FIRST DIVISION.
.
SPOUSES LORENZO
G.
FRANCISCO
AND LORENZA D.
FRANCISCO,
Petitioners,
G.
R.
No. 118749
April 25, 2003 - versus -
HONORABLE COURT
OF
APPEALS,
AND BIENVENIDO C.
MERCADO,
Respondents.
D E C I S I O N
CARPIO,
J.:chanroblesvirtuallawlibrary
The
Case
Before this court is
a Petition for Review[1]
assailing the Decision[2]
of 21 November 1994 as well as the Resolution of 17 January 1995 of the
Court of Appeals in CA-G.R. CV No. 34084. The Court of Appeals
upheld
the Decision of 10 June 1991 of the Regional Trial Court[3]
of San Fernando, Pampanga, in Civil Case No. 7909 rescinding the
subdivision
development contract between the parties and awarding damages to
respondent
Bienvenido C. Mercado.
Antecedent Facts
On 3 February 1984,
the spouses Lorenzo and Lorenza Francisco ("petitioners") and Engineer
Bienvenido C. Mercado ("respondent") entered into a Contract of
Development[4]
("Contract") for the development into a subdivision of several parcels
of land in Pampanga.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
Under the Contract,
respondent agreed to undertake at his expense the development work for
the Franda Village Subdivision. Respondent committed to complete
the construction within 27 months. Respondent also advanced
P200,000.00
for the initial expenses of the development work. In return,
respondent
would receive 50% of the total gross sales of the subdivision lots and
other income of the subdivision. Respondent also enjoyed the
exclusive
and irrevocable authority to manage, control and supervise the sales of
the lots within the subdivision. The Contract required respondent
to submit to petitioners, within the first 15 days of every month, a
report
on payments collected from lot buyers with copies of all the contracts
to sell. However, respondent failed to submit the monthly
report.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
From 16 October 1985
to sometime in March 1986, within the 27-month period granted to
respondent,
petitioners also contracted a certain Nicasio Rosales, Sr. ("Rosales")
to undertake the partial development of the subdivision. On 16
July
1986, Rosales submitted his accomplishment report. On the same
day,
petitioners demanded that respondent submit within 15 days an
accounting
of his operation of the subdivision from the beginning of the project
up
to 15 July 1986. Petitioners also requested for copies of
contracts
to sell, receipts of collections and receipts of disbursements for
development
expenses.
chanrobles virtuallaw libraryred
On 5 August 1986,
respondent
secured from the Human Settlements Regulatory Commission ("HSRC") an
extension
of time to finish the subdivision development until 30 July 1987.
On 8 August 1986, petitioners instructed respondent to stop selling
subdivision
lots and collecting payments from lot buyers. Petitioners also
demanded
the turnover to them of all official receipts in the name of Franda
Village
Subdivision.[5]
Nonetheless, respondent continued to collect payments from lot buyers
until
September 1986.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
On 18 September 1986,
petitioners wrote respondent that their accountant was not satisfied
with
respondent’s report which did not include the necessary supporting
documents.
Petitioners required respondent to submit a proper statement of
collections
with supporting receipts and documents, and reiterated that respondent
should stop selling subdivision lots and collecting payments from lot
buyers.
For the first time, petitioners also alleged that respondent violated
certain
provisions of the Contract. Petitioners mentioned the complaint
of
lot buyers that respondent was not developing the subdivision within
the
agreed period. Another complaint was that respondent issued two
kinds
of receipts, one in the name of B. C. Mercado and the other in the name
of Franda Subdivision.[6]chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
On 7 October 1986,
petitioners informed the HSRC of the lot buyers’ complaints that
respondent
completed only 5% of the development work and that he was issuing two
kinds
of receipts. Petitioners also claimed that respondent was in
serious
violation of the Contract because he did not properly remit to
petitioners
the proceeds from the lot sales.chanrobles virtuallaw libraryred
In a letter dated 25
November 1986,[7]
respondent requested petitioners to provide him with the format of the
statement of collections they wanted or, alternatively, to send an
accountant
to audit his records. He assured them that he could account for
all
the proceeds from the lot sales. He countered that he could have
finished
the development of the subdivision on time had petitioners not hampered
him with their verbal demands to stop the development and "fill up" the
lots first. Respondent suggested that he and petitioners settle
their
differences either by mutually canceling the Contract and giving to
each
party its corresponding share, or by continuing with the
arrangement.
