Salvador v. Hizon, Jr.

FIRST DIVISION

[G.R. No. 241310. October 13, 2021.]

LORENA SALVADOR, petitioner, vs.RAFAEL H. HIZON, JR. AND/OR HIZON LABORATORIES, INC., respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution datedOctober 13, 2021which reads as follows: CAIHTE

"G.R. No. 241310 (Lorena Salvador, petitioner, v. Rafael H. Hizon, Jr. and/or Hizon Laboratories, Inc., respondents).

When a real property owner sustains damages due to the construction and renovation of a neighbor's adjoining property, but fails to prove the amount of damage with certainty, the award of temperate damages, in lieu of actual damages, is proper. The award of moral damages is likewise in order if damages to such property cause its owner to suffer anxiety, sleepless nights, and wounded feelings. While the responsibility of two or more persons liable for quasi-delict is solidary, personal civil liability can lawfully attach to a corporate director, trustee or officer, only when such corporate officer: (1) assents to a patently unlawful act of the corporation, or for bad faith or gross negligence in directing its affairs, or for conflict of interest, resulting in damages to the corporation, its stockholders or other persons; (2) agrees to hold himself personally and solidarily liable with the corporation; or (3) is made, by a specific provision of law, to personally answer for corporate action.

This is an appeal by certiorari from the Court of Appeals' (CA) June 16, 2017 Decision 1 in CA-G.R. CV No. 106226, which modified the June 30, 2015 Decision 2 in Civil Case No. 259-0-08 of the Regional Trial Court, Olongapo City, Branch 72 (RTC) by: (1) dismissing the complaint for damages against respondent Rafael H. Hizon, Jr., (2) deleting the award of moral damages, and (3) remanding the case to the trial court for reception of evidence on the issue of actual damages sustained by petitioner, due to the construction and renovation of the duplex-type housing unit subleased to respondent Hizon Laboratories, Inc.

Antecedents

Petitioner Lorena Salvador (Salvador) is the owner of duplex housing unit No. 20-B at Easy Street, Binictican, Subic Bay Freeport Zone, Olongapo City, since 2003. 3

Sometime in January 2007, construction and renovation works started on the housing unit adjoining hers, unit No. 20-A, that is subleased by respondent Hizon Laboratories, Inc. (HLI) from one Gregorio C. Royol. 4

Salvador learned from the contractor of HLI that the renovation was covered by a building permit under the name of respondent Rafael Hizon, Jr. (Hizon). 5

In June 2007, HLI's contractor removed the structural beams which support the two (2) housing units, causing numerous cracks on the walls and ceiling of Salvador's house. Extension of HLI's house at the back likewise resulted in soil erosion in her backyard. 6

When Salvador reported the damages caused by the construction and renovation works to the Land Asset Management Department of the Subic Bay Metropolitan Authority (SBMA), the Building Permit & Safety Department of the SBMA conducted an inspection. 7

On July 15, 2008, the Land Asset Management Department of the SBMA wrote a letter to HLI and to Hizon (collectively, respondents) informing them of the result of the ocular inspection in relation to the complaint of Salvador:

1. The cracks, noted on both sides of the walls of the house which measure around 1/2 mm to 3mm in width, may have (sic) caused by the movement of the frame (columns and beams), and aggravated during the repair of the neighbor's unit at 20A Easy;

2. The slopes at the back of the unit were cut and disturbed and provided with retaining walls that do not contain weep holes, which may have caused retention of water in the underlying soil which in turn could have triggered soil settlement of the foundation and movement of the building frame;

3. You have failed to secure necessary building permits for the construction of terraces, and retaining walls, including the canopy at the façade of the building which is yet to be completed. 8

Despite the letter from the SBMA, the construction and renovation of HLI's unit continued. 9

On September 10, 2008, Salvador, through her counsel, wrote Hizon to cease from the construction on HLI's unit; otherwise, she would take the appropriate action in court. Despite such letter, the construction of the unit continued. 10

On September 23, 2008, Salvador filed a Complaint 11 for damages with prayer for issuance of a temporary restraining order (TRO) and preliminary injunction against Hizon.

Hizon filed a Motion to Dismiss 12 based on failure to state a cause of action, claiming that he is not the real party-in-interest but HLI. He averred that he was merely the Chief Executive Officer of HLI which is the sublessee of unit No. 20-A. He added that there was improper service of summons which was sent to No. 20-A East Street, Binictican, Subic Bay Freeport Zone, and not to his own address. 13

After hearing, the RTC issued a TRO, enjoining Hizon and all persons acting in his behalf to discontinue the construction of the residential unit for twenty (20) days. 14

On October 7, 2008, Salvador filed an Amended Complaint, 15 including HLI as co-defendant.

On October 23, 2008, Hizon filed a Motion to Dismiss 16(Ad Cautelam) for lack of cause of action, lack of jurisdiction over the defendant, failure to comply with the condition precedent, and lack of verification. On even date, HLI filed a Consolidated Motion to Dismiss with Motion for Contempt and Opposition to the Application for TRO and Preliminary Injunction (Ad Cautelam). 17

On October 24, 2008, the RTC issued an Order 18 granting the application for writ of preliminary injunction against respondents.

On October 28, 2008, the RTC issued an Order 19 denying Hizon's motion to dismiss as the ground relied upon was cured by the filing of Salvador's amended complaint.

On May 17, 2010, respondents, through their new counsel, filed a Motion for Leave to File Answer with Motion to Admit Answer. 20 Respondents denied that the damage to Salvador's house was due to the construction being done by them. They claimed that her complaint failed to show that the said damage was directly caused by them; and that they had secured the necessary permit from SBMA to undertake the construction. They added that the amount being claimed by Salvador was excessive as it was almost equal to the cost of construction of a new residential house. 21

The RTC Ruling

On June 30, 2015, the RTC rendered a decision finding that Salvador was able to establish by preponderance of evidence her claim for damages against respondents; hence, they should be held jointly and severally liable to pay her damages and attorney's fees. The dispositive portion of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff and against the defendants, ordering the defendants to pay plaintiff jointly and severally the sum of one million five hundred thousand (Php1,000,000.00) [sic] by way of temperate damages, one hundred fifty thousand (Php150,000.00) by way of moral damages and the additional forty thousand (P40,000.00) as attorney's fees, plus costs of suit.

