SECOND DIVISION
[G.R. No. 184440. July 3, 2017.]
G.R. No. 184440, RAFAEL B. DE PERALTA and WILFREDO CABINTE, petitioners,vs. PHILIPPINE COMMERCIAL INTERNATIONAL BANK, respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Second Division, issued a Resolution dated03 July 2017 which reads as follows:
"G.R. No. 184440, RAFAEL B. DE PERALTA and WILFREDO CABINTE v. PHILIPPINE COMMERCIAL INTERNATIONAL BANK
A claim for damages will prosper if there is proof that the injury resulted from a breach of a legal duty. If no legal duty is breached, no damages will be awarded and the injury is suffered by the claimant.
This resolves the Petition for Review on Certiorari1 filed by Rafael B. De Peralta (De Peralta) and Wilfredo Cabinte (Cabinte) assailing the Court of Appeals Decision 2 dated April 24, 2008 and Resolution 3 dated August 20, 2008. The assailed Court of Appeals Decision modified the Regional Trial Court Decision 4 dated June 7, 2005 by deleting the counterclaim consisting of moral damages, attorney's fees, and litigation expenses awarded to De Peralta and Cabinte.
On October 9, 1992, Philippine Commercial International Bank submitted a complaint for damages against its former client, Victor Tan Go (Tan Go), and his representative, Raul Flores (Flores). Philippine Commercial International Bank's former Acting Accounting Supervisor Reynaldo Poyaoan (Poyaoan), former Branch Manager De Peralta, and former Operations Officer Cabinte of the Session Road Branch in Baguio City were impleaded in the case. 5
Philippine Commercial International Bank alleged that Tan Go and Flores colluded with De Peralta, Cabinte, and Poyaoan to "sell to the [b]ank various second-endorsed US treasury warrants and US postal money orders with a total peso value of [P]12,632,108.50." 6 Philippine Commercial International Bank reported that some of the treasury warrants and money orders were returned or dishonored. The transactions, which were allegedly done in contravention of bank rules and regulations, resulted in a loss of P2,646,621.13. 7 The bank presented as evidence an Audit Memorandum that detailed the negligent acts of petitioners. 8 AIDSTE
In their Joint Answer, 9 De Peralta and Cabinte averred that the transactions with Tan Go were done in the ordinary course of banking business. These transactions were duly approved by the Branch Credit Committee, as well as by the bank's Vice President and Area Manager for Northern Luzon, Alegria Valenciano (Valenciano), 10 De Peralta and Cabinte claimed that while Tan Go was abroad, his checks "started returning unpaid." Upon learning this, Tan Go's brother, Johnson Tan (Johnson) negotiated a settlement with the Philippine Commercial International Bank, on his behalf. 11
Philippine Commercial International Bank and Johnson allegedly agreed to treat the value of the dishonored checks as loans which would be paid in "installment with interest at bank loan rates." 12 Johnson then gave Philippine Commercial International Bank post-dated personal checks that covered the value of the returned checks plus the agreed interest. 13 However, this settlement failed when Valenciano filed a complaint for estafa against Tan Go. 14 De Peralta and Cabinte alleged that if Valenciano had not filed the estafa case, Philippine Commercial International Bank would have been paid the full value of the dishonored checks with interest. 15 Because they were maliciously impleaded in the bank's complaint, De Peralta and Cabinte filed a counterclaim asking for moral damages, exemplary damages, attorney's fees, and litigation expenses. 16
During, the trial, Cabinte testified that aside from losing his job, his savings, and his good reputation, his friends and colleagues stopped talking to him because of this case. 17 Similarly, De Peralta testified that he was wrongfully included in the complaint. 18 He maintained that the other banks refused to hire him because he could not obtain a clearance from the Philippine Commercial International Bank while this case was still pending. 19 According to him, his reputation was tarnished and he was unable to work for almost seven (7) years. He said he had to beg his friends for a job and had they not intervened, he would not have been able to work. 20
The Regional Trial Court found Tan Go liable to Philippine Commercial International Bank for the value of the dishonored US treasury warrants and postal money orders. However, it dismissed the complaint against Flores, Poyaoan, De Peralta, and Cabinte. The trial court also granted De Peralta and Cabinte's counterclaim "for the mental anguish and besmirched reputation they suffered as a result of the filing of [the] complaint." 21 The dispositive portion of the Decision 22 dated June 7, 2005 read:
WHEREFORE, judgment is hereby rendered (a) dismissing the complaint as against defendants RAUL C. FLORES, REYNALDO R. POYAOAN, RAFAEL B. DE PERALTA and WILFREDO CABINTE; (b) ordering defendant VICTORINO TAN GO a.k.a. "VICTOR TAN GO" & "VICTOR TAN" to pay the plaintiff, PHILIPPINE COMMERCIAL INTERNATIONAL BANK, the sum of P2,592,245.51 with interest thereon at the rate of 12% per annum from 9 October 1992 until fully paid; and (c) ordering plaintiff bank to pay defendants/counterclaimants RAFAEL B. DE PERALTA and WILFREDO CABINTE the sums of P1,000,000.00 as moral damages and P400,000.00 for attorney's fees and litigation expenses. AaCTcI
Considering that defendant VICTORINO TAN GO a.k.a. "VICTOR TAN GO" & "VICTOR TAN," who was summoned by publication, has failed to appear in this action, let a copy of this decision be served upon him also by publication in a newspaper of general circulation at plaintiff's expense.
