GR 155683; (February, 2007) (Digest)
G.R. No. 155683 February 16, 2007
Petron Corporation, Petitioner, vs. National College of Business and Arts, Respondent.
FACTS
The dispute involves the ownership of seven parcels of land in Sta. Mesa, Manila (V. Mapa properties). Respondent National College of Business and Arts (NCBA) purchased the properties from the Monserrat brothers in 1982. The sale was conditioned on the sellers securing the release of the titles from a mortgage in favor of the Development Bank of the Philippines (DBP) and a prior levy from another case. The Monserrats failed to do so, prompting NCBA to file a specific performance case against them and later against DBP. During the pendency of this suit, the Monserrats’ interests in the properties were levied upon and sold at public auction to satisfy separate money judgments against them. Petitioner Petron Corporation was the highest bidder, acquiring the interests in 1985, and subsequently intervened in NCBA’s pending lawsuit to assert its ownership.
The Regional Trial Court ruled that Petron never acquired valid title, declared NCBA the lawful owner, and held Petron, DBP, and the Monserrats jointly and severally liable to NCBA for exemplary damages and attorney’s fees. The Court of Appeals affirmed this decision. Petron elevated the case, contesting solely its liability for these monetary awards.
ISSUE
Whether petitioner Petron Corporation should be held liable to pay attorney’s fees and exemplary damages to respondent NCBA.
RULING
No, Petron is not liable for attorney’s fees or exemplary damages. The Supreme Court clarified that attorney’s fees as part of damages are not awarded as a matter of course. They are recoverable only when provided for by statute or stipulated by the parties, or when the defendant’s act or omission has compelled the plaintiff to litigate or incur expenses to protect its interest. The Court found no such compelling circumstance attributable to Petron.
Petron’s intervention in the lawsuit was a legitimate exercise of its right to defend its perceived interest in the property, which it acquired through a public auction. Its act of intervening to have the conflicting claims of ownership settled in a single proceeding was not wanton, fraudulent, or in bad faith. Since Petron’s actions did not force NCBA into litigation—the suit was already initiated by NCBA against the Monserrats and DBP—the award of attorney’s fees against Petron had no legal basis.
Regarding exemplary damages, the law requires that the claimant must first be entitled to moral, temperate, liquidated, or compensatory damages. Since the award for attorney’s fees (a form of compensatory damages) against Petron was unjustified, the prerequisite for awarding exemplary damages was absent. Consequently, the awards for both attorney’s fees and exemplary damages against Petron were revoked. The Court modified the lower courts’ decisions accordingly.