Defendants' counterclaim is also hereby dismissed.

SO ORDERED.22

According to the RTC, Salvador's evidence revealed that when construction works were being done on HLI's housing unit, including removal of the beam which supported the second floor of the adjoining unit, cracks appeared on the walls of her own unit. As determined by the SBMA, the cracks on her unit were related to the construction works being made by respondents, which evaluation was contained in the memorandum issued by Engr. Marco Estabillo, manager of the SBMA Engineering Department and Officer-in-Charge of SBMA Building and Safety Division. The said memorandum showed that after inspection of the housing unit and its surroundings, cracks on Salvador's unit were caused by the movement of the frame (columns and beams), and aggravated during the repair of HLI's unit; and that the slopes at the backyard of HLI's unit were cut and disturbed, and provided with retaining walls that do not contain weep holes. 23

Culled from the testimony of Engr. Lamberto Dumlao (Engr. Dumlao), the RTC noted that as per observation of the SBMA engineer who conducted the inspection and evaluation, the absence of weeping holes contributed to the cracks on the walls of Salvador's unit; and that the same cracks were caused by unusual vibrating and affected by settlement. It added that the findings of the SBMA were corroborated by Engr. William Ramirez (Engr. Ramirez), a private civil engineer, who also testified on the extent of the damages sustained by Salvador's property, and evaluated the damages to her unit as well as the detailed cost thereof, in the aggregate amount of P2,274,757.50. Meanwhile, the RTC lent no credence to the testimony of respondents' witness and own contractor, Engr. Ildefonso R. Reyes (Engr. Reyes), who admitted the following: that his company was not the contractor allowed by the SBMA to perform construction and renovation works on HLI's property; that his company was not even an accredited contractor of SBMA; and that he did not see the building permit for the construction and renovation of HLI's property. 24

The RTC ruled that Salvador was able to prove by convincing evidence that the construction on the adjoining property caused damages to her housing unit. It also declared that she sufficiently proved that she and her family suffered anxiety, wounded feelings, and sleepless nights because they were terribly worried for the safety of their lives and of their property; and that she was constrained to engage the services of counsel to protect her interests. 25

Consequently, the RTC held that Salvador is entitled to damages and that her cause of action is not premised on any contract, quasi-contract, delict or quasi-delict, but anchored on the "abuse of rights" principle under Article 19 of the New Civil Code. Despite the testimony of Engr. Ramirez, a private civil engineer who evaluated the extent of damages sustained by Salvador's unit in the total amount of P2,274,757.50, the RTC found that the evidence submitted was insufficient to warrant the award actual and compensatory damages; because, while the cost estimate of repair was reasonable and acceptable, her claim for actual damages was not duly substantiated by receipts. In lieu of actual damages, the RTC awarded temperate damages because she suffered pecuniary loss which amount cannot be proved with certainty. It found that the amount of P1,500,000.00 was sufficient and reasonable for the repair of damages. 26

The RTC further found that the award of P150,000.00 by way of moral damages was in order because Salvador was able to prove that she indeed suffered anxiety, wounded feelings, and sleepless nights because of the damages caused to her house by the construction works undertaken by respondents. Her evidence adequately established that the injuries she sustained were the proximate cause of respondents' acts, which caused her to worry for the safety of her life and that of her family, as well as the safety of their properties. 27

The RTC awarded attorney's fees in the amount of P40,000.00, plus costs of suit, because she was constrained to engage the services of counsel and had incurred expenses to protect her interests. 28

On July 28, 2015, respondents filed a Motion for Reconsideration, 29 but the same was denied by the RTC.

Aggrieved by the denial of their motion, respondents appealed the RTC decision before the CA raising the following issues: (1) whether the trial court acquired jurisdiction over HLI; (2) whether respondents are responsible for damages suffered by Salvador; (3) whether Salvador is entitled to the award of moral and temperate damages, as well as attorney's fees; and (4) whether Hizon is liable for damages. 30

The CA Ruling

On June 16, 2017, the CA rendered the assailed decision, modifying the judgment of the RTC. The dispositive portion of the decision reads:

WHEREFORE, premises considered, the Decision dated June 30, 2013 rendered by the Regional Trial Court, Branch 72, Olongapo City in Civil Case No. 259-0-08 is MODIFIED as follows:

1. the complaint against Rafael Hizon, Jr. is DISMISSED;

2. the award of moral damages is DELETED; and

3. REMAND the case to the trial court for reception of evidence on the issue of actual damages sustained by plaintiff.

SO ORDERED. 31

The CA ruled that the RTC acquired jurisdiction over HLI, as it is considered to have voluntarily appeared and submitted itself to the court's jurisdiction when it filed its motion to admit and answer, seeking affirmative relief, despite filing a prior motion to dismiss on the ground of jurisdiction due to improper service of summons. 32

The CA held that respondents' failure to exercise due diligence in the construction and renovation of their housing unit gave rise to a quasi-delict under Art. 2176 of the New Civil Code. 33