In the meantime, respondent informed petitioners that he would continue
the operation of the subdivision in accordance with the Contract.chanrobles virtuallaw libraryred
On 20 January 1987,
petitioners granted respondent an authority[8]
to resume the sale of subdivision lots and the collection of payments
subject
to the following conditions: (1) all collections shall be
deposited
in a joint account with China Banking Corporation, San Fernando,
Pampanga
branch; (2) withdrawals shall be limited to 50% of the total
collections
or to respondent's share, which can only be used for development
expenses,
and any withdrawal shall be subject to the approval of petitioners; (3)
only Franda Village Subdivision receipts, duly countersigned by
petitioners,
shall be used; (4) collections shall be subject to a weekly or monthly
audit; and (5) any violation of these conditions shall result in
the automatic cancellation of the authority.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
On 28 January 1987,
respondent informed HSRC that he had stopped development work on the
subdivision
because the conditional authority issued by petitioners violated the
Contract.
Specifically, respondent referred to the following provisions of the
Contract
that the conditional authority contravened: (1) his exclusive and
irrevocable
right to manage, control, and supervise the sale of lots; (2) his
authority
to issue receipts as the developer without the participation of the
landowners;
and (3) his right to withdraw his 50% share without the approval of the
landowners.[9]
Respondent attributed the delay in the development of the subdivision
to
petitioners who contracted the services of another person during the
effectivity
of the Contract. Petitioners also stopped respondent, without
justification,
from selling the lots and collecting payments from lot buyers.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
On 27 February 1987,
respondent filed with the trial court an action to rescind the Contract
with a prayer for damages. Petitioners countered that respondent
breached the Contract by failing to finish the subdivision within the
27
months agreed upon, and therefore respondent was in delay. Petitioners
also alleged that respondent sold one subdivision lot to two different
buyers.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
Subsequently,
petitioners
obtained permission from the Housing and Land Use Regulatory Board to
takeover
the development of the subdivision.
chanrobles virtuallaw libraryred
The Ruling
of
the Trial Court
chanrobles virtuallaw libraryred
After trial on the merits,
the trial court found for respondent. The trial court ruled that
petitioners breached the Contract by: (1) hiring Rosales to do
development
work on the subdivision within the 27-month period exclusively granted
to respondent; (2) interfering with the latter’s development work; and
(3) stopping respondent from managing the sale of lots and collection
of
payments.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
Because petitioners
were the first to breach the Contract and even interfered with the
development
work, the trial court declared that respondent did not incur delay even
if he completed only 28% of the development work. Further, the
HSRC
extended the Contract up to July 1987. Since the Contract had not
expired at the time respondent filed the action for rescission,
petitioners’
defense that respondent did not finish the development work on time was
without basis.
chanrobles virtuallaw libraryred
The trial court also
found that respondent did not fail to pay the 50% share of petitioners
from the proceeds of the lot sales. The trial court viewed
respondent’s
failure to submit the required report as only a slight infraction not
warranting
petitioners’ interference with respondent's right to sell the lots and
collect payments from sales pursuant to Article X (3) of the
Contract.
The trial court noted that petitioners had tolerated the non-submission
of the monthly report until petitioners made the demand for accounting
on 16 July 1986, which respondent readily complied. The trial
court
stressed that respondent’s right under the Contract to sell lots and
collect
payments was exclusive and irrevocable.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
The trial court found
unproven the charge that respondent sold one subdivision lot to two
buyers.
The trial court considered the issue of a double sale immaterial, as
respondent
did not violate any provision of the Contract and the aggrieved parties
in such event would be the buyers and not petitioners.
