EK LEE STEEL WORKS CORPORATION, Petitioner,

G.R. No. 119033 Present: PUNO, C.J., Chairperson, CARPIO, CORONA, AZCUNA, and LEONARDO-DE CASTRO, JJ. Promulgated: July 9, 2008

- versus -

MANILA CASTOR OIL CORPORATION, ROMY LIM, and THE COURT OF APPEALS, Respondents.

x-----------------------------------------------------------------------------------------x DECISION CARPIO, J.: The Case Before this Court is a petition for review[1] of the Decision[2] dated 7 February 1995 of the Court of Appeals in CA-G.R. CV No. 34743. The Court of Appeals reversed the decision[3] of the Regional Trial Court, Branch 123, Kalookan City in a collection suit filed by Ek Lee Steel Works Corporation against Manila Castor Oil Corporation and Romy Lim. The Antecedents Ek Lee Steel Works Corporation (petitioner) is engaged in the construction business while Manila Castor Oil Corporation (respondent) claims to be a pioneer in the castor oil industry with Romy Lim (Lim) as its President. In November 1987, respondent contracted petitioner for the construction of respondents castor oil in Sasa, Davao City. Petitioner agreed to undertake the construction of the following structures with their respective costs: Project I. Office Building (Building I) and Boiler Room plant and office complex

Price P2,000,000 P283,662[4] P318,800 P472,500 P103,556.60 P175,650 P88,837

II. Concrete Fence 10-feet-high on three sides of the factory site III. 20-meter x 52-meter Concrete Pavement IV. 90,000-gallon Steel Oil Tank with Stand V. 40-feet-high 10,000-gallon Water Tank VI. Steel Oil Tank Foundation VII. 40-ton Oil Tank

Under the seven letter-agreements, respondent would make various stipulated down payments upon approval of petitioners proposals. The remaining balance of the contract prices was payable to petitioner through progress billings. In April 1988, petitioner alleged that respondent verbally agreed to have another building (Building II-Warehouse) constructed on the project site worth P349,249.25. Respondent denied the existence of this contract because it never approved such contract. Therefore, petitioner discontinued its construction of Building II-Warehouse after finishing its foundation and two side walls. On 16 May 1988, petitioner submitted a Statement of Account to respondent showing respondents accumulated payables totaling P764,466.[5] Respondent paid P500,000as shown in a letter of even date. In the same letter, respondent promised to pay certain [6] amounts thereafter upon the completion of specific portions of the project. The full text of the letter dated 16 May 1988 reads: May 16, 1988 MR. DANNY ANG General Manager Ek Lee Steel Works Corp. #171 5th St., 8th Avenue Caloocan City, M.M. SUBJECT: Dear Danny, This is to confirm that upon payment of the subject above, the fifth (5) partial payment which represent 70.5% of the total project cost of 3.4 Million, you will have to accomplished [sic] all the contracted work by June 15, 1988, except the office building. Thereafter, we will pay you the 6 th partial payment with the amount of P200,000.00. And upon the completion of the office building we will then pay you the amount of P460,000.00 which will represent 90% of the contracted work. As per the terms of our contract we will keep the P340,000.00 which represent the 10% retention. Yours truly, R.T. LIM President FIFTH PARTIAL PAYMENT OF P500,000.00

