THIRD DIVISION

[G.R. No. 133803. September 16, 2005.]

BIENVENIDO M. CASIÑO, JR., petitioner , vs. THE COURT OF APPEALS

and OCTAGON REALTY DEVELOPMENT CORPORATION, respondents.

George L. Howard for petitioner.

Angelica Y. Santiago for respondents.

SYLLABUS

1.REMEDIAL LAW; EVIDENCE; FACTUAL FINDINGS OF THE COURT OF

APPEALS, PARTICULARLY WHEN AFFIRMATORY OF THOSE OF THE TRIAL COURT,
ARE BINDING; EXCEPTIONS; CASE AT BAR. — Indeed, there can be denying of
petitioner's breach of his contractual obligation, more so when, as here, the two courts
below were one in holding so. This brings to mind the settled rule of jurisprudence that
factual findings of the Court of Appeals, particularly when affirmatory of those of the trial
court, are binding upon this Court. Unless the evidence on record clearly do not support
such findings or that the same were arrived at based on a patent misunderstanding of
facts, situations which do not obtain in this case, this Court is not at liberty to disturb what
has been found below and supplant them with its own.

2.ID.; CIVIL PROCEDURE; APPEALS; PETITIONS FOR REVIEW ON CERTIORARI;

ONLY QUESTIONS OF LAW MAY BE RAISED THEREIN. — This is, as it should be. For,
in petitions for review on certiorari as a mode of appeal under Rule 45, only questions of
law may be raised. This Court is not the proper venue to consider factual issues as it is not
a trier of facts.

3.CIVIL LAW; OBLIGATIONS AND CONTRACTS; OBLIGATIONS; RECIPROCAL

OBLIGATIONS; RIGHT TO RESCIND IS IMPLIED SUCH THAT ABSENT ANY
PROVISION PROVIDING FOR A RIGHT TO RESCIND, THE PARTIES MAY
NEVERTHELESS RESCIND THE CONTRACT SHOULD THE OTHER OBLIGOR FAIL TO
COMPLY WITH ITS OBLIGATIONS. — With the reality that petitioner has failed to comply
with his prestations under his contract with respondent, the latter is vested by law with the
right to rescind the parties' agreement, conformably with Article 1191 of the Civil Code,
which partly reads: . . . . Explicit it is from the foregoing that "in reciprocal obligations," or
those which arise from the same cause, and in which each party is a debtor and a creditor
of the other, in the sense that the obligation of one is dependent upon the obligation of the
other, the right to rescind is implied such that "absent any provision providing for a right to
rescind, the parties may nevertheless rescind the contract should the other obligor fail to
comply with its obligations."

4.ID.; ID.; ID.; ID.; ID.; RIGHT TO RESCIND PERMITTED ONLY FOR
SUBSTANTIAL AND FUNDAMENTAL VIOLATIONS; CASE AT BAR. — It must be
stressed, though, that the right to rescind a contract for non-performance of its stipulations
is not absolute. The general rule is that rescission of a contract will not be permitted for a
slight or casual breach, but only for such substantial and fundamental violations as would
defeat the very object of the parties in making the agreement. Here, contrary to petitioner's
asseveration, the breach he committed cannot, by any measure, be considered as "slight
or casual." For sure, petitioner's failure to make complete delivery and installation way
beyond the time stipulated despite respondent's demands, is doubtless a substantial and
fundamental breach, more so when viewed in the light of the large amount of money
respondent had to pay another contractor to complete petitioner's unfinished work.

