Like us on Facebook

Please wait..10 Seconds Cancel

Torts and Damages Case Digest: Producer's Bank v. CA (2001)

G.R. No. 111584            September 17, 2001

Lessons Applicable: Factors in determining amount (Torts and Damages)
Laws Applicable: ART. 2208, Article 2232 of the Civil Code


  • April, 1982: Salvador Chua was offered by Mr. Jimmy Rojas, manager of Producers Bank of the Philippines to transfer his account from Pacific Banking Corporation to Producers Bank.
  • Chua did and was able to obtain a loan for P2,000,000 which was secured by a real estate mortgage and payable within a period of 3 years or from 1982 to 1985
  • January 20, 1984: Chua deposited with Producers Bank P960,000 which was entered into their savings account passbook but failed to credit it because Sixto Castillo, absconded with the money.
  • Producers Bank dishonored the checks drawn by Chua in favor of various creditors.  Although his balance was P1,051,051.19.
  • Despite their request for copies of the bank's ledgers, it refused so Chua filed an action for damages.  
  • October 15, 1984: Producer's Bank filed a petition for extrajudicial foreclosure of the real estate mortgage
  • RTC: favored Chua ordering Producers to pay P2,000,000 moral damages, with legal rate of interest; P90,000/month and P18,000/month unrealized profits from his cement and gasoline station business, to commence from October 16, 1984, with legal rate of interest until fully paid; P250,000 exemplary damages.  Offset the P960,000 with his agricultural loan of P1,300,000 with 14% interest, to commence from January 4, 1984, covered by a real estate mortgage, both of which shall have a cut-off time frame on the date of this decision.  Loan of P175,000 and the clean loan of P400,000 without interest shall be off-settled by the moral, actual and compensatory damages. 15% of moral, actual and compensatory damages as attorney's fees. Cost of suit. 
  • CA: modified moral damages to P500,000. P100,000.00 attorney's fees
ISSUE: W/N the award for damages is reasonable.

HELD: YES. affirmed with MODIFICATION. P300,000 moral damages. P150,000 exemplary damages. P100,000 attorney's fees and litigation expenses.

  • Obviously, petitioner bank's wrongful act caused serious anxiety, embarrassment, and humiliation to private respondents for which they are entitled to recover moral damages in the amount of P300,000.00 which we deem to be reasonable
  • Producer's bank failure to credit the deposit constituted gross negligence in the performance of its contractual obligation which amounts to evident bad faith
  • Verily, all these acts of petitioner were accompanied by bad faith and done in wanton, fraudulent and malevolent manner warranting the award of exemplary damages in favor of private respondents, in accordance with Article 2232 of the Civil Code
  • Need not prove the actual extent of exemplary damages, for its determination is addressed to the sound discretion of the court upon proof of the plaintiff's entitlement to moral, temperate, or compensatory damages (Article 2234, Civil Code)
  • There are two kinds of actual or compensatory damages:
    • loss of what a person already possesses
    • failure to receive as a benefit that which would have pertained to him
      • damages consisting of unrealized profits, frequently referred as "ganacias frustradas" or "lucrum cessans," are not to be granted on the basis of mere speculation, conjecture, or surmise, but rather by reference to some reasonably definite standard such as market value, established experienced, or direct inference from known circumstances
      • When the existence of a loss is established, absolute certainty as to its amount is not required. The benefit to be derived from a contract which one of the parties has absolutely failed to perform is of necessity to some extent, a matter of speculation, but the injured party is not to be denied for that reason alone. He must produce the best evidence of which his case is susceptible and if that evidence warrants the inference that he has been damaged by the loss of profits which he might with reasonable certainty have anticipated but for the defendant's wrongful act, he is entitled to recover. 
  • evidence of private respondents insufficient to be considered within the purview of "best evidence."
    • The bare assertion of private respondent Salvador Chua that he lost an average of P18,000/month is inadequate if not speculative and should be admitted with extreme caution especially because it is not supported by independent evidence. 
      • Could have presented such evidence as reports on the average actual profits earned by their gasoline business, their financial statements, and other evidence of profitability which could aid the court in arriving with reasonable certainty at the amount of profits which private respondents failed to earn. Did not even present any instrument or deed evidencing their claim that they have transferred their right to operate their gasoline station to their relatives. 
  • Extrajudicial foreclosure is clearly unfounded, this does not necessarily mean, in the absence of specific facts proving damages, that actual damage has been sustained.  It must depend on actual proof of the damages alleged to have been suffered.
  • Attorney's fees may be awarded when a party is compelled to litigate or to incur expenses to protect his interest by reason of an unjustified act of the other party
    • act of not crediting private respondents' deposit of P960,000.00, as well as the premature filing of the extrajudicial foreclosure, have compelled private respondents to institute an action for injunction and damages primarily in order to protect their rights and interests