Crystal v. BPI

Doctrine: While the Court may allow the grant of moral damages to corporations, it is not automatically granted; there must still be proof of the existence of the factual basis of the damage and its causal relation to the defendant’s acts.

Facts: Spouses Raymundo and Desamparados Crystal obtained a loan in behalf of Cebu Contractors Consortium Co. (CCCC) from BPI-Butuan. The loan was secured by a chattel mortgage on heavy equipment and machinery. On the same date, the spoused executed in favor of BPI-Butuan a Continuing Suretyship where they bound themselves as surety of CCCC. Thereafter, Raymundo Crystal executed a promissory note. CCCC renewed a previous loan, this time from BPI-Cebu. The renewal was evidenced by a promissory note signed by the spouses in their personal capacities and as managing partners of CCCC. The promissory note states that the spouses are jointly and severally liable with CCCC. Before the original loan could be granted, BPI-Cebu required CCCC to put up a security. However, CCCC had no real property to offer as security for the loan, hence, the spouses executed a real estate mortgage over their own property. They executed another REM over the same lot in favor of BPI-Cebu to secure additional loan for CCCC. CCCC, as well as the spouses, failed to pay their obligations. BPI resorted to the foreclosure of the chattel and real estate mortgage. BPI filed a complaint for the sum of money against CCCC and the spouses before RTC Butuan. The spouses filed an injunction. RTC dismissed the spouses’ complaint and ordered them to pay moral and exemplary damages and attorney's fees to BPI. The spouses appeal but was dismissed. The spouses moved for reconsideration but the CA also denied their motion.

Issue: Whether or not the award for damages is proper

Held: In the more recent cases of ABS- CBN Corp. v. Court of Appeals, et al., 301 SCRA 572 (1999) and Filipinas Broadcasting Network, Inc. v. Ago Medical and Educational Center-Bicol Christian College of Medicine (AMEC-BCCM), 448 SCRA 413 (2005), the Court held that the statements in Manero and Mambulao were mere obiter dicta, implying that the award of moral damages to corporations is not a hard and fast rule. Indeed, while the Court may allow the grant of moral damages to corporations, it is not automatically granted; there must still be proof of the existence of the factual basis of the damage and its causal relation to the defendant’s acts. This is so because moral damages, though incapable of pecuniary estimation, are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer.

The awards of exemplary damages and attorney’s fees, however, are proper. Exemplary damages, on the other hand, are imposed by way of example or correction for the public good, when the party to a contract acts in a wanton, fraudulent, oppressive or malevolent manner, while attorney’s fees are allowed when exemplary damages are awarded and when the party to a suit is compelled to incur expenses to protect his interest. The spouses instituted their complaint against BPI notwithstanding the fact that they were the ones who failed to pay their obligations. Consequently, BPI was forced to litigate and defend its interest. For these reasons, BPI is entitled to the awards of exemplary damages and attorney’s fees.