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31\epublic of tbe Jlbilippines

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SECOND DIVISION

HEIRS OF DOMINADOR S. G.R. No. 225052

ASIS, JR., LUZON STEAM
LAUNDRY, INC., Present:
DOMINADOR R. ASIS III,
ANDREA ASIS OLEDAN, CARPIO, J., Chairperson,
MARIA MARTA ASIS GARCIA, PERLAS-BERNABE,
MARIAANAASIS ANGON, CAGUIOA,
Petitioners, REYES, J. JR., and
LAZARO-JAVIER, JJ.

- versus -

G.G. SPORTSWE~~ COR- ; ::;r.~·.

Promulgated:
MANUFACTURI NARI K.

II \1)\~~,\lrjj~----------x
27 ~~R 20'9
PO RATION
GIDWANI,
and
Respondents. ------------~----·~l-~-
x-----------------------------------~~~~~I (}J'll

REYES, J. JR., J.:

This is a Petition for Review on Certiorari1 under Rule 45 of the

Rules of Court, assailing the Decision2 dated September 12, 2013 of the
Court of Appeals (CA) in CA-G.R. CV No. 92867, only insofar as it deleted
the amount of actual damages and attorney's fees. The CA's Resolutions
dated November 12, 2015 3 and June 2, 2016, 4 which denied petitioners'
Manifestation and Urgent Motion (Re: Decision dated 12 September 2013) 5
and Motion for Reconsideration6 of the November 12, 2015 Resolution,
respectively, are likewise impugned herein.

Rol/o,pp.11-47.
2
Penned by Associate Justice Fiorito S. Macalino, with Associate Justices Sesinando E. Villon and
Pedro B. Corales, concurring; id. at 55-65.
3
Id.at67-71.
4
Id. at 73-74.
5
Id. at 364-368.
6
Id. at 373-386.

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 J
•
Decision 2 G.R. No. 225052

The Antecedents

On April 2, 1996, G.G. Sportswear Manufacturing Corporation and

Nari K. Gidwani (respondents) signified their intent to purchase Filipinas
Washing Company, Inc. (FWC) through a letter addressed to the latter's
President, Dominador S. Asis, Jr. (Dominador). Dominador and petitioners
Dominador R. Asis III, Andrea Asis Oledan, Maria Marta Asis Garcia, and
MariaAnaAsis Angon, are all stockholders of record ofFWC. 7

After more than two months of negotiations, the parties entered into
an agreement, whereby the respondents undertook to purchase FWC under
the terms and conditions set forth in the Letter-Agreement dated June 17,
8
1996.

In accordance with the Letter-Agreement, respondents remitted

Pl ,462,642.00 as partial payment of FWC obligations to Westmont Bank.
Respondents also issued a check amounting to Pl 0,000,000.00 in favor of
Dominador, also to be used as partial payment of FWC obligation to the said
bank. 9

On the other hand, petitioners performed the following acts in

accordance with the Letter-Agreement: (a) made representations with
Westmont Bank and Equitable Banking Corporation relative to the
restructuring of FWC loan obligations in preparation for respondents'
assumption thereof; (b) ceased FWC operations in preparation for the
turnover of the facilities to respondents; (c) advised the FWC employees
about the sale of the company and gave them their separation pay and other
10
benefits.

Respondents, however, failed to comply with their obligation under

the Letter-Agreement to assume the payment of FWC with Westmont Bank
and Equitable Banking Corporation. This prompted petitioners to demand,
through a letter dated August 14, 1996, from respondents full compliance
with their contractual obligations under the Letter-Agreement. 11

In response thereto, respondents wrote a letter to petitioners cancelling

the Letter-Agreement for the latter's failure to comply with their obligation
to deliver the FWC shares of stocks to respondents. 12

Id. at 56.
Id. at 56-58.
Id. at 57.
10
Id. at 58.
11
Id. at 58-59.
12
Id. at 59.

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Decision 3 G.R. No. 225052

On August 30, 1996, petitioners filed a Complaint for rescission of

contract with damages against respondents. 13

Regional Trial Court's Ruling

The case was originally raffled to the Regional Trial Court (RTC) of
Pasig, Branch 263 on September 5, 1996 but was re-raffled to Branch 268 on
June 19, 2006 pursuant to the Order of the former Court dated May 25,
2006. 14

After trial on the merits, the RTC, Branch 268 found respondents to
have breached the Letter-Agreement for failure to assume FWC's loan
obligations with the banks. The RTC found that while petitioners admittedly
have not yet transferred the. shares of stock to respondents, such transfer was
not a condition for the latter to undertake its contractual duty to accomplish
the restructuring of FWC loans with the banks. According to the RTC, the
Letter-Agreement did not state when exactly the shares of stocks should be
transferred. The agreement, however, provides that all shares shall be
transferred "for and in consideration of the sum of [P63,500,000.00.]"
Hence, since said amount was. never fully paid, no transfer of shares can
occur and respondents cannot use the same to justify their failure to comply
with their obligations under the Letter-Agreement. For such breach, the
RTC ruled that rescission was proper. 15

