FIRST DIVISION
[G.R. No. 207242. November 18, 2021.]
PHILIPPINE DEVELOPMENT & INDUSTRIAL CORPORATION, petitioner, vs. EQUITABLE PCI BANK (NOW KNOWN AS BANCO DE ORO-EPCI, INC.), respondent.
[G.R. No. 207439. November 18, 2021.]
EQUITABLE PCI BANK, petitioner, vs. PHILIPPINE DEVELOPMENT & INDUSTRIAL CORPORATION, respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedNovember 18, 2021which reads as follows:
"G.R. No. 207242 (Philippine Development & Industrial Corporation v. Equitable PCI Bank (now known as Banco De Oro-EPCI, Inc.); and G.R. No. 207439 (Equitable PCI Bank v. Philippine Development & Industrial Corporation). — A stipulation regarding the validity or compliance of the contract that is potestative or is left solely to the will of one of the parties is violative of the principle of mutuality of contracts and is, consequently, void.
These consolidated petitions for review on certiorari under Rule 45 of the Rules of Court seek the review of the Decision 1 dated December 13, 2012 and the Resolution 2 dated May 30, 2013 of the Court of Appeals (CA) in CA-G.R. CV No. 95063, which reversed and set aside the Decision 3 dated November 27, 2009 of the Regional Trial Court, Branch 63, Makati City (RTC Makati) in Civil Case No. 03-401.
Philippine Development Industrial Corporation (PDIC) is the registered owner of a parcel of land covered by Transfer Certificate of Title (TCT) No. 230861, located in Sta. Ana, Manila City (Sta. Ana property). PDIC was to develop the Sta. Ana property into a condominium project known as "Sta. Ana Villas Condominium," to be composed of 64 condominium and/or townhouse units of different sizes and layouts. 4
In order to finance the project, PDIC applied for a credit line with Equitable-PCT Bank (EPCIB). In a letter 5 dated August 8, 1996, EPCIB approved in favor of PDIC a clean omnibus credit line in the amount of P100,000,000.00, a second clean omnibus line in the amount of P50,000,000.00, and a secured omnibus line in the amount of P100,000,000.00. Sometime in September 1997, PDIC and EPCIB also executed a contract of real estate mortgage 6 over the Sta. Ana property as a collateral for the secured omnibus line.
PDIC availed of the peso proceeds of the clean credit line and was granted the amount of P99,605,229.72. The proceeds were used by PDIC to pay its obligation to FL Ramos Construction Co., Inc. pursuant to an Owner-General Contractor Agreement. Subsequently, PDIC also tried to draw the full amount of the secured credit line. EPCIB, however, denied the release of the proceeds. 7 PDIC instead requested to draw a partial amount of P45,000,000.00 from the secured credit line, which was similarly denied by EPCIB in a letter 8 dated October 15, 1998, pertinent portions of which state:
Based on our evaluation of your account and given the present market and economic condition, we regret to inform you that our Credit Committee has deferred the granting of the additional credit accommodation. However, we are willing to discuss and map-out (sic) a new credit package and loan restructuring with you.
Moreover, we would like to remind you of the required peso conversion of your US Dollar loan obligations on or before PN maturity date. Note that we can no longer extend the loans unless these are converted to peso. Hence, we suggest the following options:
1. Immediate Conversion of the loans to Peso for outright windup of FX risk
2. Conversion of the loans to peso upon PN maturity to allow loan extension
3. Full payment of the loan upon maturity. 9
In a reply-letter 10 dated October 30, 1998, PDIC requested for a meeting with EPCIB to clarify the denial of the release of proceeds from the credit line. According to PDIC, the requested P45,000,000.00 was part of the P100,000,000.00 secured credit that had already been approved by EPCIB. 11
On November 11, 1998, a meeting was held 12 wherein the parties came up with a list of agreed action plans, one of which provides:
4. Upon approval by our Executive Committee of the line renewal and execution of required collateral, the existing excesses in the clean lines of PDIC and RLMC shall be immediately liquidated via your own funds or the utilization/drawdown of the approved secured line. 13
Meanwhile, in order to continue with the construction of its project, PDIC resorted to other sources of financing, including a request for a loan repayment plan with the bank. 14 Moreover, to facilitate the selling of the condominium units, PDIC requested the release of TCT No. 230861 from EPCIB for the annotation of the Amended Master Deed, the alterations of floor areas, and the affidavit for the construction of a swimming pool. 15 In a letter 16 dated December 21, 1999, EPCIB agreed to release TCT No. 230861, subject to the condition that a substitute mortgage be executed on 29 condominium units of PDIC. 17 EPCIB also informed PDIC that its request for a loan repayment plan had already been approved. 18
Pursuant to the loan repayment plan, PDIC and EPCIB executed Repayment Agreement 19 dated June 13, 2000 (Repayment Agreement), where PDIC agreed to secure all of its obligations with the 29 condominium units.
