Republic of the PhilippinesSUPREME COURTManilaTHIRD DIVISIONG.R. No. 159617 August 8, 27RO!ERTO C. SICAM "#$ AGENCIA $% R.C. SICAM, INC., petitioners, vs.&U&U V. 'ORGE "#$ CESAR 'ORGE, respondents.D E C I S I O NAUSTRIA(MARTINE), J.*Before us is a Petitionfor Reviewon Certiorari filedby Roberto C. Sicam, Jr.(petitioner Sicam and Agencia deR.C. Sicam, !nc. (petitioner corporation see"in# toannul the $ecision% of the Court of &ppeals dated March '%, ())', and itsResolution( dated &u#ust *, ())', in C& +.R. C, -o. .//''.!t appearsthat ondifferent datesfromSeptemberto0ctober%1*2, 3ulu,.Jor#e(respondent 3ulu pawnedseveral piecesof 4ewelrywith Agencia de R. C. Sicamlocated at -o. %2 uirre &ve., B5 6omes Para7a8ue, Metro Manila, to secure a loanin the total amount of P.1,.)).)).0n 0ctober %1, %1*2, two armed men entered the pawnshop and too" awaywhatever cash and 4ewelry were found inside the pawnshop vault. 9he incident wasentered in the police blotter of the Southern Police $istrict, Para7a8ue Police Stationas follows:!nvesti#ation shows that at above 9$P0, while victims were inside the office,two(( maleunidentifiedpersonsenteredintothesaidofficewith#unsdrawn. Suspects(sic (% went strai#ht insideandpo"edhis#untowardRomeo Sicam and thereby tied him with an electric wire while suspects (sic(( po"ed his #un toward $ivina Mata and !sabelita Rodri#ue; and orderedthem to lay (sic face flat on the floor. Suspects as"ed forcibly the case andassorted pawned 4ewelries items mentioned above.Suspectsafter ta"in#themoneyand4ewelriesfledonboardaMarson9oyota unidentified plate number.'Petitioner Sicam sent respondent 3ulu a letter dated 0ctober %1, %1*2 informin# herof the loss of her 4ewelry due to the robbery incident in the pawnshop. 0n -ovember(, %1*2, respondent 3ulu then wrote a letter< to petitioner Sicam e=pressin# disbeliefstatin# that when the robbery happened, all 4ewelry pawned were deposited with 5ar>ast Ban" near the pawnshop since it had been the practice that before they couldwithdraw, advance notice must be #iven to the pawnshop so it could withdraw the4ewelry from the ban". Respondent 3ulu then re8uested petitioner Sicam to preparethe pawned 4ewelry for withdrawal on -ovember /, %1*2 but petitioner Sicam failed toreturn the 4ewelry.0n September (*, %1**, respondent 3ulu 4oined by her husband, Cesar Jor#e, filed acomplainta#ainstpetitionerSicamwiththeRe#ional9rialCourt of Ma"ati see"in#indemnificationfor thelossof pawned4ewelryandpayment of actual, moral ande=emplary dama#es as well as attorney?s fees. 9he case was doc"eted as Civil Case-o. **@()'..Petitioner Sicam filed his &nswer contendin# that he is not the real party@in@interest asthepawnshopwasincorporatedon &pril (), %1*2and"nownas Agencia de R.C.Sicam, !ncA that petitioner corporation had e=ercised due care and dili#ence in thesafe"eepin# of the articles pled#ed with it and could not be made liable for an eventthat is fortuitous.Respondents subse8uently filed an &mended Complaint to include petitionercorporation.9hereafter, petitioner SicamfiledaMotionto$ismissasfar asheisconcernedconsiderin# that he is not the real party@in@interest. Respondents opposed the same.9he R9C denied the motion in an 0rder dated -ovember *, %1*1..&fter trial onthemerits, theR9Crenderedits$ecision/ datedJanuary%(, %11',dismissin# respondentsB complaint as well as petitionersB counterclaim. 9he R9C heldthat petitioner Sicam could not be made personally liable for a claim arisin# out of acorporate transactionA that in the &mended Complaint of respondents, they assertedthat Cplaintiff pawnedassorted4ewelriesindefendants? pawnshopCA andthat asaconse8uence of the separate 4uridical personality of a corporation, the corporate debtor credit is not the debt or credit of a stoc"holder.9he R9C further ruled that petitioner corporation could not be held liable for the lossof the pawned 4ewelry since it had not been rebutted by respondents that the loss ofthe pled#ed pieces of 4ewelry in the possession of the corporation was occasioned byarmedrobberyA that robberyisafortuitousevent whiche=emptsthevictimfromliability for the loss, citin# the case of Austria v. Court of AppealsA2 and that the partiesBtransaction was that of a pled#or and pled#ee and under &rt. %%2< of the Civil Code,the pawnshop as a pled#ee is not responsible for those events which could not beforeseen.Respondents appealed the R9C $ecision to the C&. !n a $ecision dated March '%,())', the C& reversed the R9C, the dispositive portion of which reads as follows:D6>R>50R>, premises considered, the instant &ppeal is +R&-9>$, andthe $ecision dated January %(, %11',of the Re#ional 9rial Court of Ma"ati,Branch /(, is hereby R>,>RS>$ and S>9 &S!