METRO BOTTLED WATER CORPORATION vs.

ANDRADA CONSTRUCTION &

DEVELOPMENT CORPORATION, INC.
G.R. No. 202430, March 06, 2019

FACTS: Petitioner Metro Bottled Water and respondent Andrada Construction entered into a
Construction Agreement for the construction of a reinforced concrete manufacturing plant in
Gateway Business Park, General Trias, Cavite for the contract price of Php 45,570,237.90. The
Construction Agreement covered all materials, labor, equipment, and tools, including any other
works required. The project was to be completed within 150 calendar days to be reckoned from
Andrada Construction's posting of a Performance Bond to answer for liquidated damages, costs
to complete the project, and third party claims. The Performance Bond was issued by Intra
Strata Assurance Corporation. Thereafter, Metro Bottled Water extended the period of
completion upon Andrada’s request, due to the movement of 1 bay of the plant building,
weather conditions, and change orders.

E.S. De Castro and Associates, Metro Bottled Water's consultant for the project, recommended
the forfeiture of the Performance Bond to answer for the completion and correction of the
project, as well as liquidated damages for delay. Thus, it filed a claim against the Performance
Bond issued by Intra Strata. Andrada opposed the claim for lack of legal and factual basis.

Andrada Construction sent letters to Metro Bottled Water requesting for payment of unpaid work
accomplishments amounting to Php 7,292,721.27.21 but Metro Bottled Water refused to pay.
This prompted Andrada Construction to file a Request for Arbitration before the Construction
Industry Arbitration Commission, alleging that Metro Bottled Water refused to pay its unpaid
work accomplishment amounting to Php 7,954,961.10, with interest of Php 494,297.31.24.
Metro Bottled Water denied the allegations and counterclaimed for cost to complete and correct
the project in the amount of Php 5,231,452.03 and liquidated damages in the amount of Php
1,663,884.36.

After the arbitral tribunal conducted inspection in the construction site, they ruled that Andrada
Construction was entitled to unpaid work accomplishment in the amount of 4,607,523.40, with
legal interest. It, however, denied Metro Bottled Water's counterclaims. The arbitral tribunal also
found that there was no delay in the completion since Metro Bottled Water validly granted an
extension.

Metro Bottled Water filed before the Court of Appeals a Petition for Review assailing the arbitral
award. The Court of Appeals dismissed the Petition for lack of merit and upheld the factual
findings of the Construction Industry Arbitration Commission. It agreed with the arbitral tribunal's
evaluation that Metro Bottled Water confirmed the completed works, and thus, Andrada
Construction was entitled to compensation. To deny the payment would be to permit unjust
enrichment at Andrada Construction's expense.

ISSUE: Whether or not petitioner Metro Bottled Water Corporation was liable to respondent
Andrada Consumption & Development Corporation, Inc. for unpaid work accomplishment.

RULING: Yes.

Services were rendered for which compensation was demanded. The contract between the
parties, however, inadequately provides for the mechanism by which compensation may be
due. The fair and expeditious resolution of the issue requires the arbitral tribunal to instead
apply equitable principles to arrive at a just conclusion.

In CE Construction, jurisprudence has settled that even in cases where parties enter into
contracts which do not strictly conform to standard formalities or to the typifying provisions of
nominate contracts, when one renders services to another, the latter must compensate the
former for the reasonable value of the services rendered. This amount shall be fixed by a court.
This is a matter so basic, the Court has once characterized it as one that "springs from the
fountain of good conscience"

As early as 1903, in Perez v. Pomar, the Court ruled that where one has rendered services to
another, and these services are accepted by the latter, in the absence of proof that the service
was rendered gratuitously, it is but just that he should pay a reasonable remuneration therefore
because "it is a well-known principle of law, that no one should be permitted to enrich himself to
the damage of another." Similarly in 1914, the Court declared that in this jurisdiction, even in the
absence of statute, "…under the general principle that one person may not enrich himself at the
expense of another, a judgment creditor would not be permitted to retain the purchase price of
land sold as the property of the judgment debtor after it has been made to appear that the
judgment debtor had no title to the land and that the purchaser had failed to secure title
thereto…"
The foregoing equitable principle which springs from the fountain of good conscience are
applicable to the case at bar.