Subsequently, EPCIB sent PDIC a billing statement 20 dated August 31, 2001, reflecting an outstanding balance of P229,270,774.84. A demand letter 21 dated September 4, 2002, was also sent by the counsel of EPCIB, giving PDIC five (5) days from receipt within which to pay a total outstanding balance of P378,078,127.69, inclusive of interests and penalties.
PDIC responded, contesting the amount demanded by EPCIB considering that the secured omnibus credit line was never utilized. It also requested EPCIB to subject the mortgaged condominium units to dacion en pago as settlement of its outstanding obligation. 22 EPCIB replied that the mortgaged units only amounted to P60,110,400.00, thus, additional assets are required to cover the outstanding balance. PDIC, in turn, requested for a third-party appraisal of the mortgaged condominium units. 23
PDIC later received a Notice of Extrajudicial Sale covering the mortgaged properties in favor of EPCIB. This prompted PDIC to file before the RTC Makati a complaint for cancellation of mortgage, restitution of title, and damages dated April 11, 2003 against EPCIB. PDIC subsequently amended its complaint to one for release of mortgage and damages. 24
On April 21, 2003, the properties were foreclosed by EPCIB. In response, PDIC withdrew its complaint for cancellation/release of mortgage, which it instead filed before the Regional Trial Court of Manila City (RTC Manila) where the property is located. Thus, PDIC filed before the RTC Makati its second amended complaint for damages only. 25 The admission of the second amended complaint for damages was questioned by EPCIB via a petition for certiorari under Rules 65 of the Rules of Court before the CA. EPCIB argued that PDIC violated the rule against splitting of causes of action, considering that it also filed a case for declaration of nullity of real estate mortgage before the RTC Manila.
Meanwhile, trial for the complaint for damages before the RTC Makati proceeded. In the main, EPCIB argued that the distinction between the secured and unsecured credit lines ceased to exist when the parties entered into the Repayment Agreement where PDIC agreed to secure all of its obligations with the condominium units. 26
On November 27, 2009, the RTC Makati rendered its Decision, 27 granting the complaint of PDIC. It ruled that PDIC did not violate the rule against splitting causes of action because the reliefs sought in the action for annulment of real estate mortgage before the RTC Manila and the action for damages before it, are different and, therefore, cognizable by different tribunals. 28
The RTC Makati found that PDIC was granted by EPCIB two credit lines — one clean, and one secured line, both for the amount of P100,000,000.00. After PDIC fully availed of the loan from the clean line, it tried to apply for a P45,000,000.00 additional loan from its secured line. EPCIB, however, refused to grant the loan and wanted PDIC to convert its dollar loan into peso loan and to immediately pay the loan upon maturity. Moreover, EPCIB instead suggested a new credit package and loan restructuring for PDIC. 29
According to the RTC Makati, the refusal of EPCIB to grant the loan requested by PDIC from the secured line caused the stoppage of the construction and the non-completion of the latter's project on time because of lack of funds. 30 PDIC was, thus, constrained to resort to other sources of financing at higher interest rates. Subsequently, PDIC needed to annotate the Amended Master Deed, as well as the alterations made on the floor areas of the units, on the title of the Sta. Ana property. Thus, it requested EPCIB to release TCT No. 230861, considering that it was not even able to avail the loan under the secured line. EPCIB responded that it is amenable to the release of TCT No. 230861, subject to the condition that PDIC execute a substitute mortgage involving the 29 units of the project. Owing to the urgency of getting the title annotated and the threats of filing criminal and civil cases from its buyers, PDIC was constrained to agree to the condition and execute another real estate mortgage covering the 29 units for P149,380,000.00. Thereafter, the parties entered into the Repayment Agreement. 31
The RTC Makati held that EPCIB acted in bad faith when it refused to release the loan under the secured credit line which it had already approved in favor of PDIC. It brushed aside EPCIB's contention that the original agreement of the parties regarding the clean and secured loan has been superseded by the Repayment Agreement. PDIC, according to the RTC Makati, would not have entered into the Repayment Agreement had EPCIB only released TCT No. 230861. 32
Citing Article 2201 33 of the Civil Code, the RTC Makati awarded damages in favor of PDIC. It awarded actual damages representing the interest expense supposedly incurred by PDIC when it resorted to other financing to proceed with its project. As for the amount, the RTC Makati adopted what was indicated in the Summary of Additional Interest Expenses submitted by PDIC during trial. 34 On the other hand, the RTC Makati dismissed the claim for actual damages based on the loss which PDIC allegedly incurred when its project was delayed. According to the RTC Makati, the loss was not substantiated, as the person who prepared the computation did not testify on how he arrived at the amounts being claimed. 35 Finally, the RTC Makati awarded exemplary damages in the amount of P1,000,000.00 and attorney's fees in the amount of P100,000.00 in favor of PDIC. 36 The dispositive portion of the RTC Makati Decision states:
WHEREFORE, the foregoing considered, the Court hereby directs defendant to pay the plaintiff the following amount:
1. Seventeen Million Seven Hundred Eighty-Three Thousand Six Hundred Seventy Nine Pesos and Eighty Seven Centavos (Php17,783,679.87) representing the additional expenses incurred by the plaintiff;
