G.R. No.

190957 June 5, 2013

PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, Petitioner, vs.

APAC MARKETING CORPORATION, represented by CESAR M. ONG, JR., Respondents.

FACTS:

The present case involves a simple purchase transaction between defendant-appellant Philippine
National Construction Corporation (PNCC), represented by defendants-appellants Rogelio Espiritu
and Rolando Macasaet, and plaintiff-appellee APAC, represented by Cesar M. Ong, Jr., involving
crushed basalt rock delivered by plaintiff-appellee to defendant-appellant PNCC.

On August 17, 1999, APAC Marketing Corp. filed with the trial court a complaint against Philippine
National Construction Corp. for collection of sum of money with damages, alleging that (i) Philippine
National Construction Corp. engaged the services of APAC Marketing Corp. by buying aggregates
materials from APAC Marketing Corp., for which the latter had delivered and supplied good quality
crushed basalt rock; (ii) the parties had initially agreed on the terms of payment, whereby Philippine
National Construction Corp. would issue the check corresponding to the value of the materials to be
delivered, or "Check Before Delivery," but prior to the implementation of the said payment agreement,
Philippine National Construction Corp. requested from APAC a 30-day term from the delivery date
within which to pay, which APAC accepted; and (iii) after making deliveries pursuant to the purchase
orders and despite demands by APAC, Philippine National Construction Corp. failed and refused to
pay and settle their overdue accounts. The complaint prayed for payment of the amount of
₱782,296.80 "plus legal interest at the rate of not less than 6% monthly, to start in April, 1999 until the
full obligation is completely settled and paid," among others.

On November 16, 1999, Philippine National Construction Corp. filed a motion to dismiss, alleging that
the complaint was premature considering that Philippine National Construction Corp. PNCC had been
faithfully paying its obligations to plaintiff-appellee, as can be seen from the substantial reduction of its
overdue account as of August 1999.

PNCC filed their answer, alleging that their obligation was only with respect to the balance of the
principal obligation that had not been fully paid which, based on the latest liquidation report, amounted
to only ₱474,095.92.

The trial court rendered a Decision in favor of APAC, ordering PNCC jointly and solidarily to pay:

1. ₱782,296.80 as actual damages;

2. ₱50,000.00 as attorney’s fees, plus ₱3,000.00 per court appearance;
3. Cost of suit.

Defendants-appellants filed a motion for reconsideration, alleging that during the pendency of the
case, the principal obligation was fully paid and hence, the award by the trial court of actual damages
in the amount of ₱782,269.80 was without factual and legal bases.

The trial court considered PNCC claim of full payment of the principal obligation, hence modified the
earlier decision, to wit:

1. ₱220,234.083
2. ₱50,000.00 as attorney’s fees, plus ₱3,000.00 per court appearance;
3. Cost of Suit.

The CA promulgated a Decision affirming with modification the assailed Decision of the RTC. PNCC
is ordered to pay legal interest at six per cent (6%) per annum on the principal obligation.

ISSUE: Whether the award of attorney’s fees in favor of respondent is proper.

RULING:

Article 2208 of the New Civil Code of the Philippines states the policy that should guide the courts
when awarding attorney’s fees to a litigant. As a general rule, the parties may stipulate the recovery of
attorney’s fees. In the absence on such stipulation, this article restrictively enumerates the instances
when these fees may be recovered.

(T)he law is clear that in the absence of stipulation, attorney’s fees may be recovered as actual or
compensatory damages under any of the circumstances provided for in Article 2208 of the Civil Code.

The general rule is that attorney’s fees cannot be recovered as part of damages because of the policy
that no premium should be placed on the right to litigate. They are not to be awarded every time a
party wins a suit. The power of the court to award attorney’s fees under Article 2208 demands factual,
legal, and equitable justification. Even when a claimant is compelled to litigate with third persons or to
incur expenses to protect his rights, still attorney’s fees may not be awarded where no sufficient
showing of bad faith could be reflected in a party’s persistence in a case other than an erroneous
conviction of the

righteousness of his cause.

We have consistently held that an award of attorney’s fees under Article 2208 demands factual, legal,
and equitable justification to avoid speculation and conjecture surrounding the grant thereof. 10 Due to
the special nature of the award of attorney’s fees, a rigid standard is imposed on the courts before
these fees could be granted. Hence, it is imperative that they clearly and distinctly set forth in their
decisions the basis for the award thereof. It is not enough that they merely state the amount of the
grant in the dispositive portion of their decisions.11 It bears reiteration that the award of attorney’s fees
is an exception rather than the general rule; thus, there must be compelling legal reason to bring the
case within the exceptions provided under Article 2208 of the Civil Code to justify the award.12

We have perused the assailed CA’s Decision, but cannot find any factual, legal, or equitable
justification for the award of attorney’s fees in favor of respondent. The appellate court simply quoted
the portion of the RTC Decision that granted the award as basis for the affirmation thereof. There was
no elaboration on the basis. There is therefore an absence of an independent CA finding of the factual
circumstances and legal or equitable basis to justify the grant of attorney’s fees. The CA merely
adopted the RTC’s rational for the award, which in this case we find to be sorely inadequate.

