G.R. No. 211149 , November 28, 2019
Oscar Ll. Arcinue, Petitioner, vs. Alice Ilalo S. Baun, Respondent.

FACTS

On October 1, 1990, AMA Computer Learning Center (ACLC) granted petitioner Oscar Arcinue a ten-year franchise to operate a computer training school in Dagupan City, subject to an Agreement for Franchise Operations. Section 21 of the Agreement required ACLC’s prior approval for any transfer of the franchise. Three years later, without commencing operations, Arcinue sold his franchise to respondent Alice Baun for P85,000.00 without ACLC’s prior approval. Baun incurred expenses to set up the school, but ACLC, upon inspection, found the proposed site inadequate and discovered Baun was a director of a competing school. ACLC advised Arcinue it still considered him the franchisee and directed him to submit documents for the transfer by January 1995, but Arcinue did not respond. In 1997, ACLC terminated Arcinue’s franchise for failure to operate and for the unauthorized transfer. Baun filed a complaint for specific performance and damages against Arcinue and ACLC. The Regional Trial Court dismissed the case against ACLC but held Arcinue liable for damages for acting in bad faith, violating Articles 19, 20, and 21 of the Civil Code. The Court of Appeals affirmed the RTC decision. Arcinue appealed, arguing he did not act in bad faith and that Baun’s death rendered the action dismissible.

ISSUE

Did the Court of Appeals err in affirming petitioner’s liability for damages?

RULING

No. The Supreme Court denied the petition. First, the propriety of the award of damages is a question of fact, and in a Rule 45 petition, the Court is confined to reviewing legal issues, not re-examining evidence. The factual findings of the lower courts, which found Arcinue acted in bad faith, are binding. Second, an action for damages caused by tortious conduct survives the death of a party under Section 1, Rule 87 of the Rules of Court, as it is a suit for “recovery of damages for an injury to person or property.” The Court modified the interest rates on the monetary awards in accordance with established guidelines. Arcinue was ordered to pay the estate of Baun: 1) P85,000.00 as actual damages with legal interest at 6% per annum from 1993 until full payment; 2) legal interest on the actual damages at 12% per annum from judicial demand (September 11, 1997) until June 30, 2013, and 6% per annum from July 1, 2013 until full payment; 3) P50,000.00 as exemplary damages; 4) P50,000.00 as moral damages; and 5) legal interest of 6% per annum on the exemplary and moral damages from the finality of the decision until fully paid.