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The Propriety of Claiming Damages in Administrative Proceedings in The HLURB
The Propriety of Claiming Damages in Administrative Proceedings in The HLURB
Damages are an award of money made to compensate a claimant who has suffered loss or damage as a
result of a wrong for which the defendant is responsible.
A right to damages may arise under a statute as well as under the common law.
'Damages' can be defined as the pecuniary recompense given by process of law to a person in order to make good
the consequences of an actionable wrong that another has done to them.
The normal function of damages for breach of contract is the same as that in tort, namely,
compensatory. The aim being to compensate the true loss suffered by the innocent party and place
them in the same position, so far as it is possible to do so using only money, as if the contract had been
performed. There are, however, exceptional circumstances where the court may depart from this
general policy and award some greater sum, such as in cases of an award of gain-based damages.
Thus the overriding aim of an award of damages arising from a breach of a contractual obligation is to
put the innocent party 'so far as money can do it…in the same situation…as if the contract had been
performed' (Robinson v Harman). This differs from tort, where the aim is to put the injured party in the
same position they would have been in had the tort not occurred.
Note: unlike many torts, a breach of contract is actionable per se, therefore, in principle, a claimant who
proves a breach, even if they prove no recoverable loss at all, is entitled at least to a nominal award.
In the sale of real property, the seller is not obligated to transfer in the name of the
buyer a new certificate of title, but rather to transfer ownership of the real property. There is a
difference between transfer of the certificate of title in the name of the buyer, and transfer of
ownership to the buyer. The buyer may become the owner of the real property even if the
certificate of title is still registered in the name of the seller. (Emphasis supplied)
Universal does not base its claim for damages on grounds supported by the Contracts to
Sell. Instead, it argues that respondent's failure to transfer the CCTs and convey possession of
the properties caused the depreciation of their market value. Hence, this Court rules that
petitioner's premise for its recovery of depreciation losses is misplaced.47
The primary question is whether a breach of contract automatically triggers the award of
actual or compensatory damages.
On July 22, 1997, respondent Spouses Sotero Octobre, Jr. and Henrissa A. Octobre (Spouses Octobre)
signed a Reservation Agreement with petitioner Pryce Properties Corporation (Pryce) for the purchase
of two lots with a total of 742 square meters located in Puerto Heights Village, Puerto Heights,
Cagayan de Oro City.1 The parties subsequently executed a Contract to Sell over the lot for the price
of P2,897,510.00 on January 7, 1998.2
On February 4, 2004, Pryce issued a certification that Spouses Octobre had fully paid the purchase
price and amortization interests, as well as the transfer fees and other charges in relation to the
property, amounting to a total of P4,292,297.92.3 But Pryce had yet to deliver the certificates of title,
which prompted Spouses Octobre to formally demand its delivery. Despite repeated demands, Pryce
failed to comply.4 Thus, on May 18, 2004, Spouses Octobre filed a complaint before the Housing and
Land Use Regulatory Board (HLURB), Regional Office No. 10 for specific performance, revocation of
certificate of registration, refund of payments, damages and attorney's fees.5
It appears that the reason why Pryce was unable to deliver the titles to Spouses Octobre is because it
had previously transferred custody of the titles, along with others pertaining to the same development
project, to China Banking Corporation (China Bank) as part of the Deed of Assignment 6 executed on
June 27, 1996.7 Under this deed, Pryce agreed to assign and transfer its accounts receivables, in the
form of contracts to sell, in the Puerto Heights development project to China Bank as security for the
P200 Million credit facility extended by the latter. Pryce obligated itself to deliver to China Bank the
"contracts to sell and the corresponding owner's duplicate copies of the transfer certificates of title,
tax declaration, real estate tax receipts and all other documents and papers" 8 relating to the assigned
receivables until such receivables are paid or repurchased by Pryce. The titles to the lots purchased by
Spouses Octobre were among those held in custody by China Bank. 9 When Pryce defaulted in its loan
obligations to China Bank sometime in May 2002, China Bank refused to return the titles to
Pryce.10 For this reason, China Bank was also impleaded in the HLURB complaint.
