G.R. No. 108164 - Far East Bank and Trust Co. vs. Court of Appeals

In October 1986, private respondent Luis A. Luna applied for and was issued a FAREASTCARD by Far East Bank and Trust Company (FEBTC) at its Pasig Branch. A supplemental card was likewise issued to his wife, Clarita S. Luna.
In August 1988, Clarita lost her card and submitted an affidavit of loss. Pursuant to FEBTC’s security policy, both the principal and supplemental cards were “hotlisted” (cancelled) in the bank’s master file pending replacement.

On October 6, 1988, Luis presented his FAREASTCARD to settle a P588.13 bill for lunch at the Bahia Rooftop Restaurant, Hotel Intercontinental Manila. The waiter telephoned FEBTC’s Credit Card Department; the card was dishonored due to its hotlist status. Embarrassed, Luis paid in cash.
On October 11, 1988, through counsel, Luis demanded damages from FEBTC for the embarrassment and inconvenience.

On November 3, 1988, FEBTC Vice-President Adrian V. Festejo wrote Luis an apology letter acknowledging “failure to inform” him of the hotlisting policy and attributing the incident to an overzealous employee. FEBTC also wrote the restaurant manager to reaffirm the Lunas as valued clients; the manager responded that their credibility remained unquestioned.
Despite these assurances, the Lunas remained aggrieved and pursued legal redress.

On December 5, 1988, the Lunas filed a complaint for damages in the Regional Trial Court (RTC) of Pasig, alleging breach of contract and seeking moral, exemplary damages, and attorney’s fees.
On March 30, 1990, the RTC awarded P300,000 moral damages, P50,000 exemplary damages, and P20,000 attorney’s fees against FEBTC.
The Court of Appeals affirmed the RTC decision, denying FEBTC’s motion for reconsideration. FEBTC then filed a petition for review on certiorari with the Supreme Court.

Whether moral damages may be recovered for breach of contract absent proof of fraud or bad faith as required by Civil Code Article 2220.
Whether exemplary damages are justified under the Civil Code provisions applicable to contracts and quasi-contracts (Arts. 2231–2232).
Whether nominal damages should be awarded to vindicate the respondent’s infringed right under Civil Code Article 2221.
Whether the award of attorney’s fees was proper and within the trial and appellate courts’ discretion under Civil Code Article 2208.