. Gamboa promised to look into the matter and instructed VILLANUEVA to advise his payee, Kingly Commodities, to re-deposit the check. Gamboa assured VILLANUEVA that the check would be honored after the sufficiency of the funds was ascertained.

On 26 June 1986 at about 4:00 p.m., VILLANUEVA learned that his check was again dishonored due to insufficiency of funds and a stop-payment order he allegedly issued. Dismayed by the turn of events, VILLANUEVA called up the BANK and inquired from Gamboa the reason for the dishonor of his well-funded check and the alleged stop-payment order which he never issued. Gamboa promised to investigate the matter and to call VILLANUEVA in 15 minutes. In the meantime, she advised VILLANUEVA to re-deposit the check.

VILLANUEVA then requested Lawrence Chin of Kingly Commodities to give him until 5:30 p.m. that same day to make good his P50,000 check. He then proceeded to the BANK’S Legaspi Village Branch Office, together with his investment consultant and his trading partner, to personally inquire into the matter. They were met by Marilou Genuino, the BANK’s Branch Manager. There he complained that his trading order was rejected because of the dishonor of the check and that Kingly Commodities threatened to close his trading account unless his check payment would be made good before 5:30 p.m. that day. After making the necessary investigation, Genuino related to VILLANUEVA that the reason for the dishonor of the check was that the account number assigned to his new checkbook was the account number of another depositor also named “Isagani Villanueva” but with a different middle initial.

To resolve the matter, Genuino promised to send to Kingly Commodities a manager’s check for P50,000 before 5:30 p.m., the deadline given to VILLANUEVA. She also personally called Kingly Commodities and explained the reason for the dishonor of the check.

On 30 June 1986, VILLANUEVA sent a letter to the BANK addressed to the President, Jose Facundo, demanding indemnification for alleged losses and damages suffered by him as a result of the dishonor of his well-funded check. He demanded the amount of P70,000 as indemnification for actual damages in the form of lost profits and P2 Million for moral and other damages.

In answer to VILLANUEVA’s letter, Gregorio Anonas III, the BANK’s Senior Vice-President, apologized for the unfortunate oversight, but reminded VILLANUEVA that the dishonor of his check was due to his failure to state his current account number in his requisition slip. Anonas further stated that as soon as the mistake was discovered, the BANK promptly sent a manager’s check to Kingly Commodities before 5:30 p.m. on 26 June 1986 to avoid any damage the dishonor of the check might have caused.

Failing to obtain from the BANK a favorable action on his demand for indemnification, VILLANUEVA filed  a complaint for damages based on breach of contract and/or quasidelict before the Regional Trial Court of Makati City.

ISSUE:

whether the repeated dishonor of a check drawn against a well-funded account but bearing the account number of another depositor with the same name and surname as the drawer would entitle the drawer to compensatory and moral damages and to attorney’s fees

RULING:

Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Although incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant’s wrongful act or omission. Thus, case law establishes the requisites for the award of moral damages, viz.: (1) there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) there must be a culpable act or omission factually established; (3) the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code.

It is beyond cavil that VILLANUEVA had sufficient funds for the check. Had his account number been correct, the check would not have been dishonored. Hence, we can say that VILLANUEVA’s injury arose from the dishonor of his well-funded check. We have already ruled that the dishonor of the check does not entitle him to compensatory damages. But, could the dishonor result in his alleged “intolerable physical inconvenience and discomfort, extreme humiliation, indignities, etc, which he had borne before his peers, trading partners and officers of Kingly Commodities?” True, we find that under the circumstances of this case, VILLANUEVA might have suffered some form of inconvenience and discomfort as a result of the dishonor of his check. However, the same could not have been so grave or intolerable as he attempts to portray or impress upon us.

Further, it is clear from the records that the BANK was able to remedy the caveat of Kingly Commodities to VILLANUEVA that his trading account would be closed at 5:30 p.m. on 26 June 1986. The BANK was able to issue a manager’s check in favor of Kingly Commodities before the deadline. It was able to likewise explain to Kingly Commodities the circumstances surrounding the unfortunate situation. Verily, the alleged embarrassment or inconvenience caused to VILLANUEVA as a result of the incident was timely and adequately contained, corrected, mitigated, if not entirely eradicated. VILLANUEVA, thus, failed to support his claim for moral damages. In short, none of the circumstances mentioned in Article 2219 of the Civil Code exists to sanction the award for moral damages.

The award of attorney’s fees should likewise be deleted. The general rule is that attorney’s fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. They are not to be awarded every time a party wins a suit. The power of the court to award attorney’s fees under Article 2208 of the Civil Code demands factual, legal and equitable justification. Even when a claimant is compelled to litigate with third persons or to incur expenses to protect his rights, still attorney’s fees may not be awarded where there is no sufficient showing of bad faith in the parties’ persistence of a case other than an erroneous conviction of the righteousness of his cause.

In view of the foregoing discussion, we need not deliberate on the dispute as to whether it was the BANK’s or VILLANUEVA’s negligence which was the proximate cause of the latter’s injury because, in the first place, he did not sustain any compensable injury. If any damage had been suffered at all, it could be equivalent to damnum absque injuria, i.e., damage without injury or damage or injury inflicted without injustice, or loss or damage without violation of a legal right, or a wrong done to a man for which the law provides no remedy.