chanrobles virtuallaw libraryred
In its Decision[10]
of 10 June 1991, the trial court decreed the rescission of the Contract
and awarded damages to respondent, as follows:chanrobles virtuallaw libraryred
Premises
considered,
judgement is hereby rendered in favor of plaintiff granting the
rescission
of the Contract of Development between him and defendants’ and ordering
defendants to pay unto plaintiff the following:chanrobles virtuallaw libraryred
1. Expenses of
operation
of the subdivision in the total amount of P1,808,756.01 and return of
advance
payment of P200,000.00;chanrobles virtuallaw libraryred
2. Attorney’s fees
of
P25,000.00;chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
3. P50,000.00 and
P30,000.00
as temperate and exemplary damages; andchanrobles virtuallaw libraryred
4. Cost of suit.chanrobles virtuallaw libraryred
SO ORDERED.chanrobles virtuallaw libraryred
The Ruling of
the Court of Appeals
chanrobles virtuallaw libraryred
On appeal to the Court
of Appeals, petitioners presented for the first time a supplemental
Memorandum
of Agreement dated 9 October 1985 allegedly entered into by petitioners
and Rosales with the conformity of respondent. However, the
appellate
court refused to take cognizance of the Memorandum of Agreement, as
petitioners
did not formally offer it in evidence.chanrobles virtuallaw libraryred
The Court of Appeals
adopted the findings of fact of the trial court. Declaring that
there
was no reversible error, the appellate court in its Decision of 21
November
1994[11]
affirmed the ruling of the trial court in toto.chanrobles virtuallaw libraryred
Petitioners filed a
motion for reconsideration, which the Court of Appeals denied in its
Resolution
of 17 January 1995.[12]chanrobles virtuallaw libraryred
On 21 March 1995, petitioners
filed with the Supreme Court a petition for review assailing the
appellate
court’s decision and resolution. Petitioners prayed that the
Court:
(1) reverse the decision of the Court of
Appeals;
(2) award to petitioners P4,403,895.00 as additional cost of the
development
of the subdivision, P57,864.00 as their unremitted share, P304,152.00
to
reimburse them for the amounts paid to Rosales, P50,000.00 as
attorney’s
fees, P10,000.00 as appearance fees, and moral and exemplary damages;
and
(3) other equitable reliefs and remedies.[13]chanrobles virtuallaw libraryred
The Issues
Petitioners assign the
following errors:chanrobles virtuallaw libraryred
1.
THE COURT OF APPEALS ERRED WHEN IT HELD THAT DELAY IS NOT AN ISSUE IN
THIS
CASE;chanrobles virtuallaw libraryred
2.
THE COURT OF APPEALS ERRED WHEN IT HELD THAT THE CONTRACT OF
DEVELOPMENT
HAS NOT EXPIRED AND WAS EXTENDED UP TO JULY 30, 1997 BY PETITIONER;chanrobles virtuallaw libraryred
3.
THE COURT OF APPEALS ERRED WHEN IT HELD THAT PRIVATE RESPONDENT WAS
ENTITLED
TO THE RESCISSION OF THE CONTRACT OF DEVELOPMENT AND DAMAGES BECAUSE OF
INTERVENTION OF NICASIO ROSALES, SR. IN THE DEVELOPMENT OF THE
SUBDIVISION
DURING THE EXISTENCE OF THE CONTRACT, AND THAT THE MEMORANDUM OF
AGREEMENT
OR SUPPLEMENTAL AGREEMENT WHICH BEARS THE CONFORMITY OF PLAINTIFF WAS
NOT
OFFERED OR PRODUCED IN THE TRIAL COURT AND THEREFORE COULD NOT BE
CONSIDERED
ON APPEAL, WHEN IN FACT IT WAS REFERENCED AND MADE PART OF THE EVIDENCE
OF THE PRIVATE RESPONDENT;chanrobles virtuallaw libraryred
4.
THE COURT OF APPEALS ERRED WHEN IT HELD THAT PRIVATE RESPONDENT WAS
ENTITLED
TO THE RESCISSION OF THE CONTRACT AND DAMAGES BECAUSE PRIVATE
RESPONDENT’S
NON-SUBMISSION OF THE MONTHLY COLLECTION REPORT WAS NOT A SERIOUS AND
SUBSTANTIAL
BREACH OF THE CONTRACT OF DEVELOPMENT;chanrobles virtuallaw libraryred
5.
THE COURT OF APPEALS ERRED WHEN IT HELD THAT PRIVATE RESPONDENT WAS
ENTITLED
TO THE RESCISSION OF THE CONTRACT AND DAMAGES BECAUSE PRIVATE
RESPONDENT’S
EXECUTION OF DOUBLE SALE OF A LOT IN THE SUBDIVISION SUBJECT OF THE
CONTRACT
OF DEVELOPMENT IN FAVOR OF TWO DIFFERENT PERSONS IS AT BEST A
PERIPHERAL
ISSUE TO THE MAIN ISSUE OF RESCISSION.chanrobles virtuallaw libraryred
6.