5.ID.; ID.; ID.; ID.; ID.; THE PARTY WHO DEEMS THE CONTRACT VIOLATED
MAY CONSIDER IT RESOLVED OR RESCINDED WITHOUT PRIOR NEED OF
RESORTING TO JUDICIAL ACTION. — Likewise, contrary to petitioner's claim, it cannot
be said that he had no inkling whatsoever of respondent's recourse to rescission. True, "the
act of a party in treating a contract as cancelled or resolved on account of infractions by
the other party must be made known to the other". In this case, however, petitioner cannot
feign ignorance of respondent's intention to rescind, fully aware, as he was, of his non-
compliance with what was incumbent upon him, not to mention the several letters
respondent sent to him demanding compliance with his obligation. In fine, we thus rule and
so hold that respondent acted well within its rights in unilaterally terminating its contract
with petitioner and in entering into a new one with a third person in order to minimize its
losses, without prior need of resorting to judicial action. As we once said in University of
the Philippines v. De los Angeles, involving the question of whether the injured party may
consider the contract as rescinded even before any judicial pronouncement has been made
to that effect: . . . the party who deems the contract violated may consider it resolved or
rescinded, and act accordingly, without previous court action, but it proceeds at its own
risk. For it is only the final judgment of the corresponding court that will conclusively and
finally settle whether the action taken was or was not correct in law. But the law definitely
does not require that the contracting party who believes itself injured must first file suit and
wait for a judgment before taking extrajudicial steps to protect its interest. Otherwise, the
party injured by the other's breach will have to passively sit and watch its damages
accumulate during the pendency of the suit until the final judgment of rescission is rendered
when the law itself requires that he should exercise due diligence to minimize its own
damages. . . . We see no conflict between this ruling and the previous jurisprudence of this
Court invoked by respondent declaring that judicial action is necessary for the resolution of
a reciprocal obligation; (Ocejo, Perez & Co. v. International Banking Corp., 37 Phil. 631;
Republic v. Hospital de San Juan de Dios, et al., 84 Phil. 820) since in every case where
the extrajudicial resolution is contested only the final award of the court of competent
jurisdiction can conclusively settle whether the resolution was proper or not. It is in this
sense that judicial action will be necessary, as without it, the extrajudicial resolution will
remain contestable and subject to judicial invalidation, unless attack thereon should
become barred by acquiescence, estoppel or prescription.

6.ID.; DAMAGES; ACTUAL OR COMPENSATORY DAMAGES; AWARDED IN

SATISFACTION OF OR IN RECOMPENSE FOR LOSS OR INJURY SUSTAINED; KINDS.
— Under Articles 2199 and 2200 of the Civil Code, actual or compensatory damages are
those awarded in satisfaction of or in recompense for loss or injury sustained. They
proceed from a sense of natural justice and are designed to repair the wrong that has been
done. Citing Producers Bank of the Philippines vs. CA, this Court, in the subsequent case
of Terminal Facilities and Services Corporation vs. Philippine Ports Authority ruled: There
are two kinds of actual or compensatory damages: one is the loss of what a person already
possesses, and the other is the failure to receive as a benefit that which would have
pertained to him. . . . In the latter instance, the familiar rule is that damages consisting of
unrealized profits, frequently referred as 'ganacias frustradas' or 'lucrum cessans,' are not
to be granted on the basis of mere speculation, conjecture, or surmise, but rather by
reference to some reasonably definite standard such as market value, established
experience, or direct inference from known circumstances.

7.ID.; ID.; ID.; UNREALIZED PROFITS; ABSOLUTE CERTAINTY, IS NOT

NECESSARY TO ESTABLISH THE AMOUNT OF "GANACIAS FRUSTRADAS" OR
"LUCRUM CESSANS" WHEN THE EXISTENCE OF A LOSS IS ESTABLISHED. —
Absolute certainty, however, is not necessary to establish the amount of "ganacias
frustradas" or "lucrum cessans." As we have said in Producers Bank of the Philippines,
supra: When the existence of a loss is established, absolute certainty as to its amount is
not required. The benefit to be derived from a contract which one of the parties has
absolutely failed to perform is of necessity to some extent, a matter of speculation, but the
injured party is not to be denied for this reason alone. He must produce the best evidence
of which his case is susceptible and if that evidence warrants the inference that he has
been damaged by the loss of profits which he might with reasonable certainty have
anticipated but for the defendant's wrongful act, he is entitled to recover. Gauged by the
aforequoted test, the evidence adduced by respondent is sufficient enough to substantiate
its claim for actual or compensatory damages in the amount of P2,111,061.69.

8.ID.; ID.; ATTORNEYS FEES; AWARD THEREOF WARRANTED IN CASE AT

BAR. — Finally, on the matter of attorney's fees, respondent's entitlement thereto is beyond
cavil, what with the fact that respondent was compelled to litigate and incurred expenses
relative thereto by reason of petitioner's breach of his contractual obligations.