Here, the arbitral tribunal computed the entire cost of Change Order Nos. 1 to 109 at
5,242,697.76.117 This includes that of Change Order Nos. 1 to 38, which petitioner
categorically admitted were authorized changes. Upon subtracting the contract price and other
costs chargeable to respondent, the arbitral tribunal found that there was still an unpaid amount
of 4,607,523.40,118 resulting from the costs of the change orders, which petitioner refuses to
pay.
 MARCELINO E. LOPEZ, FELIZA LOPEZ, ZOILO LOPEZ, LEONARDO LOPEZ, AND
SERGIO F. ANGELES vs. THE HON. COURT OF APPEALS AND PRIMEX CORPORATION
G.R. No. 163959, August 01, 2018

FACTS: Respondent Primex as vendee entered into a Deed of Conditional Sale (DCS) with the
herein petitioners as vendors. The parties agreed at a purchase price of 280 pesos per square
meter, translating into a total land purchase value of 39,208,120. Primex alleged that from the
time of the execution of the DCS, the company had dutifully complied with all its monetary
obligations under the said contract and was again ready to pay another 2,000,000.00 pesos
upon presentation by the petitioners of a valid certificate of title in the name of one or all of the
vendors. However, instead of delivering a valid title, petitioners delivered TCT No. 196256 and
while it was indeed registered under the name of one of the vendors, Marcelino Lopez, the title
was derived from OCT No. 537, which had been declared by the Supreme Court in G.R. No.
90380 dated September 13, 1990 as null and void together with all the other TCTs emanating
from the said OCT.

Consequently, Primex refused to accept TCT No. 196256 as a valid and sufficient compliance
with the terms of the DCS, which would warrant the release of another 2,000,000.00 pesos.
Despite its failure to deliver a valid title, petitioners threatened to sell or mortgage the subject
property to other parties on account of Primex's ostensible refusal to pay part of the purchase
price as scheduled. Hence, PRIMEX's a complaint for specific performance and preliminary
injunction.

The parties submitted a Compromise Agreement with Joint Motion to Dismiss and Withdrawal of
Petition.

Thereafter, the heirs of Marcelino Lopez tiled their oppositions arguing that Atty. Angeles no
longer had the authority to enter into and submit the Compromise Agreement because the
special power of attorney in his favor had ceased to have force and effect upon the death of
Marcelino Lopez.

ISSUE: Whether or not the authority of Atty. Angeles was terminated upon the death of
Marcelino Lopez.

RULING: Yes.

By the contract of agency, a person binds himself to render some service or to do something in
representation or on behalf of another with the consent or authority of the latter. For a contract
of agency to exist, therefore, the following requisites must concur, namely: (1) there must be
consent coming from persons or entities having the juridical capacity and capacity to act to enter
into such contract; (2) there must exist an object in the form of services to be undertaken by the
agent in favor of the principal; and (3) there must be a cause or consideration for the agency.

One of the modes of extinguishing a contract of agency is by the death of either the principal or
the agent.

In Rallos v. Felix Go Chan & Sons Realty Corporation, the Court declared that because death of
the principal extinguished the agency, it should follow a fortiori that any act of the agent after the
death of his principal should be held void ab initio unless the act fell under the exceptions
established under Article 1930 and Article 1931 of the Civil Code. The exceptions should be
strictly construed. In other words, the general rule is that the death of the principal or, by
analogy, the agent extinguishes the contract of agency, unless any of the circumstances
provided for under Article 1930 or Article 1931 obtains; in which case, notwithstanding the death
of either principal or agent, the contract of agency continues to exist.

Atty. Angeles asserted that he had been authorized by the Lopezes to enter into the
Compromise Agreement; and that his authority had formed part of the original pre-trial records
of the RTC.

Marcelino Lopez died on December 3, 2009, as borne out by the Certificate of Death submitted
by his heirs. As such, the Compromise Agreement, which was filed on February 2, 2012, was
entered into more than two years after the death of Marcelino Lopez. Considering that Atty.
Angeles had ceased to be the agent upon the death of Marcelino Lopez, Atty. Angeles'
execution and submission of the Compromise Agreement in behalf of the Lopezes by virtue of
the special power of attorney executed in his favor by Marcelino Lopez were void ab initio and of
no effect. The special power of attorney executed by Marcelino Lopez in favor of Atty. Angeles
had by then become functus officio. For the same reason, Atty. Angeles had no authority to
withdraw the petition for review on certiorari as far as the interest in the suit of the now-
deceased principal and his successors-in interest was concerned.