$>, orderin# the appellees topay appellants the actual value of the lost 4ewelry amountin#to P(2(,))).)), and attorney? fees of P(2,()).)).*!n findin# petitioner Sicam liable to#ether with petitioner corporation, the C& appliedthe doctrine of piercin# the veil of corporate entity reasonin# that respondents weremisled into thin"in# that they were dealin# with the pawnshop owned by petitionerSicam as all the pawnshop tic"ets issued to them bear the words CAgencia de R.C.SicamCA andthat therewasnoindicationonthepawnshoptic"etsthat it wasthepetitionercorporationthat ownedthepawnshopwhiche=plainedwhyrespondentshad to amend their complaint impleadin# petitioner corporation.9he C& further held that the correspondin# dili#ence re8uired of a pawnshop is that itshould ta"e steps to secure and protect the pled#ed items and should ta"e steps toinsure itself a#ainst the loss of articles which are entrusted to its custody as it derivesearnin#s from the pawnshop trade which petitioners failed to doA that Austria is notapplicabletothis casesincetherobbery incident happenedin%1/%whenthecriminality had not as yet reached the levels attained in the present dayA that they areat least #uiltyof contributoryne#li#enceandshouldbeheldliableforthelossof4ewelriesA and that robberies and hold@ups are foreseeable ris"s in that thoseen#a#ed in the pawnshop business are e=pected to foresee.9he C& concluded that both petitioners should be 4ointly and severally held liable torespondents for the loss of the pawned 4ewelry.PetitionersB motionfor reconsideration wasdeniedin a Resolutiondated &u#ust*,())'.6ence, the instant petition for review with the followin# assi#nment of errors:96>C0ER905&PP>&3S>RR>$&-$D6>-!9$!$, !90P>->$!9S>35 90 R>,>RS&3, D6>- !9 &$0P9>$ E-CR!9!C&33F (!- 5&C9 !9R>PR0$EC>$ &S !9S 0D- D!960E9 !- 96> M>&-9!M>&CG-0D3>$+!-+ !9 D6&9 96>R>SP0-$>-9S &R+E>$!- 96>!RBR!>5, D6!C6 &R+EM>-9 D&S P&3P&B3F E-SES9&!-&B3>.96>C0ER905&PP>&3S>RR>$, &-$D6>-!9$!$, !90P>->$!9S>35 90 R>,>RS&3 BF 96!S 60-0R&B3> C0ER9, D6>- !9 &+&!-&$0P9>$E-CR!9!C&33F(BE9D!960E9 &CG-0D3>$+!-+!9 96>SEBM!SS!0-S0596>R>SP0-$>-9S!-96>!RBR!>5D!960E9&$$!-+ &-F96!-+M0R>96>R>90$>SP!9>96>5&C996&996>S&!$&R+EM>-90596>R>SP0-$>-9SC0E3$-096&,>B>>-SES9&!->$ !- ,!>D 05 E-R>BE99>$ >,!$>-C> 0- R>C0R$.1&nent the first assi#ned error, petitioners point out that the C&Bs findin# that petitionerSicamispersonallyliablefor thelossof thepawned4ewelriesisCavirtual anduncritical reproduction of the ar#uments set out on pp. .@/ of the &ppellantsB brief.C%)Petitioners ar#ue that the reproduced ar#uments of respondents in their &ppellantsBBrief suffer from infirmities, as follows:(% Respondentsconclusivelyassertedinpara#raph(of their &mendedComplaint that encia de R.C. Sicam, !nc. is the present owner of enciade R.C. Sicam Pawnshop, and therefore, the C& cannot rule a#ainst saidconclusive assertion of respondentsA(( 9he issue resolved a#ainst petitioner Sicam was not amon# those raisedand liti#ated in the trial courtA and(' By reason of the above infirmities, it was error for the C& to have piercedthe corporate veil since a corporation has a personality distinct and separatefrom its individual stoc"holders or members.&nent the second error, petitioners point out that the C& findin# on their ne#li#ence isli"ewiseanuneditedreproductionof respondentsB brief whichhadthefollowin#defects:(% 9here were unrebutted evidence on record that petitioners had observedthe dili#ence re8uired of them, i.e, they wanted to open a vault with a nearbyban" for purposes of safe"eepin# the pawned articles but was discoura#edby the Central Ban" (CB since CB rules provide that they can only store thepawned articles in a vault inside the pawnshop premises and no other placeA(( Petitioners weread4ud#edne#li#ent astheydidnot ta"einsurancea#ainst the loss of the pled#ed 4elweries, but it is 4udicial notice that due tohi#h incidence of crimes, insurance companies refused to cover pawnshopsand ban"s because of hi#h probability of losses due to robberiesA(' !n Hernandez v. Chairman, Commission on Audit (%21 SCR& '1, 3>C9R!C C0MP&-F,+.R. -o. %.*1%%Petitioner,Present@ versus @F-&R>S@S&-9!&+0, J.,Chairperson,&ES9R!&@M&R9!->M,M&9!3$> M&C&B&+$&3 R&M0F,C6!C0@-&M&R!0,B!>-,>-!$0 R&M0F, R0M&-&-&C6ER&, andR&M0F@R&M0S, R0S>M&R!>R>F>S, JJ.R&M0F, 05>3!& $ER!&- andCFR>-> P&-&$0,Promul#ated:Respondents.March C ! S ! 0 - &ES9R!&@M&R9!->M, J.: 9hisresolvesthePetitionforReviewonCertiorari underRulelectric Company (M>R&3C0 to pay 3eoncioRamoyN(O moral and e=emplary dama#es and attorney?s fees, and the C&ResolutionN'O dated July %, ())', denyin# petitioner?s motion for reconsideration, bereversed and set aside. 