GR 186976; (December, 2016) (Digest)
G.R. No. 186976. December 07, 2016.
PRYCE PROPERTIES CORPORATION, PETITIONER, V. SPOUSES SOTERO OCTOBRE, JR. AND HENRISSA A. OCTOBRE, AND CHINA BANKING CORPORATION, RESPONDENTS.
FACTS
Spouses Octobre fully paid petitioner Pryce Properties Corporation for two subdivision lots under a Contract to Sell. Pryce issued a certification of full payment but failed to deliver the titles. The spouses demanded delivery and later discovered Pryce had previously assigned its receivables, including the contracts and titles for the project, to China Banking Corporation as security for a loan. When Pryce defaulted on its loan, China Bank refused to release the titles. The spouses filed a complaint with the HLURB for specific performance and damages.
The HLURB Arbiter rescinded the contract and ordered Pryce to refund the payments with interest and pay compensatory damages. The HLURB Board modified this, ordering Pryce to pay China Bank to redeem the titles, or alternatively, to refund the spouses. This was affirmed by the Office of the President and the Court of Appeals, which found Pryce acted in bad faith by not disclosing the title encumbrance. Pryce appealed to the Supreme Court, contesting the award of compensatory damages and attorney’s fees for lack of proof of actual loss and bad faith.
ISSUE
Whether the Court of Appeals erred in upholding the award of compensatory damages and attorney’s fees in favor of the Spouses Octobre.
RULING
No. The Supreme Court affirmed the awards. On compensatory damages, the Court clarified that a breach of contract does not automatically entitle a party to such damages; the amount of pecuniary loss must be duly proved under Article 2199 of the Civil Code. Here, the spouses did not claim a specific amount for actual damages beyond the refund. The awarded ₱30,000.00 was not compensatory but temperate damages, which may be awarded when some pecuniary loss has been suffered but its exact amount cannot be proven with certainty, as when a party is deprived of the use of property. The spouses were deprived of their lots for a significant period due to Pryce’s breach.
Regarding attorney’s fees, the Court found the award proper under Article 2208 of the Civil Code. Pryce’s failure to deliver the titles, compounded by its concealment of the fact that the titles were in China Bank’s custody, compelled the spouses to litigate to protect their interests. This constituted bad faith, justifying the award. The Court also upheld the factual findings of the lower bodies regarding the Deed of Assignment and the inapplicability of a corporate rehabilitation stay order, which had been lifted.