Conforme: Mr. Danny Ang Date: signed On 5 July 1988, respondent paid petitioner P70,000. Sometime thereafter, petitioner allegedly demanded payment of respondents remaining balance, but to no avail. Hence, petitioner stopped its construction in the project site. Thereafter, petitioner requested the Office of the City Engineer of Davao City to conduct an ocular inspection of the project site to determine the percentage of its finished work. Engineer Demetrio C. Alindada of the Davao Engineering Office reported that most of the scope of the work items were 100% completed. On 4 November 1988, petitioner filed a collection suit against respondent and Lim, with an application for a writ of preliminary attachment. The complaint prayed, among others, that respondent and Lim be held jointly and severally liable for the amount of P1,623,013.81 with interest. In their answer filed on 23 December 1988, respondents jointly alleged, as an affirmative defense, that as of 16 May 1988, petitioner was already in delay. They claimed that petitioner abandoned the project on 16 July 1988. Respondents further alleged that certain portions of the construction work did not conform to the specifications agreed upon by the parties. Then, on 8 May 1990, respondents filed a Supplemental Answer, alleging that sometime in July 1989, the 90,000-gallon capacity oil tank tilted towards the sea resulting in the stoppage of respondents operations. Consequently, respondents were constrained to hire a contractor to remedy the damage caused by the poor and substandard installation of the oil tank. Respondents prayed for the payment of surveyors fee, contractors fee, operating expenses, and unrealized income during the shut-down period. During the trial, respondents presented as evidence a Technical Verification Report submitted by Engineer Raul D. Moralizon to prove that the project was incomplete and had no utility value at the time petitioner abandoned the project. The Ruling of the Trial Court The trial court ruled in favor of petitioner. The trial court held that petitioner was justified in abandoning its construction of the project. As of 5 July 1988, when respondent paid P70,000, petitioners billings reached P3,895,872.85, while payments totaled only P2,505,534, or short by P1,390,338.85, exclusive of other charges. Considering respondents non-payment of this remaining balance, petitioner was understandably unwilling to proceed with the construction of the project. Respondents non-payment was a clear violation of the stipulated progress billings. The trial court likewise noted petitioners request for an inspection from the Engineering Office of Davao City prior to the issuance of an occupancy permit. The trial court declared that no contractor who has unreasonably abandoned a job ever bothered itself making such a request; an abandoning contractor just packs up and goes. In addition, the trial court found that respondent never reported the supposed abandonment to the Engineering Office of Davao City. Neither did respondent send a notice or letter demanding the completion of the project. Had there been abandonment, respondent would have filed a suit against petitioner. On the modifying agreement dated 16 May 1988, the trial court found the parties diametrically -opposed versions equally true. Respondent claimed that it gave petitioner an extension of the deadline until 15 June 1988. On the other hand, petitioner insisted that it gave respondent an equivalent extension to raise enough funds to meet the accumulated bills. However, the trial court held that this particular agreement is not crucial in this case. The trial court also gave the Report of Engineer Demetrio C. Alindada of the Davao Engineering Office (Alindada Report) a higher probative value than the Technical Verification Report submitted by respondents hired Civil Engineer, Raul D. Moralizon (Moralizon Report). The trial court found the Moralizon Report self-serving. Based onthe Alindada Report, most of the items contracted for construction were 100% completed. Hence, the trial court applied Article 1234 of the Civil Code which states that [i]f the obligation has been substantially performed in good faith, the obligor may recover as though there had been a strict and complete fulfillment, less the damages suffered by theobligee. The trial court disposed of the collection case, as follows: WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants, ordering the latter, jointly and severally, as follows: 1. 2. 3. 4. To pay the plaintiff the amount of P1,426,176.45 with legal interest to be computed from the date of the filing of the complaint until fully paid; To pay the plaintiff the amount of P154,883.33 representing actual damages in the form of interest payment for loans; To pay the amount of P100,000.00 as and for attorneys fees; and Costs of the suit.

Defendants counterclaims are hereby dismissed for lack of merit. SO ORDERED.[7]

The Ruling of the Court of Appeals The Court of Appeals reversed the decision of the trial court. The appellate court ruled that the 16 May 1988 letter novated all the earlier agreements between the parties. It held that the letter specified the scope of the remaining construction work, the amounts payable by respondent, and the schedules for the completion of the remaining work and for the corresponding payments. The Court of Appeals stated that petitioner was not entitled to further payments from respondent because petitioner failed to comply with its obligation of finishing all the contracted work, except the office building, on 15 June 1988 as clearly stipulated in the 16 May 1988 letter. The Court of Appeals found that the petitioners failure to complete the project rendered the same useless for the object whi ch the parties had intended it to be, specifically, an office, plant, and warehouse complex. The Court of Appeals disagreed with the trial courts reliance on the Alindada Report. The appellate court stated that the Alindada Report should rather have indicated the scope of work items enumerated in the parties seven letters -contracts and the percentage of work accomplished in each of these items, instead of enumerating merely the scope of work items which Alindada found completed. The Alindada Report was therefore not a reliable evidence in determining the percentage of accomplishment in the project.