2. One Million Pesos (Php1,000,000.00) by way of exemplary damages;
3. One Hundred Thousand Pesos (Php100,000.00) as attorney's fees; and
4. Costs of suit.
Defendant's Compulsory Counterclaims are hereby dismissed for lack of merit.
SO ORDERED." 37
Aggrieved, EPCIB and PDIC separately filed their appeals to the CA. On December 13, 2012, the CA issued the assailed Joint Decision. 38 First, it noted that the issue on whether PDIC is guilty of violating the rule against splitting causes of action had been resolved with finality by this Court in the case of Banco de Oro-EPCI, Inc. (formerly known as Equitable PCI Bank, Inc.) v. Judge Daguna, 39 where the Court held that PDIC did not engage in forum shopping in filing an action for damages, which was previously an action for release of mortgage with damages, and the complaint for annulment of mortgage before the RTC Manila against EPCIB.
On the merits, the CA held that EPCIB is guilty of breach of contract when it failed to release the amount approved under the secured credit line in favor of PDIC. It dismissed EPCIB's argument that the distinction between the secured and unsecured credit lines had been extinguished by the Repayment Agreement, noting that even before the Repayment Agreement was made, both the secured and unsecured credit lines were existing. The CA also found that the deferment of the release of the amount of the secured line was not fully justified by EPCIB through its letter dated October 15, 1998. A careful reading of the said letter, according to the CA, would reveal that the intent was rather to induce PDIC to resort to the Repayment Agreement. 40
As a result, EPCIB is liable for damages that are the natural and probable consequences of its breach of the contract. In this regard, however, claims for actual damages must be substantiated. 41 Unfortunately for PDIC, it failed to present sufficient evidence to support its claim for additional interest expenses. The CA held that the RTC Makati erred in giving credence to the Summary of Additional Interest Expenses submitted by PDIC during trial because it was not properly authenticated. 42
Further, a list of expenses cannot replace receipts when the latter should have been issued as a matter of course in business transactions. 43 The CA then deleted the award of exemplary damages for failure of PDIC to show that it is entitled to moral, temperate, or compensatory damages. 44 The dispositive portion of the CA Decision states:
WHEREFORE, in view of the foregoing, the instant Appeal is GRANTED. The Decision dated November 27, 2009, issued by the Regional Trial Court of Makati City, Branch 63 in Civil Case No. 03-401, is REVERSED and SET ASIDE.
SO ORDERED. 45
EPCIB's and PDIC's respective motion for reconsideration were denied by the CA in its Resolution 46 dated May 30, 2013.
Consequently, EPCIB and PDIC separately filed their Petitions for Review 47 on Certiorari under Rule 45 of the Rules of Court before this Court. In a Resolution 48 dated August 28, 2013, the Court ordered the consolidation of the petitions.
