SECOND DIVISION
[G.R. No. 221651. July 11, 2016.]
CARITAS HEALTH SHIELD, INC., petitioner, vs. MRL CYBERTECH CORPORATION, respondent.
[G.R. No. 221691. July 11, 2016.]
MRL CYBERTECH CORPORATION, petitioner, vs. CARITAS HEALTH SHIELD, INC., respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Second Division, issued a Resolution dated 11 July 2016 which reads as follows:
"G.R. No. 221651 (Caritas Health Shield, Inc. v. MRL Cybertech Corporation).
G.R. No. 221691 (MRL Cybertech Corporation v. Caritas Health Shield, Inc.).
In this Resolution, we resolve the respective motions for reconsideration of Caritas Health Shield, Inc. (Caritas) and MRL Cybertech Corporation (MRL) to challenge our April 4, 2016 Resolution.
In the assailed Resolution, this Court denied Caritas' and MRL's respective petitions for review on certiorari in G.R. 221651 and 221691 1 for failure to show any reversible error sufficient to warrant the exercise of this Court's discretionary appellate jurisdiction. 2
Antecedent Facts
MRL is a corporation engaged in the business of selling clinical laboratory equipment. 3
On June 2, 2004, MRL and Caritas executed a Memorandum of Agreement (MOA) for MRL to supply and "to install in Caritas' place [of business] various types of clinical laboratory equipment" for P7,000,000.00. 4
Pursuant to the MOA, 5 Caritas paid MRL a down payment of P2,100,000.00, representing 30% of the contract price. Upon receipt of the down payment, MRL ordered and procured the equipment. 6
On July 21, 2004, Caritas unilaterally cancelled the MOA and requested MRL to return the down payment. 7
In a letter dated July 27, 2004, MRL informed Caritas that it could no longer cancel the MOA because it had already "invested" in equipment's procurement, 8 and had already imported 80% thereof. 9
On April 18, 2005, MRL demanded Caritas to push through with the MOA. Caritas, however, refused, prompting MRL to file before the Regional Trial Court (RTC) of Quezon City an action for Specific Performance or Rescission, with Damages.
In its defense, Caritas argued that it is not bound by the MOA since it was signed by a corporate officer who was not authorized by the board of directors. 10 Neither did Caritas' board of directors ratify the MOA, which, after audit, turned out to be overpriced. 11
Meanwhile, MRL sold the equipment to other customers. 12
In its January 16, 2012 decision, the RTC ruled that Caritas is estopped from claiming that the MOA is ultra vires because it had ratified the MOA signatory's authority when it paid the down payment. 13
Acknowledging that MRL had already sold the equipment to other customer, the RTC ruled that MRL is only entitled to rescind the MOA, and to claim for damages. 14
Since rescission requires mutual restitution, and since the MOA contains no stipulation that MRL can forfeit the down payment in case of breach, the RTC ordered MRL to return the down payment. In turn, the RTC ordered Caritas to pay MRL P100,000.00 in litigation expenses, P500,000.00 as attorney's fees, and P500,000.00 as moral damages.
On appeal, the CA affirmed the RTC decision in toto. 15 The RTC likewise denied Caritas' motion for partial reconsideration. caITAC
On January 15, 2016 and January 22, 2016, MRL and Caritas filed before this Court their respective petitions for review on certiorari under Rule 45 of the Rules of Court. As already discussed, the Court denied both petitions on April 4, 2016.
The Motions for Reconsideration
On June 7, 2016, MRL and Caritas filed their respective motions for reconsideration.
As in its petition for review, MRL insisted that it is entitled to actual damages amounting to P4,900,000.00, or Caritas' unpaid balance in the MOA, as recompense for the "expected profits" it lost. 16
In addition, MRL reiterates its prayer to: (i) delete the RTC's order to refund the down payment; 17 (ii) increase the award of moral damages to P1,000,000.00; 18 and (iii) award MRL P1,000,000.00 in exemplary damages. 19
On the other hand, Caritas maintains that MRL is not entitled to moral damages. Caritas argues that while moral damages may be awarded to a corporation whose reputation was besmirched, there is no evidence that "MRL enjoyed a good reputation" 20 or that Caritas debased and besmirched such reputation. 21
In any case, Caritas argues that the moral damages awarded must be reduced for being unreasonable 22 because MRL "is definitely not that big, or its name that prestigious, to sustain [such a] huge award." 23
Finally, Caritas argues that the award of attorney's fees and litigation expenses in MCL's favor must be deleted for lack of legal and factual basis.
The Court's Ruling
We deny MRL's motion for reconsideration, and partly grant Caritas' motion for reconsideration but only insofar as the award of moral damages is concerned. As an added modification, the Court holds that Caritas is liable to MRL for temperate damages.
