Pen Development Corporation v. Martinez Leyba, Inc.

Doctrine: A juridical person is generally not entitled to moral damages because, unlike a natural person, it cannot experience physical suffering, or such sentiments as wounded feelings, serious anxiety, mental anguish or moral shock. While the courts may allow the grant of moral damages to corporations in exceptional situations, it is not automatically granted because there must still be proof of the existence of the factual basis of the damage and its casual relation to the defendant’s acts. 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.

Facts: Plaintiff-Appellee Martinez Leyba, Inc. is a corporation organized and existing under Philippine Laws and the registered owner of 3 parcels of land in Antipolo, Rizal. Defendant-Appellants Pen Devt and Las Brisas Resorts are also domestic corporations duly organized and existing under Philippine laws, which merged into one corporate entity under the name Las Brisas Resorts Corporation. Their land is situated adjacent to the lands owned by Martinez. Martinez noticed that Las Brisas’ fence seemed to encroached on its land. Upon verification by surveyors, Martinez was informed that the fence of Las Brisas overlaps its property. Martinez and Las Brisas exchanged letters but the fence remained on Martinez’ land. Martinez filed a Complaint for Quieting of Title, Cancellation of Title and Recovery of Ownership with Damages against Las Brisas before RTC Antipolo City which ruled in favor of the plaintiff. Petitioners filed a joint Motion for Reconsideration but RTC held its ground. Petitioners appealed before the CA but the CA affirmed the RTC decision, but with modifications, deleting moral and exemplary damages and adding nominal damages.

Issue: Whether or not the CA erred in its decision.

Held: No. The SC affirmed CA’s decision in toto. According to the CA:

A juridical person is generally not entitled to moral damages because, unlike a natural person, it cannot experience physical suffering, or such sentiments as wounded feelings, serious anxiety, mental anguish or moral shock. While the courts may allow the grant of moral damages to corporations in exceptional situations, it is not automatically granted because there must still be proof of the existence of the factual basis of the damage and its casual relation to the defendant’s acts. 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. In this case, We find no evidence that Martinez suffered besmirched reputation on account of the Las Brisas encroachment on Martinez’s land. Hence, the award of moral damages should be deleted.

Neither is Martinez entitled to exemplary damages. Exemplary damages may only be awarded if it has been shown that the wrongful act was accompanied by bad faith or done in a wanton, fraudulent and reckless or malevolent manner. Exemplary damages are allowed only in addition to moral damages such that no exemplary damage can be awarded unless the claimant first establishes his clear right to moral damages. As the moral damages are improper in the instant case, so is the award of exemplary damages.

Nevertheless, an award of nominal damages of P100,000.00 is warranted since Las Brisas violated the property rights of Martinez.