9he Re#ional 9rial Court (R9C of Jue;on City, Branch *%, accurately summari;edthe facts as culled from the records, thus: 9heevidenceonrecord hasestablishedthatin theyear%1*2 the -ational PowerCorporation(-PC filedwiththeM9CJue;onCityacasefor e4ectment a#ainstseveral personsalle#edlyille#allyoccupyin#itspropertiesinBaesa, Jue;onCity.&mon# the defendants in the e4ectment case was 3eoncio Ramoy, one of the plaintiffsin the case at bar. 0n &pril (*, %1*1 after the defendants failed to file an answer inspite of summons duly served, the M9C Branch '/, Jue;on City rendered 4ud#mentfor the plaintiff NM>R&3C0O and orderin# the defendants to demolish or remove thebuildin#andstructures theybuilt onthelandof theplaintiff andtovacatethepremises. !n the case of 3eoncio Ramoy, the Court found that he was occupyin# aportion of 3ot -o. 2(@B@(@B with the e=act location of his apartments indicated andencircled in the location map as -o. 2. & copy of the decision was furnished 3eoncioRamoy (>=hibits (, (@&, (@B, (@C, pp. %(*@%'%, RecordA 9S-, July (, %11', p. .. 0n June (), %11) -PC wrote Meralco re8uestin# for the immediate disconnection ofelectric power supply to allresidentialand commercialestablishments beneath the-PC transmission lines alon# Baesa, Jue;on City (>=h. 2, p. %=hibits '@$ to '@>, Rosemarie Ramoy (>=h. '@5, 0felia $urian (>=h. '@+, Jose ,ali;a (>=h. '@6 and Cyrene S. Panado (>=h. '@!. !naletter dated&u#ust %2, %11)Meralcore8uested-PCfor a4oint surveytodetermine all the establishments which are considered under -PC property in view ofthe fact that the houses in the area are very close to each other (>=h. %(. Shortlythereafter, a4oint surveywasconductedandthe-PCpersonnel pointedout theelectric meters to be disconnected (>=h. %'A 9S-, 0ctober *, %11', p. 2A 9S-, July%11=hibits $ to +, with submar"in#s, pp. */@*2, Record. Plaintiff 3eoncio Ramoy testified that he and his wife are the re#istered owners of aparcel of landcoveredby9C9-o. '(/'R&3C0 for not re8uirin# from -ational Power Corporation (-PC a writof e=ecution or demolition and in not coordinatin# with the court sheriff or other properofficer before complyin# with the -PC?s re8uest. 9hus, the C& held M>R&3C0 liablefor moral ande=emplarydama#es andattorney?s fees. M>R&3C0?s motionforreconsideration of the $ecision was denied per Resolution dated July %, ())'. 6ence, herein petition for review on certiorari on the followin# #rounds: !96>C0ER9 05 &PP>&3S +R&,>3F>RR>$D6>-!9 50E-$M>R&3C0->+3!+>-9 D6>- !9 $!SC0-->C9>$ 96> SEBJ>C9 >3>C9R!C S>R,!C> 05R>SP0-$>-9S. !!96> C0ER9 05 &PP>&3S +R&,>3F >RR>$ D6>- !9 &D&R$>$ M0R&3 &-$>P>MP3&RF$&M&+>S &-$ &990R->F?S5>>S &+&!-S9M>R&3C0E-$>R96>C!RCEMS9&-C>S96&996>3&99>R&C9>$!-+00$5&!96!-96>$!SC0-->C9!0- 05 96> >3>C9R!C S>R,!C>S 05 96> R>SP0-$>-9S. N.O 9he petition is partly meritorious. M>R&3C0admitsN/O thatrespondentsareitscustomersunderaServiceContractwhereby it is obli#edtosupply respondents withelectricity. -evertheless, uponre8uest of the -PC, M>R&3C0 disconnected its power supply to respondents on the#round that they were ille#ally occupyin# the -PC?s ri#ht of way. Ender the ServiceContract, NaO customer of electric service must show his ri#ht or proper interest overthe property in order that he will be provided with and assured a continuous electricservice.N2O M>R&3C0 ar#ues that since there is a $ecision of the Metropolitan 9rialCourt (M9C of Jue;on City rulin# that herein respondents were amon# the ille#aloccupants of the -PC?s ri#ht of way, M>R&3C0 was 4ustified in cuttin# off service torespondents. Clearly, respondents? causeof action a#ainst M>R&3C0is anchored on culpacontractual or breachof contract for thelatter?sdiscontinuanceof itsservicetorespondents under &rticle %%2) of the Civil Code which provides: &rticle %%2). 9hose who in the performance oftheir obli#ations are #uilty offraud,ne#li#ence, or delay, and those who in any manner contravene the tenor thereof, areliable for dama#es.!n Radio Communications of the Philippines, !nc. v. ,erche;,N*O the Court e=poundedon the nature of culpa contractual, thus:!n culpacontractual===themere proofofthee=istenceof thecontractand thefailure of its compliance 4ustify, prima facie, a correspondin# ri#ht of relief. 