The RTC also found that due to respondents' failure to comply with
their contractual obligations, petitioners were constrained to place FWC
under rehabilitation, for which they suffered consequential damages in the
amount of Pl2,568,493.18 "per Exhibits 'E' to 'BB' ." 16

In conclusion, the RTC ruled that by virtue of the resc1ss10n,

respondents' partial payment amounting to Pl 1,462,000.00 should be
restituted, while the consequential damages amounting to P12,568,493.18
should be awarded to petitioners. It disposed, thus:

WHEREFORE, foregoing premises considered, judgment is

hereby rendered as follows:

1. The JUNE 12, 1996 letter-agreement entered into by the

parties is RESCINDED and is declared of no force and
effect;

2. Ordering [respondents] to pay [petitioners] jointly and

severally the following sums:

2.1 Php 1, 106,493 .18 representing the actual

13 Id.
14
Id. at 243.
15
Id. at 254-256.
16
Id. at 256.

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Decision 4 G.R. No. 225052

damages caused by the stoppage of operation.

(Php 12,568,493.18 less Phpl 1,462,000.00).

2.2 Php250,000.00 as and by way of attorney's fees;

and

2.3 Cost of Suit.

SO ORDERED. 17

Court of Appeals' Ruling

In its assailed Decision, the CA affirmed the findings of the RTC as to

respondents' breach and the rescission of the Letter-Agreement. It deleted,
however, the award of actual damages for failure to find basis therefor, as
there were no receipts or any competent evidence on record to prove the
alleged cost; and the RTC Decision did not explain how it arrived with the
said figures. The CA found on record, only a summary of the rehabilitation
cost, which reflects a lower amount and is, at any rate, self-serving. Citing
jurisprudence, the CA ruled the credence can be given only to claims which
are duly supported by receipts. The CA further deleted the attorney's fees,
also, for failure of the RTC to explain such award in its decision. 18 The CA,
thus, disposed as follows:

WHEREFORE, premises considered, the instant Appeal is hereby

PARTLY GRANTED. Accordingly, the 1 September 2008 Decision of
the Regional Trial Court of Pasig City, Branch 268 in Civil Case No.
65881 is AFFIRMED with MODIFICATION. The award of actual
damages and attorney's fees to [petitioners] are deleted for lack of basis.
Meanwhile, [petitioners] are ordered to return to [respondents] the amount
of PhPI 1,462,642.00.

SO ORDERED. 19

Petitioners received a copy of the said Decision on September 26,

20
2013. Hence, it has until October 11, 2013 to file a motion for
reconsideration thereto. Petitioners, however, discovered that Exhibits "E-
series" through "S-series", i.e., documentary evidence, which include
receipts, vouchers, requisition slips, invoices, and purchase orders, on the
rehabilitation cost and other pecuniary losses allegedly sustained as a result
of respondents' non-performance of their contractual obligations, were
nowhere to be found in the records transmitted by the RTC to the CA. Thus,
instead of filing a motion for reconsideration, petitioners filed a
Manifestation and Urgent Motion on October 8, 2013, praying that the CA
issue an order directing the Branch Clerk of Court of Branch 268, to transmit
the said documentary evidence to the CA. Petitioners also prayed that the

17
Id. at 256-257.
18
Id. at 63-64.
19
Id. at 64.
20
Id. at 21.

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Decision 5 G.R. No. 225052

period for the filing of their partial motion for reconsideration be suspended
until such time that the subject exhibits be transmitted to the CA. 21

Acting upon the said manifestation and motion, the CA issued a

Resolution22 dated September 3, 2014, ordering the Branch Clerk of Court,
Branch 268, RTC, Pasig, to transmit to the CA the missing Exhibits "E-
series" to "S-series" and their sub-markings, within 10 days from notice.

No compliance, however, was undertaken with the said Resolution.

Hence, on March 13, 2015, the CA issued a Resolution23 directing the
Branch Clerk of Court to show cause why no disciplinary action should be
meted against him/her and ordering him/her to comply anew within the same
period of 10 days.

On April 16, 2015, the Acting Branch Clerk of Court of Branch 268,
filed a Letter-Compliance stating that she failed to comply with the
Resolution due to inadvertence. She also stated that she could not transmit
the subject exhibits considering that the same were not among those
transmitted to Branch 268 by Branch 263 when the case was re-raffled to the
former as shown in the transmittal letter dated February 26, 2009. 24

On November 12, 2015, the CA issued the assailed Resolution,

denying petitioners' Manifestation and Urgent Motion.