THE COURT OF APPEALS ERRED WHEN IT HELD THAT IT AFFIRMED THE DECISION
DATED
JUNE 10, 1991 OF THE TRIAL COURT INSTEAD OF REVERSING THE SAME AND
AWARDING
DAMAGES TO PETITIONERS.[14]chanrobles virtuallaw libraryred
The Ruling
of
the Courtchanrobles virtuallaw libraryred
It is evident from
the assigned errors that petitioners are asking the Court to reexamine
certain findings of fact of the trial court. Petitioners submit
that
this case constitutes an exception to Rule 45 of the Rules of Court
limiting
to questions of law the issues that may be raised in an appeal by
certiorari
to this Court.
chanrobles virtuallaw libraryred
To bolster this
argument,
the petition for review, prepared by Atty. Pedro D. Diwa as counsel for
petitioners, cited what is supposed to be the Court’s ruling in Misa v.
Court of Appeals.[15]
However, petitioner’s counsel misquoted the ruling in Misa. We
reproduce
the erroneous excerpt - which petitioner’s counsel even underscored -
as
follows:chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
And finally, Mr.
Justice
Medialdea of this COURT in the case of Misa vs. Court of Appeals, G.R.
No. 97291, August 5, 1992, by way of exception to the settled rule that
only questions of law may be raised in a petition for review on
certiorari
under Rule 45 of the Rules of Court, held as follows:chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
"It is firmly settled
that only questions of law may be raised in a petition for review on
certiorari
under Rule 45 of the Rules of Court. However, there are several
instances
when findings of fact may be passed upon and reviewed by the Supreme
Court,
to wit: xxx"[16]chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
Contrary to the
quotation
made in the petition for review, the Court in Misa refused to review
the
factual findings of the lower court. There the Court merely
acknowledged
the exceptional circumstances which may warrant such a review, thus:chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
It is readily
discernible
that petitioners are asking Us to re-examine all the evidence already
presented
before the respondent court and trial court and evaluated by
them.
These evidence served as basis in arriving at their findings of
fact.
We shall not analyze such evidence all over again. Instead, We
put
finis to the factual findings in this case. It is firmly settled
that only questions of law may be raised in a petition for review on
certiorari
under Rule 45 of the Rules of Court. Certainly, We recognize exceptions
to this rule. The case of Medina, et. al. v. Asistio, etc., et
al.,
G.R. No. 75450, November 8, 1990, 191 SCRA 218, 223-224 enumerates
several
instances when findings of fact may be passed upon and reviewed by this
Court, none of which obtain herein:chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
"(1) When the
conclusion
is a finding grounded entirely on speculation, surmises or conjecture
(Joaquin
v. Navarro, 93 Phil. 257 [1953]; (2) When the inference made is
manifestly
mistaken, absurd or impossible (Luna v. Linatok, 74 Phil. 14 [1942];
(3)
Where there is a grave abuse of discretion (Buyco v. People, 95 Phil.
453
[1955]; (4) When judgment is based on a misapprehension of facts (Cruz
v. Sosing, L-4875, Nov. 27, 1953); (5) When the findings of fact
are conflicting (Casica v. Villaseca, L-9590 Ap. 30, 1957; unrep.);**
(6)
When the Court of Appeals, in making its findings, went beyond the
issues
of the case and the same is contrary to the admissions of both
appellant
and appellee (Evangelista v. Alto Surety and Insurance Co., 103 Phil.
401
[1958]; (7) The findings of the Court of Appeals are contrary to those
of the trial court (Garcia v. Court of Appeals, 33 SCRA 622 [1970];
Sacay
v. Sandiganbayan, 142 SCRA 593 [1986]) ** (8) When the findings of fact
are conclusions without citation of specific evidence on which they are
based (Ibid.,); (9) When the facts set forth in the petition as well as
in the petitioners’ main and reply briefs are not disputed by the
respondents
(Ibid.,); and (10) The finding of fact of the Court of Appeals is
premised
on the supposed absence of evidence and is contradicted by the evidence
on record (Salazar v. Gutierrez, 33 SCRA 242 [1970]).[17]
(Emphasis
and underscoring supplied)
chanrobles virtuallaw libraryred
We frown on the obvious
carelessness of Atty. Diwa. Since only decisions of the Court
establish
jurisprudence and doctrines in this jurisdiction,[18]
it is the duty of all officers of the court to cite the rulings and
decisions
of the Supreme Court accurately, even "word-for-word and punctuation
mark-for-punctuation
mark."[19]
Otherwise, "if not faithfully and exactly quoted, the decisions and
rulings
of this Court may lose their proper and correct meaning, to the
detriment
of other courts, lawyers and the public who may thereby be misled."[20]chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
In any event, the
issues
about the alleged extension of the Contract, the double sale, the
interference
with the development of the subdivision, are matters requiring the
introduction
and evaluation of evidence. They are questions of fact, which
arise
when doubt or difference exists about the truth or falsehood of alleged
facts.[21]chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
As a rule, only
questions
of law may be appealed to the Court by certiorari. The Court is
not
a trier of facts, its jurisdiction being limited to errors of law.[22]
Moreover, where as in this case the Court of Appeals affirms the
factual
findings of the trial court, such findings generally become conclusive
and binding upon the Court.[23]
The Court will not disturb the factual findings of the trial and
appellate
courts unless there are compelling or exceptional reasons, and there is
none in the instant petition.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
The trial and appellate
courts found that the HSRC granted respondent an extension of up to 30
July 1987 to complete the development work under the
Contract.
