Pryce Properties Corporation Vs. Sps. Sotero Octobre, Jr., et al.
G.R. No. 186976. December 7, 2016

The primary question is whether a breach of contract automatically triggers the award of actual or compensatory damages.

On July 22, 1997, respondent Spouses Sotero Octobre, Jr. and Henrissa A. Octobre (Spouses Octobre) signed a Reservation Agreement with petitioner Pryce Properties Corporation (Pryce) for the purchase of two lots with a total of 742 square meters located in Puerto Heights Village, Puerto Heights, Cagayan de Oro City. The parties subsequently executed a Contract to Sell over the lot for the price of P2,897,510.00 on January 7, 1998.

However, despite repeated demands, Pryce failed to comply. It appears that the reason why Pryce was unable to deliver the titles to Spouses Octobre is because it had previously transferred custody of the titles, without knowledge of Spouses Octobre, along with others pertaining to the same development project, to China Banking Corporation (China Bank) as part of the Deed of Assignment executed on June 27, 1996. Pryce disclosed the fact to Spouses Octobre when Spouses Octobre had fully paid the price and had demanded delivery of the titles.


1.       Is the award of actual or compensatory damages proper in this case?

No. In the absence of adequate proof, compensatory damages should not have been awarded.

To be entitled to compensatory damages, the amount of loss must therefore be capable of proof and must be actually proven with a reasonable degree of certainty, premised upon competent proof or the best evidence obtainable. The burden of proof of the damage suffered is imposed on the party claiming the same, who should adduce the best evidence available in support thereof. Its award must be based on the evidence presented, not on the personal knowledge of the court; and certainly not on flimsy, remote, speculative and non-substantial proof.


2.       What is actual or compensatory damages?

Article 2199 of the Civil Code defines actual or compensatory damages:

Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages.


3.       What award for damages is proper in this case?

In fine, contractual breach is sufficient to justify an award for nominal damages but not compensatory damages.

It is undisputed that Pryce failed to deliver the titles to the lots subject of the Contract to Sell even as Spouses Octobre had already fully settled the purchase price. Its inability to deliver the titles despite repeated demands undoubtedly constitutes a violation of Spouses Octobre's right under their contract.


4.       May the Court award attorney's fees and costs of suit despite the absence of the exemplary damages?

Yes.

Under Article 2208, the award of exemplary damages is just one of 11 instances where attorney's fees and expenses of litigation are recoverable.

Article 2208(2) allows the award of attorney's fees when the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. This provision requires a showing of bad faith and not mere erroneous conviction of the righteousness of a defendant's cause. In this case, Pryce acted in bad faith when it did not disclose to Spouses Octobre the fact that the certificates of title to the properties purchased were in the custody of China Bank until Spouses Octobre had fully paid the price and had demanded delivery of the titles.


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