According to the CA, Salvador presented photographs of cracks on the walls of her unit and the damages outside thereof which were allegedly caused by the construction and renovation of HLI's unit. Officers of the Building Permit & Safety Department of the SBMA testified that there were indeed damages to her housing unit. One of the witnesses she presented was Engr. Dumlao, the one who conducted an ocular inspection of the house at No. 20B Easy Street, Binictican, Subic Bay Freeport Zone and testified that the cracks on the walls of her unit were caused by the lateral movement of frames (columns and beams). Respondents' own witness, Engr. Reyes, admitted that during the renovation of HLI's unit, to build a stairway in it, they cut a portion of a beam which connects the two (2) housing units and serves to strengthen the building. Also, the slopes at the back of the unit were cut, disturbed, and provided with retaining walls that do not contain weep holes, which may have caused retention of water in the underlying soil. Said retention of water may have triggered soil settlement of the foundation and movement of the building frame. It was also established that respondents failed to secure the necessary building permit for the construction of terraces and retaining walls, including the canopy at the façade of the unit which had yet to be completed at the time of inspection by Engr. Dumlao. 34

The CA ruled that Salvador is entitled to the award of actual damages, and thus, the remand of the case to the RTC is proper. It held that the RTC erred in awarding temperate damages in lieu of actual damages because temperate damages under Art. 2224 of the New Civil Code states that such damages may only be awarded if the amount cannot, from the nature of the case, be proved with certainty. It noted that the damages sustained by Salvador's house were due to the construction work done by HLI on its own unit, and that the amount of such damages is ascertainable in the form of expenses for the repair of the damaged portion of the house. 35

The CA pointed out that Salvador had already introduced renovations in her house as shown by the pictures submitted by respondents; and that the pictures were submitted after termination of presentation of evidence of both parties. Hence, to determine the actual value of the repairs done to her house, the remand of the case to the trial court for further reception of evidence is necessary. 36

The CA found no basis to award moral damages because Salvador failed to establish that damages done on her property were caused by the willful act of respondents. 37 Finally, it ruled that Hizon is not solidarily liable with HLI as it is clear from the Residential Sublease Agreement that HLI is the sublessee and Hizon only acted as officer of the corporation when he applied for the construction and renovation permits of its housing unit. Salvador failed to prove that Hizon, as officer of HLI, acted with malice and bad faith resulting to damages on her property. 38

Dissatisfied with the CA decision, Salvador filed a Motion for Partial Reconsideration, 39 arguing that she is entitled to temperate damages in lieu of actual damages, and moral damages; and that Hizon should be adjudged solidarily liable with HLI.

On August 1, 2018, the CA issued a Resolution 40 denying Salvador's motion for partial reconsideration for lack of merit.

Hence, this appeal by certiorari.

Issues

In her appeal by certiorari, Salvador prays for the grant of her petition and the reinstatement of the RTC decision based on the following assignment of errors, allegedly committed by the CA:

A. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN RULING THAT THE PETITIONER IS NOT ENTITLED TO TEMPERATE DAMAGES IN LIEU OF ACTUAL DAMAGES;

B. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN RULING THAT PETITIONER 1S NOT ENTITLED TO MORAL DAMAGES;

C. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN DECIDING THAT RAFAEL HIZON, JR. IS NOT SOLIDARILY LIABLE WITH HIZON LABORATORIES, INC. 41

Anent the issue of temperate damages, Salvador argues that the CA committed a serious mistake in holding that the RTC erred in awarding such damages in lieu of actual damages. She asserts that there was sufficient basis to award P1,500,000.00 since it was already established that she suffered some pecuniary loss due to the acts of respondents. She cites Canada v. All Commodities Marketing Corp.42(Canada) wherein the Court disallowed the award of actual damages arising from breach of contract — therein respondent merely alleged that it was entitled to actual damages but failed to adduce proof to support its plea — but awarded temperate damages in recognition of the pecuniary loss suffered. To prove her claim for damages, Salvador invokes the testimonial evidence consisting of her testimony and that of Engr. Ramirez, and documentary evidence consisting of pictures of damages sustained by her property and the plan of repairs. 43

Regarding the remand of the case for reception of evidence to ascertain actual damages, Salvador posits that the CA erred in concluding that she had already made renovations in her house based on pictures submitted by respondents in their Motion for Permit to Conduct Repairs. 44 She stresses that all pictures attached to the motion cannot be given any weight or evidentiary value because they were not formally offered in evidence; no one identified the pictures in a testimony duly recorded in court; and even the motion itself is bereft of any identification as to the nature of Annex "T" 45 as referring to the renovation of her unit. At any rate, she insists that the pieces of evidence she offered show the extent of damage done to her housing unit, and that there is sufficient basis for the award of P1,500,000.00 as temperate damages, in lieu of actual damages. 46

On the issue of moral damages, Salvador contends that while the CA found that HLI's liability is based on quasi-delict under Art. 2176 of the New Civil Code, it anchored the denial of her claim for moral damages on the ground that she failed to prove that the award of said damages is predicated on any of the cases in Art. 2219 or 2220 of the same Code. She maintains that while there is an enumeration stated in Art. 2219, such is not meant to be complete and exclusive as explained in Macondray & Co., Inc. v. Villarosa, et al.47 She insists that she had convincingly proved her entitlement to moral damages since the injuries she sustained (anxiety, wounded feelings, and sleepless nights) were the proximate result of respondents' acts, and there could not have been a better witness for these experiences than herself. She states that her continued stay in the house does not shy away from the fact that she, indeed, suffered the said injuries. 48

Salvador also maintains that respondents were in bad faith as they continued with the renovation and construction despite being informed by the Land Asset Management of the SBMA and by her counsel of the damages being caused to her property by their ongoing construction. 49

As to the issue of whether Hizon should be held solidarily liable with HLI, Salvador contends that even if HLI is a mere sublessee, Hizon is also an occupant or resident of the unit adjoining her house. She adds that Hizon is estopped from claiming that he is not an occupant of HLI's unit because the building permits were issued under his name. Moreover, since the CA ruled that respondents are liable because of quasi-delict, it is proper that both Hizon and HLI should be held solidarily liable pursuant to Art. 2194 of the New Civil Code which states that the responsibility of two or more persons who are liable for quasi-delict is solidary. Respondents are also estopped from raising the issue of solidary liability as it was never raised during pre-trial or trial, but only for the first time during appeals. 50