The want of authority in favor of Atty. Angeles was aggravated by the fact that he did not
disclose the death of the late Marcelino Lopez to the Court. His omission reflected the height of
unprofessionalism on his part, for it engendered the suspicion that he thereby tried to pass off
the Compromise Agreement as genuine and valid despite his authority under the special power
of attorney having terminated for all legal purposes.

Therefore, the Compromise Agreement is void.

 VDM TRADING, INC. AND SPOUSES LUIS AND NENA DOMINGO, REPRESENTED BY
THEIR ATTORNEY-IN-FACT, ATTY. F. WILLIAM L. VILLAREAL vs. LEONITA
CARUNGCONG AND WACK WACK TWIN TOWERS CONDOMINIUM ASSOCIATION, INC.,
G.R. No. 206709, February 06, 2019

FACTS: VDM Trading is the owner of Unit 2208B-1 located at Wack Wack Twin Towers
Condominium. Sps. Domingo are the actual occupants of the unit.

While the Sps. Domingo were in the United States, Nena's sister, Nancy, discovered that soapy
water was heavily penetrating through the ceiling of the Unit. With the leak persisting for several
days, Nancy reported the matter with Sps. Domingo's counsel and attorney-in-fact, Atty.
Villareal and as well as to Wack Wack's building administrator. After inspection, it was found
that the strong leak apparently came from Unit 2308B-1, which is located directly above Unit
2208B-1. Unit 2308B-1 is owned by Carungcong but was being leased by Tan at that time. Unit
2308B-1's balcony, which was being utilized as a laundry area, had unauthorized piping and
plumbing works installed therein, which were in violation of Wack Wack's rules and regulations,
as well as the building's original plans.

For this reason, Sps. Domingo through Atty. Villareal, sent a letter demanding that Wack Wack
and Carungcong make restoration works and/or pay for the damages caused upon the Unit.
When no action was taken and after the lapse of a considerable length of time, Atty. Villareal
sent another letter to respondents as well as to Dragon Real Estate Corporation, the developer
of the Condominium, demanding that repairs be made on the unit. Subsequently, repair works
on the unit were referred to M. Laher Construction for a quotation. The estimated cost in
repairing the unit amounted to 490,635. Afterwards, several demand letters were sent by the
counsel of the Sps. Domingo to Wack Wack, Carungcong, Tan, and Golden Dragon for the
payment of the amount quoted by M. Laher, but to no avail.

Hence, Sps. Domingo filed their complaint for damages. The Regional Trial Court rendered its
Decision granting the Complaint against Carungcong. VDM and Sps. Domingo filed their Motion
for Partial Reconsideration praying that Wack Wack be held solidarily liable with Carungcong
pursuant to the provisions of the Amended Master Deed. In its order, the RTC modified its
Decision and held that Wack Wack is solidarily liable with Carungcong for the award of
damages granted to the petitioners. Hence, respondents Carungcong and Wack Wack
appealed the RTC's Decision and Order before the CA. The CA granted the appeal and
reversed the RTC's Decision.

ISSUE: Whether or not respondents Carungcong and Wack Wack Twin Towers should be held
liable for damages

RULING: No.

By alleging that damage was caused to their property by virtue of the respondents' individual
and collective fault and/or negligence, the petitioners' cause of action is anchored on quasi-
delict.

According to Article 2176 of the Civil Code, whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-
delict.

A quasi-delict has the following elements: a) the damage suffered by the plaintiff; b) the act or
omission of the defendant supposedly constituting fault or negligence; and c) the causal
connection between the act and the damage sustained by the plaintiff, or proximate cause.

A perusal of the evidence on record shows that the foregoing elements of a quasi-delict are
absent insofar as respondents Carungcong and Wack Wack are concerned.

The full extent of the damage caused to the petitioners' Unit was not sufficiently proven.

Aside from the purely self-serving testimony of Atty. Villareal, the sole witness of the petitioners
who is also the petitioners' counsel, there was no sufficient evidence presented to show the
extent of the damage caused to the Unit.