DECISION

GARCIA, J : p

Via this petition for review on certiorari under Rule 45 of the 1997 Rules of Court,
petitioner Bienvenido M. Casiño, Jr. seeks the annulment and setting aside of the following
issuances of the Court of Appeals (CA) in C.A. — G.R. CV No. 47702 , to wit:

1.Decision dated January 21, 1997, 1 affirming an earlier decision of the

Regional Trial Court at Pasig which upheld private respondent's rescission
of its contract with petitioner; and

2.Resolution dated May 20, 1998, 2 denying petitioner's motion for

reconsideration.

On October 2, 1991 in the Regional Trial Court at Pasig City, respondent Octagon
Realty Development Corporation, a corporation duly organized and existing under
Philippine laws, filed a complaint for rescission of contract with damages against petitioner
Bienvenido M. Casiño, Jr., owner and proprietor of the Casiño Wood Parquet and Sanding
Services, relative to the parties' agreement for the supply and installation by petitioner of
narra wood parquet ordered by respondent.

As recited by the Court of Appeals in the decision under review, the parties' principal
pleadings in the Regional Trial Court disclose the following:

In its complaint, [respondent] alleges that on December 22, 1989, it entered

into a contract with [petitioner] for the supply and installation by the latter of narra
wood parquet (kiln dried) to the Manila Luxury Condominium Project, of which
[respondent] is the developer, covering a total area of 60,973 sq. ft. for a total price
of P1,158,487.00; that the contract stipulated that full delivery by [petitioner] of
labor and materials was in May 1990; that in accordance with the terms of
payment in the contract, [respondent] paid to [petitioner] the amount P463,394.50,
representing 40% of the total contract price; that after delivering only 26,727.02
sq. ft. of wood parquet materials, [petitioner] incurred in delay in the delivery of the
remainder of 34,245.98 sq. ft.; that [petitioner] misrepresented to [respondent] that
he is qualified to do the work contracted when in truth and in fact he was not and,
furthermore, he lacked the necessary funds to execute the work as he was totally
dependent on the funds advanced to him by [respondent]; that due to [petitioner's]
unlawful and malicious refusal to comply with its obligations, [respondent]
incurred actual damages in the amount of P912,452.39 representing estimated
loss on the new price, unliquidated damages and cost of money; that in order to
minimize losses, the [respondent] contracted the services of Hilvano Quality
Parquet and Sanding Services to complete the [petitioner's] unfinished work,
[respondent] thereby agreeing to pay the latter P1,198,609.30.

The [respondent] in its complaint prays for rescission of contract, actual

damages of P912,452.39, reimbursement in the amount of P1,198,609.30, moral
damages of P200,000.00, and attorney's fees of P50,000.00 plus a fee of
P1,000.00 per appearance and other expenses of the suit.

In his answer to the complaint, the [petitioner] admits the execution of the
December 22, 1989 contract with the [respondent], the terms thereof relating to
total price and scope of work, as well as the payment by the [respondent] of the
40% downpayment. He, however, avers that the manner of payment, period of
delivery and completion of work and/or full delivery of labor and materials were
modified; that the delivery and completion of the work could not be done upon the
request and/or representations by the [respondent] because he failed to make
available and/or to prepare the area in a suitable manner for the work contracted,
preventing the [petitioner] from complying with the delivery schedule under the
contract; that [petitioner] delivered the required materials and performed the work
despite these constraints; that the [petitioner] delivered a total of 29,209.82 sq. ft.
of wood parquet; that the [respondent] failed to provide for a safe and secure area
for the materials and work in process or worked performed, thus exposing them to
the elements and destroying the materials and/or work; that the [respondent]
failed to pay the [petitioner's] second and third billings for deliveries and work
performed in the sum of P105,425.68, which amount the [petitioner] demanded
from the [respondent] with the warning of suspension of deliveries or rescission
for contract for non-payment; that the [petitioner] was fully qualified and had the
experience of at least nine years to perform the work; and that it was the
[respondent], after failing to prepare the area suitable for the delivery and
installation of the wood parquet, [respondent] . . . who advised or issued orders to
 the [petitioner] to suspend the delivery and installation of the wood parquet, which
created a storage problem for the [petitioner].