According to PDIC, EPCIB's unilateral refusal to grant the proceeds from the previously-approved loan is a blatant violation of the principle of mutuality of contracts embodied in Article 1308 49 of the Civil Code. 50 For such violation, EPCIB is liable for damages under Articles 1170 51 and 1171 52 of the Civil Code. 53
PDIC disagreed with EPCIB's assertion that the terms of the approved credit line had been superseded by the Repayment Agreement. It avers that it was only forced to enter into the Repayment Agreement so that EPCIB would release TCT No. 230816. In any case, the Repayment Agreement could not have impliedly superseded the terms of the letter approving the credit line. By virtue of the Repayment Agreement, moreover, PDIC was forced to submit the certificates of title of its 29 condominium units and have them annotated with a real estate mortgage in favor of EPCIB. The annotation, in turn, prevented PDIC from selling these units. 54
PDIC added that Article 2199 55 of the Civil Code does not particularly limit the proof of pecuniary loss to receipts. On the contrary, pecuniary loss may be proven by the best evidence obtainable. EPCIB's refusal to release the portion of the previously approved secured loan prompted PDIC to resort to other sources of financing at a higher rate of interest so it can proceed with its project. In this regard, PDIC's Summary of Additional Interest Expenses showing that it incurred additional interest expense of P17,783,679.87 was duly admitted by the RTC. 56 Contrary to the finding of the CA, the Summary of Additional Interest Expenses was authenticated by its witness, Anthony Go Eng Kuang, who identified the document because he has personal knowledge of its contents, having seen the same being prepared and signed by a Angeline Pavon. 57 Even assuming that the Summary of Additional Interest Expenses is not sufficient to prove actual pecuniary loss, PDIC should at least be entitled to temperate damages under Article 2216 58 of the Civil Code. 59
Since the delay for the completion of the project was directly attributable to the failure of EPCIB to release the loan under the secured line, EPCIB is also liable for losses suffered by PDIC in the form of decline in the market value of the affected units amounting to P29,062,005.00. 60
For its part, EPCIB argued that it was justified in not releasing the amount approved under the secured credit line to PDIC. 61 It avers that the letter approving the credit facilities in favor of PDIC expressly states that the loan is subject to the review by EPC at its discretion and convenience and may be modified and cancelled at the bank's option. 62 Thus, it was well within EPCIB's prerogative to modify and cancel the credit facilities granted to PDIC taking into consideration all relevant information. In denying the release of the amount from the secured credit line, EPCIB was merely exercising the appropriate degree of diligence required of it as a bank. 63 It cannot be faulted for its prudence in deferring the release of the secured credit line especially since it already had a clean loan exposure from PDIC's full availment of its clean credit line. 64 Moreover, the market and economic conditions at the time of PDIC's request to release the loan under the secured line were quite precarious in view of the Asian financial crisis. During that time, banks clamped down on lending because of higher credit risks across industries, particularly the real estate industry. 65 It cannot be said, therefore, that EPCIB acted in bad faith in withholding the release of the loan from the secured line. 66
EPCIB further argued that contrary to the finding of the CA, the restructuring of obligations it proposed was not an attempt to commit a breach of its contractual commitment to PDIC. 67 The execution of the Repayment Agreement, mutually agreed upon by the parties, is more of an accommodation granted by EPCIB, which PDIC was not under any compulsion to accept. 68 Finally, even assuming that EPCIB was unjustified in refusing to release the secured line loans, no damages may be recovered since the parties' previous contract was already superseded by the Repayment Agreement. 69
The sole issue for the Court's resolution is whether PDIC is entitled to payment of damages from EPCIB.
At the onset, the CA correctly observed that, in the case of Banco de Oro-EPCI, Inc. (formerly known as Equitable PCI Bank, Inc.) v. Judge Daguna, 70 the Court held that PDIC did not engage in forum shopping in filing the present case for damages and the complaint for annulment of mortgage before the RTC Manila against EPCIB. In that case, the Court discussed that the present action for damages was originally an action for release of mortgage with damages brought about by EPCIB's alleged failure to provide funds under the secured credit line. On the other hand, the RTC Manila complaint sought the annulment of the mortgage constituted over the 29 condominium units and the foreclosure sale on the basis of alleged flaws and irregularities attendant to it. 71
In the action for annulment of mortgage, the RTC Manila would have to rely on specific instances of supposed vitiated consent, fraud, lack of consideration, and irregularities in the foreclosure, while in the action for release of mortgage with damages, it would have to rely on the willful refusal of EPCIB to release the funds under the secured credit line and losses incurred by PDIC. 72 Prior to foreclosure sale, an action for release of mortgage is a personal action, possess and ownership of the properties having remained with the mortgagor, PDIC. Since EPCIB, in the interim, foreclosed the properties, PDIC had to withdraw its action for release of mortgage and file the appropriate action for annulment of foreclosure in the proper venue, the RTC Manila. The RTC, however, still retained jurisdiction over the present action for damages which is a personal action. 73
In insisting that it is entitled to payment of damages, PDIC dwells on EPCIB's act of not releasing the full or partial loan amount under the secured credit line. For PDIC, this is a violation of the terms of the loan, which EPCIB approved in its favor.
The RTC Makati and the CA agreed with PDIC. More specifically, the CA declared EPCIB guilty of breach of contract when it refused to release the amount approved under the secured credit line in favor of PDIC without sufficient justification.
It has already been held that the determination of the existence of a breach of contract is a factual matter not usually reviewable in a petition filed under Rule 45. 74 The Court, in petitions for review, limits its inquiry into questions of law. After all, it is not a trier of facts, and findings of fact made by the trial court, especially when reiterated by the CA, must be given great respect if not considered as final. 75 While there are recognized exceptions 76 to this rule, the Court finds that none applies to the present case.