In their Comment, 51 respondents counter that the amount of actual damage, if any, allegedly suffered by Salvador must be ascertained given the nature thereof; and that the CA correctly held that the amount of damage she suffered is ascertainable in the form of expenses for the repair of the damaged portions of the house. 52

Respondents argue that Canada is not applicable to this case, since the amount of alleged damages are not the same and there is a clear disparity between actual damages and temperate damages. They also claim that the evaluation of Engr. Ramirez on the amount of P2,274,757.50 is highly speculative and without factual basis, and that no receipts or substantive documents were presented by her. They aver that the award of P1,500,000.00 as temperate damages is unreasonable and excessive, as she failed to show the amount of actual damages suffered. 53

Respondents posit that their acts were not willfully done, and that Salvador's continued occupancy of her property belies the anxiety, sleepless nights, and wounded feelings that she claims to have suffered. They theorize that ordinary human experience shows that she would immediately move out of the house if she and her family were suffering from serious anxiety, sleepless nights, and wounded feelings. 54 They also agree with the CA that Hizon is not solidarily liable with HLI because it has a separate and distinct personality from its shareholders and officers; and there is no sufficient and specific evidence presented to show that he had acted in bad faith or gross negligence. 55

Subsequently, Salvador filed her Reply, 56 in amplification of her arguments; particularly, that the RTC correctly awarded temperate damages in lieu of actual damages in line with Yamauchi v. Suñiga57 that she is entitled to moral damages for the anxiety, sleepless nights, and wounded feelings that she and her family suffered; and that Hizon should be solidarily liable with HLI.

The Court's Ruling

The appeal by certiorari is impressed with merit.

The case should not be

In ordering the remand of the case to the RTC for reception of evidence on the issue of actual damages, the CA considered the pictures submitted by respondents in their motion for permit to conduct repairs as basis to rule that she had already made renovations in her house, thus:

As found by the trial court, plaintiff failed to prove the amount of actual damages. Actual damages, to be recoverable, must not only be capable of proof, but must actually be proved with a reasonable degree of certainty. Courts cannot simply rely on speculation, conjecture or guesswork in determining the fact and amount of damages. To justify an 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. In one case, the Supreme Court ruled that job estimate and a photo showing the damage incurred are not competent proof on the specific amounts of actual damages suffered. Review of the records reveal that plaintiff [Salvador] had already made renovation in her house as shown by the pictures submitted by defendant. It is noted that pictures were submitted after termination of presentation of evidence of both parties. Hence, this Court deems it proper to remand the case to the trial court for reception of evidence on the issue of actual damages.

The trial court erred in awarding temperate damages in lieu of actual damages in favor of plaintiff-appellee. Article 2224 of the Civil Code provides that:

Art. 2224. Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty. DETACa

Thus, temperate damages may only be awarded if the amount cannot, from the nature of the case, be proved with certainty. The damage sustained by Salvador's house was due to the construction done by HLI to its own unit. From the nature of the case, it is clear that the amount of damage suffered by Salvador is ascertainable in the form of expenses for the repair of the damaged portion of the house. Thus, as earlier stated, in order to determine the actual value of the repairs done to the house of plaintiff-appellee, the remand of this case to the trial court for reception of evidence is necessary.58 (emphases supplied and underscoring in the original)

The Court agrees with Salvador that the CA erred in ordering the remand of the case for reception of evidence on the issue of actual damages, and in not awarding temperate damages in lieu of actual damages.

First, the CA should not have considered the pictures marked as Annexes "A" to "T" of Hizon's motion for permit to conduct repairs given intervening event of deterioration to rule that Salvador's property was renovated, and to justify the remand of the case. 59

Section 34, Rule 132 of the Revised Rules on Evidence states that the court shall consider no evidence which has not been formally offered, and that the purpose for which the evidence is offered must be specified. Extreme caution has been exercised in applying the exception to this rule. Relaxation of this rule strictly requires that the evidence must have been (1) duly identified by testimony duly recorded and (2) incorporated in the records of the case. 60 In this case, the second requisite is present but the first is absent.

As correctly pointed out by Salvador, 61 no one identified these pictures in a testimony duly recorded in court. Although the said pictures were attached to the case records, they were only intended by Hizon to show the state of deterioration of HLI's premises sought to be repaired at a stage when the parties had already rested their respective cases, and the case was still pending decision by the RTC. Besides, the pictures were never claimed to prove that Salvador conducted renovations on her housing unit. Hence, the CA erred in ruling that renovations had been made on her property; and that there is a need to remand the case to the trial for reception of evidence on the issue of actual damages.

Second, Salvador had already presented evidence but failed to prove the amount of actual damages. To prove her claim of actual damages, she presented Engr. Ramirez who testified on his three-page report 62 the cause and extent of damages to her house, as well as the details of repairs and their costs amounting to P2,274,757.50. Both the RTC and the CA found such evidence inadequate to prove her claim of actual damages. As aptly noted by the CA, the Court ruled in one case that a job estimate and a photo showing the damage incurred are not competent proof of the specific amounts of actual damages suffered. 63 In Southern College, Inc. v. Court of Appeals, 64 the Court observed that it is not enough that the claimant merely present an estimated amount needed for the repair of the building that was allegedly damaged. Guided by the foregoing jurisprudence and the rule that courts can hardly rely on speculation, conjecture or guesswork in determining the fact and amount of actual damages, the Court finds Engr. Ramirez's report, 65 on the details of repairs and their estimated costs amounting to P2,274,757.50, to be incompetent and unreliable proof of actual damages, being unduly supported by receipts.