Set up by the [petitioner] as special and affirmative defenses, are that the
filing of the case is premature; that the [respondent] has no cause of action; that
the obligation has been waived/extinguished; that the [respondent's] failure to
accept deliveries compelled the [petitioner] to store the materials in his
warehouse/s and to use valuable space in his premises, which he could have
utilized for the storage of materials for other customers, and also prevented him
from accepting new orders from other customer causing him actual and potential
losses of income; that the [respondent's] extrajudicial rescission of contract is void
since there is no breach or violation thereof by the [petitioner]; and that it was
[respondent] which violated the terms/conditions of the contract, entitling
[petitioner] to have the same judicially rescinded.

The [petitioner] pleaded counterclaims of rescission of contract and

payment by the [respondent] of P597,392.90 with legal interest from the filing of
the complaint until fully paid or, in the alternative payment of the cost of the
billings in the sum of P105,425.68 plus legal interest; actual and compensatory
damages of P600,000.00 and P30,000.00, respectively; moral damages of
P100,000.00, attorney's fees of P40,000.00; and litigation expenses and costs of
the suit. 3 (Words in bracket ours).

In a decision dated June 2, 1994, the trial court, upon a finding that petitioner is the
one who breached the parties' agreement, rendered judgment for respondent, to wit:

WHEREFORE, based on the foregoing, this Court finds and so holds that
the rescission of contract effected by [respondent] is valid, and [petitioner]t is
thereby ordered to pay the[respondent] the following:

1.P2,111,061.69 by way of actual and compensatory damages; and,

2.P50,000.00, as attorney's fees.

No pronouncement as to cost.

SO ORDERED. 4

Explains the trial court in its decision:

. . . [T]he contract clearly and categorically stipulates that full delivery by

[petitioner] of labor and materials was to be in May 1990. However, as of January
30, 1991, no deliveries have been made by [petitioner] necessitating the sending
by [respondent] of a demand letter . . . . Thereafter, while [petitioner] started
mobilization, the workers assigned were insufficient resulting in the very slow
progress of the works for which reason Engr. Alcain sent a letter to [petitioner]
instructing [petitioner] to make 'full-blast delivery' of the materials. This,
incidentally, effectively negates [petitioner's] contention that [respondent] had
requested for the suspension of deliveries.

xxx xxx xxx

Finally, it was established that out of the total 60,973 sq. ft. of wood
 parquet, [petitioner] was able to deliver only 26,727.02 sq. ft.. In this connection
[petitioner] denied this and insisted that he was actually able to deliver 29,109.82
sq. ft. Whichever of the two figures is correct, the fact remains that [petitioner] was
unable to deliver the full quantity contracted by [respondent]. For purposes of the
record, however, this Court believes the figure given by [respondent], which is
supported by [petitioner's] own statements of account where the total amount of
deliveries jibes with [respondent's] alleged figure.

On the basis of the foregoing findings, this Court hereby finds that
[respondent] has established its right to rescind the contract dated December 22,
1989, on the strength of Art. 1191 of the Civil Code.

In this case, [respondent], after [petitioner's] breach of his contractual

obligations, considered the contract as rescinded and proceeded to contract with
Hilvano Quality Parquet & Sanding Services, in order to minimize losses in view
of the delay in the completion schedule of its condominium project. 5 (Words in
bracket ours).

On petitioner's appeal to the Court of Appeals in CA-G.R. CV No. 47702, the

appellate court, in the herein assailed Decision 6 dated January 21, 1997, affirmed that of
the trial court but modified the same by reducing the amount of damages awarded, thus:

WHEREFORE, the decision appealed from is AFFIRMED with the

MODIFICATION that the [petitioner] be made to pay the [respondent] as actual
and compensatory damages, the amount of P1,662,003.80, with interest thereon
at the legal rate from the finality of this judgment until fully paid.

SO ORDERED. (Words in bracket ours).

In time, petitioner and respondent filed their respective Motion for Reconsideration
and Motion for Partial Reconsideration. In its Resolution dated May 20, 1998, 7 the
appellate court denied petitioner's motion for lack of merit but found that of respondent as
well-grounded. Accordingly, and noting that "the amount of P97,699.67 . . . had already
been factored in, in the computation of the amount of P912,452.39, under the decision of
the court a quo", the Court of Appeals amended its original Decision by affirming in toto the
decision of the trial court, as follows:

WHEREFORE, [petitioner's] appeal is dismissed. The Decision appealed

from is AFFIRMED IN TOTO. With costs against the [petitioner]. SO ORDERED.
(Words in bracket ours).