As correctly found by the CA, the photographs offered into evidence by the petitioners merely
depict a wet bed, wet floor, and wet cabinet apparently taken from one room only, i.e., the
master bedroom. The CA was correct in its assessment that "no photographs were presented to
prove that the other rooms of Unit 2208B-1 were also damaged by the leak."
As regards the second element of a quasi-delict, a careful perusal of the evidence on record
shows that the petitioners failed to present even a shred of evidence that there was fault or
negligence on the part of the respondents Carungcong and Wack Wack.

The Court has held that in a cause of action based on quasi-delict, the negligence or fault
should be clearly established as it is the basis of the action. The burden of proof is thus placed
on the plaintiff, as it is the duty of a party to present evidence on the facts in issue necessary to
establish his claim or defense by the amount of evidence required by law. Therefore, if the
plaintiff alleged in his complaint that he was damaged because of the negligent acts of the
defendant, he has the burden of proving such negligence.

Applying the foregoing in the instant case, the burden of proving fault or negligence was clearly
not discharged by the petitioners.

Proximate cause between the supposed damage caused and the plumbing works undertaken
was not established.

To constitute quasi-delict, the alleged fault or negligence committed by the defendant must be
the proximate cause of the damage or injury suffered by the plaintiff.

Proximate cause is that cause which, in natural and continuous sequence, unbroken by any
efficient intervening cause, produces the injury and without which the result would not have
occurred.

Stated in simple terms, it must be proven that the supposed fault or negligence committed by
the respondents, i.e., the undertaking of plumbing works on Unit 2308B-1, was the cause of the
damage to the Unit.

Such was not proven by the petitioners.

First, as correctly observed by the CA, the claim that a supposed leak in the plumbing works
located in the balcony of Unit 2308B-1 caused the leakage of soapy water in various parts of the
Unit, including the various bedrooms inside the Unit, is highly doubtful and illogical. As noted by
the CA, the subject plumbing works are isolated in the balcony area of Unit 2308B-1. The
petitioners do not dispute that the said area is separated from the other areas of the unit and
sealed off by a wall and beam. Hence, if a leakage in the plumbing works on the balcony of Unit
2308B-1 indeed occurred, it is highly improbable that such leak would spread to a wide area of
the Unit.

Second, aside from the unsubstantiated self-serving testimony of Atty. Villareal, there was no
evidence presented to show that the supposed widespread leak of soapy water in the various
parts of the Unit was caused by plumbing works on the balcony of Unit 2308B-1. No witness or
document establishing a causal link between the plumbing works and the damage to the Unit
was offered. The petitioners could have utilized assessors or technical experts on building and
plumbing works to personally examine and assess the damage caused to the Unit to provide
some substantiation to the claim of proximate cause. However, no such witness was presented.
The petitioners relied solely on the testimony of their own counsel, Atty. Villareal. Proximate
cause cannot be established by the mere say-so of a self-serving witness.

Lastly, the fact that the plumbing works done in Unit 2308B-1 was not the cause of the damage
suffered by the petitioners' Unit is further supported by the factual finding of the CA that a case
before the HLURB was previously filed by the petitioners against Golden Dragon. In this
complaint, which was offered in evidence by the petitioners themselves, the latter alleged that in
1996, way before the installation of the subject plumbing works in Unit 2308B-1, they had
already discovered water leaks in the Unit which damaged the interiors thereof. It was the
petitioners' allegation that the water leakage in the Unit was made possible due to Golden
Dragon's delivery of a "defective and/or substandard unit." In fact, the CA noted that the HLURB
issued a Decision dated July 9, 2009 holding Golden Dragon liable for the water leakage
suffered by the petitioners. It is of no coincidence that the award for actual damages granted to
the petitioners is similar to the award for actual damages sought by the petitioners in the instant
case.