Petitioners did not contest HSRC’s extension of time to respondent.
Thus,
the Court finds no merit in petitioner’s claim that respondent incurred
delay in the performance of his obligation under the Contract. At
that time, the law authorized HSRC to grant extensions of time for
completion
of subdivision projects.[24]chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
The law provides that
delay may exist when the obligor fails to fulfill his obligation within
the time expressly stipulated.[25]
In this case, the HSRC extended the period for respondent to finish the
development work until 30 July 1987. Respondent did not incur
delay
since the period granted him to fulfill his obligation had not expired
at the time respondent filed the action for rescission on 27 February
1987.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
Petitioners argue the
Court of Appeals naively assumed that respondent could complete the
development
work in five months when he only finished 28.67% of the work in some 36
months.[26]
This argument is speculative and deserves scant consideration. It
cannot prevail over the express grant to respondent of a period within
which to fulfill his obligation.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
Moreover, as the trial
and appellate courts found, petitioners hampered and interfered with
respondent’s
development work. Petitioners also stopped respondent from
selling
lots and collecting payments from lot buyers, which was the primary
source
of development funds. In effect, petitioners rendered respondent
incapable, or at least made it difficult for him, to develop the
subdivision
within the allotted period. In reciprocal obligations, neither
party
incurs in delay if the other does not comply or is not ready to comply
with what is incumbent upon him. It is only when one of the
parties
fulfills his obligation that delay by the other begins.[27]chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
Petitioners argue that
the alleged Memorandum of Agreement may be treated as a judicial
admission
in accordance with Geagonia v. Court of Appeals.[28]
We do not agree. In Geagonia, the Court of Appeals considered a
letter
written by Geagonia, although not formally offered in evidence, because
it was originally annexed to Geagonia’s initial complaint filed with
the
Insurance Commissioner. The Court upheld the appellate court’s
reversal
of the Insurance Commissioner’s decision on the ground that the letter
constituted a judicial admission by Geagonia. Findings of the
Insurance
Commissioner and the Court of Appeals were divergent in Geagonia, an
exceptional
circumstance that allowed the Court to reexamine the factual findings
of
the Insurance Commissioner.
chanrobles virtuallaw libraryred
In the instant case,
petitioners never presented the Memorandum of Agreement before the
trial
court. Petitioners merely annexed to their petition for review
before
the Court of Appeals an unauthenticated photocopy of the alleged
Memorandum
of Agreement. Petitioners argue that this agreement was
"referenced
and testified to" by respondent during his cross-examination on 1
August
1989 before the trial court. However, in that testimony,
respondent
merely admitted to signing an amended or supplemental agreement, the
contents
of which he could not recall.[29]
Respondent’s testimony does not identify or admit that the Memorandum
of
Agreement presented by petitioners was the agreement or contract
respondent
had signed. Atty. Gorospe, then counsel for petitioners, even
manifested
during the cross-examination of respondent that no supplemental
agreement
or contract was appended to the complaint.[30]chanrobles virtuallaw libraryred
Further, petitioners
failed to explain adequately why the alleged Memorandum of Agreement
was
never presented before the trial court. As succinctly explained
by
the Court of Appeals:chanrobles virtuallaw libraryred
Appellants’ advertence
to an alleged supplemental Memorandum of Agreement (Annex "A",
Appellant’s
brief) to prop up their cause deserves scant consideration. The
said
document was neither produced nor offered in evidence in the
proceedings
below, although it could have been easily produced in court by
compulsory
process. This lapse has not been satisfactorily explained by
appellants.