Undaunted, petitioner is now with us via the present recourse on his submissions
that:

A.THE SUBJECT DECISION DECLARING THE RESCISSION OF THE

QUESTIONED CONTRACT BY PRIVATE RESPONDENT AS VALID
AND HOLDING THE PETITIONER LIABLE FOR BREACH OF
CONTRACT IS CONTRARY TO OR IN VIOLATION OF ART. 1191, NEW
CIVIL CODE;
 B.THE AWARD TO PRIVATE RESPONDENT OF ACTUAL AND
COMPENSATORY DAMAGES OF P1,662,003.80 WITH LEGAL
INTEREST WAS NOT LEGALLY JUSTIFIED, OR PROVEN WITH
REASONABLE DEGREE OF CERTAINTY; and

C.THE SAME WAS ISSUED WITH GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OF OR IN EXCESS OF JURISDICTION,
AND/OR CONTRARY TO THE FACTS, EVIDENCE, JURISPRUDENCE
AND LAW. 8

The petition lacks merit.

It is undisputed that under their contract, petitioner and respondent had respective
obligations, i.e., the former to supply and deliver the contracted volume of narra wood
parquet materials and install the same at respondent's condominium project by May, 1990,
and the latter, to pay for said materials in accordance with the terms of payment set out
under the parties' agreement. But while respondent was able to fulfill that which is
incumbent upon it by making a downpayment representing 40% of the agreed price upon
the signing of the contract and even paid the first billing of petitioner, 9 the latter failed to
comply with his contractual commitment. For, after delivering only less than one-half of the
contracted materials, petitioner failed, by the end of the agreed period, to deliver and install
the remainder despite demands for him to do so. Doubtless, it is petitioner who breached
the contract.

Petitioner asserts that while he was ready to comply with his obligation to deliver and
install the remaining wood parquet, yet respondent was not ready to accept deliveries due
to the unsuitability of the work premises for the installation of the materials. Petitioner's
contention flies in the light of the following observations of the appellate court, to which we
are in full accord:

. . . no sufficient proof was presented by the [petitioner] to substantiate his

allegation. On the other hand, the [respondent] was able to prove by substantial
evidence that as of May, 1990, the time when the [petitioner] was supposed to
make complete delivery 'there was already available in the condominium
building any space from the basement to the fourteenth floor', and the [petitioner]
could have chosen from any of those. (Words in bracket ours).

Indeed, there can be no denying of petitioner's breach of his contractual obligation,

more so when, as here, the two courts below were one in holding so. This brings to mind
the settled rule of jurisprudence that factual findings of the Court of Appeals, particularly
when affirmatory of those of the trial court, are binding upon this Court. 10 Unless the
evidence on record clearly do not support such findings or that the same were arrived at
based on a patent misunderstanding of facts, 11 situations which do not obtain in this case,
this Court is not at liberty to disturb what has been found below and supplant them with its
own.

This is, as it should be. For, in petitions for review on certiorari as a mode of appeal
under Rule 45, only questions of law 12 may be raised. This Court is not the proper venue
to consider factual issues as it is not a trier of facts. 13

With the reality that petitioner has failed to comply with his prestations under his
contract with respondent, the latter is vested by law with the right to rescind the parties'
agreement, conformably with Article 1191 of the Civil Code, which partly reads:

Art. 1191.The power to rescind obligations is implied in reciprocal ones, in

case one of the obligors should not comply with what is incumbent upon him.