All in all, with the petitioners failing to prove the existence of the elements of a quasi-delict in the
instant case, the CA committed no reversible error that warrants the Court's exercise of its
discretionary appellate power.
BANK OF THE PHILIPPINE ISLANDS AND ANA C. GONZALES VS. SPOUSES FERNANDO
V. QUIAOIT AND NORA L. QUIAOIT
G.R. No. 199562, January 16, 2019

FACTS: Fernando Quiaoit maintains peso and dollar accounts with BPI Greenhills branch.
Fernando, through Merlyn Lambayong, encashed BPI Greenhills Check No. 003434 for
US$20,000. However, Lambayong did not count the US$20,000 that she received because the
money was placed in a large Manila envelope. BPI did not inform Lambayong that the dollar
bills were marked with its "chapa" and the bank did not issue any receipt containing the serial
number of the bills. Lambayong delivered the dollar bills to the Sps. Quiaoit in US$100
denomination in US$10,000 per bundle. Nora then purchased plane tickets worth US$13,100 for
their travel abroad, using part of the US$20,000 bills withdrawn from BPI.

Spouses Quiaoit left the Philippines for Jerusalem and Europe. Nora handcarried US$6,900
during the tour. However, Nora was placed in a shameful and embarrassing situation when
several banks in Madrid, Spain refused to exchange some of the US$100 bills because they
were counterfeit. Nora was also threatened that she would be taken to the police station when
she tried to purchase an item in a shop with the dollar bills. The spouses were also informed by
their friends, a priest and a nun, that the US dollar bills they gave them were refused by third
persons for being counterfeit. Their aunt, Elisa Galan also returned, via DHL, the five US$100
bills they gave her and advised them that they were not accepted for deposit by foreign banks
for being counterfeit.

When the spouses Quiaoit returned to the Philippines, they personally complained to Gonzales,
the bank manager of BPI Greenhills. The latter took from Fernando the remaining 44 dollar bills
worth US$4,400 and affixed her signature on the photocopy of the bills, acknowledging that she
received them. The spouses were informed that an investigation would be conducted but they
were not furnished any report. Gonzales informed Fernando that the absence of the
identification mark ("chapa") on the dollar bills meant they came from other sources and not
from BPI Greenhills. Fernando withdrew the remaining balance of his account through his
representative, Henry Mainot. The dollar bills withdrawn by Mainot were marked and the serial
numbers were listed. The spouses Quiaoit demanded in writing for the refund of the US$4,400
from Gonzales but BPI sent its written refusal to refund or reimburse the US$4,400.

The spouses Quiaoit alleged that BPI failed in its duty to ensure that the foreign currency bills it
furnishes its clients are genuine. According to them, they suffered public embarrassment,
humiliation, and possible imprisonment in a foreign country due to BPI's negligence and bad
faith.

BPI countered that it is the bank's standing policy and part of its internal control to mark all
dollar bills with "chapa" bearing the code of the branch when a foreign currency bill is
exchanged or withdrawn. BPI alleged that any local or foreign currency bill deposited or
withdrawn from the bank undergoes careful and meticulous scrutiny by highly trained and
experienced personnel for genuineness and authenticity. BPI alleged that the US$20,000 in
US$100 bills encashed by Fernando through Lambayong were inspected, counted, personally
examined, and subjected to a counterfeit detector machine by the bank teller under Gonzales'
direct supervision. Gonzales also personally inspected and "piece-counted" the dollar bills which
bore the identifying "chapa" and examined their genuineness and authenticity. BPI alleged that
after its investigation, it was established that the 44 US$100 bills surrendered by the spouses
Quiaoit were not the same as the dollar bills disbursed to Lambayong. The dollar bills did not
bear the identifying "chapa" from BPI Greenhills and as such, they came from another source.

The Regional Trial Court ruled in favor of Sps. Quiaoit. The Court of Appeals affirmed RTC’s
decision.

ISSUE: Whether or not BPI is liable for damages

RULING: Yes, BPI failed to exercise due diligence in the transaction.

In Spouses Carbonell v. Metropolitan Bank and Trust Company, the Court emphasized that the
General Banking Act of 2000 demands of banks the highest standards of integrity and
performance. The Court ruled that banks are under obligation to treat the accounts of their
depositors with meticulous care. The Court ruled that the bank's compliance with this degree of
diligence has to be determined in accordance with the particular circumstances of each case.

