In 1997, Leo applied for a Caltex dealership of a company-owned service station in Sta. Cruz, Virac, Catanduanes; the dealership, however, was awarded to the spouses Francisco; Caltex, in informing him of the award to the spouses Francisco, informed him that he is now included in the dealership pool of Caltex. Leo protested the award to the spouses Francisco thru a letter. For the second time, he again applied for a dealership, and once again the dealership was awarded to another person, whom he learned was his brother-in-law, and according to him did not even meet the required dealership requirement, The reason cited by Caltex for the award to Cua was that the other application is more strategic in location. Firm in his belief that he is being bypassed by the company, Leo in a letter to the Caltex president insisted that his inclusion in the dealership pool established a “partnership inchoate” between him and Caltex which must be respected and fulfilled. Thru counsel, he also sent a demand letter to Caltex, reiterating his position that the award of the San Andres dealership to Cua deprived him of his rightful dealership, causing him injustice and irreparable damages. Thus, Mendoza demanded that Caltex settle the matter within fifteen (15) days from receipt of the letter of demand; otherwise he will be constrained to take the necessary legal remedy to protect his interest. Caltex refused, thus Leo filed a Complaint [for Torts & Damages with Preliminary Mandatory Injunction and/or Temporary Restraining Order (Complaint). In its Answer, Caltex maintained Mendoza’s lack of cause of action against it since he had no vested right to a dealership from Caltex. As Mendoza’s unfounded allegations allegedly tarnished its good name and reputation, Caltex prayed that it be awarded moral and exemplary damages, attorney’s fees and litigation expenses. (Caltex subsequently changed its name to Chevron Philippines, Inc.)
Ruling against Leo, the RTC held that Chevron had no obligation to award the dealership to Leo; hence, Leo is not entitled to any of the damages he prayed for. Conversely, considering its stature and prestige in the oil industry, the RTC deemed reasonable the award of PhP 1,000,000.00 as moral damages and PhP500,000.00 as exemplary damages to Chevron. The RTC also deemed just and equitable the award of attorney’s fees in the amount of PhP 291,838.85to Chevron since Mendoza’s Complaint against it was unfounded.
On appeal to the CA, the appellate court ruled that Leo’s appeal lacked merit. While maintaining the award of attorney’s fees and costs of suit in favor of Chevron, the CA held that Chevron is not entitled to moral and exemplary damages, finding that there was no evidence presented establishing the factual basis for the award of moral and exemplary damages in favor of Chevron.
Both parties parties appealed to the CA. Leo on the issue of whether or not abuse of rights was committed by Chevron (Caltex), and Chevron on the propriety of CA’s deletion of moral and exemplary damages in its favor.
The Ruling:
After a review of the records of the instant case, the Court finds the Chevron and Mendoza Petitions equally unmeritorious.
| Chevron did not commit any abuse of right in awarding dealerships to the Franciscos and Cua, and not to Mendoza. |
The Court shall first delve into the argument raised by Mendoza that the CA supposedly erred in sustaining the RTC’s Decision, which held that Chevron’s act of awarding dealerships to the Franciscos and Cua, and not to Mendoza, did not constitute an abuse of right. Mendoza maintains that “[Chevron’s] actions bordered on the abuse of its prerogative of choice.”
The Court finds Mendoza’s argument patently unmeritorious. There was no abuse of right committed by Chevron in denying an award of dealership in favor of Mendoza. The CA did not commit any reversible error when it sustained the RTC’s Decision dismissing Mendoza’s Complaint for lack of merit.
The Court has previously explained that the aforesaid Civil Code provision contains what is commonly referred to as the principle of abuse of rights. It sets certain standards which may be observed not only in the exercise of one’s rights but also in the performance of one’s duties. These standards are the following: to act with justice; to give everyone his due; and to observe honesty and good faith.
The recognized Civil Law Commentator, former CA Justice Eduardo P. Caguioa, explained that through the principle of abuse of rights, “he incurs in liability who, acting under the aegis of a legal right and an apparently valid exercise of the same, oversteps the bounds or limitations imposed on the right by equity and good faith[,] thereby causing damage to another or to society.”
As correctly explained by the CA in the assailed Decision, jurisprudence has held that the elements of an abuse of right under Article 19 of the Civil Codeare the following: (1) the existence of a legal right or duty, (2) which is exercised in bad faith, and (3) for the sole intent of prejudicing or injuring another. Malice or bad faith is at the core of an abuse of right. Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity. Such must be substantiated by evidence.In the instant case, as noted by the CA, “Mendoza utterly failed in this regard, and was unable to prove the alleged indications of bad faith on the part of Chevron.”
The unchallenged factual finding of the CA states that:
x x x [I]t is clear that [the Franciscos] were awarded the Virac dealership not because of the former’s relationship with the lessor of the land where the service station is situated, but because among the three (3) finalists, the Franciscos ranked first and Mendoza ranked only second. Mendoza cannot impeach Jose, who is his own witness, under Section 12, Rule 132 of the Rules of Court Having voluntarily offered Jose to the witness stand, Mendoza is bound by his testimony.
To recall, Jose, Mendoza’s own witness, testified under oath that Chevron assured the Franciscos that there was absolutely no undue advantage given to them by Chevron and that they were awarded the franchise by the latter because of Jose’s qualifications as a civil engineer and his wife’s experience as a former marketing manager.[35] There is absolutely no argument raised by Mendoza in his Petition that belies this factual finding by the CA.