The HLURB Arbiter rendered a Decision11 dated March 31, 2005 finding that Spouses Octobre had no
cause of action against China Bank and rescinding the contract between Pryce and Spouses Octobre. It
ordered Pryce to refund the payments made by the spouses with legal interest and to pay the latter
compensatory damages amounting to P30,000.00, attorney's fees and costs of suit.12
On appeal, the HLURB Board of Commissioners modified the Decision by ordering Pryce to pay the
redemption value to China Bank so that the latter may release the titles covering the lots purchased
by Spouses Octobre. In default thereof, Pryce shall refund the payments with legal interest. The
HLURB Board upheld the grant of compensatory damages, attorney's fees and costs to Spouses
Octobre.13 Pryce moved for reconsideration and to stay the proceedings on account of Pryce's ongoing
corporate rehabilitation.14 The HLURB Board, however, denied Pryce's motion considering that the stay
order of the rehabilitation court had already been reversed by the Court of Appeals. 15
Thereafter, Pryce appealed the case to the Office of the President, which affirmed 16 in full the HLURB
Board's Decision. Undeterred, Pryce elevated the case to the Court of Appeals which denied the
petition for review and affirmed the Office of the President's Decision. The Court of Appeals found that
Pryce acted in bad faith because it "did not disclose [that the titles were in the custody of China Bank]
to respondents Spouses Octobre until the latter demanded delivery of the titles." 17 The Court of
Appeals held that Pryce's contractual breach justified the award of compensatory damages as well as
the payment of attorney's fees and costs of suit.18
Pryce is now before this Court primarily arguing that the Court of Appeals erred in upholding the
award of compensatory damages because Spouses Octobre failed to present competent proof of the
actual amount of loss.19 It also questions the award of attorney's fees and litigation costs because
there was allegedly no finding of bad faith.20 Additionally, as side issues, Pryce questions the Court of
Appeals' finding that the stay order had been reversed and its decision to uphold the finding by the
HLURB Board and Office of the President that the subject properties were mortgaged to China Bank.21
In response, Spouses Octobre maintain that the award of compensatory damages, attorney's fees and
costs were proper because they were forced to litigate to enforce their contractual right as a result of
Pryce's breach.22 With respect to the stay order, Spouses Octobre cite this Court's February 4, 2008
Decision in G.R. No. 17230223 which affirmed the appellate court's reversal of the stay order. Finally,
Spouses Octobre note that the characterization of the Deed of Assignment as a mortgage came from
Pryce's own appeal memorandum filed with the HLURB Board, and that, in any event, whether it is an
assignment or mortgage, the decisive fact is that the titles were delivered by Pryce to China Bank.24
In its comment, China Bank insists that Pryce only has itself to blame for failing to comply with its
obligation to remit the payments received from the various contracts to sell, including its obligation to
Spouses Octobre. Under the Deed of Assignment, China Bank is entitled to hold custody of the titles
surrendered by Pryce until the assigned receivables are paid or repurchased by Pryce, which to date
the latter has failed to do.25
II
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. Such compensation is referred
To be entitled to compensatory damages, the amount of loss must therefore be capable of proof and
must be actually proven with a reasonable degree of certainty, premised upon competent proof or the
best evidence obtainable. The burden of proof of the damage suffered is imposed on the party
claiming the same, who should adduce the best evidence available in support thereof. 27 Its award must
be based on the evidence presented, not on the personal knowledge of the court; and certainly not on
flimsy, remote, speculative and non-substantial proof.28
It is clear that the amount paid by Spouses Octobre to Pryce as purchase price for the lots has been
adequately proved. There is no dispute that Spouses Octobre are entitled to such amount with legal
interest. The issue being raised by Pryce is only with respect to the P30,000.00 awarded as
compensatory damages.29
The records of this case are bereft of any evidentiary basis for the award of P30,000.00 as
compensatory damages. When the HLURB Arbiter initially awarded the amount, it merely mentioned
that "[Spouses Octobre] are entitled to compensatory damages, which is just and equitable in the
circumstances, even against an obligor in good faith since said damages are the natural and probable
consequences of the contractual breach committed."30 On the other hand, the Court of Appeals
justified the award of compensatory damages by stating that "it is undisputed that petitioner Pryce
committed breach of contract in failing to deliver the titles to respondents [Spouses] Octobre which
necessitated the award of compensatory damages." 31 In their comment, Spouses Octobre emphasized
that they were "forced to litigate and seek the intervention of the courts because of Pryce's failure to
comply with its contractual and legal obligation"32 without so much as mentioning any proof that would
tend to prove any pecuniary loss they suffered.
In the absence of adequate proof, compensatory damages should not have been awarded.
Nonetheless, we find that nominal damages, in lieu of compensatory damages, are proper in this case.
Under Article 2221, nominal damages may be awarded in order that the plaintiff’s right, which has
been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose
of indemnifying the plaintiff for any loss suffered. Nominal damages are "recoverable where a legal
right is technically violated and must be vindicated against an invasion that has produced no actual
present loss of any kind or where there has been a breach of contract and no substantial injury or
actual damages whatsoever have been or can be shown."33 So long as there is a violation of the right
of the plaintiff—whether based on law, contract, or other sources of obligations34—an award of nominal
damages is proper.35 Proof of bad faith is not required.36 The HLURB Arbiter and the Court of Appeals
appear to have confused nominal damages with compensatory damages, since their justifications
more closely fit the former.
It is undisputed that Pryce failed to deliver the titles to the lots subject of the Contract to Sell even as
Spouses Octobre had already fully settled the purchase price. Its inability to deliver the titles despite
repeated demands undoubtedly constitutes a violation of Spouses Octobre's right under their contract.
