Singson vs. Bank of the Philippine Islands

The existence of a contract between the parties does not bar the commission of a tort by one against the other and the consequent recovery of damages therefor.

Julian C. Singson and his wife, Ramona del Castillo, maintained a current account with the Bank of the Philippine Islands, whose president was Santiago Freixas. Singson had been a co-defendant in a separate civil case (Civil Case No. 23906 of the CFI of Manila) together with Celso Lobregat and Villa-Abrille & Co., in which judgment had been rendered ordering them to pay P105,539.56 to the plaintiff therein, Philippine Milling Co. Singson and Lobregat had appealed the judgment, but Villa-Abrille & Co. had not, rendering the judgment against it final and executory. A writ of garnishment was subsequently served upon the Bank of the Philippine Islands, but only insofar as Villa-Abrille's credits against the bank were concerned.

Julian C. Singson and his wife, Ramona del Castillo, maintained a current account with the Bank of the Philippine Islands. Singson had been a co-defendant in Civil Case No. 23906 of the CFI of Manila, together with Celso Lobregat and Villa-Abrille & Co., in which judgment had been rendered ordering them to pay P105,539.56 to the plaintiff therein, Philippine Milling Co. Singson and Lobregat had seasonably appealed from that judgment, but Villa-Abrille & Co. had not, so the judgment against Villa-Abrille became final and executory. In due course, a writ of garnishment was served upon the Bank of the Philippine Islands, but only insofar as Villa-Abrille's credits against the bank were concerned.

Upon receipt of the writ, a bank clerk in charge of execution and garnishment matters read the name of Singson in the title of the writ as a party defendant, but did not read the body of the writ to ascertain that the garnishment was intended only for the deposits of Villa-Abrille & Co. and its associated individuals. The clerk prepared a letter for the signature of the bank's president, Santiago Freixas, informing Singson that his deposits had been garnished. Another letter was prepared and signed by Freixas for the Special Sheriff, dated April 17, 1963.

Subsequently, two checks issued by Singson — one for P383 in favor of B. M. Glass Service dated April 16, 1963 (Check No. C-424852), and another for P100 in favor of Lega Corporation (Check No. C-394996), both drawn against the bank — were deposited. Believing that Singson had no more control over the balance of his deposits due to the garnishment, the bank dishonored and refused payment on both checks. After the first check was returned, B. M. Glass Service wrote Singson a letter dated April 19, 1963, advising him that his check had not been honored because his account had been garnished, and stating that they were constrained to close his credit account with them.

Singson thereupon wrote the bank on April 19, 1963, claiming that his name was not included in the writ of execution and notice of garnishment. Freixas took steps to verify this information and, upon confirming it, apologized to Singson and wrote him a letter dated April 22, 1963, requesting him to disregard the bank's letter of April 17, 1963, and informing him that the garnishment had been removed from his account. A similar letter was sent to the Special Sheriff on the same date. The bank thus rectified the mistake promptly, resulting in only a temporary freezing of Singson's account.

On May 8, 1963, the Singsons commenced the present action against the bank and its president for damages, claiming P100,000 as moral damages, P20,000 as exemplary damages, P20,000 as nominal damages, and P10,000 for attorney's fees and expenses of litigation, plus costs. The Court of First Instance of Manila dismissed the complaint, holding that the claim could not be based on quasi-delict because the relationship was contractual in nature, that the case did not fall under Article 2219 of the Civil Code, and that the plaintiffs had not established the amount of damages allegedly sustained.

• Basis of Recovery in Tort: Petitioner maintained that damages were recoverable on the basis of tort or quasi-delict notwithstanding the contractual relationship with the bank, relying on Article 2219 of the Civil Code.
• Quantum of Damages: Petitioner claimed P100,000 as moral damages, P20,000 as exemplary damages, P20,000 as nominal damages, and P10,000 for attorney's fees and expenses of litigation, plus costs, arising from the illegal freezing of their account.

• Contractual Relationship Bars Quasi-Delict: Respondent argued that the relationship between the parties was contractual in nature and that, accordingly, the plaintiffs' claim for damages could not be predicated upon a tort or quasi-delict.
• Article 2219 Inapplicable: Respondent contended that the case did not fall under Article 2219 of the Civil Code, upon which the plaintiffs relied.
• Failure to Prove Damages: Respondent maintained that the plaintiffs had not established the amount of damages allegedly sustained.

• Tort Within a Contractual Relationship: Whether the existence of a contract between the parties bars the commission of a tort by one against the other and the consequent recovery of damages therefor.
• Measure of Damages: Whether, given the facts and the prompt rectification of the wrongful act, an award beyond nominal damages and attorney's fees is warranted.

• Tort Within a Contractual Relationship: No. The existence of a contract does not bar recovery of damages for tort, the act that breaks the contract may also be a tort.
• Measure of Damages: Nominal damages of P1,000 and attorney's fees of P500 suffice, given that the wrong was promptly remedied once the bank's president realized the mistake.