With respect to Chevron’s award of the San Andres dealership to Cua, as emphasized by the CA, it was stipulated by the parties during the pre-trial that the site offered by Cua was a two-way street located along the national highway, making the site obviously and manifestly preferable compared to Mendoza’s site, which was located at a one-way, inner street not located along the national highway. Again, upon perusal of the Mendoza Petition, there is undeniably no cogent argument raised that seriously contradicts the factual finding by the CA that Chevron’s act of awarding a dealership in favor of Cua was perfectly above-board and was exercised in good faith.
In sum, the Court completely concurs with the CA’s assessment that “Chevron had been more than patient and accommodating to Mendoza who could not simply accept his defeat.”Chevron’s act of denying Mendoza’s stubborn and obstinate attempts to obtain something which he has absolutely no right to acquire is definitely not an actionable wrong.
The Court shall now delve into the issues raised with respect to the damages previously awarded by the RTC in favor of Chevron.
Chevron is not entitled to moral damages.
In the Chevron Petition, Chevron insist that the RTC committed an error in deleting the award for moral damages because the acts of Mendoza purportedly “showed the intention to destroy the reputation and credibility of petitioner Chevron.”[38]
The Court does not agree.
A corporation is not as a rule entitled to moral damages because, not being a natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish and moral shock. The only exception to this rule is where the corporation has a good reputation that is debased, resulting in its social humiliation.
Be that as it may, as explained in the very recent case of Noell Whessoe, Inc. v. Independent Testing Consultants, Inc., the Court held that “[c]laims for moral damages must have sufficient factual basis, either in the evidence presented or in the factual findings of the lower courts.“
Similarly, in the earlier case of Crystal v. Bank of the Philippine Islands,the Court held that:
x x x [T]here 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. (Emphasis supplied and italics in the original)
In the instant case, the CA factually found that: “Here, no evidence was presented by Chevron to establish the factual basis of its claim for moral damages. Mere allegations do not suffice; they must be substantiated by clear and convincing proof. Thus, We delete the award of moral damages in favor of Chevron.”
At this juncture, it must be stressed that, as an elementary rule, in an appeal by certiorari under Rule 45, the Court does not pass upon questions of fact as the factual findings of the trial and appellate courts are binding on the Court. The Court is not a trier of facts.
In any case, the Court finds that the CA did not commit any reversible error in not granting moral damages in favor of Chevron. Chevron supports its claim for moral damages merely by pointing out that Mendoza copy furnished third persons his correspondence with Chevron. However, there was absolutely no evidence presented showing that Chevron’s reputation was even remotely scathed by the letters of Mendoza. It is very much implausible and inconceivable how the mere act of furnishing copy of the letters from a single, unknown trader can even slightly affect the reputation of one of the largest oil companies in the country.
Hence, the CA’s assessment that no evidence was presented by Chevron to establish the factual basis of its claim for moral damages must be left undisturbed.
| Chevron is not entitled to exemplary damages. |
Considering that Chevron is not entitled to moral damages, necessarily, it is likewise not entitled to exemplary damages. As made clear under Article 2234 of the Civil Code, the plaintiff must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded. Hence, exemplary damages are merely ancillary with respect to moral, temperate, or compensatory damages. Jurisprudence has held that “this specie of damages is allowed only in addition to moral damages such that no exemplary damages can be awarded unless the claimant first establishes his clear right to moral damages.”
Therefore, the CA was correct in deleting the award of exemplary damages previously awarded by the RTC in favor of Chevron.
| The CA did not err in sustaining attorney’s fees and costs of suit in favor of Chevron |
Lastly, in the Mendoza Petition, Mendoza argues that the CA was mistaken in upholding the award of attorney’s fees and costs of suit in favor of Chevron, alleging that such award finds no basis.
The argument fails to convince.
According to Article 2208 of the Civil Code, attorney’s fees and expenses of litigation can be awarded by the court in the case of a clearly unfounded civil action or proceeding or in any other case where the court deems it just and equitable that attorney’s fees and expenses of litigation should be recovered.
As held by the CA, the award of attorney’s fees and costs of suit are warranted because “Mendoza’s Complaint against Chevron is unfounded.” Further, the RTC found that based on the documentary evidence on record, Mendoza’s Complaint was merely an unfounded suit instigated by a “sore loser x x x [who] refused to accept [the reasonable explanation of Chevron].”
Considering the serious lack of merit of Mendoza’s Complaint against Chevron, which considerably and palpably failed to substantiate the claim of abuse of right hurled against Chevron, the Court has no reason to overturn the RTC and CA’s assessment and exercise of discretion that it is just and equitable to impose attorney’s fees and litigation costs against Mendoza in favor of Chevron.
WHEREFORE, in view of the foregoing, the Petitions in G.R. Nos. 211533 and 212071 are hereby DENIED. The Decision dated September 18, 2013 and Resolution dated February 24, 2014 rendered by the Court of Appeals in CA-G.R. CV No. 93847 are AFFIRMED.
SO ORDERED.
CAGUIOA, J:
Carpio (Chairperson), Perlas-Bernabe, J. Reyes, Jr., and Lazaro-Javier, JJ., concur.
SECOND DIVISION
[ G.R. No. 211533, June 19, 2019 ]
G.R. No. 211533, June 19, 2019, CHEVRON PHILIPPINES, INC. (FORMERLY KNOWN AS CALTEX PHILIPPINES, INC.), PETITIONER, V. LEO Z. MENDOZA, RESPONDENT.
[G.R. No. 212071, June 19, 2019]
LEO Z. MENDOZA, PETITIONER, V. CHEVRON PHILIPPINES, INC., RESPONDENT.
Citations omitted.
SEE ALSO:
1 thought on “A corporation is not as a rule entitled to moral damages because, not being a natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish and moral shock.”