Third, from the nature of the case, the amount of actual damages sustained by Salvador cannot be reasonably determined with certainty because she did not immediately cause the estimation or repair of the damages to her property. At the time she filed the complaint on September 23, 2008, she had not yet caused the estimation or repair of damages to her housing unit and her backyard. There is nothing in her amended complaint to support her claim of P2,000,000.00 in actual damages. In fact, it was only in May 2012 that she asked Engr. Ramirez to investigate what caused the damages to her property; to identify the extent thereof, and to make a recommendation on the plan and cost of repairing them, amounting to P2,274,757.50. Due to the lapse of more than three (3) years between the filing of the complaint and the estimation of cost of repair, an essential question loomed and remained indeterminable: whether the necessary repairs would include not only damages caused by the construction and renovation of HLI's unit, but also the ordinary wear and tear of Salvador's house itself. 66

Under the New Civil Code, one is entitled to adequate compensation only for such pecuniary loss suffered as one has duly proved. 67 In the absence of competent proof on the amount of actual damages suffered, a party may still recover temperate damages, which are more than nominal but less than compensatory damages, when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be provided with certainty. 68 No proof of pecuniary loss is necessary in order that temperate damages may be adjudicated, and the assessment of such damages is left to the discretion of the court, according to the circumstances of each case. 69 Temperate damages must be reasonable under the circumstances. 70

In Universal International Investment (BVI) Limited v. Ray Burton Development Corporation, 71 the Court summarized the parameters in determining the amount of temperate damages:

The calculation of temperate damages is usually left to the sound discretion of the courts. We observe the limit that in giving recompense, the amount must be reasonable, bearing in mind that the same should be more than nominal, but less than compensatory. In jurisprudence, this Court has pegged temperate damages to an amount equivalent to a certain percentage of the actual damages claimed by the injured party. 72

In this case, Salvador alleged in her Amended Complaint dated October 7, 2008, that the actual damages she sustained was P2,000,000.00, 73 yet she testified during the hearing of her application for preliminary injunction on September 30, 2008, that she assessed the damage to her property to be in the amount of P500,000.00. 74 Meanwhile, Salvador's witness, Engr. Ramirez, testified that when he investigated, in May 2012, the cause of damages to her property to identify the extent thereof and to make a recommendation on the plan and cost of repairing them, he estimated the cost of damage at P2,274,757.50 75 in terms of labor and materials, but without supporting receipts. On the contrary, HLI's witness, Engr. Reyes, stated in his judicial affidavit that the amount is an "overkill" because, based on his experience, the cost to build a new house is between P14,000.00 to P18,000.00 per square meter, and the cost of the repair is around P20,000.00 per sq. m. 76 For its part, the RTC awarded P1,500,000.00 as temperate damages without stating why the amount was sufficient and reasonable.

Considering that Salvador has proven that her property sustained damages due to the construction and renovation of HLI's housing unit, but failed to prove the amount thereof with certainty, the Court agrees with the pronouncement of the RTC that the award of temperate damages in lieu of actual damages is just and proper. However, in view of the attendant circumstances, the Court reduces the RTC's award of P1,500,000.00 as temperate damages, and finds that P1,000,000.00 (50% of the actual damages claimed) is sufficient and reasonable to repair the damages to Salvador's property and to prevent it from sustaining extraordinary wear and tear. In the same vein, the Court holds that the case should no longer be remanded to the RTC for further reception of evidence on the issue of actual damages because the CA erred in giving credence to the pictures which were not formally offered to prove that she conducted renovation on her property.

Award of moral damages under

As to the second issue, the CA ruled that there is no basis to award moral damages, thus:

x x x In the present case, plaintiff-appellee failed to prove that the award of moral damages is predicated on any of the cases stated in Article 2219 or Article 2220 of the Civil Code. To be entitled to the award thereof, it is not enough that one merely suffered sleepless nights, mental anguish or serious anxiety as a result of the actuations of the other party. Art. 2220. [sic] Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages arc justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith. Clearly, before moral damages may be granted, the defendant's act must be vitiated by bad faith or that there is willful intent to injure. Simply put, moral damages cannot arise from simple negligence. In this case, plaintiff-appellee failed to establish that damages done to her property was caused by the willful act of defendants. 77 (citations omitted)

In contrast, the RTC justified the award of moral damages to ease one's grief and suffering, taking into consideration that Salvador suffered anxiety and sleepless nights because respondents' acts affected the very house where she and her family reside.

The award of moral damages requires proof of all these conditions: (1) there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (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 of damages is predicated on any of the cases stated in Art. 2219 or Art. 2220 of the New Civil Code. 78

Here, the RTC and the CA found the first three conditions present, but differed on the existence of the last condition. Considering that Salvador is not claiming moral damages under Art. 2220 79 for willful injury to property, where malice or bad faith is a crucial element to merit an award of such damages, 80 the remaining issue is whether the award of moral damages is predicated on any of the cases in Art. 2219.

Anent the first three conditions to award moral damages, both the RTC and the CA determined that Salvador and her family suffered anxiety, sleepless nights and wounded feelings because their adjoining unit sustained cracks on the ceiling and walls due to the movement of the frame (columns and beams) during the construction and renovation of HLI's unit. They also found that the slopes at the backyard of HLI were cut and disturbed and provided with retaining walls that do not contain weep holes, which could have triggered soil settlement of the foundation and movement of the building frame. As correctly ruled by the CA, respondents are liable under Art. 2176, 81 for failing to exercise due diligence in the construction and renovation of their housing unit, which caused damages to Salvador's adjoining unit.

Under the New Civil Code, the obligation imposed by Art. 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is responsible for. 82 Since HLI contracted the services of the construction company which caused damages to Salvador's property while making constructions and renovations on its adjoining unit, HLI is liable for all damages which are the natural and probable consequences of the act or omission complained of. 83

We do not subscribe to the RTC ruling that Salvador's demand for damages was anchored on the "abuse of rights principle" under Art. 19 84 of the New Civil Code. The elements of abuse of rights are as follows: (1) there is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring another. 85 Neither HLI nor Hizon was proven to have acted in bad faith.

