SECOND DIVISION
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ZACARIAS Petitioner, - versus - CONSUELO B. PAPA and MARIA C. MATEO, Respondents. |
G.R. No. 154427 Present: *QUISUMBING,
Chairperson, **carpio MORALES, TINGA,
VELASCO, JR., ***DE CASTRO, and BRION, JJ. Promulgated:
May 8, 2009 |
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D E C
I S I O N |
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BRION, J.: |
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In this petition for review on certiorari under Rule 45 of the Rules
of Court, the petitioner Zacarias Delos Santos (petitioner) seeks the
reversal of the January 16, 2002 Decision[1]
of the Court of Appeals (CA) and its subsequent
Resolution of July 22, 2002[2]
denying the petitioner’s motion for reconsideration.
BACKGROUND FACTS
The facts of this case are
undisputed.[3] The
petitioner was leasing respondent Consuelo Papa’s (Papa) property (subject
property). On
Meanwhile, the petitioner failed to
pay his rent from May to August 1994, prompting Mateo, as the subject
property’s new owner, to institute ejectment proceedings against him before the
Metropolitan Trial Court (MeTC) of
On October 17, 1994, while the
ejectment case was pending, the petitioner filed the present case for
“Annulment of Deed of Sale and Cancellation of Title with Injunction and/or
Issuance of Temporary Restraining Order,” docketed as Civil Case No. 94-71936,
with the Regional Trial Court (RTC), Branch 38, Manila. On
During
the trial that ensued, the petitioner presented two witnesses – his son,
William Delos Santos (who had been his representative in the suit) and Mrs.
Geronima Angeles (Angeles), District Manager of the National Housing
Authority. At the scheduled hearing for
the completion of Angeles’ testimony, neither the petitioner nor his counsel appeared.
The RTC ordered Angeles’ incomplete testimony stricken off the record, and
declared that the lone testimony of the petitioner’s son was insufficient to
sustain a judgment against the respondents. Thus, the RTC dismissed the
complaint.
The
RTC continued to hear and receive evidence on the respondents’ counterclaim, consisting
of the testimonies of respondents Papa and Mateo. On March 8, 2000, the RTC rendered a Decision
awarding respondents exemplary damages in the amount of P100,000.00
each, moral damages for P100,000.00 each and attorney’s fees and litigation
expenses in the amount of P50,000.00 each, with costs of suit.
On P50,000.00. The CA reasoned
that the petitioner was not a bona fide lessee
as contemplated by Presidential Decree (P.D.) No. 1517 and P.D. No. 2016;
he had failed to pay his rent from May to August 1994, the time that the
subject property was offered and subsequently sold to Mateo. The CA thus concluded that he instituted the
complaint in bad faith, considering that he was aware that he was in no
position to exercise the right of first refusal. The CA also ruled that he
violated Article 19 of the Civil Code.[4]
The CA denied the petitioner’s
subsequent motion for reconsideration. Hence, this
petition for review on certiorari, raising the following issues:
ISSUES
I.
THE HONORABLE COURT OF APPEALS GRAVELY AND SERIOUSLY
ERRED IN DISREGARDING THE ISSUE REGARDING PETITIONER’S RIGHT OF FIRST REFUSAL
IN VIEW OF HIS FAILURE [TO] APPEAL THE DISMISSAL IN DUE TIME[;]
II.
THE HONORABLE COURT OF APPEALS GRAVELY AND SERIOUSLY
ERRED IN FAILING TO CONSIDER THAT THE AWARD OF MORAL AND EXEMPLARY DAMAGES, AS
WELL AS ATTORNEY’S FEES AND LITIGATION EXPENSES WAS ABSOLUTELY WITHOUT FACTUAL
LEGAL BASIS[.]
The petitioner argues that respondent
Papa is mandated by law to give him a written notice of her intention to sell
the subject property to Mateo and that the failure to do so renders the sale to
the latter null and void. This right of first refusal or first option is provided
under P.D. No. 1517 and P.D. No. 2016.
He further argues that the filing of
the complaint was the idea of his previous counsel, who later abandoned his
case. He cannot be said to have acted in bad faith when his lawyer was the one
who advised him to file the suit. Bad faith is never presumed, and the
respondents miserably failed to discharge the burden of proof required to prove
that he had acted in bad faith. He also argues that the CA erred in finding him
guilty of committing an act similar to malicious prosecution, which has the
following elements: 1) there is a sinister
design to vex and humiliate a person, and 2) the suit was deliberately initiated
by the defendant knowing that his charges were false and groundless. Petitioner
stresses that the mere act of submitting a case to the authorities does not
make one liable for malicious prosecution.