The CA ruled that the period for filing the motion for reconsideration
is non-extendible. Petitioners filing of the Manifestation and Urgent Motion
did not toll the running of the period to file the motion for reconsideration.
Having failed to file its motion for partial reconsideration within the 15-day
period, the CA's September 12, 2013 Decision has already attained finality. 25

The CA continued to rule that even if petitioners were able to timely

file a motion for partial reconsideration to question the deletion of the actual
damages and attorney's fees, still it would not merit the reversal or
modification of the CA Decision, considering that it did not have any basis
in awarding the said actual damages and attorney's fees, thus:

WHEREFORE, premises considered, [petitioners'] Manifestation

and Urgent Motion praying that the running of the prescriptive period for
filing Motion for Partial Reconsideration be suspended pending transmittal
of the documentary exhibits is DENIED.

SO ORDERED. 26

21
Id. at 21-22.
22
Id. at 369-371.
23
Id. at 372.
24
Id. at 68.
25
Id. at 69.
26
Id. at 70.
Decision 6 GR. No. 225052

Undaunted, petitioners filed a motion for reconsideration of the CA's

November 12, 2015 Resolution, which was likewise denied in its June 2,
2016 assailed Resolution, the dispositive portion thereof reads:

WHEREFORE, premises considered, [petitioners'] Motion for

Reconsideration is hereby DENIED for lack of merit.

SO ORDERED. 27

Hence, this petition.

Issues

( 1) Did the CA err in deleting the award for actual damages?

(2) Did the CA err in deleting the attorney's fees?

This Court's Ruling

The petition is partly meritorious.

In awarding actual damages, the RTC, Branch 268 merely has this to
say:

Due to the non-compliance by the [respondents] of their

obligations, [petitioners] were compelled to rehabilitate the plant of
FWC and suffered consequential damages in the amount of
Php12,568,493.18 as per Exhibits "E" to "BB". Considering that
[respondents] already made a partial payment in the amount of
Phpll,462,000.00, equity and fair play dictates that said amount s[h]ould
be set off with the amount spent by [petitioners] in the rehabilitation of
[FWC]. 28 (Emphasis supplied)

As correctly observed by the CA, however, this Court could not find
any basis for the grant of such amount for actual damages. This Court has,
time and again, ruled in no uncertain terms that actual or compensatory
damages cannot be presumed but must be proved with reasonable degree of
certainty. A court cannot rely on speculations, conjectures or guesswork as
to the fact of damage but must depend upon competent proof that they have
indeed been suffered by the injured party and on the basis of the best
evidence obtainable as to the actual amount thereof. It must point out
specific facts that could provide the gauge for measuring whatever
. 29
compensatory or actual damages were borne.

27
Id. at 74.
28
Id. at 256.
29
Mr. & Mrs. Tan v. G. V.T Engineering Services, 529 Phil. 751, 770 (2006) (emphasis supplied).

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Decision 7 G.R. No. 225052

In this case, petitioners argue that, contrary to the CA's conclusion,

Branch 268 has a basis in awarding the Phpl2,568,493.18 actual damages,
i.e., Exhibits "E" to "BB". The fact, however, that said exhibits were
presented before Branch 263, coupled with the fact that said vital evidence
were not transmitted to Branch 268 for examination to aid it in its decision,
leave clouds of doubts to our minds as to how the latter court arrived at said
figures.

It is noteworthy, that even up to present, the said vital exhibits are

nowhere to be found.

To be clear, this Court's ruling on the matter of actual damages is not

merely based on the Branch 263 's failure to transmit the subject evidence to
Branch 268 and Branch 268's failure to specifically explain the basis of its
award of actual damages. A careful reading of the transcript of stenographic
30 .
notes (TSN) of the hearings before Branch 263 on the matter, would also
show that no such amount of actual damages was proven with the reasonable
certainty contemplated by our jurisprudential rules on the matter.

Further, the TSNs would show that aside from alleged rehabilitation
costs and business closure expenses, the alleged consequential damages
claimed include the amount shelled out to update their loan obligations with
the banks. Petitioners argue that these should have been respondents'
obligation had they proceeded with the sale of FWC. 31 This position is
erroneous.

