G.R. No. 199513 APRIL 18, 2018
TERESA GUTIERREZ YAMAUCHI, Petitioner vs ROMEO F. SUÑIGA, Respondent

FACTS

Petitioner Teresa Gutierrez Yamauchi engaged her cousin’s husband, respondent Romeo Suñiga, to renovate her house for an estimated cost of ₱869,658. She made partial payments totaling ₱400,000. The renovation stalled, and Suñiga presented billings claiming 47.02% accomplishment, demanding additional payment. Yamauchi, upon consulting an engineer who opined the costs were bloated, felt deceived. A confrontation ensued, leading Suñiga to stop work and pull out his workers and materials. Yamauchi filed a complaint for rescission and damages, alleging substantial breach, including misrepresentation, non-compliance with agreed plans, refusal to finish, and reporting unaccomplished work.
Suñiga countered that payments were on an accomplishment basis, there was no fixed schedule, and Yamauchi herself requested the suspension due to lack of funds. He claimed he was entitled to unpaid obligations and filed counterclaims for damages. The Regional Trial Court (RTC) ruled in favor of Yamauchi, ordering rescission and awarding her ₱400,000 as actual damages, plus moral and exemplary damages, attorney’s fees, and costs.

ISSUE

Whether the Court of Appeals (CA) correctly reduced the award for actual damages and deleted the awards for moral and exemplary damages, attorney’s fees, and costs of suit.

RULING

The Supreme Court affirmed the CA’s modification. On actual damages, the Court upheld the reduction from ₱400,000 to ₱200,000. While Yamauchi proved pecuniary loss from the failed renovation, she failed to substantiate the exact amount with competent evidence, such as official receipts. The Bill of Materials and billing summaries alone were insufficient. Thus, temperate damages under Article 2224 of the Civil Code were proper, and the CA’s award was reasonable.
Regarding moral and exemplary damages, the Court agreed with their deletion. Moral damages require proof of bad faith or wanton conduct. The CA and Supreme Court found that Suñiga’s actions, while constituting a breach of contract, did not rise to the level of fraud, malice, or wantonness that would warrant moral damages. His conduct stemmed from a contractual dispute, not from a deliberate intent to cause injury. Consequently, with no basis for moral damages, the award for exemplary damages, which is corrective in nature, must also be deleted.
Finally, the Court sustained the deletion of attorney’s fees and costs. Attorney’s fees are not awarded as a matter of course and require specific justification under Article 2208 of the Civil Code, such as when a party’s act compelled the other to litigate. Since Suñiga’s breach did not involve gross bad faith, and the case involved an ordinary breach of contract dispute, no exceptional circumstance existed to justify the award. The costs of suit were properly adjudged against Suñiga as the losing party, but the CA’s deletion was not appealed and thus stands.