The injured party may choose between the fulfillment and the rescission of
the obligation, with the payment of damages in either case. He may also seek
rescission even after he has chosen fulfillment, if the latter should become
impossible.

xxx xxx xxx

Explicit it is from the foregoing that "in reciprocal obligations ", or those which arise
from the same cause, and in which each party is a debtor and a creditor of the other, in the
sense that the obligation of one is dependent upon the obligation of the other, 14 the right to
rescind is implied such that "absent any provision providing for a right to rescind, the
parties may nevertheless rescind the contract should the other obligor fail to comply
with its obligations". 15

It must be stressed, though, that the right to rescind a contract for non-performance
of its stipulations is not absolute. The general rule is that rescission of a contract will not
be permitted for a slight or casual breach, but only for such substantial and fundamental
violations as would defeat the very object of the parties in making the agreement. 16

Here, contrary to petitioner's asseveration, the breach he committed cannot, by any

measure, be considered as "slight or casual ". For sure, petitioner's failure to make
complete delivery and installation way beyond the time stipulated despite respondent's
demands, is doubtless a substantial and fundamental breach, more so when viewed in the
light of the large amount of money respondent had to pay another contractor to complete
petitioner's unfinished work. Again, to quote from the challenged decision of the appellate
court:DAaIEc

The [petitioner] also asserts that the breach was merely casual that does
not warrant a rescission. While apparently, the [petitioner] agreed to complete
delivery and installation of the narra wood parquet to the [respondent's]
condominium project by May, 1990, yet on three occasions the [respondent's]
counsel sent letters demanding compliance with the [petitioner's] obligation. At
that time, only 26,727.02 sq. ft. of parquet out of a total of 60,973 sq. ft., or less
than one half of the contracted volume, had been delivered. Hence, the
[respondent] was finally forced to contract the services of another company and
had to pay the sum of P1,198,609.30 for the completion of the unfinished work.
The large cost of completion of the [petitioner's] unfinished work can only
evidence the gravity of the [petitioner's] failure to comply with the terms of the
contract. 17 (Words in bracket ours).

Likewise, contrary to petitioner's claim, it cannot be said that he had no inkling

whatsoever of respondent's recourse to rescission. True, "the act of a party in treating a
contract as cancelled or resolved on account of infractions by the other party must be
made known to the other " . 18 In this case, however, petitioner cannot feign ignorance of
respondent's intention to rescind, fully aware, as he was, of his non-compliance with what
was incumbent upon him, not to mention the several letters 19 respondent sent to him
demanding compliance with his obligation.

In fine, we thus rule and so hold that respondent acted well within its rights in
unilaterally terminating its contract with petitioner and in entering into a new one with a
third person in order to minimize its losses, without prior need of resorting to judicial action.
As we once said in University of the Philippines v. De los Angeles , 20 involving the
question of whether the injured party may consider the contract as rescinded even before
any judicial pronouncement has been made to that effect:

. . . the party who deems the contract violated may consider it resolved or
rescinded, and act accordingly, without previous court action, but it proceeds at its
own risk. For it is only the final judgment of the corresponding court that will
conclusively and finally settle whether the action taken was or was not correct in
law. But the law definitely does not require that the contracting party who believes
itself injured must first file suit and wait for a judgment before taking extrajudicial
steps to protect its interest. Otherwise, the party injured by the other's breach will
have to passively sit and watch its damages accumulate during the pendency of
the suit until the final judgment of rescission is rendered when the law itself
requires that he should exercise due diligence to minimize its own damages . . . .

We see no conflict between this ruling and the previous jurisprudence of

this Court invoked by respondent declaring that judicial action is necessary for the
resolution of a reciprocal obligation; (Ocejo, Perez & Co. v. International Banking
Corp., 37 Phil. 631; Republic v. Hospital de San Juan de Dios, et al ., 84 Phil.
820) since in every case where the extrajudicial resolution is contested only the
final award of the court of competent jurisdiction can conclusively settle whether
the resolution was proper or not. It is in this sense that judicial action will be
necessary, as without it, the extrajudicial resolution will remain contestable and
subject to judicial invalidation, unless attack thereon should become barred by
acquiescence, estoppel or prescription.

This brings us to the propriety of the award for actual or compensatory damages,
attorney's fees and litigation expenses.

Under Articles 2199 and 2200 of the Civil Code, 21 actual or compensatory damages
are those awarded in satisfaction of or in recompense for loss or injury sustained. They
proceed from a sense of natural justice and are designed to repair the wrong that has been
done.