9he law,reco#ni;in# the obli#atory force of contracts, will not permit a party to be set free fromliability for any "ind of misperformance of the contractual underta"in# or acontraventionof thetenor thereof. &breachuponthecontract confersuponthein4ured party a valid cause for recoverin# that which may have been lost or suffered.9he remedy serves to preserve the interests of the promissee that may include hise=pectation interest, which is his interest in havin# the benefit of his bar#ain by bein#put in as #ood a position as he would have been in had the contract been performed,or his reliance interest, which is his interest in bein# reimbursed for loss caused byreliance on the contract by bein# put in as #ood a position as he would have been inhadthecontractnot beenmadeA orhisrestitutioninterest, whichishisinterest inhavin# restored to him any benefit that he has conferred on the other party. !ndeed,a#reements can accomplish little, either for their ma"ers or for society, unless theyare made the basis for action. 9he effect of every infraction is to create a new duty,that is, to ma"e recompense to the one who has been in4ured by the failure of anotherto observe his contractual obli#ation unless he can show e=tenuatin# circumstances,li"eproof of hise=erciseof duedili#ence===orof theattendanceof fortuitousevent, to e=cuse him from his ensuin# liability.N1O (>mphasis supplied &rticle %%2' also provides that the fault or ne#li#ence of the obli#or consists in theomissionof that dili#encewhichisre8uiredbythenatureof theobli#ationandcorresponds with the circumstances of the persons, of the time and of the place. 9heCourt emphasi;ed in Rid4o 9ape Q Chemical Corporation v. Court of &ppealsN%)O thatas a public utility, M>R&3C0 has the obli#ation to dischar#e its functions with utmostcare and dili#ence.N%%O 9heCourt a#reeswiththeC&that under thefactual milieuof thepresent case,M>R&3C0 failed to e=ercise the utmost de#ree of care and dili#ence re8uired of it.9o repeat, it was not enou#h for M>R&3C0 to merely rely on the $ecision of the M9Cwithout ascertainin#whether it hadbecomefinal ande=ecutory.,erily,onlyuponfinality of said $ecision can it be said with conclusiveness that respondents have nori#ht or proper interest over the sub4ect property, thus, are not entitled to the servicesof M>R&3C0. &lthou#hM>R&3C0insiststhat theM9C$ecisionisfinal ande=ecutory,it nevershowed any documentary evidence to support this alle#ation. Moreover, if it were truethat the decision was final and e=ecutory, the most prudent thin# for M>R&3C0 tohavedonewastocoordinatewiththeproper court officialsindeterminin#whichstructures are covered by said court order. 3i"ewise, there is no evidence on record toshow that this was done by M>R&3C0.9he utmost care and dili#ence re8uired of M>R&3C0 necessitates such #reat de#reeof prudenceonitspart, andfailuretoe=ercisethedili#encere8uiredmeansthatM>R&3C0 was at fault and ne#li#ent in the performance of its obli#ation. !n Rid4o9ape,N%(O the Court e=plained: NBOein# a public utility vested with vital public interest, M>R&3C0 is impressed withcertain obli#ations towards its customers and any omission on its part to perform suchduties would be pre4udicial to its interest. 5or in the final analysis, the bottom line isthat those who do not e=ercise such prudence in the dischar#e of their duties shall bemade to bear the conse8uences of such oversi#ht.N%'O9his bein# so, M>R&3C0 is liable for dama#es under &rticle %%2) of the Civil Code. 9he ne=t 8uestion is: &re respondents entitled to moral and e=emplary dama#es andattorney?s feesK &rticle ((() of the Civil Code provides: &rticle(((). Dillful in4urytopropertymaybeale#al #roundfor awardin#moraldama#es if the court should find that, under the circumstances, such dama#es are4ustly due. 9he same rule applies to breaches of contract where the defendant actedfraudulently or in bad faith. !n the present case, M>R&3C0wilfully caused in4ury to 3eoncio Ramoy bywithholdin#fromhimandhistenantsthesupplyof electricitytowhichtheywereentitledunder theServiceContract. 9hisiscontrarytopublicpolicybecause, asdiscussedabove, M>R&3C0, bein#avital publicutility, ise=pectedtoe=erciseutmost care and dili#ence in the performance of its obli#ation. !t was incumbent uponM>R&3C0 to do everythin# within its power to ensure that the improvements built byrespondents arewithinthe-PCsri#ht of waybeforedisconnectin#their powersupply. 9he Court emphasi;ed in Samar !! >lectric Cooperative, !nc. v. Jui4anoN%lectricity is a basic necessity the #eneration and distribution of which is imbued withpublicinterest, anditsproviderisapublicutilitysub4ect tostrict re#ulationbytheState in the e=ercise of police power. 5ailure to comply with these re#ulations will #iverise to the presumption of bad faith or abuse of ri#ht.N%.O (>mphasis supplied 9hus, by analo#y, M>R&3C0?s failure to e=ercise utmost care and dili#ence in theperformance of its obli#ation to 3eoncio Ramoy, its customer, is tantamount to badfaith. 