In one case, 86 the Court explained that the legal concept of bad faith denotes a dishonest purpose, moral deviation, and a conscious commission of a wrong. It includes "a breach of known duty through some motive or interest or ill will that partakes of the nature of fraud. It is, therefore, a question of intention, which can be inferred from one's conduct and/or contemporaneous statements. Bad faith under the law cannot be presumed; it must be established by clear and convincing evidence. Bad faith does not simply connote bad judgment or negligence. 87

Here, no clear and convincing proof was proffered to show that HLI or Hizon received the Demand Letter 88 from Salvador's counsel and the 15 July 2008 Letter of the SBMA Land Asset Management Department. 89 While both the demand letter and the SBMA letter were addressed to HLI, through Hizon as its Chief Executive Officer, both letters were sent to #20-A Easy St., Binictican, Subic Bay Freeport Zone, and not to the address of HLI at No. 29 Quezon Avenue, Quezon City, as indicated in the Residential Sub-Lease Agreement, 90 the Certificate of Filing of Amended Articles of Incorporation 91 and the Amended Complaint. 92 Thus, HLI cannot be faulted with bad faith, but can be deemed negligent for failing to prevent its contractor from continuing with the construction on its property which aggravated the damage to Salvador's adjoining unit. HEITAD

Moreover, contrary to the CA ruling that Salvador failed to prove that the award of moral damages is predicated on any of the cases stated in Art. 2219 93 of the New Civil Code, the Court rules that her case falls under "analogous cases." This ruling is also consistent with the intention of the Code Commission to give the judge discretion in awarding moral damages to serve the ends of justice:

Denial of the award of moral damages has been predicated on the idea that physical suffering, mental anguish and similar injury are incapable of pecuniary estimation. But it is unquestionable that the loss or injury is just as real as in other cases. The ends of justice are better served by giving the judge discretion to adjudicate some definite sum of moral damages. That is more equitable than that the sufferer should be uncompensated. The wrongdoer cannot complain because it was he who caused the injury. In granting moral damages, the Project proceeds upon the ancient maxim that when there is a wrong there is a remedy. 94

In his concurring opinion in Macondray & Co. v. Villarosa, 95 Justice Francisco Capistrano, one of the members of the Code Commission, gave the background on the inclusion of a chapter on moral damages in the New Civil Code:

The law on moral damages found in Articles 2217 to 2220 (Sec. 1, Chapter 3, Title XVII, Book IV) of the Civil Code is new. The Spanish Civil Code of 1889 contained no provisions on moral damages. The Code Commission, however, was aware that two recent and progressive decisions of the Supreme Court (Lilius v. Manila Road Co., 59 Phil. 758; Castro v. Acro Taxicab Co., Inc. 82 Phil. 359) had held that damages could be recovered in case of a wrongful act resulting in physical injuries for the physical pain suffered by the offender party and that the American jurisprudence contains a big and rich field of law on moral damages. In view of its duty to codify laws "in accordance . . . with modern trends in legislation and the progressive principles of law" (Exec. Order No. 48), the Commission resolved to include a section (Sec. 2) on 'moral damages' in Chapter 3, Title XVIII on "Damages" in the Project of Civil Code.

After consulting the America jurisprudence on moral damages, the Code Commission formulated Article 2217 as the basic rule or principle giving, in the first sentence, the concept of moral damages or what it includes, and, in the second sentence, the requisite that the moral damages be the proximate result of the guilty party's wrongful act or omission. x x x

It is clear from the article that moral damages can be recovered in every case of "wrongful act or omission" (a broad term which includes, delict, quasi-delict, and breach of contract which is sui generis) causing, as the proximate result thereof, 'physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. 96

Justice Capistrano added that "[i]n view of the fact that the question of moral damages is a novel one in the civil law, the Code Commission considered it advisable, for the convenience of the bar and the bench, to mention some cases as examples of wrongful acts where moral damages may be recovered. It was not prepared at that time to make a complete and exclusive enumeration of all such wrongful acts or omissions." 97 The Commission purposely added the words "and analogous cases" in the opening sentence of the article in order to avoid a possible erroneous interpretation that the enumeration made therein was intended to be exclusive. The term "analogous cases" was intended by the Commission to mean other cases of "wrongful act or omission," causing, as the proximate result thereof, "physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury." 98

Justice Capistrano also noted that "the enumeration does not mention any wrongful omission. This is so because, as pointed out, the enumeration was not intended to be complete and exclusive. The cases of wrongful acts mentioned, enumerated merely for purposes of style, were those which the Commission could readily give at the time of its deliberation (two hours) on the formulation of the article." 99

Justice Capistrano added that "it is obvious from a reading of the enumeration that those mentioned are clearly cases which immediately suggest physical or moral suffering. Thus, the delicts or crimes mentioned in Nos. (1) and (2) immediately suggest physical suffering. But it was not meant that other crimes and quasi-delicts not resulting in, or causing physical injuries were to be excluded. This is apparent from the fact that Nos. (3) to (7) involve crimes not resulting in physical injuries, and No. (8) a quasi-delict (malicious prosecution is no longer punished as a crime in the Revised Penal Code) not causing physical injuries, all of which, however, immediately suggest moral suffering; and the fact that No. (9) involves quasi-delicts clearly causing moral suffering, while No. (10) covers quasi-delicts immediately causing moral suffering. The Commission did not resolve to make an exclusive enumeration, for that would have required an examination of all the provisions of the Project of the Civil Code and the Revised Penal Code in order to determine all the cases where moral damages could be recovered. It neither had the time nor the inclination to do so. The Commission also felt that the 'analogous cases' for moral damages should be left to the courts to determine. There was no good reason to narrow the coverage of the law to the few cases mentioned in Article 2219 considering that the field of moral injury is a vast one in the civil and criminal laws, and that the field of moral damages in American jurisprudence is equally extensive." 100

In view of the incomplete and non-exclusive enumeration of cases where moral damages could be recovered under Art. 2219, and the discretion given to the judge to award the same to better serve the ends of justice, the Court finds that the anxiety, sleepless nights and wounded feelings sustained by Salvador due to the construction and renovation of HLI's duplex housing unit, resulting in cracks on the walls and ceilings and soil erosion on her adjoining unit, is an analogous case under Art. 2219 meriting the award of moral damages. As stated in her Judicial Affidavit 101 and confirmed in her testimony, 102 the said damages on her property caused anxiety, sleepless nights and wounded feelings to her and her family because they were worried for the safety of their property which they acquired through their hard-earned income. Since the damages sustained by Salvador fall under analogous cases immediately causing moral suffering under Art. 2219, the Court upholds the RTC ruling that there is factual and legal basis to award moral damages.