Mutual restitution is required in cases involving rescission like in this

case. This means bringing the parties back to their original status prior to
the inception of the contract. 32 These loan obligations are petitioners'
outstanding loan obligations prior to the Letter-Agreement. While
respondents undertook to assume said liabilities in the Letter-Agreement,
they cannot be made to answer therefor, by virtue of the rescission of the
said agreement. Rescission is not merely to terminate the contract and
release the parties from further obligations to each other, but to abrogate it
from the beginning and restore the parties to their relative positions as if no
contract has been made. 33 Hence, petitioners' outstanding loan obligations
with the banks cannot be made part of the consequential damages it suffered
due to the rescission of the Letter-Agreement.

Thus, the CA did not err in deleting the award of actual damages for
lack of evidentiary basis.

30
Rollo, pp. 390-470.
31
Id. at 43.
32
Un/ad Resources Development Corporation v. Dragon, 582 Phil. 61, 79 (2008).
33
Id. at 80.

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Decision 8 G.R. No. 225052

Nonetheless, in the absence of competent proof on the amount of

actual damages suffered, petitioners correctly argue that they are entitled to
temperate damages. 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. 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. 34

There is no question that petitioners suffered damages due to the

breach committed by the respondents. The cessation of FWC's operations,
the termination of its employees, and the process of re-operating the
business due to the failed tum over to the respondents necessarily entailed
expenses. However, as above-discussed, petitioners failed to present
competent proof of the exact amount of such pecuniary loss to warrant an
award of actual damages. In view of the circumstances obtaining in this
case, the Court finds the amount of PS00,000.00 just and reasonable.

In view of the courts a quo's findings that respondents committed

breach in their agreement with petitioners, we also find it proper to award
exemplary damages in this case. Exemplary or corrective damages are
intended to serve as a deterrent to serious wrong doings, and as a vindication
of undue sufferings and wanton invasion of the rights of an injured.
"Business owners must always be forthright in their dealings. They cannot
be allowed to renege on their obligations, considering that these obligations
were freely entered into by them." 35 We, thus, find the grant of PS00,000.00
exemplary damages proper in this case.

Anent the award of attorney's fees, the CA did not err in ruling that
the factual and legal justification in granting the same should be expressly
stated in the decision; granting it in the dispositive portion of the judgment is
not enough as its basis is being improperly left to speculation and
COI1Jecture.
. 36 H
owever, .m view
. of the award o f exemp1ary damages, 37 m .
8
consonance with Article 2208(1)3 of the New Civil Code, and petitioners
were constrained to litigate to protect their interests due to respondents'
breach, this Court finds the award of attorney's fees in the amount of
Pl 00,000.00 which is equivalent to I 0% of the total amount adjudged the
petitioners, proper.

34
Engr. Duenas v. Guce-Africa, 618 Phil. 10, 22 (2009).
35
Arco Pulp and Paper Co, Inc. v. Lim, 737 Phil. 133, 153 (2014).
36
Abobon v. Abobon, 692 Phil. 530, 545 (2012).
37
Tan v. OMC Carriers, Inc., 654 Phil. 443, 458(2011)
38
CIVIL CODE, Article 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other
than judicial costs, cannot be recovered except: (I) When exemplary damages are awarded.

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Decision 9 G.R. No. 225052

In accordance with the principle of mutual restitution, the RTC's order

upon petitioners, as affirmed by the CA, to return the amount of
Pl 1,462,642.00 to the respondents, stands.

Finally, pursuant to the latest jurisprudence,39 the monetary awards

adjudged being in the nature of forbearance of money, shall earn an interest
at the rate of 6% per annum from finality of this judgment until full
satisfaction thereof.

WHEREFORE, premises considered, the Petition is PARTLY

GRANTED. The Decision dated September 12, 2013, of the Court of
Appeals in CA-G.R. CV No. 92867 is hereby AFFIRMED with
MODIFICATION. Accordingly, the order to delete the actual damages
awarded to petitioners, STANDS. In lieu thereof, respondents are ordered to
pay petitioners temperate damages in the amount of P500,000.00.
Respondents are further ordered to pay petitioners exemplary damages in the
amount of P500,000.00 and attorney's fees in the amount of Pl 00,000.00.
On the other hand, the order upon petitioners to return to respondents the
amount of Pl 1,462,642.00, also STANDS. The monetary awards adjudged
to both parties shall earn an interest rate of 6% per annum from finality of
thisjudgment until full satisfaction thereof.

SO ORDERED.

a
l-·~~
E C. ru{y: s, JR.
sociate .'1 stice

WE CONCUR:

ANTONIO T. CARPIO
Senior Associate Justice
Chairperson

39
Nacar v. Gallery Frames, 716 Phil. 267, 279 (2013).
 ..
Decision 10 G.R. No. 225052

JA0~ l.btJi
ESTELA M. PEkLAS-BERNABE
Associate Justice

...

AMY

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.

Senior Associate Justice

Chairperson, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the

Division Chairperson's Attestation, I certify 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 Di':'ision.

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