The Court of Appeals went on to say that even assuming that Article 1234 of the Civil Code applies to this case, the trial court should have correspondingly decreased the amount to be recovered by petitioner by the amount of damages suffered by respondent, as stated in the same provision. However, the Court of Appeals faulted respondent for the trial courts failure to correspondingly reduce the amount recoverab le by petitioner. There was no showing that respondent demanded that petitioner should finish the project; otherwise, respondent would hire another contractor to complete it. Respondent did not report petitioners abandonment of the project to the Office of the Building Official of Davao City. Respondent simply hired another contractor to complete the unfinished job left by petitioner. In addition, the building permits obtained for the supposed continuation of the works indicated that they were for new construction instead of addition, repair, renovation, or others. The Court of Appeals ordered petitioner to reimburse P70,000 as overpayment by respondent. The dispositive portion of the Court of Appeals decision reads: WHEREFORE, and for all the foregoing considerations, the Decision appealed from is hereby REVERSED and SET ASIDE, and another one entered: 1. Dismissing the complaint; 2. Ordering the plaintiff: (a) To reimburse the defendants the amount of P70,000.00; (b) To pay defendant Manila Castor Oil Corporation the sum of P50,000.00 as damages for besmirched reputation; (c) To pay defendant Romy Lim the amount of P50,000.00 for moral damages; (d) To pay defendants their attorneys fees in the amount of P10,000.00. With costs in this instance against the plaintiff-appellee. SO ORDERED.[8]

Hence, this petition.

The Issues The issues in this case are: 1. 2. 3. 4. Whether Whether Whether Whether the 16 May 1988 letter novated the previous agreements of the parties; petitioner can validly collect from respondent the remaining balance of the total contract price; respondent is entitled to P70,000 allegedly as overpayment; and Lim is solidarily liable to petitioner for the alleged remaining balance. The Ruling of the Court The petition has no merit. The resolution of the issues in this case requires a re-examination of the evidence presented by the contending parties during the trial. Generally, the Court does not resolve questions of facts. However, this rule admits of several exceptions. The instant case falls under one of the recognized exceptions, which is, when the findings of facts of the trial court and the Court of Appeals are conflicting. [9] Therefore, a review of the facts and the pieces of evidence is proper. We shall discuss jointly the first two issues as they are interrelated.

Respondent contends that the 16 May 1988 letter novated the parties previous agreements, thereby scrapping the system of progress billings. Respondent posits that its obligation to pay petitioner the remaining balance of the contract price arises only upon the completion of the entire project, except the office building, on 15 June 1988, pursuant to the terms of the 16 May 1988 letter. Since petitioner failed to finish this portion of the project on 15 June 1988, its claim is not yet due and demandable. The Court finds no novation of the previous agreements between the parties considering that the 16 May 1988 letter did not expressly extinguish the parties obligations under their previous contracts. On the contrary, it expressly recognized the parties reciprocal obligations. [10] It must be pointed out that as of 16 May 1988, respondents accumulated payables reached P764,466, but only P500,000 was paid. Respondent was therefore not up to date with its payments. Petitioner, on the other hand, was behind schedule in its construction work because the project should be fully operational by April 1988.[11] To remedy the situation, the 16 May 1988 letter fixed a period for the completion of the other structures of the project, except the office building.[12] Petitioner was given a month to finish this portion of the project and the records show that it was aware of this deadline. Danny Ang testified on this matter. ATTY. GUNO Can you stipulate as manifested June 15 as indicated in the contract. by counsel then the new deadline for all the project on [sic]

ATTY. SALVADOR It is stated here in Exhibit 1, the complaint [sic] here has to finish not later June 15 of 1988. ATTY. GUNO We agree on that. Q: A: And you were also informed by the defendants that they had to be operated [sic] by April 1988?

