Pryce Properties Corporation vs. Spouses Octobre Case Digest

Pryce Properties Corporation vs. Sps. Sotero Octobre, Jr., et al.

G.R. No. 186976. December 7, 2016

Facts

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. The parties subsequently executed a Contract to Sell over the lot for the price of P2,897,510.00 on January 7, 1998. 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. 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. Thus, on May 18, 2004, Spouses Octobre filed a complaint before the Housing and Land Use Regulatory Board (HLURB), for specific performance, revocation of certificate of registration, refund of payments, damages and attorney's fees.

Pryce was unable to deliver the titles to Spouses Octobre 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 executed on June 27, 1996 under which 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 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. When Pryce defaulted in its loan obligations to China Bank sometime in May 2002, China Bank refused to return the titles to Pryce.

The HLURB Arbiter 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.

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. Pryce moved for reconsideration but it was denied.

Thereafter, Pryce appealed the case to the Office of the President, which affirmed 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.

Pryce went to the Supreme 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.

Issue

Whether a breach of contract automatically triggers the award of actual or compensatory damages.

Ruling

No. 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.

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.

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.” 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.

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 plaintiffs 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. xxx xxx. So long as there is a violation of the right of the plaintiff-whether based on law, contract, or other sources of obligations-an award of nominal damages is proper. Proof of bad faith is not required. The BLURB 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.

WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 103615 are MODIFIED in that nominal damages in the amount of P30,000.00 are awarded in lieu of compensatory damages.