In this case, BPI failed to exercise the highest degree of diligence that is not only expected but
required of a banking institution.
It was established that Fernando informed BPI to prepare US$20,000 that he would withdraw
from his account. The withdrawal, through encashment of BPI Greenhills Check No. 003434,
was done five days later. BPI had ample opportunity to prepare the dollar bills. Since the dollar
bills were handed to Lambayong inside an envelope and in bundles, Lambayong did not check
them. However, as pointed out by the Court of Appeals, BPI could have listed down the serial
numbers of the dollar bills and erased any doubt as to whether the counterfeit bills came from it.
While BPI Greenhills marked the dollar bills with "chapa" to identify that they came from that
branch, Lambayong was not informed of the markings and hence, she could not have checked if
all the bills were marked.

BPI insists that there is no law requiring it to list down the serial numbers of the dollar bills.
However, it is well-settled that the diligence required of banks is more than that of a good father
of a family. Banks are required to exercise the highest degree of diligence in its banking
transactions. In releasing the dollar bills without listing down their serial numbers, BPI failed to
exercise the highest degree of care and diligence required of it. BPI exposed not only its client
but also itself to the situation that led to this case. Had BPI listed down the serial numbers, BPI's
presentation of a copy of such listed serial numbers would establish whether the returned 44
dollar bills came from BPI or not.

We agree with the Court of Appeals that the action of BPI is the proximate cause of the loss
suffered by the spouses Quiaoit. Proximate cause is defined as the cause which, in natural and
continuous sequence, unbroken by any efficient intervening cause, produces injury and without
which the result would not have occurred. Granting that Lambayong counted the two bundles of
the US$100 bills she received from the bank, there was no way for her, or for the spouses
Quiaoit, to determine whether the dollar bills were genuine or counterfeit. They did not have the
expertise to verify the genuineness of the bills, and they were not informed about the "chapa" on
the bills so that they could have checked the same. BPI cannot pass the burden on the spouses
Quiaoit to verify the genuineness of the bills, even if they did not check or count the dollar bills in
their possession while they were abroad.

The Court has also applied the doctrine of last clear chance in banking transactions. In Allied
Banking Corporation v. Bank of the Philippine Islands, the Court explained:

The doctrine of last clear chance, stated broadly, is that the negligence of the plaintiff does not
preclude a recovery for the negligence of the defendant where it appears that the defendant, by
exercising reasonable care and prudence, might have avoided injurious consequences to the
plaintiff notwithstanding the plaintiff's negligence. The doctrine necessarily assumes negligence
on the part of the defendant and contributory negligence on the part of the plaintiff, and does not
apply except upon that assumption. Stated differently, the antecedent negligence of the plaintiff
does not preclude him from recovering damages caused by the supervening negligence of the
defendant, who had the last fair chance to prevent the impending harm by the exercise of due
diligence. Moreover, in situations where the doctrine has been applied, it was defendant's failure
to exercise such ordinary care, having the last clear chance to avoid loss or injury, which was
the proximate cause of the occurrence of such loss or injury.

As pointed out by the Court of Appeals, BPI had the last clear chance to prove that all the dollar
bills it issued to the spouses Quiaoit were genuine and that the counterfeit bills did not come
from it if only it listed down the serial numbers of the bills. BPI's lapses in processing the
transaction fall below the extraordinary diligence required of it as a banking institution. Hence, it
must bear the consequences of its action.
 BNL MANAGEMENT CORPORATION AND ROMEO DAVID v. REYNALDO UY, RODIEL
BALOY, ATTY. LUALHATI CRUZ, ALBERTO WONG, TERESITA PASIA, ROLAND INGEL,
AND MARISSA SEVILLA
G.R. No. 210297, April 03, 2019

FACTS: BNL Management owned 6 condominium units at the Imperial Bayfront Tower
Condominium located at Malate, Manila. These units were leased to its clients under separate
contracts of lease. BNL Management also held exclusive rights to 3 parking spaces of Imperial
Bayfront.

BNL Management, through Romeo David, wrote a letter to the building administrator of Imperial
Bayfront concerning the following: 1) general cleanliness and maintenance of common areas; 2)
security; 3) building insurance; 4) encroachment on 2 of the parking spaces; and 5) the
annotation of the parking spaces on the mother title. The letter also provides that if the listed
problems remain unresolved, they will withhold all future payments of association dues until the
issues are resolved satisfactorily.

In a follow-up letter, BNL Management declared that it would withhold paying monthly dues and
instead deposit them and its arrears in a bank as escrow, which could be withdrawn by the
Imperial Bayfront only after it has complied with the demands in the letter.