At the outset, we emphasize that we have already passed upon all of Caritas and MRL's arguments in our April 14, 2016 Resolution. Hence, we shall limit our discussion on matters relevant to the modification of the award.
There is no basis to
Moral damages are meant to compensate the claimant for any physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injuries unjustly caused. 24
Moral damages enables an injured party to obtain means of diversion or amusements to obviate the moral suffering he has undergone, and are not meant to enrich the injured party at the erring party's expense. 25
Generally, a juridical person is not entitled to moral damages because unlike a natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish or moral shock. 26
Admittedly, the Court, in the 1968 case of Mambulao Lumber v. PNB27 and in the 1993 case of People v. Manero, 28 said that moral damages may be awarded to a juridical person whose good reputation is debased or besmirched.
Likewise, the Court, in Filipinas Broadcasting v. AMEC-BCCM, 29 held that persons, whether natural or juridical, can validly complain for libel or any form of defamation and claim for moral damages.
In the 2008 case of Crystal v. BPI, 30 however, the Court categorically held that the statements in Manero and Mambulao were mere obiter dicta. 31
More importantly, Crystal clarified that corporations are not automatically entitled to moral damages. To be entitled, the plaintiff-corporation must prove the existence of the factual basis of the damage, and its causal relation to the defendant's acts. 32
Notably, the RTC failed to discuss the extent of MRL's reputation and how it was affected by Caritas' breach. Neither did the CA resolve these issues since it simply quoted and affirmed the relevant portions of the RTC decision. 33
At any rate, what is clear to us is that — except for MRL's self-serving statement that it is a "well-known company in the medical field" 34 — MRL failed to show how Caritas' breach caused, or at least led to, MRL's social humiliation. ICHDca
To demonstrate, MRL never alleged, much less proved, that Caritas' breach resulted to MRL's inability to comply with its obligations to its suppliers or to its other clients. Neither is MRL a victim of libel or any form of defamation. To be sure, Caritas never publicly accused MRL of overpricing the equipment it sold.
To us, the lack of causal link between Caritas' breach, on one hand, and MRL's alleged besmirched reputation, on the other — not to mention the RTC and the CA's lack of discussion on these points — reveals that the award of moral damages has no factual or legal basis. In short, Caritas' backing out from the MOA could not have been the proximate cause of MRL's besmirched reputation — if its reputation was besmirched at all.
Caritas is liable
Inasmuch as we disagree that Caritas is liable for moral damages, we also disagree with the observation that "the only damages that [the RTC] may allow [MRL] are moral damages".
Under Article 1191 of the Civil Code, the injured party who demands specific performance, or one who is forced to rescind the contract, is entitled to damages. Article 1170 also states that those who in any manner contravene the tenor of their obligations are liable for damages.
Aside from moral damages, Article 2197 of the Civil Code allows an injured party to claim actual, nominal, temperate, liquidated and exemplary damages.
Notably, we cannot award actual damages to MRL because it failed to present sales and delivery receipts, cash and check vouchers or other documents of similar nature before the trial court. 35 This does not mean, however, that MRL is not entitled to temperate damages.
Absent competent proof of the actual damages suffered, and regardless if the pecuniary loss suffered by the claimant is capable of proof, temperate damages may be awarded so long as the court is convinced that the aggrieved party suffered some pecuniary loss. 36
Consequently, the amount of temperate damages is left within the court's discretion, provided the amount is reasonable and bearing in mind that temperate damages should be more than nominal but less than actual. 37
The RTC observed that "since CARITAS has (sic) failed to comply with the MOA, and since MRL has (sic) already exerted sufficient time, money and effort in order for it to comply with the agreement, it [MRL] should be entitled to (sic) damages that it sustained." 38
We cannot close our eyes to the difficulties MRL must have faced because of Caritas' breach. These difficulties, whether they come in the form of preserving the equipment, searching for new buyers, 39 or recovering advances already made, 40 entail pecuniary expense.
In these lights, we find an award of temperate damages amounting to P500,000.00 reasonable.
WHEREFORE, petitioner MRL Cybertech Corporation's motion for reconsideration in G.R. No. 221691 is DENIED for lack of merit and for lack of substantial argument. TCAScE
On the other hand, Petitioner Caritas Health Shield, Inc.'s motion for reconsideration in G.R. No. 221651 is PARTLY GRANTED. Accordingly, the dispositive portion in the RTC's January 16, 2012 decision is modified to delete the award of Moral Damages, and to replace it with the award of P500,000.00 as Temperate Damages.
SO ORDERED."
Very truly yours,
MA. LOURDES C. PERFECTO
Division Clerk of Court
By:
(SGD.) TERESITA AQUINO TUAZONDeputy Division Clerk of Court
* Mendoza, J., on leave.