xxx[31]
(Emphasis supplied) chanrobles virtuallaw libraryred
On the fourth assigned
error, we find no reversible error in the ruling of the trial and
appellate
courts that respondent’s non-submission of the monthly report was
merely
a slight infraction of the Contract. Respondent’s failure to
submit
the monthly report cannot serve as sufficient basis for the
cancellation
of the Contract. The cancellation of a contract will not be
permitted
for a slight or casual breach. Only a substantial and fundamental
breach, which defeats the very object of the parties in making the
contract,
will justify a cancellation.[32]
In the instant case, the development work continued for more than two
years
despite the lack of a monthly report.chanrobles virtuallaw libraryred
Petitioners further
contend that, considering respondent’s non-submission of collection
reports,
they were merely enforcing their rights under Article X (3) of the
Contract[33]
in demanding that respondent stop selling the subdivision lots and
collecting
payments from lot buyers.chanrobles virtuallaw libraryred
Whether petitioners
could have justifiably invoked Article X (3) of the Contract based on
respondent’s
failure to submit the required reports is beside the point. It is
clear from the records that petitioners did not seek to stop
respondent’s
activities due to the latter’s failure to submit the required
reports.
The non-submission of the required reports was never mentioned in any
of
petitioners’ letters. Indeed, petitioners’ letter of 8 August
1986,
which first instructed respondent to stop selling the lots and
collecting
payments, did not mention any violation at all,[34]
while the subsequent letters referred only to the complaints of lot
buyers.
Article X (3) of the Contract required the "innocent party" to serve a
written notice of "a violation of the terms and conditions of this
contract."[35]
Absent such written notice, this provision cannot be invoked, much less
enforced.chanrobles virtuallaw libraryred
On the fifth assigned
error, it is unnecessary for this Court to rule on the materiality of
the
alleged double sale in the face of the trial and appellate courts'
finding
that no double sale took place.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
On the award of
damages,
however, we find some modification is in order. The trial
court
awarded P50,000.00 in temperate damages to respondent for his
"besmirched
reputation on his goodwill and image as a good and able engineer and
contractor."[36]
Under the law, however, moral and not temperate damages may be awarded
for besmirched reputation and similar injury.[37]
Temperate damages may be awarded only when pecuniary loss has been
suffered
but the amount cannot be proved with certainty from the nature of the
case.[38]
Hence, the award of P50,000.00 in temperate damages should be deleted
for
lack of legal basis.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
We likewise find
without
basis the trial court’s award of exemplary damages. In contracts,
exemplary damages may be awarded if the defendant acted in a wanton,
fraudulent,
reckless, oppressive or malevolent manner.[39]
Nothing in the trial and appellate courts’ decisions indicates that
petitioners
behaved in such manner as to warrant the grant of exemplary damages.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
On the award of
attorney’s
fees, the general rule is that attorney's fees cannot be recovered as
part
of damages because no premium should be placed on the right to litigate.[40]
Article 2208 of the Civil Code provides that attorney’s fees and
expenses
of litigation should not be granted unless stipulated, except in
certain
cases where "the defendant acted in gross and evident bad faith in
refusing
to satisfy the plaintiff’s plainly valid, just and demandable claim."[41]
chanrobles virtuallaw libraryred
That petitioners
required
respondent to submit a statement of collection on the same day that
Rosales
submitted his accomplishment report does not sufficiently show, by
itself,
gross and evident bad faith. The Contract itself required the
submission
of a collection report. Although early on petitioners may have
tolerated
the non-submission of the report, they should not be penalized for
demanding
later on that respondent comply with a condition of the Contract.chanrobles virtuallaw libraryred
chanrobles virtuallaw libraryred
WHEREFORE, the Decision
of 21 November 1994 of the Court of Appeals in CA-G.R. CV No. 34084
upholding
the Decision of 10 June 1991 of the Regional Trial Court of San
Fernando,
Pampanga, Branch XLV, in Civil Case No. 7909 is AFFIRMED, with the
MODIFICATION
that the award of attorney’s fees, temperate and exemplary damages is
DELETED.chanrobles virtuallaw libraryred
SO ORDERED.chanrobles virtuallaw libraryred
Davide, Jr., C.J.,
(Chairman), Vitug, and Azcuna, JJ., concur.