In response, the Building Administrator explained that the failure to annotate ownership of the
parking spaces was due to BNL Management not submitting the necessary documents to the
Association. It added that the maintenance issues were due to lack of funds as a result of BNL
Management's nonpayment of association dues.

BNL Management received a letter from the building administrator containing a breakdown of its
arrears in the payment of association dues from November 1996 to June 1999. It received a
Second Notice of Billing which informed it of its pending arrears worth P180,981.80,
representing unpaid association dues from November 1996 to August 1999. The Second Notice
also contained a warning that after a third notice had been sent, the Association would
terminate utility services. Thereafter, BNL Management received the Third Notice of Billing.

Still, BNL Management did not pay the arrears. Thus, Imperial Bayfront disconnected the
lighting facilities in the 6 units owned by BNL Management pursuant to the Master Deed of the
Association. Thereafter, the water services were also disconnected from its units. This prompted
BNL Management and David to file before the Regional Trial Court a complaint for damages
and specific performance with preliminary mandatory/prohibitory injunction.

ISSUE: Whether or not petitioners BNL Management Corporation and its president, Romeo
David, are entitled to damages for the disconnection of water and electricity utilities from the
units they own at Imperial Bayfront.

RULING: No, petitioners are not entitled to the damages they prayed for.

Moral damages are awarded in circumstances enumerated under Article 2217 of the Civil Code:

ARTICLE 2217. Moral damages include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury. Though incapable of pecuniary computation, moral damages may be recovered if they
are the proximate result of the defendant's wrongful act or omission.

For moral damages to be awarded, the following requisites must be present:

Such damages, to be recoverable, must be the proximate result of a wrongful act or omission
the factual basis for which is satisfactorily established by the aggrieved party. An award of moral
damages would require certain conditions to be met; to wit: (1) First, there must be an injury,
whether physical, mental or psychological, clearly sustained by the claimant; (2) second, there
must be a culpable: act or omission factually established; (3) third, the wrongful act or omission
of the defendant is the proximate cause of the injury sustained by the claimant; and (4) fourth,
the award of damages is predicated on any of the cases stated in Article 2219.

Here, respondents were not found to have committed any culpable act or omission that would
warrant an award of moral damages for petitioner David. Clearly, the injury he allegedly
sustained was caused by his own failure, as president of petitioner BNL Management, to
resolve the corporation's nonpayment of dues.
For its part, petitioner BNL Management, being a corporation, is not entitled to moral damages.
In Noell Whessoe, Inc. v. Independent Testing Consultants, Inc.

A corporation is not a natural person. It is a creation of legal fiction and "has no feelings, no
emotions, no senses." A corporation is incapable of fright, anxiety, shock, humiliation, and
physical or mental suffering. "Mental suffering can be experienced only by one having a nervous
system and it flows from real ills, sorrows, and griefs of life." A corporation, not having a nervous
system or a human body, does not experience physical suffering, mental anguish,
embarrassment, or wounded feelings. Thus, a corporation cannot be awarded moral damages.

In the 1968 case of Mambulao Lumber v. Philippine National Bank, this Court stated, in passing,
"a corporation may have a good reputation which, if besmirched, may also be a ground for the
award of moral damages."

This same statement has appeared in People v. Manero. Mambulao Lumber and Manero,
however, were not meant to be used as basis to carve an exception to the rule. There is still no
definitive pronouncement by this Court of any existing exceptions to the rule. In ABS-CBN
Broadcasting Corporation v. Court of Appeals, this Court even clarified that the statement in
Mambulao Lumber and Manero was mere obiter dictum.

There is no standing doctrine that corporations are, as a matter of right, entitled to moral
damages. The existing rule is that moral damages are not awarded to a corporation since it is
incapable of feelings or mental anguish. Exceptions, if any, only apply pro hac vice.

There is no showing here that an exception should apply pro hac vice in favor of petitioner BNL
Management.

Moreover, as the Court of Appeals aptly pointed out, exemplary damages may only be awarded
if a party proves entitlement to temperate, liquidated, actual, or moral damages. Petitioners
have already admitted that they will not quantify the actual damages they sustained. They have
also neither sought for nor been granted temperate or liquidated damages.

Accordingly, petitioner BNL Management cannot be awarded exemplary damages.