As correctly found by the RTC Makati and the CA, EPCIB violated its agreement with PDIC when it refused to release the partial or full loan amount under the secured credit line. The letter 77 dated August 8, 1996 from EPCIB approving the loan in favor of PDIC clearly states that the latter was granted a credit line in the total amount of P339,000,000.00. Included in this credit line is a clean omnibus line and a secured omnibus line, both in the amount of P100,000,000.00. EPCIB initially released the full proceeds of the clean omnibus line, but it refused to release any further proceeds under the secured omnibus line.
The agreement between EPCIB and PDIC was one of loan. Under Article 1934 78 of the Civil Code, a loan contract is perfected upon the delivery of the object of the contract. In the present case, when EPCIB released the proceeds of the clean omnibus line representing portion of the total credit facility, the contract of loan was perfected.
In Spouses Ong v. BPI Family, Savings Bank, Inc., 79 the Court discussed the obligation of the parties to a contract of loan, thus:
Loan is a reciprocal obligation, as it arises from the same cause where one party is the creditor and the other the debtor. The obligation of one party in a reciprocal obligation is dependent upon the obligation of the other, and the performance should ideally be simultaneous. This means that in a loan, the creditor should release the full amount and the debtor repays it when it becomes due and demandable. 80
In the above-mentioned case, the Court found that when respondent Bank of Southeast Asia (now BPI Family Savings Bank) released to the Spouses Ong the amount of P3,000,000.00 out of the approved original credit facility of P5,000,000.00, the contract of loan was perfected. Thus, the bank violated the loan contract when it deliberately failed to release the remaining P2,000,000.00, notwithstanding the Spouses Ong's compliance with the condition for the said release, which is to pay in full the initial P3,000,000.00 loan.
In the present case, the records do not show that the release of the proceeds under the secured omnibus line was subject to any condition, such as the full payment by PDIC of previously drawn amounts from the credit line. There is also no evidence that EPCIB previously demanded from PDIC the payment of any outstanding unpaid account, or the performance of some undertaking, before deciding to hold any further release of funds.
In its letter 81 dated October 15, 1998 denying PDIC's request to withdraw proceeds from the secured omnibus line, EPCIB only stated that based on an evaluation of PDIC's account, as well as the present market and economic condition, its credit committee has decided to defer the granting of additional accommodation. On this score, the Court agrees with the holding of the CA that such reason was vague and does not fully justify deferral of the release of the proceeds under the secured line. The reasons cited by EPCIB were rather general assertions, and EPCIB failed to specifically show how they arrived at such a decision.
EPCIB insists that, in any case, its credit committee was justified in deferring further credit accommodation to PDIC in view of the catch-all provision in its letter dated August 8, 1996 which reads:
It is understood that the above credit facilities shall be subject to review at the bank's discretion and convenience and may be modified and cancelled at the bank's option.82
The principle of mutuality of contracts is pronounced in Article 1308 of the Civil Code:
Article 1308. The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them.
The binding effect of any agreement between parties to a contract is premised on two settled principles: (1) that any obligation arising from contract has the force of law between the parties; and (2) that there must be mutuality between the parties based on their essential equality. 83 Thus, the principle of mutuality of contracts dictates that a contract must be rendered void when the execution of its terms is skewed in favor of one party. 84 Likewise, any stipulation regarding the validity or compliance of the contract that is potestative, or is left solely to the will of one of the parties, is invalid. 85
In this regard, the Court had the occasion to declare as void (1) a stipulation allowing banks to unilaterally determine and/or modify interest rates in their loans; 86 (2) a provision in the employment contract stating that the employment relationship between the employer and the seafarer shall commence once the shipmaster has issued boarding confirmation to the seafarer; 87 and (3) a clause in a supply contract where the buyer was given the right to stop delivery of raw materials by the seller when supply of it shall become sufficient, until such time when need for said raw materials shall be necessary. 88 The Court found the foregoing provisions as solely potestative or dependent upon the will of one of the contracting parties only, and thus violative of the principle of mutuality of contracts.
In the present case, the provision invoked by EPCIB grants it the power to review the credit facility already granted to PDIC, at any time at its own discretion and convenience. Pursuant to its review, EPCIB may cancel or modify the credit facilities at its option and refuse to release any further credit accommodation, as it did in the present case. Notably, the standard of such review, as well as the parameters for withholding further credit accommodation, were not previously agreed upon by the parties or made known to PDIC at any given point. In effect, the release of the proceeds of the approved credit line was beholden to the sole will of EPCIB, without any participation from and/or notice to PDIC.