At any rate, the Court finds it reasonable under the circumstances to reduce the award of moral damages from P150,000.00 to P50,000.00. Moral damages are not meant to be punitive but are designed to compensate and alleviate the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar harm unjustly caused to a person. 103 Such damages are not a bonanza but are given to ease the defendant's grief and suffering; thus, reasonably approximate the extent of hurt caused and the gravity of the wrong done. 104 They are awarded not to enrich the complainant but to enable the latter to obtain means, diversions, or amusements that will serve to alleviate the moral suffering he has undergone by reason of the defendant's culpable action. 105

Hizon is declared not solidarily

Finally, on the issue of whether respondents are solidarily liable pursuant to Art. 2194 106 of the New Civil Code, Salvador argues that Hizon is solidarily liable with HLI because he is an occupant of its housing unit and the building permits were issued under his name. She adds that respondents are also estopped from raising the issue of solidary liability, as it was never raised during pre-trial or trial, but only for the first time during appeal. On the other hand, respondents contend that HLI has a separate and distinct personality from its Chief Executive Officer, Hizon, who was not proven to have acted with bad faith or malice which resulted in the damage to Salvador's property.

The Court agrees with respondents. A corporation is a juridical entity with a personality separate and distinct from those acting for and in its behalf and, in general, from the people comprising it. In Santos v. NLRC, 107 the Court explained the rule, thus:

A corporation is a juridical entity with legal personality separate and distinct from those acting for and in its behalf and, in general, from the people comprising it. The rule is that obligations incurred by the corporation, acting through its directors, officers and employees, are its sole liabilities. Nevertheless, being a mere fiction of law, peculiar situations or valid grounds can exist to warrant, albeit done sparingly, the disregard of its independent being and the lifting of the corporate veil. As a rule, this situation might arise when a corporation is used to evade a just and due obligation or to justify a wrong, to shield or perpetrate fraud, to carry out similar other unjustifiable aims or intentions, or as a subterfuge to commit injustice and so circumvent the law. In Tramat Mercantile, Inc. v. Court of Appeals, the Court has collated the settled instances when, without necessarily piercing the veil of corporate fiction, personal civil liability can also be said to lawfully attach to a corporate director, trustee or officer; to wit: When —

(1) He assents (a) to a patently unlawful act of the corporation, or (b) for bad faith or gross negligence in directing its affairs, or (c) for conflict of interest, resulting in damages to the corporation, its stockholders or other persons;

(2) He consents to the issuance of watered stocks or who, having knowledge thereof, does not forthwith file with the corporate secretary his written objection thereto;

(3) He agrees to hold himself personally and solidarily liable with the corporation; or

(4) He is made, by a specific provision of law, to personally answer for his corporate action. 108 (citations omitted)

None of these exceptional instances have been proven in this case.

The Court concurs with the conclusion reached by the CA that Salvador failed to prove that Hizon, as officer of HLI, had acted with malice or bad faith which resulted in the damage to her property. There is no dispute that the Residential Sublease Agreement 109 shows that HLI is the sublessee, and that Hizon only acted as Chief Executive Officer of HLI when he secured the building permits. Hizon's act of securing building permits for HLI's subleased unit or of being an occupant or resident thereof is not enough to hold him solidarily liable for HLI's corporate obligations. Since no evidence was adduced to prove that Hizon committed any of the above acts or omissions or was made specifically liable by a provision of law, he cannot be held solidarily liable with HLI.

Contrary to Salvador's claim that Hizon is raising the issue of solidary liability for quasi-delict only for the first time on appeal, records show that Hizon's counsel filed a motion to dismiss 110 on the grounds of improper service of summons at No. 20-A Easy Street and not to his address; and failure to state a cause of action because he is merely the Chief Executive Officer of HLI which is the real party-in-interest as sublessee of the housing unit. Clearly, Hizon's motion to dismiss constitutes as a specific denial of his solidary liability with HLI. Thus, there is no merit in Salvador's claim that Hizon is estopped from raising the issue of solidary liability only for the first time during appeal.

In line with jurisprudence, 111 since an obligation arising from quasi-delict was breached, the Court deems it proper to impose the legal interest of six percent (6%) per annum on the total monetary awards, computed from October 7, 2008, when Salvador filed the amended complaint for damages against HLI, until finality of this judgment, and six percent (6%) per annum from such finality until fully paid.

WHEREFORE, the appeal by certiorari is PARTIALLY GRANTED. The June 16, 2017 Decision of the Court of Appeals in CA-G.R. CV No. 106226 is MODIFIED, as follows:

(1) Respondent Hizon Laboratories, Inc. is ORDERED to PAY petitioner Lorena Salvador One Million Pesos (P1,000,000.00) as temperate damages, Fifty Thousand Pesos (P50,000.00) as moral damages, and Forty Thousand Pesos (P40,000.00) as attorney's fees, plus costs of suit, with legal interest of six percent (6%) per annum of the total monetary awards computed from October 7, 2008 until finality of this Resolution, and six percent (6%) per annum from such finality until fully paid.

(2) The complaint against respondent Rafael H. Hizon, Jr. and the counterclaim of Hizon Laboratories, Inc. are DISMISSED.