Yes, sir.[13]

At the same time, the 16 May 1988 letter specified the amounts still payable to petitioner conditioned upon the accomplishment of certain portions of the project. The amount of P200,000 was payable on 15 June 1988 if petitioner finished the project, excluding the office building; and P460,000 was payable after the completion of the office building. Thus, while the 16 May 1988 letter did not extinguish the parties obligations under their previous contracts, it modified the manner of payment from the system of progress billings to a specific schedule of payments. The question now is whether petitioner complied with its obligation of finishing the project, except the office building, on 15 June 1988 to be entitled to P200,000. Contrary to petitioners claim of project completion, there is sufficient evidence on record showing peitioners failure to finish the project on 15 June 1988. Petitioner admitted in its complaint that Contracts I and III failed to reach full accomplishment: Contract I 97% for Building I, 95% for Office Building, and 99% for Boiler Room, and Contract III 90%.[14] The photographs[15] presented by respondent show various areas of the construction which were not completed. Danny Ang, petitioners General Manager, confirmed on the witness stand that the images in the photographs showed the incomplete status of the project, thus: Q: A: Q: A: Q: A: Q: A: xxx Q: A: Please tell us if these are the pictures? This is the picture of the project which we were not able to finish, sir.[16] (Emphasis supplied) Now Mr. Witness please tell us the date when you left the It could be in July 1988, sir. And during the direct testimony last July 17 you testified that the pictures attached in the answer of the defendants were the pictures of unfinished portion of the project, is that correct? Yes, sir. And these are the pictures after you had pulled out of the Yes, sir. These are the pictures on July 1988 when you pulled out of I dont know when those pictures... the construction? job site? job site or you pulled out of the job site?

Further, the Moralizon Report found deficiencies in three construction contracts and concluded that petitioner abandoned the project. Significantly, petitioner did not rebut the Moralizon Report. Petitioner relied on the Alindada Report to support its claim of completion. The Alindada Report concluded that almost all the work items are 100% completed and that only two pieces of steel sliding doors in Building I were not yet installed. [17] However, petitioners admissions and respondents evidences clearly contradict the AlindadaReport. This contradiction effectively destroyed the disputable presumption of the regular issuance of the Alindada Report.[18] The fact that the building permits obtained by respondent after petitioner stopped its construction were for new construction instead of addition, repair, renovation, or others does not conclusively prove that petitioner finished the project. Considering the foregoing, there is no doubt that petitioner failed to comply with its undertaking to complete the project, except the office building, on 15 June 1988. Consequently, respondents obligation to pay the P200,000 did not arise. Respondent could not be considered in delay when it failed to pay petitioner at that time. According to the last paragraph of Article 1169 of the Civil Code, [i]n reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins. Furthermore, the loss of the probative value of the Alindada Report due to petitioners admissions and respondents unrefuted evidences, as discussed above, renders petitioners claim for the remaining balance of the contract price unsubstantiated. Without any corroborating evidence, petitioners allegations are plainly without weight. The plaintiff must rely on the strength of its own evidence and not upon the weakness of that of the defendants.[19] Hence, for its failure to discharge the burden of proof [20]required in this case,[21] petitioners complaint must be dismissed. As regards the reimbursement of P70,000, suffice it to state that this figure was never specifically pleaded as an overpayment in the answer filed by respondent before the trial court. Therefore, wanting any basis, the Court of Appeals erred in ordering the return of this particular amount to respondent. The foregoing discussion renders unnecessary the resolution of the last issue raised by petitioner. WHEREFORE, we DENY the petition. We MODIFY the assailed Decision of of P70,000 in favor of respondent Manila Castor Oil Corporation. Costs against petitioner. SO ORDERED. the Court of Appeals by deleting the reimbursement

ANTONIO T. CARPIO Associate Justice

Under Rule 45 of the Rules of Court. Rollo, pp. 41-54. Penned by Associate Justice Cezar D. Francisco with Associate Justices Delilah Vidallon Magtolis and Celia Lipana-Reyes, concurring. [3] Id. at 55-67. Penned by Judge Mauro T. Allarde. [4] A handwritten figure was superimposed on the letter-contract signifying that the contract price is only P283,662 instead of P387,280. Based on Section 15, Rule 130 of the Rules of Court, when an instrument consists partly of written words and partly of a printed form, and the two are inconsistent, the former controls the latter. [5] Exhibit K, Folder of Exhibits, Vol. I, p. 32.
[2]

[1]