Such unilateral authority in favor of EPCIB is violative of the principle of mutuality of contracts and is, consequently, void. It leaves PDIC at the mercy of EPCIB and renders illusory the contract of loan between the parties. To emphasize, PDIC applied for a credit facility with EPCIB for the purpose of financing the Sta. Ana Villas Condominium project. The loan was intended to assist and finance PDIC's business by way of providing additional funds as working capital or revolving funds. Thus, the unbridled discretion given to EPCIB to determine the propriety of releasing the proceeds of the loan renders the contract and the purpose for which it was entered into by the parties, inutile.
A purely potestative imposition of this character should be stricken down from the contract, without affecting the rest of the provisions considering that the said condition relates to the fulfillment of an already existing obligation and not to its creation. 89 As discussed above, the contract of loan was already perfected when EPCIB released the partial proceeds of the whole credit facility to PDIC. At that point, therefore, the respective obligations of PDIC and EPCIB already arose.
Having declared the unilateral authority in favor of EPCIB void and of no effect, the respective obligations of the parties under the contract of loan are deemed unconditional. Thus, EPCIB violated the contract when it failed, without sufficient justification, to release to PDIC the proceeds under the secured omnibus line.
The RTC Makati found that EPCIB's failure to release the balance of the approved loan caused the stoppage of the construction and development of the Sta. Ana Villas Condominium project for lack of funds. Moreover, PDIC was constrained to resort to other sources of financing at higher interest rates. This factual finding was affirmed by the CA. It is a well-settled principle that factual findings of the trial court, when affirmed by the Court of Appeals, are binding on this Court. 90 The Court sees no reason to deviate from this rule, since the findings of the RTC and the CA are supported by the evidence on record.
Under Article 2199 of the Civil Code, actual or compensatory damages are those awarded in satisfaction of, or in recompense for, loss or injury sustained. 91 In this regard, one is entitled to an adequate compensation for only such pecuniary loss suffered by him as he has duly proved.
In the present case, the Court agrees with the CA that PDIC failed to prove with a reasonable degree of certainty, the actual amount of loss it incurred in the form of interest expense and unrealized profits.
First, the CA correctly observed that the Table of Unrealized Profits 92 and the Summary of Additional Interest Expenses 93 were not properly authenticated during the respective testimonies of PDIC's Vice-President, Mr. Go Eng Kuang and its officer, Evangeline Pavon. Section 20, 94 Rule 132 of the Revised Rules on Evidence, prior to its amendment in 2019, provides that the due execution and authenticity of a private document may be proved by (a) anyone who saw the document executed or written; or (b) evidence of the genuineness of the signature or handwriting of the maker. Here, Go Eng Kuang merely testified that PDIC made a table containing the figures for the unrealized profits and the interest expenses. 95 However, he did not state that he himself participated in the preparation of the documents or that he saw the same being executed or written. On the other hand, while it was admitted that Evangeline Pavon prepared the Summary of Additional Interest Expenses, the records do not show that the actual document was shown to and identified by her during her testimony.
Further, the Summary of Additional Interest Expenses was not duly supported with receipts. To justify the award of actual damages, there must be competent proof of the actual amount of loss, credence can be given only to claims which are duly supported by receipts. 96 A list of expenses cannot replace receipts when the latter should have been issued as a matter of course in business transactions. 97 PDIC could have very well submitted receipts or documentary proof showing its actual payment of interest to the bank or financial institution it claims it had secured additional financing from.
The Court also notes that the claim for unrealized profits was computed by PDIC on the basis of the supposed decline in the market value of the condominium units. It cannot be said with reasonable certainty, however, that PDIC could have sold those units were it not only for EPCIB's refusal to release the proceeds under the secured omnibus line. In order to recover actual damages, the alleged unearned profits must not be conjectural or based on contingent transactions. 98 Speculative damages are too remote to be included in an accurate estimate of damages. 99
Nonetheless, the failure to present competent proof of actual damages should not deprive PDIC of some degree of indemnity for the economic damage it suffered. As borne by the records, the wrongful act of EPCIB affected, in one way or another, the commercial standing and the financial condition of PDIC.
Temperate or moderate damages may be recovered when some pecuniary loss has been suffered, but its amount cannot, from the nature of the case, be proved with certainty. 100 The amount thereof is usually left to the discretion of the courts, but the same should be reasonable, bearing in mind that temperate damages should be more than nominal but less than compensatory. 101 In view of the circumstances obtaining in this case, the Court finds the amount of P400,000.00 as temperate damages just and reasonable.
