Far East Bank v. The Honorable Court of Appeals

Summary

This case involved Far East Bank's failure to honor Luis Luna's credit card at a restaurant after his wife's supplemental card was reported lost, resulting in both cards being tagged as cancelled per internal security policy. Luna sued for damages after being embarrassed when forced to pay cash. The Regional Trial Court awarded substantial moral and exemplary damages, which the Court of Appeals affirmed. However, the Supreme Court modified the decision, finding that while the bank was negligent in not informing Luna of the cancellation, this did not constitute the fraud or bad faith required under Article 2220 of the Civil Code for moral damages in contractual breach. The Court emphasized that Article 21 cannot override the specific requirements of Article 2220. The Supreme Court deleted the moral and exemplary damages but awarded P5,000 nominal damages under Article 2221 to vindicate Luna's contractual rights, while maintaining the attorney's fees award. The decision clarified important principles regarding damages in breach of contract cases.