GR 104576; (January, 1995) (Digest)
G.R. No. 104576 January 20, 1995
MARIANO L. DEL MUNDO, petitioner, vs. HON. COURT OF APPEALS, JOSE U. FRANCISCO and GENOVEVA V. ROSALES, respondents.
FACTS
Petitioner Mariano Del Mundo, operator of a dive camp resort, proposed a corporate joint venture with respondents-spouses Jose and Genoveva Francisco for developing the Franciscos’ property in Batangas. To cover the Franciscos’ capital subscription, Del Mundo offered to secure a P125,000.00 loan for them using the property as collateral. The Franciscos executed a Special Power of Attorney (SPA) authorizing Del Mundo to negotiate a loan and mortgage the property, but they only gave him a duplicate copy, retaining the original pending firm loan arrangements. They also delivered physical possession of the property to him before departing abroad.
Del Mundo applied for and obtained a P265,000.00 loan from respondent Republic Planters Bank (RPB), executing a real estate mortgage over the Franciscos’ property. The joint venture failed. The Franciscos demanded rental payments and the return of equipment from Del Mundo. Upon his failure to comply, they sued for annulment of the mortgage and damages against Del Mundo and RPB.
ISSUE
Whether the Court of Appeals erred in affirming the award of P200,000.00 as actual and moral damages against Del Mundo and RPB.
RULING
The Supreme Court modified the decision, deleting the award of P200,000.00 for actual and moral damages. The Court held that while the trial court and the Court of Appeals correctly declared the real estate mortgage void due to Del Mundo’s abuse of authority under the SPA—which was limited to securing a P125,000.00 loan for the joint venture, not a P265,000.00 loan for his personal benefit—the award of damages lacked sufficient factual and legal basis.
For actual damages, the Franciscos failed to substantiate their claim with competent proof of the actual loss suffered. The law requires that actual damages be duly proven with a reasonable degree of certainty, which was not satisfied. For moral damages, the award was unjustified as the case did not fall under any of the specific instances enumerated in Article 2219 of the Civil Code where moral damages are recoverable. While Article 2220 allows moral damages for willful injury to property or fraudulent breach of contract, the Court found the trial court’s decision devoid of factual findings establishing the nature of the alleged fraud, bad faith, or willful injury necessary to support such an award. Consequently, the unsubstantiated award was deleted. All other aspects of the appellate court’s decision were affirmed.