Ynares-Santiago, J.,
no part.chan
robles virtual law library
____________________________
Endnotes:
[1]
Under Rule 45 of the Rules of Court.chanrobles virtuallaw libraryred
[2]
Penned by Associate Justice Consuelo Ynares-Santiago (now an Associate
Justice of the Supreme Court) with Associate Justices Emeterio C.
Cui and Conchita Carpio-Morales (now an Associate Justice of the
Supreme
Court) concurring.chanrobles virtuallaw libraryred
[3]
Branch XLV.chanrobles virtuallaw libraryred
[4]
Records of Civil Case No. 7909, Exhibits "A", "A-1" to "A-8".
[5]
Ibid., Exhibit "B".chanrobles virtuallaw libraryred
[6]
Ibid., Exhibit "D".chanrobles virtuallaw libraryred
[7]
Ibid., Exhibit "C".chanrobles virtuallaw libraryred
[8]
Ibid., Exhibit "E".chanrobles virtuallaw libraryred
[9]
The salient provisions of the Contract state:chanroblesvirtuallawlibrarychanrobles virtuallaw libraryred
I.
GENERAL PROVISIONSchanrobles virtuallaw libraryred
xxxchanrobles virtuallaw libraryred
2.
That the DEVELOPER shall be entitled, as their share in the project, to
fifty per cent (50%) of the gross proceeds from sale of the lots in
cash,
on installments and on all other incidental income actually paid to,
and
received by the DEVELOPER. It being agreed and understood that
commissions
due to agents or brokers shall be at the exclusive account of the
DEVELOPER;
xxx
IV.
SALES, TERMS AND CONDITIONS THEREOFchanrobles virtuallaw libraryred
1.
That the DEVELOPER shall, at his exclusive expense, control,
supervision
and responsibility, develop, administer and manage the subdivision
project
and the sales of all lots within the subdivision to the buying public;chanrobles virtuallaw libraryred
2.
That the authority of the DEVELOPER to managed (sic), control,
supervise
and administer the sales of the lots shall be exclusive and
irrevocable,
unless this contract is rescinded by agreement of the parties or in
accordance
with provisions or RESCISION (sic) AND PENAL CLAUSE of this contract;
xxxchanrobles virtuallaw libraryred
VI.
COLLECTIONS AND REMITTANCESchanrobles virtuallaw libraryred
1.
That the DEVELOPER shall be in charge of all collection of proceed of
sales,
in cash or in installments, and all collections shall be duly receipted
and in all cases the DEVELOPER shall issue the corresponding official
receipts;
xxxchanrobles virtuallaw libraryred
X.
RESCISION AND PENAL CLAUSEchanrobles virtuallaw libraryred
1.
That the LANDOWNERS shall have the right to ask for the recession (sic)
of this contract on failure of the DEVELOPER to remit whatever gross
collections
due to the LANDOWNERS within the period herein stipulated, or to comply
with their commitments and obligations contained with this
contract
xxxchanrobles virtuallaw libraryred
2.
That should the LANDOWNERS be unable or fail to comply with their
commitments
and obligations under this contract, the DEVELOPER shall have the right
to retain whatever amount due to the LANDOWNERS to answer for whatever
damages that the former may suffer, or the said DEVELOPER may ask for
the
rescision (sic) of this contract xxxchanrobles virtuallaw libraryred
3.
That should there be a violation of the terms and conditions of this
contract,
the innocent party can stop any erring party by serving the latter a
written
notice to that effect, from retaining collections, from collecting
proceeds,
and from further selling the lots of the subdivision, and all such
collections
made after such notice by either party shall be deposited in a bank in
the joint name of both parties; and withdrawals from such deposits can
be made only upon the mutual written agreement of both parties, or
after
the condition violated is complied with; xxx
[10]
Rollo of CA-G.R. CV No. 34084, p. 17.chanrobles virtuallaw libraryred
[11]
Rollo, p. 45.chanrobles virtuallaw libraryred
[12]
Ibid., p. 54.chanrobles virtuallaw libraryred
[13]
Ibid., p. 9.chanrobles virtuallaw libraryred
[14]
Ibid.chanrobles virtuallaw libraryred
[15]
G.R. No. 972941, 5 August 1992, 212 SCRA 217 (1992).