The RTC found as follows:

x x x since it is clear that plaintiff was compelled to hire the services of a counsel, to litigate and to
protect his interest by reason of an unjustified act of the other party, plaintiff is entitled to recover
attorney’s fees in the amount of ₱50,000.00 which it paid as acceptance fee and ₱3,000.00 as
appearance fee.13

The only discernible reason proffered by the trial court in granting the award was that respondent, as
complainant in the civil case, was forced to litigate to protect the latter’s interest. Thus, we find that
there is an obvious lack of a compelling legal reason to consider the present case as one that falls
within the exception provided under Article 2208 of the Civil Code. Absent such finding, we hold that
the award of attorney’s fees by the court a quo, as sustained by the appellate court, was improper and
must be deleted.

G.R. No. 165679 October 5, 2009

ENGR. APOLINARIO DUEAS, Petitioner vs. ALICE GUCE-AFRICA, Respondent

FACTS:

Respondent entered into a Construction Contract[5] with petitioner for the demolition of the
ancestral house and the construction of a new four-bedroom residential house. The parties agreed
that respondent would pay P500,000.00 to the petitioner, who obliged himself to furnish all the
necessary materials and labor for the completion of the project. Petitioner likewise undertook to finish
all interior portions of the house on or before March 31, 1998, or more than two weeks before
respondent’s sister, Sally’s wedding.

On April 18, 1998, however, the house remained unfinished. The wedding ceremony was thus
held at the Club Victorina and respondents relatives were forced to stay in a hotel. Her mother lived
with her children, transferring from one place to another.

Respondent filed a Complaint[6] for breach of contract and damages against petitioner before
the Regional Trial Court of Pasig City. Respondent prayed for the return of the P50,000.00
overpayment. She also prayed for an award of P100,000.00 for the purpose of repairing what had
been poorly constructed and at least P200,000.00 to complete the project.

Petitioner alleged that the delay in the construction of the house was due to circumstances
beyond his control, namely: heavy rains, observance of Holy Week, and celebration
of barangay fiesta. Ultimately, he was not able to complete the project because on May 27, 1998,
respondent went to his house and told him to stop the work. He maintained that he cannot be held
liable for the amounts claimed by the respondent in her complaint considering that he had
faithfully complied with the terms and conditions of the Construction Contract.

The RTC rendered a Decision[9] in favor of the respondent and against the petitioner
Apolinario Dueas who is hereby directed to pay plaintiff:

- P100,000.00 for the necessary repair of the structure;

- 200,000.00 for the completion of the construction;
- 50,000.00 as and for attorneys fees;
- and costs of suit.

Plaintiffs claim for moral, nominal and exemplary damages are hereby denied for lack
of sufficient basis.

The Court of Appeals affirmed the decision of the RTC but deleted the award of attorney’s fees.

ISSUE: Whether the award of actual damages is proper.

RULING:

Respondent not entitled to actual damages for want

of evidentiary proof

Article 2199 of the Civil Code provides that one is entitled to an adequate compensation only
for such pecuniary loss suffered by him as he has duly proved. In Ong v. Court of Appeals,[21] we held
that (a)ctual damages are such compensation or damages for an injury that will put the injured party
in the position in which he had been before he was injured. They pertain to such injuries or losses that
are actually sustained and susceptible of measurement. To be recoverable, actual damages must not
only be capable of proof, but must actually be proved with reasonable degree of certainty. We cannot
simply rely on speculation, conjecture or guesswork in determining the amount of damages. Thus, it
was held that before actual damages can be awarded, there must be competent proof of the actual
amount of loss, and credence can be given only to claims which are duly supported by receipts. [22]

Here, as correctly pointed out by petitioner, respondent did not present documentary proof to
support the claimed necessary expenses for the repair and completion of the house. In awarding the
amounts of P100,000.00 and P200,000.00, the RTC and the Court of Appeals merely relied on the
testimonies of the respondent and her witness.
Respondent entitled to temperate damages in lieu of
actual damages

Nonetheless, in the absence of competent proof on the amount of actual damages suffered, a
party is entitled to temperate damages. Articles 2216, 2224 and 2225 of the Civil Code provide
Temperate or moderate damages may be recovered when some pecuniary loss has been
suffered but its amount cannot, from the nature of the case, be proved with certainty. [23] The amount
thereof is usually left to the discretion of the courts but the same should be reasonable, bearing in
mind that temperate damages should be more than nominal but less than compensatory. [24]

There is no doubt that respondent sustained damages due to the breach committed by the
petitioner. The transfer of the venue of the wedding, the repair of the substandard work, and the
completion of the house necessarily entailed expenses. However, as earlier discussed, respondent
failed to present competent proof of the exact amount of such pecuniary loss. To our mind, and in
view of the circumstances obtaining in this case, an award of temperate damages equivalent to 20%
of the original contract price of P500,000.00, or P100,000.00 (which, incidentally, is equivalent to 1/3
of the total amount claimed as actual damages), is just and reasonable.