• Tort Within a Contractual Relationship: The lower court had held that the plaintiffs' claim could not be based on quasi-delict because their relationship with the bank was contractual in nature. The Supreme Court rejected this reasoning, citing its repeated holdings that the existence of a contract between the parties does not bar the commission of a tort by one against the other and the consequent recovery of damages. The Court relied on Cangco vs. Manila Railroad, Yamada vs. Manila Railroad, and Vazquez vs. Borja, and most recently on Air France vs. Carrascoso, where a first-class airplane passenger who was illegally ousted from his accommodation was held entitled to recover damages on the ground of tort, even though the passenger-carrier relationship was contractual. The Court quoted the principle that "the act that breaks the contract may also be a tort." The contractual origin and nature of the bank-depositor relationship did not negate the tortious character of the bank's erroneous garnishment of the Singsons' account.

• Measure of Damages: While the Court recognized that a tort had been committed, it found that the circumstances warranted only a modest award. The wrong done to the plaintiff was remedied as soon as the bank's president realized the mistake he and his subordinate had committed. The account was frozen only temporarily and for a short time. Accordingly, the Court awarded nominal damages in the sum of P1,000 — the amount of which need not be proven, citing Ventanilla vs. Centeno — together with attorney's fees of P500, pursuant to Articles 2208 and 2221 of the Civil Code. The award of nominal damages was deemed sufficient to vindicate the plaintiff's rights without requiring proof of the actual amount of loss.

• Tort May Arise Within a Contractual Relationship — The existence of a contract between parties does not bar the commission of a tort by one against the other and the consequent recovery of damages. The act that breaks a contract may also constitute a tort. This doctrine permits a party to a contract to recover damages on a tort theory where the other party's conduct, though arising from or connected to the contractual relationship, amounts to a wrongful act causing injury. The Court applied this principle to hold that the bank's erroneous garnishment of the Singsons' account, though occurring within a depositor-bank contractual relationship, constituted a tort for which damages were recoverable.

• Nominal Damages Need Not Be Proven in Amount — Nominal damages are awarded to vindicate a right that has been violated, and the amount thereof need not be proven. The Court applied this principle to award P1,000 as nominal damages, finding it sufficient to vindicate the plaintiffs' rights given the prompt rectification of the wrongful act.

• "the existence of a contract between the parties does not bar the commission of a tort by the one against the order and the consequent recovery of damages therefor." — This is the ratio decidendi of the case, establishing that tort liability may arise even within a contractual relationship, overturning the lower court's dismissal on that ground.

• "the act that breaks the contract may also be a tort" — Quoted from Air France vs. Carrascoso, this formulation encapsulates the doctrinal basis for allowing tort recovery within a contractual framework and is frequently cited in subsequent Philippine jurisprudence on concurrent contractual and tortious liability.

• "an award of nominal damages — the amount of which need not be proven — in the sum of P1,000, in addition to attorney's fees in the sum of P500, would suffice to vindicate plaintiff's rights." — This passage defines the measure of damages appropriate where a tort has been committed but promptly remedied, grounding the award in the vindicatory function of nominal damages under Articles 2208 and 2221 of the Civil Code.

• Cangco vs. Manila Railroad, 38 Phil. 768 — Cited as authority for the proposition that the existence of a contract does not bar tort recovery; followed.
• Yamada vs. Manila Railroad, 33 Phil. 8 — Cited as authority for the proposition that the existence of a contract does not bar tort recovery; followed.
• Vazquez vs. Borja, 74 Phil. 560 — Cited as authority for the proposition that the existence of a contract does not bar tort recovery; followed.
• Air France vs. Carrascoso, G.R. No. L-21438, Sept. 28, 1966 — Cited as the most recent reiteration of the doctrine that a contractual relationship does not preclude tort liability; followed as directly analogous in principle, where a passenger-carrier contractual relationship did not bar tort recovery for the carrier's wrongful act.
• Ventanilla vs. Centeno, G.R. No. L-14333, Jan. 28, 1961 — Cited for the rule that the amount of nominal damages need not be proven; followed in awarding P1,000 without requiring proof of actual loss.

• Article 2219, Civil Code of the Philippines — Enumerates the instances in which moral damages may be recovered. The lower court held that the case did not fall under this article; the Supreme Court did not directly address this provision but reversed the dismissal on the broader ground that tort recovery is not barred by the contractual relationship.
• Article 2208, Civil Code of the Philippines — Authorizes the award of attorney's fees and expenses of litigation under specified circumstances. The Court applied this provision to award P500 as attorney's fees.
• Article 2221, Civil Code of the Philippines — Defines nominal damages as those awarded for the purpose of vindicating a right that has been violated. The Court applied this provision to award P1,000 as nominal damages, the amount of which need not be proven.

Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, and Angeles, JJ., concurred. Fernando, J., took no part.