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.Rollo, pp. 8-21; penned by Associate Justice Rosmari D. Carandang (now a Member of this Court), with Associate Justice Ramon Paul L. Hernando (now a Member of this Court) and Associate Justice Maria Elisa Sempio Diy, concurring.

2. CA rollo, pp. 53-65; penned by Judge Richard A. Paradeza.

3.Rollo, p. 9.

4.Id.

5.Id.

6.Id.

7.Id.

8. Records, p. 31; Exhibit "3."

9.Rollo, p. 11.

10.Id.

11. Records, pp. 2-5.

12.Id. at 11-15.

13.Id. at 12-13.

14.Id. at 25; Order dated October 1, 2008.

15.Id. at 80-83.

16.Id. at 102-107.

17.Id. at 108-125.

18.Id. at 127-128.

19.Id. at 129.

20.Id. at 218-219.

21.Id. at 220-221.

22. CA rollo, p. 65.

23.Id. at 61.

24.Id. at 61-62.

25.Id. at 62.

26.Id. at 63-64.

27.Id. at 65.

28.Id.

29. Records, pp. 604-608.

30. CA rollo, p. 39.

31.Rollo, p. 20.

32.Id. at 15.

33.Id. at 16.

34.Id. at 16-17.

35.Id. at 17.

36.Id.

37.Id. at 18-19.

38.Id. at 19-20.

39. CA rollo, pp. 130-135.

40.Rollo, pp. 23-24.

41.Id. at 30.

42. 590 Phil. 342, 350-351 (2008).

43.Rollo, pp. 30-31.

44. Records, pp. 573-574.

45.Id. at 579.

46.Rollo, pp. 31-32.

47. 1 CAR 2s 402, 415 [1961], cited in Torts and Damages by Timoteo B. Aquino [2005], pp. 899-901.

48.Rollo, pp. 32-34.

49.Id. at 34.

50.Id. at 35.

51.Id. at 97-105.

52.Id. at 98-99.

53.Id. at 99-100.

54.Id. at 101.

55.Id. at 102-103.

56.Id. at 111-116.

57. 830 Phil. 122 (2018).

58.Rollo, pp. 17-18.

59. Records, pp. 573-579.

60.Commissioner of Internal Revenue v. United Salvage and Towage (Phils.), Inc., 738 Phil. 335, 344-345 (2014).

61.Rollo, p. 32.

62. Records, pp. 334-336, marked as Annexes "L" and "L-1."

63.Viron Transportation Co., Inc. v. Delos Santos, 399 Phil. 243, 255 (2000).

64. 354 Phil. 434, 446 (1998).

65. Records, pp. 335-336, marked as Annex "L-1."

66.Marikina Auto Line Transport Corporation v. People, 520 Phil. 809, 826 (2006).

67. Article 2199.

68. Article 2224.

69. Article 2216.

70. Article 2225.

71. 799 Phil. 420 (2016).

72.Id. at 444.

73. Records, p. 82.

74. TSN dated September 30, 2008, p. 19.

75. Records, pp. 335-336, marked as Exhibit "L-1:" Description of Works: 1. Wall Tiles Crack and Damage — P177,000.00; 2. Wall Partition Damage — P292,500.00; 3. Concrete Ceiling Damage/Separation — P337,500.00; 4. Roof Deck Damage — P1,171,050.00; 5. Supervision Cost/Management — P296,707.50.

76. Records, p. 443, marked as Exhibit "11-b."

77.Rollo, pp. 18-19.

78.Mendoza v. Gomez, 736 Phil. 460, 480 (2014); Regala v. Carin, 662 Phil. 782, 791 (2011).

79. Article 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith.

80.Regala v. Carin, supra note 78, at 792-793.

81. Article 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.

82. Article 2180.

83. Article 2202.

84. Article 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due and observe honesty and good faith.

85.California Clothing, Inc. v. Quiñones, 720 Phil. 373, 381 (2013).

86.Tocoms Philippines, Inc. v. Philips Electronics and Lighting, Inc., G.R. No. 214046, February 5, 2020.

87.Adriano v. Lasala, 719 Phil. 408, 419 (2013).

88. Records, p. 79, marked as Exhibit "G."

89.Id. at 41, marked as Exhibits "2" and "2-a."

90.Id. at 533, marked as Exhibit "14."

91.Id. at 230-231, marked as Exhibit "4."

92. Records, p. 80.

93. Article 2219. Moral damages may be recovered in the following and analogous cases:

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

(3) Seduction, abduction, rape, or other lascivious acts;

(4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;

(7) Libel, slander or any other form of defamation;

(8) Malicious prosecution;

(9) Acts mentioned in article 309;

(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages.

The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named. (emphasis and underscoring added)

94. Report (2005), pp. 623-624, cited in Torts and Damages by Timoteo B. Aquino [2013], pp. 980-981.

95. 1 CAR 2s 402, 415 [1961], cited in Torts and Damages by Timoteo B. Aquino [2013], pp. 985-987.

96.Id. at 981-982.

97.Id. at 985-986.

98. 1 C.A. Rep., 402, cited in Civil Law Civil Code Annotated Vol. VII by Ambrosio Padilla [1975], p. 571.

99.Id.

100. 1 CAR 2s 402, 415-416 [1961], cited in Torts and Damages by Timoteo B. Aquino [2013], pp. 986-987.

101. Records, p. 356.

102. TSN dated June 18, 2013, p. 14.

103.Atty. Geromo v. La Paz Housing and Development Corporation, 803 Phil. 506, 521 (2017).

104.California Clothing, Inc. v. Quiñones, supra note 85, at 384.

105.Mendoza v. Gomez, supra note 78, at 480.

106. Article 2194. The responsibility of two or more persons who are liable for quasi-delict is solidary.

107. 325 Phil. 145 (1996).

108.Id. at 156-157.

109. Records, pp. 533-536, marked as Exhibit "14."

110.Id. at 11-15.

111.Nacar v. Gallery Frames, 716 Phil. 267, 282-283 (2013).