Exemplary damages, on the other hand, are intended to serve as an example or correction for the public good, thus, the courts may award them if the defendant is found to have acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. 102 In this case, the CA was correct in deleting the award of exemplary damages inasmuch as PDIC failed to show that EPCIB was motivated by malice or bad faith in failing to release the proceeds under the secured omnibus line.
With respect to the award of attorney's fees, the Court affirms the award of the RTC Makati in the amount of P100,000.00, being just and equitable under the circumstances of this case. 103
WHEREFORE, premises considered, the petitions are DENIED. The Decision dated December 13, 2012 and the Resolution dated May 30, 2013 of the Court of Appeals in CA-G.R. CV No. 95063 are hereby AFFIRMEDwithMODIFICATION. The complaint for damages filed by Philippine Development & Industrial Corporation is PARTIALLY GRANTED. Equitable PCI Bank, Inc. (now known as Banco de Oro-EPCI, Inc.) is hereby ORDERED to PAY Philippine Development & Industrial Corporation P400,000.00 as temperate damages and P100,000.00 as attorney's fees. All awards for damages shall earn interest of six percent (6%) per annum reckoned from the finality of this Resolution until full payment.
SO ORDERED." Lopez, M., J., on official leave.
By authority of the Court:
(SGD.) LIBRADA C. BUENADivision Clerk of Court
By:
MARIA TERESA B. SIBULODeputy Division Clerk of Court
Footnotes
1. Penned by Associate Justice Agnes Reyes-Carpio, with Associates Justices Priscilla J. Baltazar-Padilla (a retired member of this Court) and Zenaida T. Galapate-Laguilles concurring; rollo (G.R. No. 207439), pp. 36-56.
2.Id. at 58-60.
3. Penned by Presiding Judge Tranquil P. Salvador, Jr.; id. at 312-320.
4.Rollo (G.R. No. 207439), p. 37.
5.Id. at 62-64.
6.Id. at 65-67.
7.Id. at 38.
8.Rollo (G.R. No. 207242), p. 231.
9.Id. at 233.
10.Id.
11.Id.
12.Rollo (G.R. No. 207439), p. 39.
13.Id.
14.Id. at 40.
15.Id.
16.Rollo (G.R. No. 207242), pp. 235-236.
17.Id. at 236.
18.Id. at 235.
19.Id. at 346-349.
20.Id. at 317-319.
21.Id. at 320.
22.Rollo (G.R. No. 207439), pp. 41-42.
23.Id. at 42.
24.Id.
25.Id. at 43.
26.Id. at 43.
27.Id. at 312-320.
28.Id. at 316-317.
29.Id. at 317.
30.Id.
31.Id. at 317-318.
32.Id. at 318.
33. Article 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted.
34.Rollo (G.R. No. 207439), p. 334.
35.Id. at 319.
36.Id. at 320.
37.Id.
38.Id. at 36-56.
39. 591 Phil. 371, 380 (2008).
40.Rollo (G.R. No. 207439), pp. 47-49.
41.Id. at 50.
42.Id. at 51-54.
43.Id. at 54.
44.Id. at 55.
45.Id.
46.Id. at 58-60.
47.Id. at 8-29; rollo (G.R. No. 207242), pp. 8-46.
48.Rollo (G.R. No. 207439), p. 746.
49. Article 1308. The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them.
50.Rollo (G.R. No. 207242), p. 40.
51. Article 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages.
52. Article 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for future fraud is void.
53.Rollo (G.R. No. 207242), p. 42.
54.Id.
55. Article 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.
56.Rollo (G.R. No. 207242), p. 30.
57.Id. at 31.
58. Article 2216. No proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or exemplary damages, may be adjudicated. The assessment of such damages, except liquidated ones, is left to the discretion of the court, according to the circumstances of each case.
59.Rollo (G.R. No. 207242), p. 33.
60.Rollo (G.R. No. 207439), pp. 44-45.
61.Id. at 21.
62.Id. at 23.
63.Id. at 24.
64.Id.
65.Id. at 25.
66.Id.
67.Id. at 26.
68.Id.
69.Id. at 27.
70.Supra note 39.
71.Id. at 379.
72.Id.
73.Id.
74.Dueñas v. Guce-Africa, 618 Phil. 10, 19 (2009), citing Spouses Omengan v. Philippine National Bank, 541 Phil. 293, 297 (2007).
75.Solar Harvest, Inc. v. Davao Corrugated Carbon Corporation, 639 Phil. 461, 470 (2010), citing Filipinas (Pre-Fab Bldg.) Systems, Inc. v. MRT Development Corporation, 563 Phil. 184, 215 (2007).