Petitioner argues that there is no
factual basis and evidentiary support for the grant of moral and exemplary
damages, the only bases being: Papa’s self-serving and inadequate testimony
that she felt “great inconvenience”; her agreement with her lawyer regarding
attorney’s fees; and Mateo’s unsubstantiated assertion that she suffered
hypertension. The petitioner also argues that there is no basis for the lower
courts’ conclusion that he violated Article 19 of the Civil Code.
On his failure to appeal the RTC’s
dismissal of his complaint for lack of cause of action, the petitioner explains
that his son, William, who was acting as his attorney-in-fact and legal
representative, died in 1996; that William was the one who contacted his
lawyers; and that since William’s death, the petitioner lost contact with these
lawyers.
The respondent, on the
other hand, argues that the petitioner knew that he was disqualified from
exercising the right of first refusal under P.D. No. 1517 and P.D. No. 2016.
His filing of the baseless and unfounded complaint caused the petitioner to
suffer mental anguish; thus, the award of moral and exemplary damages, and of attorney’s
fees, is justified.[5]
OUR RULING
We
find the petition meritorious.
When moral damages are recoverable
The award of moral damages is proper when the
following circumstances concur: (1) there is an injury,
whether physical, mental or psychological, clearly sustained by the claimant;
(2) there is 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 Article 2219.[6] This article provides:
Art. 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.
The CA sustained the lower court’s grant
of moral damages on the ground that the petitioner, in filing the “baseless,
unfounded and groundless suit despite the fact that defendant Maria C. Mateo
owns the property in question as evidenced by her Transfer Certificate of Title
No. 216221 of the Registry of Deeds of Manila which she acquired by purchase
from her co-defendant Consuelo B. Papa, xxx did not act with justice, did not
give defendants their due and did not observe honesty and good faith in
violation of the Civil Code.”[7] However,
a close scrutiny of the case reveals that the complaint was not completely
groundless.
Petitioner’s Right of First Refusal under P.D. No. 1517
At the
outset, we note that the petitioner’s failure to appeal the RTC’s dismissal of his
complaint rendered the dismissal final and executory. Hence, we cannot reverse
the RTC’s ruling that the petitioner lacked a cause of action and that the lone
testimony of the petitioner’s son failed to muster a preponderance of evidence
in his favor. If we look at this aspect of the case at all, it is for purposes
of determining whether sufficient basis exists to conclude that the filing of
the complaint was an act of malicious
prosecution that entitled the respondent to the awards of moral and exemplary
damages, attorney’s fees, and costs of suit granted by the lower courts. In
other words, the dismissal of the complaint is final, but for purposes of
reviewing the propriety of the awards, we examine the filing of the complaint from
the prism of whether it constituted a malicious prosecution or an abuse of
rights. We rule that it was not.
First. The complaint was based on P.D. No. 1517 or the
Urban Land Reform Act (the Act) that grants
preferential rights to landless tenants to acquire land within urban land
reform areas.[8] The right of first refusal is provided by Section
6 of the Act, which states:
Section 6. Land Tenancy
in Urban Land Reform Areas. Within the Urban Zones legitimate tenants who
have resided on the land for ten years or more who have built their homes on
the land and residents who have legally occupied the lands by contract,
continuously for the last ten years shall not be dispossessed of the land and shall
be allowed the right of first refusal to purchase the same within a reasonable
time and at reasonable prices, under terms and conditions to be determined by
the Urban Zone Expropriation and Land Management Committee created by Section 8
of this Decree. [Underscoring supplied]
A
beneficiary of this Act must fulfill the following requirements: he
or she (1) must be a legitimate tenant of the land for ten (10) years or more;
(2) must have built his or her home on the land by contract; and (3) has
resided on the land continuously for the last ten (10) years or more.[9] It
is likewise imperative that the leased property be within a declared Area for
Priority Development (APD) and Urban Land Reform Zone (ULRZ).[10]
It
appears undisputed that the petitioner possesses requisites 2 and 3 - he built
his home on the leased property and has lived there for more than 10 years. The
inclusion of the land in the APD and the ULRZ was not raised as an issue before
the appellate court.[11] The bone
of contention that the lower courts emphasized is whether he is a legitimate
tenant as defined by the Act, as amended by P.D. No. 2016. A legitimate tenant is one who is not a usurper
or an occupant by tolerance.[12] Sections 3(f) of the
Act, as amended by P.D. No. 2016, provides:
SEC. 3(f). Tenant
refers to the rightful occupant of land and its structures, but does not
include those whose presence on the land is merely tolerated and without the
benefit of contract, those who enter the land by force or deceit, or those
whose possession is under litigation.