Citing Producers Bank of the Philippines vs. CA , 22 this Court, in the subsequent
case of Terminal Facilities and Services Corporation vs. Philippine Ports Authority 23
ruled:

There are two kinds of actual or compensatory damages: one is the loss of
what a person already possesses, and the other is the failure to receive as a
benefit that which would have pertained to him . . . . In the latter instance, the
familiar rule is that damages consisting of unrealized profits, frequently referred as
'ganacias frustradas' or 'lucrum cessans,' are not to be granted on the basis of
mere speculation, conjecture, or surmise, but rather by reference to some
reasonably definite standard such as market value, established experience, or
 direct inference from known circumstances.

Absolute certainty, however, is not necessary to establish the amount of "ganacias

frustradas" or "lucrum cessans". As we have said in Producers Bank of the Philippines,
supra:

When the existence of a loss is established, absolute certainty as to its

amount is not required. The benefit to be derived from a contract which one of the
parties has absolutely failed to perform is of necessity to some extent, a matter of
speculation, but the injured party is not to be denied for this reason alone. He
must produce the best evidence of which his case is susceptible and if that
evidence warrants the inference that he has been damaged by the loss of profits
which he might with reasonable certainty have anticipated but for the defendant's
wrongful act, he is entitled to recover.

Gauged by the aforequoted test, the evidence adduced by respondent is sufficient

enough to substantiate its claim for actual or compensatory damages in the amount of
P2,111,061.69. As found by the trial court and affirmed by the Court of Appeals:

Clearly, [respondent] must be indemnified for the following damages it

sustained by reason of [petitioner's] breach of contract. Finding [respondent's]
claim justified, this court awards the following: P912,452.39, representing
[respondent's] estimated losses on new price, unliquidated damages and cost of
money, as substantiated by Exhibit 'Q'; and P1,198,609.30, representing the cost
incurred by [respondent] in engaging the services of Hilvano Quality Parquet and
Sanding Services for the completion of the work unfinished by [petitioner] (Exhibit
'C-4', par. 24) . . . . 24 (Words in bracket ours).

Finally, on the matter of attorney's fees, respondent's entitlement thereto is beyond

cavil, what with the fact that respondent was compelled to litigate and incurred expenses
relative thereto by reason of petitioner's breach of his contractual obligations.

WHEREFORE, the instant petition is DENIED and the assailed Decision and
Resolution of the appellate court AFFIRMED.

Costs against petitioner. Ac TDaH

SO ORDERED.

Panganiban, Sandoval-Gutierrez, Corona and Carpio Morales, JJ., concur.

Footnotes

1.Penned by Associate Associate Justice Gloria C. Paras (now ret.) with Associate Justices
Conrado M. Vasquez and Romeo J. Callejo, Sr. (now a member of this Court),
concurring; Rollo, pp. 42-51.

2.Penned by then, now Supreme Court Justice Romeo J. Callejo, Sr. and concurred in by
Associate Justices Ruben T. Reyes and Conrado M. Vasquez, Jr.; Rollo, p. 53.
3.CA Decision; Rollo, pp. 42-44.

4.Ibid, at p. 46.

5.Ibid at pp. 45-46.

6.Ibid at pp. 50-51.

7.CA Resolution; Rollo, p. 53.

8.Petition; Rollo, p. 16.

9.CA Decision, Supra at p. 50.

10.Salvador vs. CA , 426 SCRA 433, 443 [2004].

11.Montecillo vs. Reynes and Spouses Abucay , 385 SCRA 246, 255-256 [2002].

12.Ibid at p. 253.

13.Ibid.

14.Ong vs. CA 310 SCRA 1, 9 [1999].

15.Multinational Village Homeowners Association, Inc. vs. Ara Security & Surveillance
Agency, Inc., 441 SCRA 126, 135 [2004].

16.Barredo vs. Leano, 431 SCRA 107, 115 [2004].

17.CA Decision; supra, p. 49.

18.Jacinto vs. Kaparaz 209 SCRA 246, 258 citing University of the Philippines vs. De los
Angeles, 35 SCRA 102, 107 [1970].

19.CA Decision, supra at p. 45.

20.Supra, pp. 107-108.

21.Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate

compensation only for such pecuniary loss suffered by him as he has duly proved.

Art. 2200. Indemnification for damages shall comprehend not only the value of the loss suffered
but also that of the profits which the oblige failed to obtain.

22.365 SCRA 326, 337 [2002].

23.378 SCRA 82, 114 [2002].

24.Rollo, pp. 33 & 116.