Exhibit J, id. at 31. Rollo, pp. 66-67. Id. at 53. [9] Ong v. Bogalbal, G.R. No. 149140, 12 September 2006, 501 SCRA 490; Yao v. Matela, G.R. No. 167767, 29 August 2006, 500 SCRA 136. [10] See Zapanta v. De Rotaeche, 21 Phil. 154, 159 (1912). [11] See TSN, 6 October 1989, p. 8. [12] Rollo, p. 222. [13] TSN, 6 October 1989, p. 8. [14] Records, pp. 7-8. [15] Exhibits 1, 1-A, 4 to 4-V, Folder of Exhibits, Vol. II, pp. 48, 53-70. [16] TSN, 6 October 1989, pp. 31-32. [17] Exhibit I, Folder of Exhibits, Vol. I, p. 29. [18] See Yao v. Matela, supra note 9. [19] See Quinto v. Andres, G.R. No. 155791, 16 March 2005, 453 SCRA 511, 523. [20] Section 1 of Rule 131 defines burden of proof as 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. [21] In civil cases, the burden of proof is on the plaintiff to establish his case by preponderance of evidence. Preponderance of evidence means evidence which is of greater weight, or more convincing than that which is offered in opposition to it. (See Condes v. Court of Appeals, G.R. No. 161304, 27 July 2007, 528 SCRA 339, 352.)
[6] [7] [8]

EK LEE STEEL WORKS CORPORATION vs. MANILA CASTOR OIL CORPORATION, ROMY LIM, and THE COURT OF APPEALS G.R. No. 119033, July 9, 2008 FACTS: Ek Lee Steel Works Corporation (petitioner) is engaged in the construction business while Manila Castor Oil Corporation (respondent) claims to be a pioneer in the castor oil industry with Romy Lim (Lim) as its President. respondent contracted petitioner for the construction of respondents castor oil plant and office complex in Sasa, Davao City. Petitioner agreed to undertake the construction. petitioner alleged that respondent verbally agreed to have another building (Building II-Warehouse) constructed on the project site worth P349,249.25. Respondent denied the existence of this contract because it never approved such contract. Therefore, petitioner discontinued its construction of Building II-Warehouse after finishing its foundation and two side walls. petitioner submitted a Statement of Account to respondent showing respondents accumulated payables totaling P764,466.5 Respo ndent paid P500,000 as shown in a letter of even date. In the same letter, respondent promised to pay certain amounts thereafter upon the completion of specific portions of the project. On 5 July 1988, respondent paid petitioner P70,000. petitioner allegedly demanded payment of respondents remaining balance, but to no avail. Hence, petitioner stopped its const ruction in the project site. petitioner filed a collection suit against respondent and Lim, with an application for a writ of preliminary attachment. Respondents Defense: petitioner was already in delay. They claimed that petitioner abandoned the project on 16 July 1988. Re spondents further alleged that certain portions of the construction work did not conform to the specifications agreed upon by the parties. The trial court ruled in favor of petitioner. The trial court held that petitioner was justified in abandoning its construction of the project. The Court of Appeals reversed the decision of the trial court. The appellate court ruled that the 16 May 1988 letter novated all the earlier agreements between the parties; that petitioner was not entitled to further payments from respondent because petitioner failed to comply with its obligation of finishing all the contracted work, except the office building, on 15 June 1988 as clearly stipulated in the 16 May 1988 letter. However, the Court of Appeals faulted respondent for the trial courts failure to correspondingly reduce the amount recoverable by petitioner. Hence, this petition. ISSUE: Whether petitioner can validly collect from respondent the remaining balance of the total contract price HELD: NO Petitioner, on the other hand, was behind schedule in its construction work because the project should be fully operational by April 1988. To remedy the situation, the 16 May 1988 letter fixed a period for the completion of the other structures of the project, except the office building. Petitioner was given a month to finish this portion of the project and the records show that it was aware of this deadline. At the same time, the 16 May 1988 letter specified the amounts still payable to petitioner conditioned upon the accomplishment of certain portions of the project. There is no doubt that petitioner failed to comply with its undertaking to complete the project, except the office building, on 15 June 1988. Consequently, respondents obligation to pay the P200,000 did not arise. Respondent could not be considered in delay when it failed to pay petitioner at that time. According to the last paragraph of Article 1169 of the Civil Code, [i]n reciprocal obligations, neither party incurs in dela y if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins. WHEREFORE, we DENY the petition.