SO ORDERED.23 (Emphasis in the original)
On July 7, 2005, Philippine Commercial International Bank moved for partial reconsideration, which the Regional Trial Court denied. 24 Aggrieved, Philippine Commercial International Bank filed a Notice of Appeal on October 14, 2005. 25
On April 24, 2008, the Court of Appeals affirmed the dismissal of the complaint against De Peralta and Cabinte. However, it deleted the award of damages that the Regional Trial Court granted to De Peralta and Cabinte. 26 The dispositive portion of the Decision 27 read:
WHEREFORE, the decision appealed from is AFFIRMED with MODIFICATION in that the award to Rafael B. De Peralta and Wilfredo Cabinte of their counterclaim consisting of moral damages in the sum of P500,000.00 each, and attorney's fees and litigation expenses in the sum of P200,000.00 each is DELETED.
SO ORDERED.28 (Emphasis in the original)
The Court of Appeals declared Tan Go to be "solely liable for the value of the dishonored [checks]" since there was no evidence that De Peralta and Cabinte colluded with him. The Court of Appeals further stated that the clear cause of Philippine Commercial International Bank's loss was Tan Go's failure to return the money he received for the dishonored treasury warrants and money orders. It ruled that there was no proof that the procedural infractions done by De Peralta and Cabinte were "the proximate cause of the loss"; their negligent acts, at most, only contributed to it. As a result, De Peralta and Cabinte were not held liable for the damage that Philippine Commercial International Bank suffered. 29
Despite exonerating them from liability, the Court of Appeals deleted the award of damages granted to De Peralta and Cabinte. In reversing the grant of moral damages and attorney's fees, the Court of Appeals declared that it was unemployment that caused De Peralta and Cabinte's moral suffering, "not the filing of the instant case." According to the Court of Appeals, Philippine Commercial International Bank was justified in terminating the petitioners' employment and could not be blamed if other banks refused to hire them. 30 EcTCAD
Hence, De Peralta and Cabinte filed this Petition 31 with the sole issue of whether respondent Philippine Commercial International Bank should be held liable for moral damages, attorney's fees, and litigation expenses.
According to the petitioners, the Court of Appeals erred when it deleted the award of damages granted by the Regional Trial Court. They argue that the trial court was correct in ruling that respondent's malicious act of including them in the complaint caused their suffering, which they claim is separate from and in addition only to the anguish of their employment termination. 32
On the other hand, respondent Philippine Commercial International Bank contends that the deletion of the award of damages is proper. As the Court of Appeals correctly ruled, petitioners' negligence clearly contributed to the bank's loss; thus, the respondent had a valid reason to terminate their employment. 33 Moreover, to hold a party liable for malicious prosecution, "there must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person and that the prosecution was initiated with the deliberate knowledge that the charge was false and baseless." 34 Given that the petitioners' acts contributed to the damage suffered by the bank, the respondent cannot be held liable for malicious prosecution. 35 According to the respondent, "moral damages cannot be recovered" if the complaint was filed without malice and if the damage "results from the filing of the complaint, it is damnum absque injuria." 36
This Court rules for the respondent. Philippine Commercial International Bank should not be held liable for the damages claimed by the petitioners.