The
lower courts unanimously held that the petitioner was not a legitimate tenant, as
he had failed to pay his rentals for the months of May to August, 1994. We
find this conclusion questionable, as mere failure to
pay rent does not make the lessee's possession of the premises unlawful,
thereby denying him the status of being a tenant. What should assume materiality here is that
the petitioner is not a usurper or an occupant by tolerance, but one who believed that he had a claim to
possession based on the right of first refusal.
If at all, the more appropriate reason would have been the pendency of
an ejectment case against the petitioner at the time he filed his complaint for
annulment of sale. Even this reason,
however, is not a clear cut reason for barring him from filing his annulment of
sale case; his status as a tenant involves factual and legal questions touching
on, and intertwined with, the merits of the annulment of sale case. In other words, it is a legitimate issue that
could have been raised in the case and cannot be an outright bar to the filing
of the case. We find it obvious that, at
that point, the petitioner resorted to the complaint for annulment of sale as a
counter-step, taken at another venue and for another legal reason bearing on,
but not directly related to, the issues in the ejectment case he was facing.
Second.
The petitioner’s complaint is anchored on the argument that the sale to Mateo
is void because no written offer to sell was extended to him before the
property was sold to Mateo. This argument is not without basis in law. Section
34 of the Rules and Regulations to Implement P.D. No. 1517 provides:
Period to Exercise Right of First
Refusal.
In cases where the tenants and residents referred to in Section 33 are unable
to purchase the said lands or improvement, they may apply for financial
assistance from the government. The right of first refusal shall be exercised
within the time to be determined by the Urban Zone Committee which shall not
exceed 6 months from the time the owner made a written offer to sell to
the tenant or resident.
Since
the implementing rules require a written
offer to sell to the tenant, the petitioner – who allegedly was not served
a written offer – was merely exercising his right to litigate when he filed his
complaint for annulment.
Under these circumstances, we cannot
conclude that the suit for annulment of sale that the petitioner filed was
completely without basis and one that was filed simply to vex or harass the
respondents. On the contrary, from the surrounding factual and legal circumstances,
it appears that the petitioner was at the point of losing his home and was
motivated by the desire to prevent the loss, rather than by any intent to vex
or harass the respondents; he had a legal basis, although a disputable one, to
back up his claim. If he failed at all to
pursue his case, it was not due to lack of merit; the case was lost because
nobody pursued the case after his son and attorney-in-fact, who was handling
the case for him, died.
The filing of an unfounded suit is not a ground for the grant of moral
damages
Assuming arguendo
that the petitioner’s case lacked merit, the award of moral damages is not a
legal consequence that automatically followed.
Moral damages are only awarded if the basis therefor, as provided in the
law quoted above, is duly established.
In the present case, the ground the respondents invoked and failed to
establish is malicious prosecution. Crystal v. Bank of the Philippine
The spouses'
complaint against BPI proved to be unfounded, but it does not automatically
entitle BPI to moral damages. Although the institution of a clearly unfounded
civil suit can at times be a legal justification for an award of attorney's
fees, such filing, however, has almost invariably been held not to be a ground
for an award of moral damages. The rationale for the rule is that the law could
not have meant to impose a penalty on the right to litigate. Otherwise,
moral damages must every time be awarded in favor of the prevailing defendant
against an unsuccessful plaintiff.
Given
this conclusion, we find it unnecessary to rule on whether the respondents
indeed suffered injuries for which they should be awarded moral damages.