Footnotes
1. Both cases were consolidated in this Court's January 25, 2016 Resolution, Rollo, p. 230, G.R. No. 221651.
2. Id. at 233.
3. Id. at 35.
4. Id. at 54.
5. Par. 4 of the MOA reads "In consideration thereto, CARITAS HEALTH SHIELD shall pay and/or deposit the equivalent of 30% of the total amount involve as stated in our proposal". Id. at 108.
6. Id. at 35.
7. Id.
8. Id. at 64.
9. Id. at 36.
10. Id. at 66.
11. Rollo, p. 37, G.R. No. 221691.
12. Id. at 107, G.R. No. 221651.
13. Id. at 109.
14. Id. at 106-107.
15. In its July 24, 2014 Decision, id. at 36.
16. Rollo, pp. 11 and 238, G.R. No. 221691.
17. Id. at 11 and 239.
18. Id. at 12 and 238.
19. Id. at 12 and 239.
20. Rollo, pp. 22 and 178, G.R. No. 221651.
21. Id. at 22 and 178.
22. Id. at 178.
23. Id. at 179.
24. Article 2217 of the Civil Code; See also Samson, Jr. v. Bank of the Philippine Islands, 453 Phil. 577, 583 (2003). Article 2217 of the Civil Code.
25. ABS-CBN v. CA, 361 Phil. 499, 529-530, citing Visayan Sawmill Company v. Court of Appeals, G.R. No. L-83851 January 24, 2007, 219 SCRA 378, 392, citing R&B Security Insurance Co., Inc. v. Intermediate Appellate Court, G.R. No. L-64515, June 22, 1984, 129 SCRA 736; De la Serna v. Court ofAppeals, G.R. No. 109161, June 21, 1994, 233 SCRA 325, 329-330.
26. Crystal v. Bank of the Philippine Islands, 593 Phil. 344, 355 (2008), citing People v. Manero, Jr., G.R. Nos. 86883-85, January 29, 1993, 218 SCRA 85, 96-97.
27. G.R. No. L-22973, 130 Phil. 366, 391 (1968).
28. G.R. Nos. 86883-85, 218 Phil. 85, 97 (1993).
29. G.R. No. 141994, 489 Phil. 380, 400 (2005), citing Yap, et al. v. Carreon, 121 Phil. 883 (1965), where the appellants included Philippine Harvardian College which was an educational institution.
30. Crystal v. BPI, supra note 26.
31. Notably, neither Manero nor Mambulao awarded moral damages to the claimant corporation.
32. See also First Lepanto v. Chevron, 679 Phil. 313, 329 (2012).
33. See rollo, p. 109, G.R. No. 221691 reads:
The only damages that this Court may allow the plaintiff to recover are moral damages, litigation expenses, and attorney's fees.
For the award of moral damages to be granted, the following must exist: (1) there must be an injury clearly sustained by the claimant, whether physical, mental or psychological; (2) there must be a culpable act or omission factually established; (3) the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) the award for damages is predicated on any of the cases stated in Article 2219 of the Civil Code.
While corporations cannot suffer wounded feelings, mental anguish, among others, however, when it has already established a reputation and goodwill, and the same were besmirched, a corporation like MRL has a right to claim for moral damages.
34. Id. at 12.
35. The party claiming actual damages should adduce the best evidence available like sales and delivery receipts, cash and check vouchers and other pieces of documentary evidence of the same nature. See MCC Industrial Sales Corporation v. Ssangayong Corporation, G.R. No. 153051, October 18, 2007, 536 SCRA 408, 467-468.
36. See Gonzales, et al. v. Camarines Sur II Electric Coop., Inc., et al., 705 Phil. 511, 520 (2013), citing Republic v. Tuvera, G.R. No. 148246, February 16, 2007, 516 SCRA 113, 151-152 and Tan v. OMC Carriers, Inc., G.R. No. 190521, January 12, 2011, 639 SCRA 471, 482.
37. College Assurance Plan v. Belfranlt Development, Inc., 563 Phil. 355, 367 (2007), citing Hernandez v. Dolor, G.R. No. 160288, July 30, 2004, 435 SCRA 668, 677-678.
38. Rollo, p. 109, G.R. No. 221651, emphasis supplied.
39. As quoted in the RTC's decision, MRL testified that, it had to sell the equipment to other buyers due to Caritas' breach. Id. at 107.
40. In its letter dated July 27, 2004, MRL informed Caritas "Unfortunately, we regret to inform you that we cannot grant your request since we have already invested on all units comprising the system package. Thus, we are bound to deliver all items as agreed upon our Memorandum of Agreement dated June 2, 2004."