Spouses Custodio v. Court of Appeals 37 held that mere presence of an injury is not enough for damages to be awarded. For the claim to prosper, there must be proof that the injury resulted from a breach of a legal duty:
However, the mere fact that the plaintiff suffered losses does not give rise to a right to recover damages. To warrant the recovery of damages, there must be both a right of action for a legal wrong inflicted by the defendant, and damage resulting to the plaintiff therefrom. Wrong without damage, or damage without wrong, does not constitute a cause of action, since damages are merely part of the remedy allowed for the injury caused by a breach or wrong.
There is a material distinction between damages and injury. Injury is the illegal invasion of a legal right; damage is the loss, hurt, or harm which results from the injury, and damages are the recompense or compensation awarded for the damage suffered. Thus, there can be damage without injury in those instances in which the loss or harm was not the result of a violation of a legal duty. These situations are often called damnum absque injuria. HSAcaE
In order that a plaintiff may maintain an action for the injuries of which he complains, he must establish that such injuries resulted from a breach of duty which the defendant owed to the plaintiff — a concurrence of injury to the plaintiff and legal responsibility by the person causing it. The underlying basis for the award of tort damages is the premise that an individual was injured in contemplation of law. Thus, there must first be the breach of some duty and the imposition of liability for that breach before damages may be awarded; it is not sufficient to state that there should be tort liability merely because the plaintiff suffered some pain and suffering.
Many accidents occur and many injuries are inflicted by acts or omissions which cause damage or loss to another but which violate no legal duty to such other person, and consequently create no cause of action in his favor. In such cases, the consequences must be borne by the injured person alone. The law affords no remedy for damages resulting from an act which does not amount to a legal injury or wrong.
In other words, in order that the law will give redress for an act causing damage, that act must be not only hurtful, but wrongful. There must be damnum et injuria. If, as may happen in many cases, a person sustains actual damage, that is, harm or loss to his person or property, without sustaining any legal injury, that is, an act or omission which the law does not deem an injury, the damage is regarded as damnum absque injuria. 38 (Citations omitted)
Spouses Custodio 39 distinguished injury, damage, and damages. "Injury is the illegal invasion of a legal right; damage is the loss, hurt, or harm which results from the injury; and damages are the recompense or compensation awarded for the damage suffered." 40
Damages are recoverable in cases where the plaintiff suffers loss due to a breach of duty committed by the defendant. The plaintiff must prove two (2) things: first, that he or she suffered a loss; and second, that the defendant caused the loss by breaching a legal duty he or she owed to the plaintiff. Absent one (1) of these elements, the plaintiff is not considered to have been injured in contemplation of the law.
On the other hand, no damages can be recovered when the harm done is not the result of a violation of a legal duty. Even if the plaintiff is hurt, if no legal duty owed to him is violated, no cause of action accrues in his favor. In such cases, the plaintiff bears the loss.
It is well-settled that findings of fact by the Court of Appeals are final and binding upon this Court. 41 After careful examination, this Court finds that although petitioners suffered, their losses were not the result of a breach of any legal duty. Respondent had no legal duty to continue engaging their services. Moreover, it acted in good faith and for the protection of its interest when it included the petitioners in the case. Accordingly, the respondent should not be held liable for damages. HESIcT
Petitioners were found negligent in their duties although the Regional Trial Court and the Court of Appeals found them not liable for the loss suffered by Philippine Commercial International Bank. The Audit Memorandum submitted by the respondent enumerated the procedural infractions committed by the petitioners:
Findings.
1. Acceptance of second-endorsed [US Treasury Warrants/US Postal Money Orders] was not covered by secured Foreign Bills Purchased Line as required by policy. From 11/12/90 to 3/26/91, a total of 3,200 second-endorsed [US Treasury Warrants] and [US Postal Money Orders] with an aggregate peso value of P12.632M were purchased from Victorino Tan Go. Acceptance was through encashment, deposit to the current account and placements under Trust Indentures. The Trust Indenture placements were subsequently used as security to the Credit-On-Hand line extended to Victorino Tan Go and were withdrawn in guise of COH releases.
a) The Branch Manager, together with the other officers of the branch caused the consummation of these transactions despite the absence of a secured Foreign Bills Purchased Line and credit checking as to the character and moral and business reputation of the client.
2. The checks purchased were outside the branch's trading area.
3. There was complete breakdown of controls at the unit and area level.
a) The transaction documents and records were processed and signed by all the branch's officers as required in this type of transaction. Nobody appeared to have questioned the soundness of these transactions considering their volume and the relative newness of the seller or identified the irregularity in connection with these. There could only have been either mass ignorance or mass collusion for this to have happened as the working area of all the officers except the Accountant are in one small place.