[16]
Rollo, p. 9.chanrobles virtuallaw libraryred
[17]
Ibid.chanrobles virtuallaw libraryred
[18]
Commissioner of Internal Revenue v. Court of Appeals, 312 Phil. 337
(1995);
Insular Life Assurance Co., Ltd., Employees Association-Natu v. Insular
Life Assurance Co., Ltd., G.R. No. L-25291, 30 January 1971, 37 SCRA
244
citing Miranda v. Imperial, 77 Phil 1066 (1947).chanrobles virtuallaw libraryred
[19]
Insular Life Assurance Co., Ltd., Employees Association-Natu v. Insular
Life Assurance Co., Ltd., ibid.
[20]
Ibid.chanrobles virtuallaw libraryred
[21]
Tirol v. Commission on Audit, G.R. No. 133954, 3 August 2000, 337 SCRA
198.
[22]
Ibid.chanrobles virtuallaw libraryred
[23]
Tiongco v. Deguma, G.R. No. 133619, 26 October 1999, 317 SCRA 527.chanrobles virtuallaw libraryred
[24]
Executive Order No. 648, "Reorganizing the Human Settlements Regulatory
Commission" (1981) provides:chanroblesvirtuallawlibrarychanrobles virtuallaw libraryred
Article
VII. GENERAL PROVISIONSchanrobles virtuallaw libraryred
Sec.
8. Transfer of Functions. The regulatory functions of the
National
Housing Authority pursuant to Presidential Decrees No. 957, 1216, 1344
and other related laws are hereby transferred to the Commission,
together
with such applicable personnel, appropriation, records, equipment and
property
necessary for the enforcement and implementation of such functions.
Among
these regulatory functions are: xxx (8) Granting of permits for
the
alteration of plans and the extension of period for completion of
subdivision
or condominium projects; xxx
[25]
Civil Code, Article 1169.chanrobles virtuallaw libraryred
[26]
See note 9.chanrobles virtuallaw libraryred
[27]
See note 25.chanrobles virtuallaw libraryred
[28]
311 Phil. 152 (1995). The petitioner therein was Armando
Geagonia,
not "Geogonia" as cited in petitioners’ Reply, Rollo, p. 144.
[29]
TSN of Civil Case No. 7909, August 1, 1989 on the cross-examination of
Engr. Mercado, states:chanroblesvirtuallawlibrarychanrobles virtuallaw libraryred
Atty.
Gorospe: Your Honor, I do not know of any amended
agreement.
According to him they have. We, as far as we are converned (sic), we do
not have any amended or supplemental agreement or contract appended to
the Complaint.chanrobles virtuallaw libraryred
A:
I know that there was such an agreement, sir, but I do not have a copy
of it.chanrobles virtuallaw libraryred
Q:
If you do not have the copy now, could you remember what are included
in
that amended or supplemental agreement since you said you have.
A:
I am not familiar with the content but there is such a document.chanrobles virtuallaw libraryred
Q:
Could you produce it?chanrobles virtuallaw libraryred
A:
I do not have the copy, sir.chanrobles virtuallaw libraryred
Q:
Who prepared that?chanrobles virtuallaw libraryred
A:
I am not sure who prepared it.chanrobles virtuallaw libraryred
Q:You
are not sure but you signed that amended agreement?
A:
Yes, sir.chanrobles virtuallaw libraryred
Q:
Or is it because there is none that is why you do not remember anything
about it?
A:
There is, sir.chanrobles virtuallaw libraryred
Q:
That document which you said is an amended or supplemental agreement,
was
it notarized?
A:
I am not familiar with the contents, sir. xxxchanrobles virtuallaw libraryred
[30]
Ibid.chanrobles virtuallaw libraryred
[31]
See note 11.chanrobles virtuallaw libraryred
[32]
Laforteza v. Machuca, G.R. No. 137552, 16 June 2000, 333 SCRA 643.
[33]
See note 9.chanrobles virtuallaw libraryred
[34]
See note 5.chanrobles virtuallaw libraryred
[35]
See note 9.chanrobles virtuallaw libraryred
[36]
See note 10.chanrobles virtuallaw libraryred
[37]
Civil Code, Art. 2217.chanrobles virtuallaw libraryred
[38]
Ibid., Art. 2224.chanrobles virtuallaw libraryred
[39]
Ibid., Art. 2232.chanrobles virtuallaw libraryred
[40]
American Home Assurance Co. v. Chua, 368 Phil. 555 (1999).chanrobles virtuallaw libraryred
[41]
Civil Code, Art. 2208 (5).chanrobles virtuallaw libraryred |