3eoncio Ramoy testified that he suffered wounded feelin#s because ofM>R&3C0?s actions.N%/O 5urthermore, due to the lac" of power supply, the lessees ofhis four apartments on sub4ectlot left the premises.N%2O Clearly, therefore, 3eoncioRamoy is entitled to moral dama#es in the amount awarded by the C&. 3eoncioRamoy,thelonewitnessforrespondents, wastheonlyonewhotestifiedre#ardin# the effects on him of M>R&3C0?s electric service disconnection. 6is co@respondents Matilde Ramoy, Rosemarie Ramoy, 0felia $urian and Cyrene Panadodid not present any evidence of dama#es they suffered. !t is a hornboo" principle that dama#es may be awarded only if proven. !n Mahinay v.,elas8ue;, Jr.,N%*O the Court held thus: !n order that moral dama#es may be awarded, there must be pleadin# and proof ofmoral sufferin#, mental an#uish, fri#ht and the li"e. Dhile respondent alle#ed in hiscomplaint that hesufferedmental an#uish, seriousan=iety,woundedfeelin#sandmoral shoc", he failed to prove them durin# the trial. !ndeed, respondent should haveta"enthewitnessstandandshouldhavetestifiedonthemental an#uish, seriousan=iety, wounded feelin#s and other emotionaland mentalsufferin# he purportedlysuffered to sustain his claim for moral dama#es. Mere alle#ations do not sufficeA theymustbesubstantiatedbyclearandconvincin#proof. -ootherpersoncouldhaveproven such dama#es e=cept the respondent himself as they were e=tremelypersonal to him. !n Geirulf vs. Court of &ppeals, we held: Dhile no proof of pecuniary loss is necessary in order that moral dama#es may beawarded, theamount of indemnitybein#left tothediscretionof thecourt, it isnevertheless essentialthat the claimant should satisfactorily show the e=istence ofthe factual basis of dama#es and its causal connection to defendants acts. 9his is sobecause moral dama#es, thou#h incapable of pecuniary estimation, are in thecate#ory of an award desi#ned to compensate the claimant for actual in4ury sufferedand not to impose a penalty on the wron#doer. !n 5rancisco vs. +S!S, the Court heldthat there must be clear testimony on the an#uish and other forms of mental sufferin#.9hus, if theplaintiff failstota"ethewitnessstandandtestifyastohisHhersocialhumiliation, woundedfeelin#sandan=iety,moral dama#escannot beawarded. !nCocoland$evelopment Corporationvs. -ational 3aborRelationsCommission, theCourt held that additional facts must be pleaded and proven to warrant the #rant ofmoral dama#es under the Civil Code, these bein#, = = = social humiliation, woundedfeelin#s, #rave an=iety, etc. that resulted therefrom. ===9heawardof moral dama#esmust beanchoredtoaclear showin#thatrespondent actuallye=periencedmental an#uish, besmirchedreputation, sleeplessni#hts, woundedfeelin#s or similar in4ury. 9here was nobetter witness tothise=perience than respondent himself. Since respondent failed to testify on the witnessstand, the trial court did not have any factual basis to award moral dama#es to him.N%1O (>mphasis supplied 9hus, only respondent 3eoncio Ramoy, who testified as to his wounded feelin#s, maybe awarded moral dama#es.N()O Dith re#ard to e=emplary dama#es, &rticle (('( of the Civil Code provides that incontracts and 8uasi@contracts, the court may award e=emplary dama#es if thedefendant, in this case M>R&3C0, acted in a wanton, fraudulent, rec"less,oppressive, or malevolent manner, while &rticle (('' of the same Code provides thatsuch dama#es cannot be recovered as a matter of ri#ht and the ad4udication of thesame is within the discretion of the court. 9he Court finds that M>R&3C0 fell short of e=ercisin# the due dili#ence re8uired, butits actions cannot be considered wanton, fraudulent, rec"less, oppressive ormalevolent. Records show that M>R&3C0 did ta"e some measures, i.e., coordinatin#with -PC officials and conductin# a 4oint survey of the sub4ect area, to verify whichelectric meters should be disconnected althou#h these measures are not sufficient,considerin#thede#reeof dili#encere8uiredof it. 9hus, inthiscase, e=emplarydama#es should not be awarded. Since the Court does not deem it proper to award e=emplary dama#es in this case,then the C&?s award for attorney?s fees should li"ewise be deleted, as &rticle (()* oftheCivil Codestatesthat intheabsenceof stipulation, attorney?sfeescannot berecovered e=cept in cases provided for in said &rticle, to wit: &rticle (()*. !n the absence of stipulation, attorneys fees and e=penses of liti#ation,other than 4udicial costs, cannot be recovered, e=cept: (% Dhen e=emplary dama#es are awardedA (( Dhen the defendants act or omission has compelled the plaintiff to liti#ate withthird persons or to incur e=penses to protect his interestA (' !n criminal cases of malicious prosecution a#ainst the plaintiffA (< !n case of a clearly unfounded civil action or proceedin# a#ainst the