4. Transactions were not properly booked; not properly documented. As noted, the transactions were not consistently recorded in the required transaction records and/or not properly documented. A number of transactions were not booked to the proper account as required by the policy. 42 (Emphasis in the original) caITAC
These were negligent acts which were, however, not enough to hold petitioners liable. The petitioners nevertheless contributed to Philippine Commercial International Bank's loss. "[B]anks are expected to exercise the highest degree of diligence in the selection and supervision of their employees." 43 Hence, Philippine Commercial International Bank could not be faulted for dismissing its negligent employees.
In Bank of the Philippine Islands v. Court of Appeals: 44
Banks handle daily transactions involving millions of pesos. By the very nature of their work the degree of responsibility, care and trustworthiness expected of their employees and officials is far greater than those of ordinary clerks and employees. For obvious reasons, the banks are expected to exercise the highest degree of diligence in the selection and supervision of their employees. 45
Article 2219 of the Civil Code, which allows moral damages to be recovered, enumerates the instances when such award is proper:
Article 2219. Moral damages may be recovered in the following and analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in Article 309;
(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages.
The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named. ICHDca
The award of attorney's fees and litigation expenses is found under Article 2208 of the Civil Code:
Article 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;
(8) In actions for indemnity under workmen's compensation and employer's liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be reasonable.
The respondent cannot be held liable for damages. It breached no legal duty when it terminated the services of its erring employees. Moreover, none of the circumstances enumerated under the law, which allow for the award of moral damages or attorney's fees and litigation expenses to be recovered, is attendant in this case. TCAScE
WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed Decision dated April 24, 2008 and the assailed Resolution dated August 20, 2008 of the Court of Appeals in CA-G.R. CV No. 86806 are AFFIRMED.
SO ORDERED.(Carpio, J., on official leave. Peralta, J., designated Acting Chairperson per S.O. No. 2445 dated June 16, 2017.)."
Very truly yours,
MA. LOURDES C. PERFECTODivision Clerk of Court
By:
(SGD.) TERESITA AQUINO TUAZONDeputy Division Clerk of Court
Footnotes
1.Rollo, pp. 10-33.
2.Id. at 36-50. The Decision, docketed as CA-G.R. CV No. 86806, was penned by Associate Justice Ricardo R. Rosario and concurred in by Associate Justices Mariano C. Del Castillo and Arcangelita Romilla-Lontok of the Thirteenth Division of the Court of Appeals, Manila.
3.Id. at 67-68. The Resolution was penned by Associate Justice Ricardo R. Rosario and concurred in by Associate Justices Mariano C. Del Castillo and Arcangelita Romilla-Lontok of the Former Thirteenth Division of the Court of Appeals, Manila.
4.Id. at 121-135. The Decision, docketed as Civil Case No. 92-2915, was penned by Presiding Judge Rommel O. Baybay of Branch 132, Regional Trial Court, Makati City.
5.Id. at 37.
6.Id.
7.Id.
8.Id. at 40.
9.Id. at 97-108.
10.Id. at 99.
11.Id. at 103.
12.Id.
13.Id. at 38 and 103.
14.Id. at 38-39.
15.Id. at 104.
16.Id. at 105-106.
17.Id. at 24.
18.Id. at 17.
19.Id. at 18.
20.Id.
21.Id. at 135.
22.Id. at 121-135.
23.Id. at 135.
24.Id. at 137.
25.Id. at 145.
26.Id. at 49-50.
27.Id. at 36-50.
28.Id. at 49-50.
29.Id. at 43-47.
30.Id. at 49.
31.Id. at 10-33.
32. Id. at 28.
33. Id. at 275.
34. Id. at 277.
35. Id.
36. Id. at 278.
37. 323 Phil. 575 (1996) [Per J. Regalado, Second Division].
38. Id. at 585-586.
39. Id. at 585.
40. Id.
41. Commissioner of Internal Revenue v. Embroidery & Garments Industries (Phil.), Inc., 364 Phil. 541, 546 (1999) [Per J. Pardo, First Division].
42. Rollo, pp. 45-46.
43. Id. at 48-49.
44. 290 Phil. 452 (1992) [Per J. Gutierrez, Jr., Third Division].
45. Id. at 480.