Laws Applicable: Article 2229 of the Civil Code, Article 2208 of the Civil Code
FACTS:
- Metal Forming Corp. advertised there metal shingles as "STRUCTURALLY SAFE AND STRONG" and that the "BANAWE METAL TILE structure acts as a single unit against wind and storm pressure due to the strong hook action on its overlaps." The Spouses Del Rosario through their contractor Engineer Puno purchased believing their representation.
- The proper installation procedure expressly specified in the former's brochures and advertisements for installation, i.e., the metal tile attached to the roof panels should be by 2 self-drilling screws for 1 metal cleat but instead what was attached was metal cleats with only 1-inch ordinary nail each and others were fastened with only 1 wood screw each so the roof was blown by Typhoon Ruping 2 months later
- MFC replaced the roof free of charge, in acknowledgment of its one-year warranty on the materials and their installation. Esteban Adjusters and Valuers, Inc. hired by the Spouses Del Rosario determined that only with a single wood screw or a combination of a single wood screw and a 1-inch nail was used
- DTI: charged MFC administrative fine of P10,000 otherwise its registration will be deemed suspended and its establishment closed until the fine was fully paid
- Office of the President: affirmed
- MFC declining to concede to liability for the other damages to its electrical wiring, ceiling, furtures, walls, wall paper, wood parquet flooring and furniture, the Spouses Del Rosario filed in the RTC for total damage of P1,008,003 also praying for moral and exemplary damages
- RTC: favored Spouses Del Rosario Actual damage P1,008,003, Moral Damages P500,000, Exemplary Damages P300,000 and Attorney's fees and expenses of litigation P150,000
- CA: reversed holding there is no privity bet. the Spouses Del Rosario and MFC
ISSUE: W/N the Spouses Del Rosario should be awarded damages
HELD: YES. REINSTATED AND AFFIRMED, with the modification that the award of actual damages and attorney's fees is deleted, and the moral and exemplary damages awarded are reduced from P500,000.00 to P100,000.00, and from P300,000.00 to P50,000.00, respectively.
- Since MFC, in bad faith and with gross negligence, infringed the express warranty made by it to the general public in connection with the "Banawe" tiles brought to and set up in the house of the Del Rosarios who had relied on the warranty, and thereby caused them considerable injury, the identity of the individual who actually dealt with MFC and asked the latter to make such delivery and installation is of little moment
- Actual or compensatory damages cannot be presumed, but must be duly proved and proved with reasonable degree of certainty.
- relied only on the report of the Esteban Adjusters and Valuers, Inc. which contains no statement whatever of the amount of the damage therefore no evidentiary foundation upon which to lay an award of actual damages
- law explicitly authorizes the award of moral damages "in breaches of contract where the defendant acted fraudulently or in bad faith."
- There being, moreover, satisfactory evidence of the psychological and mental trauma actually suffered by the Del Rosarios, the grant to them of moral damages is warranted
- Article 2229 of the Civil Code
- damages may be imposed by way of example or correction for the public good, While exemplary damages cannot be recovered as a matter of right, they need not be proved, although plaintiff must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded.
- Exemplary damages are imposed not to enrich one party or impoverish another but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions
- moral damages awarded must be commensurate with the loss or injury suffered
- Since the judgment does not say why attorney's fees are awarded, there is no basis for such award, which should consequently be removed
- It is settled that the award of attorney's fees is the exception rather than the rule and counsel's fees are not to be awarded every time a party wins. The power of the court to award attorney's fees under Article 2208 of the Civil Code demands factual, legal, and equitable justification; its basis cannot be left to speculation or conjecture. Where granted. the court must explicitly state in the body of the decision, and not only in the dispositive portion thereof, the legal reason for the award of attorney's fees.