plaintiffA (. Dhere the defendant acted in #ross and evident bad faith in refusin# to satisfy theplaintiffs plainly valid, 4ust and demandable claimA (/ !n actions for le#al supportA (2 !n actions for the recovery of wa#es of household helpers, laborers and s"illedwor"ersA (*!nactionsforindemnityunderwor"menscompensationandemployersliabilitylawsA (1 !n a separate civil action to recover civil liability arisin# from a crimeA (%) Dhen at least double 4udicial costs are awardedA (%% !n any other case where the court deems it 4ust and e8uitable that attorneys feesand e=penses of liti#ation should be recovered. !n all cases, the attorneys fees and e=penses of liti#ation must be reasonable. -one of the #rounds for recovery of attorney?s fees are present.D6>R>50R>, thepetitionisP&R93F+R&-9>$. 9he$ecisionof theCourt of&ppeals is &55!RM>$ with M0$!5!C&9!0-. 9he award for e=emplary dama#es andattorney?s fees is $>3>9>$. -o costs.S0 0R$>R>$.Republic of the PhilippinesSupreme CourtManila S>C0-$ $!,!S!0- S03&R 6&R,>S9, !-C.,Petitioner, @ versus @$&,&0 C0RRE+&9>$ C&R90- C0RP0R&9!0-,Respondent. +.R. -o. %2/*/* Present: C&RP!0, J.,Chairperson,-&C6ER&,P>R&39&,&B&$, andM>-$0M&, JJ. Promul#ated: July (/, ()%) =@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@= $>C!S!0- -&C6ER&, J.:Petitioner see"s a review of the Court of &ppeals (C& $ecisionN%O dated September(%, ())/ and ResolutionN(O dated 5ebruary (', ())2, which denied petitioners motionfor reconsideration. 9he assailed $ecision denied petitioners claim for reimbursementfor the amount it paid to respondent for the manufacture of corru#ated carton bo=es. 9he case arose from the followin# antecedents: !n the first 8uarter of %11*, petitioner, Solar 6arvest, !nc., entered into an a#reementwith respondent, $avao Corru#ated Carton Corporation, for the purchase ofcorru#ated carton bo=es, specifically desi#ned for petitioners business ofe=portin#fresh bananas, at ESR%.%) each. 9he a#reement was not reduced into writin#. 9o #etthe production underway, petitioner deposited, on March '%, %11*, ESRstanislao testifiedthat hemet Juein$avao in 0ctober %11* to inspect the bo=es and that the latter #ot samples of them.!n5ebruary())), theyinspectedthebo=esa#ainandJue#ot moresamples.>stanislaosaidthatpetitionerdidnot pic"upthebo=esbecausetheshipdidnotarrive.N%%O Jaime 9an (9an, president of respondent, also testified that his companyfinished production of the '/,.)) bo=es on &pril ', %11* and that petitioner made asecondorderof (C0.De find no reversible error in the assailed $ecision that would 4ustify the #rant of thispetition.Petitionersclaimforreimbursement isactuallyoneforrescission(orresolutionofcontract under &rticle %%1% of the Civil Code, which reads:&rt. %%1%. 9he power to rescind obli#ations is implied in reciprocal ones, in case oneof the obli#ors should not comply with what is incumbent upon him.9hein4uredpartymaychoosebetweenthefulfillment andtherescissionof theobli#ation, with the payment of dama#es in either case. 6e may also see" rescission,even after he has chosen fulfillment, if the latter should become impossible.9he court shall decree the rescission claimed, unless there be 4ust cause authori;in#the fi=in# of a period.9hisis understood tobewithoutpre4udice tothe ri#hts ofthird persons whohaveac8uired the thin#, in accordance with &rticles %'*. and %'** and the Mort#a#e 3aw. 9he ri#ht to rescind a contract arises once the other party defaults in the performanceofhis obli#ation.!n determinin# whendefaultoccurs, &rt.%%1% shouldbeta"en incon4unction with &rt. %%/1 of the same law, which provides: &rt. %%/1. 9hose obli#ed to deliver or to do somethin# incur in delay from the time theobli#ee 4udicially or e=tra4udicially demands fromthemthe fulfillment of theirobli#ation.6owever, the demand by the creditor shall not be necessary in order that delay maye=ist: (% Dhen the obli#ation or the law e=pressly so declaresA or (( Dhen from the nature and the circumstances of the obli#ation it appearsthat the desi#nation of the time when the thin# is to be delivered or the service is tobe rendered was a controllin# motive for the establishment of the contractA or (' Dhen demand would be useless, as when the obli#or has rendered itbeyond his power to perform.!n reciprocal obli#ations, neither party incurs in delay if the other does not comply oris not ready to comply in a proper manner with what is incumbent upon him. 5rom themoment one of the parties fulfills his obli#ation, delay by the other be#ins. !n reciprocal obli#ations, as in a contract of sale, the #eneral rule is that the fulfillmentof the parties respective obli#ations should be simultaneous. 