Award of Exemplary Damages and Attorney’s Fees Deleted
The rule in our jurisdiction is
that exemplary damages are awarded in addition to moral damages. In Mahinay v. Velasquez, Jr.,[14] we
held:
Neither is
respondent entitled to exemplary damages. "If the court has no proof or
evidence upon which the claim for moral damages could be based, such indemnity
could not be outrightly awarded. The same holds true with respect to the award
of exemplary damages where it must be shown that the party acted in a wanton,
oppressive or malevolent manner."
Furthermore, this specie of
damages is allowed only in addition to moral damages such that no exemplary
damages can be awarded unless the claimant first establishes his clear right to
moral damages. (emphasis ours)
In light of our ruling on non-entitlement
to moral damages, the CA’s award of exemplary damages should be deleted.
Neither do we find factual and legal basis for the award of
attorney’s fees. We have consistently held that the award of attorney’s fees is
the exception rather than the general rule, and “counsel's fees are not to be
awarded every time a party wins a suit. The discretion of the court to award
attorney's fees under Article 2208 of the Civil Code demands factual, legal,
and equitable justification, without which the award is a conclusion without a
premise, its basis being improperly left to speculation and conjecture. In all
events, the court must state the reason for the award of attorney's fees.”[15] None of the circumstances justifying an award of
attorney’s fees enumerated under Art. 2008 of the Civil Code are present, or
have been proven in this case.[16]
WHEREFORE, the Decision of the Court of Appeals – which affirmed with
modification the award of the Regional Trial Court Manila, Branch 38, of
damages, attorney’s fees and costs in the respondents’ counterclaim in Civil
Case No. 94-71936 – is REVERSED and SET ASIDE.
No pronouncement as to costs.
SO ORDERED.
ARTURO D. BRION
Associate Justice
WE CONCUR:
(On
official leave)
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LEONARDO A. QUISUMBING Associate Justice Chairperson |
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CONCHITA CARPIO MORALES Associate Justice Acting Chairperson |
DANTE O.
TINGA Associate
Justice |
PRESBITERO J. VELASCO, JR.
Associate Justice
TERESITA
J. LEONARDO-DE CASTRO
Associate
Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
CONCHITA CARPIO MORALES
Associate Justice
Acting
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the
Constitution and Division Chairperson’s Attestation, it is hereby certified
that the conclusions in the above Decision were reached in consultation before
the case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
* On official leave.
** Designated Acting Chairperson of the Second
Division per Special Order No. 618 dated
***
Designated additional Member of the Second Division per Special Order No. 619
dated
[1] Penned by Associate Justice Andres B. Reyes,
Jr., with Associate Justices Conrado M. Vasquez, Jr. and Amelita G. Tolentino,
concurring; rollo, pp. 14-20.
[2]
[3]
[4] Art. 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.
[5] Rollo, p. 27.
[6]
Expertravel & Tours, Inc, v. Court of Appeals, G.R. No. 130030,
[7] Rollo, p. 19.
[8] Dimaculangan v. Casalla, G.R. No. 156689, June 8, 2007, 524 SCRA 181; Frilles v. Yambao, G.R. No. 129889, July 11, 2002, 384 SCRA 353.
[9] Alcantara v. Reta, G.R. No. 136996,
[10] Fernando v. Lim, G.R. No. 176282,
[11] The records show that a witness, the District Manager of the National Housing Authority, was testifyhing on this point, but her testimony was not completed because of the failure of the petitioner and his counsel to appear.
[12]
[13] G.R. No.
172428,
[14] G.R. No. 152753,
[15] Congregation of the Religious of the Virgin Mary v. Court of Appeals, G.R. No. 126363, 26 June 1998, 291 SCRA 385; Philipp Brothers Oceanic v. Court of Appeals, G.R. No. 105416-17, 111863, 143715, 25 June 2003, 404 SCRA 605.
[16] In the absence of stipulation,
attorney's fees and expenses of litigation, other than judicial costs cannot be
recovered, except:
(1) When exemplary damages are awarded;
(2) When the
defendant's act or omission has compelled the plaintiff to litigate with third
persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious
prosecution against the plaintiff;
(4) In case
of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where
the defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff's plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In
actions for the recovery of wages of household helpers, laborers and skilled
workers;
(8) In
actions for indemnity under workmen's compensation and employer's liability
laws;
(9) In a
separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are
awarded;
(11) In any
other case where the court deems it just and equitable that attorney's fees and
expenses of litigation should be recovered.
In all cases, the attorney's
fees and expenses of litigation must be reasonable.