That Pryce had transferred custody of the titles to China Bank pursuant to a Deed of Assignment is
irrelevant, considering that Spouses Octobre were not privy to such agreement.
In fine, contractual breach is sufficient to justify an award for nominal damages but not compensatory
damages.
III
Pryce questions the award of attorney's fees and costs of suit because no exemplary damages were
awarded. This contention, however, is clearly unmeritorious because under Article 2208,37 the award of
exemplary damages is just one of 11 instances where attorney's fees and expenses of litigation are
recoverable.
Article 2208(2) allows the award of attorney's fees when the defendant's act or omission has
compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. The
Court has interpreted that this provision requires a showing of bad faith and not mere erroneous
conviction of the righteousness of a defendant's cause.38 In this case, the Court of Appeals found that
Pryce acted in bad faith when it did not disclose to Spouses Octobre the fact that the certificates of
title to the properties purchased were in the custody of China Bank until Spouses Octobre had fully
paid the price and had demanded delivery of the titles. We agree with this finding and therefore
sustain the award of attorney's fees and costs of suit in favor of Spouses Octobre.
IV
The other side issues raised by Pryce shall be disposed of swiftly since they have no substantial
bearing on the merits of this case. As admitted by Pryce itself, "it is not the entire Decision that is
being assailed"39 but only the portion regarding the award of compensatory damages, attorney's fees
and costs of suit.
When the stay order being invoked by Pryce was reversed and set aside at the first instance by the
Court of Appeals in CA-G.R. SP No. 88479, that stay order was automatically deemed vacated.40 By
reversing the stay order of the rehabilitation court, the Court of Appeals effectively enjoined the
execution of such order as allowed by the 2000 Interim Rules of Procedure on Corporate
Rehabilitation41 (which was then in effect when Pryce filed its petition for rehabilitation in 2004). We
affirmed the Court of Appeals' decision to set aside the stay order in the Decision dated February 4,
200842 and Resolution dated June 16, 2008.43 Although we later reconsidered the Decision on February
18, 2014,44 the same does not affect the validity of the proceedings already conducted before the
HLURB, Office of the President, and Court of Appeals during the intermediate period that the stay
order was vacated. Neither does it affect our resolution of this petition for review because under the
Financial Rehabilitation and Insolvency Act of 2010 45 (FRIA), the stay order shall not apply to cases
already pending appeal in the Supreme Court. 46 Section 146 of the FRIA expressly allows the
application of its provisions to pending rehabilitation cases, except to the extent that their application
would not be feasible or would work injustice.47
The characterization of the Deed of Assignment between Pryce and China Bank as either an
assignment of receivables or a mortgage of real property is irrelevant to Pryce's obligation to Spouses
Octobre. The principal reason why Pryce raises this argument is to elude the applicability of Section 18
of Presidential Decree No. 957.48 But Spouses Octobre's claim is precisely premised on its contract with
Pryce, not this specific provision of law. Hence, even if the provision is inapplicable, Pryce's contractual
liability to deliver the titles to Spouses Octobre remains.
WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals in
CA-G.R. SP N9. 103615 are MODIFIED in that nominal damages in the amount of P30,000.00 are
awarded in lieu of compensatory damages.
3.) GR No. 223637, Aug 28, 2019, ERIC STO. TOMAS v. ADORACION I.
DEL VALLE
On the question of whether or not the HLURB had basis to award moral and exemplary
damages and attorney's fees in favor of respondents, the Court finds no reason to depart from the
findings of Arbiter Melchor and the HLURB, as affirmed by the CA.
Moral damages may be awarded when there is willful injury to property if the court should find
that, under the circumstances, such damages are justly due.[48] Further, exemplary damages may be
awarded by way of example or correction for the public good, in addition to the moral damages.[49]
In this case, the CA aptly observed that petitioners violated respondents' property rights and acted
with discrimination and bad faith when they passed the June 21, 2009 Board Resolution[50] restricting
the construction of duplexes in Vermont after respondents were able to secure a building permit, and
despite the fact that some duplexes already existed therein prior to the issuance of the resolution.
Verily, the award of moral and exemplary damages in favor of respondents was proper.
Moreover, the award of attorney's fees and litigation expenses was in order. Recovery of
attorney's fees and expenses of litigation, other than judicial costs, may be allowed in cases where
"the defendant's act or omission has compelled the plaintiff x x x to incur expenses to protect his
interest."[51] Here, due to petitioners' prolonged refusal to allow respondents to construct the
proposed duplex on their own lot, respondents were compelled to litigate their claim before the HLURB
and to incur expenses to protect their rights and interests. Consequently, respondents' entitlement to
the recovery of attorney's fees and litigation expenses cannot be denied.
4.)