6ence, no demand is#enerally necessary because, once a party fulfills his obli#ation and the other partydoes not fulfill his, the latter automatically incurs in delay. But when different dates forperformanceof theobli#ationsarefi=ed, thedefault for eachobli#ationmust bedetermined by the rules #iven in the first para#raph of the present article,N%1O that is,the other party would incur in delay only from the moment the other party demandsfulfillment of the formers obli#ation. 9hus, even in reciprocal obli#ations, if the periodfor the fulfillment of the obli#ation is fi=ed, demand upon the obli#ee is still necessarybeforetheobli#or canbeconsideredindefault andbeforeacauseof actionforrescission will accrue.>vident from the records and even from the alle#ations in the complaint was the lac"of demand by petitioner upon respondent to fulfill its obli#ation to manufacture anddeliver the bo=es. 9he Complaint only alle#ed that petitioner made a follow@up uponrespondent, which, however, would not 8ualify as a demand for the fulfillment of theobli#ation. Petitioners witness also testified that they made a follow@up of the bo=es,but not ademand. -oteista"enof thefact that, withrespect totheir claimforreimbursement, the Complaint alle#ed and the witness testified that a demand letterwas sent to respondent. Dithout a previous demand for the fulfillment of theobli#ation, petitioner would not have a cause of action for rescission a#ainstrespondent asthelatter wouldnot yet beconsideredinbreachof itscontractualobli#ation.>ven assumin# that a demand had been previously made before filin# the presentcase, petitioners claim for reimbursement would still fail, as the circumstances wouldshow that respondent was not #uilty of breach of contract.9he e=istence of a breach of contract is a factual matter not usually reviewed in apetitionfor reviewunder Rulestanislao who accompaniedJue to the factory, attestin# that, durin# their first visit to the company, they saw thepileof petitionersbo=esandJuetoo"samplesthereof. Jue, petitionerswitness,himself confirmed this incident. 6e testified that 9an pointed the bo=es to him and thathe #ot a sample and saw that it was blan". Jues absolute assertion that the bo=eswere not manufactured is, therefore, implausible and suspicious. !n fact, we note that respondents counselmanifested in court,durin# trial, that hisclient was willin# to shoulder e=penses for a representative of the court to visit theplant and see the bo=es.N((O 6ad it been true that the bo=es were not yet completed,respondent wouldnot havebeensoboldastochallen#ethecourt toconduct anocular inspection of their warehouse. >ven in its Comment to this petition, respondentprays that petitioner be ordered to remove the bo=es from its factory site,N('O whichcould only mean that the bo=es are, up to the present, still in respondents premises. De also believe that the a#reement between the parties was for petitioner to pic" upthebo=esfromrespondentswarehouse, contrarytopetitionersalle#ation. 9hus, itwas due to petitioners fault that the bo=es were not delivered to 9&$>C0. Petitioner had the burden to prove that the a#reement was, in fact, for respondent todeliver the bo=es within ') days from payment, as alle#ed in the Complaint. !ts solewitness, Jue, was not even competent to testify on the terms of the a#reement and,therefore, wecannot #ivemuchcredencetohistestimony. !t appearedfromthetestimony of Jue that he did not personally place the order with 9an, thus: J. -o, my 8uestion is, you went to $avao City and placed your order thereK&. ! made a phone call. J. Fou made a phone call to Mr. 9anK&. 9he first time, the first call to Mr. &lfNreOd 0n#. &lfred 0n# has a contact with Mr.9an. J. So, your first statement that you were the one who placed the order is not trueK&. 9hats true. 9he Solar 6arvest made a contact with Mr. 9an and ! deposited themoney in the ban". J. Fou said a while a#o NtOhat you were the one who called Mr. 9an and placed theorder for '/,.)) bo=es, isnt itK&. 