76. (1) when the findings are grounded entirely on speculations, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on misapprehension of facts; (5) when the findings of fact are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to that of the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; or (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion. (Adriano v. Lasala, 719 Phil. 408, 416-417 [2013], citing Development Bank of the Philippines v. Traders Royal Bank, 642 Phil. 547, 556-557 [2010]).
77.Rollo (G.R. No. 207439), pp. 62-64.
78. Article 1934. An accepted promise to deliver something by way of commodatum or simple loan is binding upon parties, but the commodatum or simple loan itself shall not be perfected until the delivery of the object of the contract.
79. 824 Phil. 439 (2018).
80.Id. at 446, citing IV Tolentino, The Civil Code of the Philippines, p. 175 (1999) and Subic Bay Metropolitan Authority v. Court of Appeals, 690 Phil. 336, 344 (2012). (Emphasis supplied)
81.Rollo (G.R. No. 207242), p. 231.
82.Rollo (G.R. No. 207439), p. 64.
83.Spouses Juico v. China Banking Corporation, 708 Phil. 495, 507 (2013), citing Spouses Almeda v. Court of Appeals, 326 Phil. 309, 316 (1996).
84.Vasquez v. Philippine National Bank, G.R. No. 228355, August 28, 2019, citing Spouses Limso v. Philippine National Bank, 779 Phil. 287, 370 (2016).
85.Security Bank Corporation v. Spouses Mercado, 834 Phil. 286, 305 (2018), citing Spouses Almeda v. Court of Appeals, supra note 83.
86.Vasquez v. Philippine National Bank, supra note 84; Security Bank Corporation v. Spouses Mercado, supra note 85; Spouses Juico v. China Banking Corporation, supra note 83; Philippine Savings Bank v. Castillo, 664 Phil. 774 (2011); Philippine National Bank v. Court of Appeals, 275 Phil. 849 (1991).
87.Gemudiano, Jr. v. Naess Shipping Philippines, Inc., G.R. No. 223825, January 20, 2020.
88. See Rustan Pulp & Paper Mills, Inc. v. The Intermediate Appellate Court, 289 Phil. 279 (1992).
89. See Gemudiano, Jr. v. Naess Shipping Philippines, Inc., supra note 87; Romero v. Court of Appeals, 320 Phil. 269 (1995); Rustan Pulp & Paper Mills, Inc. v. The Intermediate Appellate Court, supra.
90.Republic Planters Bank v. Montinola, Jr., 518 Phil. 344, 351 (2006), citing Domingo v. Robles, 493 Phil. 916, 920 (2005).
91.Kabisig Real Wealth Dev., Inc. v. Young Builders Corporation, 804 Phil. 389, 395 (2017).
92.Rollo (G.R. No. 207439), p. 333.
93.Id. at 334.
94. Section 20. Proof of private document. — Before any private document offered as authentic is received in evidence, its due execution and authenticity must be proved either:
(a) By anyone who saw the document executed or written; or
(b) By evidence of the genuineness of the signature or handwriting of the maker.
Any other private document need only be identified as that which it is claimed to be.
95. TSN, July 9, 2007, pp. 50-52.
96.Geromo v. La Paz Housing and Development Corporation, 803 Phil. 506, 520 (2014), citing Viron Transportation Co., Inc. v. Delos Santos, 399 Phil. 243 (2000); see also Barbosa v. People, 814 Phil. 16 (2017); Cathay Pacific Airways v. Reyes, 712 Phil. 398 (2013); OMC Carriers, Inc. v. Sps. Nabua, 636 Phil. 634 (2010); B.F. Metal (Corporation) v. Spouses Lomotan, 574 Phil. 740 (2008).
97.People v. Mamaruncas, 680 Phil. 192, 213-214 (2012), citing People v. Guillera, 601 Phil. 155, 166 (2009).
98.Universal International Investment (BVI) Limited v. Ray Burton Development Corp., 799 Phil. 420, 437 (2016), citing National Power Corporation v. Philipp Brothers Oceanic, Inc., 421 Phil. 532, 552 (2001).
99.Id., citing Coca Cola Bottlers, Phils., Inc. v. Roque, 367 Phil. 493, 502 (1999).
100.Seven Brothers Shipping Corp. v. DMC-Construction Resources, Inc., 748 Phil. 692, 669 (2014).
101.Heirs of Asis, Jr. v. G.G. Sportswear Manufacturing Corp., G.R. No. 225052, March 27, 2019, citing Dueñas v. Guce-Africa, supra note 74, at 22.
102.Philippine National Bank v. Spouses Tajonera, 744 Phil. 127, 146 (2014).
103. Civil Code, Art. 2208 (11).