5irst time it was Mr. &lfred 0n#. J. !t was Mr. 0n# who placed the orderN,O not youK&. Fes, sir.N(stanislaoK&. Fes, sir.N(.O Moreover, assumin# that respondent was obli#ed to deliver the bo=es, it could nothavecompliedwithsuchobli#ation. Jue, insistin#that thebo=eshadnot beenmanufactured, admitted that he did not #ive respondent the authority to deliver thebo=es to 9&$>C0: J. $id you #ive authority to Mr. 9an to deliver these bo=es to 9&$>C0K&. -o, sir. &s ! have said, before the delivery, we must have to chec" the carton, the8uantity and 8uality. But ! have not seen a sin#le carton. J. &reyoutryin#toimpressupontheNcOourt that it isonlyafter thebo=esarecompleted, will you #ive authority to Mr. 9an to deliver the bo=es to 9&$>C0NKO&. Sir, because when ! chec"ed the plant, ! have not seen any carton. ! as"ed Mr. 9anto rush the carton but notN(/O J. $id you #ive any authority for Mr. 9an to deliver these bo=es to 9&$>C0K&. Because ! have not seen any of my carton. J. Fou dont have any authority yet #iven to Mr. 9anK&. -one, your 6onor.N(2O Surely, without suchauthority, 9&$>C0wouldnot have allowedrespondent todeposit the bo=es within its premises. !nsum, theCourt finds that petitioner failedtoestablishacauseof actionforrescission, the evidence havin# shown that respondent did not commit any breach ofitscontractual obli#ation. &spreviouslystated, thesub4ect bo=esarestill withinrespondents premises. 9o put a rest to this dispute, we therefore relieve respondentfrom the burden of havin# to "eep the bo=es within its premises and, conse8uently,#ive it the ri#ht to dispose of them, after petitioner is #iven a period of time withinwhich to remove them from the premises. D6>R>50R>, premises considered, the petition is $>-!>$. 9he Court of &ppeals$ecisiondatedSeptember(%, ())/andResolutiondated5ebruary(', ())2are&55!RM>$. !naddition, petitioneris#ivenaperiodof ')daysfromnoticewithinwhich to cause the removal of the '/,.))bo=es from respondents warehouse. &fter the lapse of said period and petitioner failsto effect such removal, respondent shall have the ri#ht to dispose of the bo=es in anymanner it may deem fit. S0 0R$>R>$.S>C0-$ $!,!S!0- M!-$&-&0 9>RM!-&3 &-$ +.R. -o. %/(R&+> S>R,!C>, !-C.Petitioner, Present: @ versus @ C&RP!0 M0R&3>S ,S JJ.,&ctin# Chairperson,9!-+&,P60>-!P &SSER&-C> ,>3&SC0, JR.,C0MP&-F 05 ->D F0RGH 3>0-&R$0 $> C&S9R0,SS andMC+>> Q C0., !-C., BR!0-, JJ.Respondent.Promul#ated:May *, ())1=@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@= $ > C ! S ! 0 - 9!-+&, J.:Before us is a petition for review on certiorariN%O under Rule !-S9&9>$ M!-ESthe awards of P%)),))).)) as attorneys fees and P*',1R>$.Republic of the PhilippinesSEPR>M> C0ER9Manila5!RS9 $!,!S!0-+.R. -o. 3@'))./ &u#ust '), %1**M&RC>30 &+C&0!3!, plaintiff@appelleevs.+0,>R-M>-9 S>R,!C> !-SER&-C> SFS9>M, defendant@appellant.&rtemio 3. caoili for plaintiff@appellee.0ffice of the +overnment Corporate Counsel for defendant@appellant. -&R,&S&, J.:9he appellant +overnment Service !nsurance System, (+S!S, for short havin#approved the application of the appellee caoili for the purchase of a house and lotin the +S!S 6ousin# Pro4ect at -an#"a Mari"ina, Ri;al, sub4ect to the condition thatthe latter should forthwith occupy the house, a condition that acoili tried to fulfill butcould not for the reason that the house was absolutely uninhabitableA caoili, afterpayin# the first installment and other fees, havin# thereafter refused to ma"e furtherpayment of other stipulated installments until +S!S had made the house habitableAandappellant havin#refusedtodoso, optin#insteadtocancel theawardanddemand the vacation by caoili of the premisesA and caoili havin# sued the +S!Sin the Court of 5irst !nstance of Manila for specific performance with dama#es andhavin# obtained a favorable 4ud#ment, the case was appealled to this Court by the+S!S. !ts appeal must fail.9he essential facts are not in dispute. &pproval of caoili?s aforementionedapplicationfor purchase%wascontainedinaletter (addressedto caoili andsi#ned by +S!S Mana#er &rchimedes ,illanueva in behalf of the Chairman@+eneralMana#er, readin# as follows:Please be informed that your application to purchase a house and lot in our +S!S6ousin# Pro4ect at -an#"a, Mari"ina, Ri;al, has been approved by this 0ffice. 3ot -o.(/, Bloc" -o. (R>50R>, the4ud#ment of theCourt a8uoinsofarasit invalidatesandsetsaside the cancellation by respondent +S!S of the award in favor of petitioner caoiliof 3ot -o. (/, Bloc"-o. ($ as bein# in accord with the factsandthelaw.Said4ud#mentsishowever modifiedbydeletin#there8uirement forrespondent +S!SCtocompletethehousein8uestionsoastoma"ethesamehabitable,C and instead it is hereby 0R$>R>$ that the contract between the partiesrelative to the property above described be modified by addin# to the cost of the land,as of the time of perfection of the contract, the cost of the house in its unfinished statealso as of the time of perfection of the contract, and correspondin#ly ad4ustin# theamorti;ations to be paid by petitioner caoili, the modification to be effected afterdeterminationbytheCourt a8uoof thevalueof saidhouseonthebasisof thea#reement of the parties, or if this is not possible by such commissioner orcommissioners as the Court may appoint. -o pronouncement as to costs.S0 0R$>R>$.Cru;, +ancayco, &8uino and Medialdea, JJ., concur.