G.R. No. 83768 February 28, 1990 RADIO COMMUNICATIONS OF THE PHILIPPINES, INC. (RCPI) and GLOBE MACKAY AND RADIO CORPORATION, petitioners, vs. RUFUS B. RODRIGUEZ, respondent. Salalima, Ungos and David for petitioners. Maximo G. Rodriguez for private respondent. GUTIERREZ, JR., J.: This petition for review on certiorari seeks to reverse the decision of the Court of Appeals which affirmed the decision of the then Court of First Instance of Rizal, Branch 17-B, Quezon City in Civil Case No. Q-26623 ordering petitioner Radio Communications of the Philippines, Inc. [RCPI] and their codefendant Globe Mackay and Radio Corporation (Globe Mackay), jointly and severally to pay the plaintiff, private respondent herein, a total amount of Two Hundred Thirteen Thousand One Hundred Forty Eight Pesos (P213,148.00) broken down as follows: a) P100, 000.00 as moral damages; b) P50,000.00 as exemplary damages; c) P43,148.00 as actual damages; and d) P20,000.00 as attorney's fees by way of damages. This is the second time that this case has been brought to us. The first was when petitioner RCPI questioned the decision of the Court of Appeals which refused to set aside the orders of the lower court directing execution pending appeal of the money awards. In that case (G.R. No. 59311, 134 SCRA [1985]) we set aside the decision of the appellate court and entered a new order authorizing execution pending appeal of the award of actual damages but enjoining the execution of the award of moral damages, exemplary damages and attorney's fees until after the resolution of the issues in the main case. We summarized the facts of the case as follows: On September 8, 1978, Rufus B. Rodriguez, as President of the World Association of Law Students (WALS), sent two cablegrams overseas through RCPI, one addressed to Mohamed Elsir Taha in Khartoum, Sudan Socialist Union, and the other to Diane Merger in Athens, Georgia, United States. The cablegram were, in turn, relayed to GLOBE for transmission to their foreign destination The telegram to Taha advised him of Rodriguez's pending arrival in Khartoum on September 18, 1978, while the telegram to Merger advised her of the scheduled WALS conference in Khartoum. Rodriguez left the Philippines on September 15, 1978. On September 18, 1978, he arrived in Khartoum, Sudan at 9:30 in the evening. Nobody was at the airport to meet him. Due to the lateness of the hour, he was forced to sleep at the airport. He lined up five (5) chairs together and lay down with his luggages near him. Because of the non-receipt of the cablegram, Taha was not able to meet him. Worse all preparations for the international conference had to be cancelled. Furthermore, Fernando Barros, the Vice-President, arrived the next day from Chile, followed by the other officers from other countries except Diane Merger, the organization's secretary. It turned out that the wire sent by Rodriguez to Merger was delivered to the address on the message but the person who delivered it was told that the address was no longer staying there. This fact was not accordingly reported to Rodriguez in Metro Manila. The undelivered cablegram was not returned by the correspondent abroad to Globe for disposition in the Philippines. On December 8, 1978, Rodriguez filed a complaint for compensatory damages in the amount of P45,147.00, moral damages in the amount of P200,000.00, and exemplary damages in the amount of P50,000.00 against RCPI and GLOBE. On March 17, 1980, the then Presiding Judge Lino L. Anover of the Court of First Instance of Rizal rendered a decision, the dispositive portion of which reads as follows: "WHEREFORE, judgment is hereby rendered ordering the defendants jointly and severally to pay the plaintiff the total sum of TWO HUNDRED THIRTEEN THOUSAND ONE HUNDRED FORTY EIGHT PESOS (P213,148.00) by way of damages and to pay the costs of this suit." The above amount is broken down as follows by the trial court: "Moral damages consequent to the humiliation and embarrassment that the plaintiff suffered under the two causes of action in the amount of P100,000.00 are adequate. Exemplary damages under both counts are fixed reasonably at P50,000.00. On the actual damages, the court accepts plaintiffs expenses for the preparation of the trip at P10,000.00; plane fare at P20,000.00; stay in transit in Pakistan at P5,000.00; his hotel bills in Khartoum at P4,000.00; his meals in Khartoum at P4,000.00 and the telegraphic toll at P78.00. The court refuses the sum spent for the dinner that he allegedly tendered as not established by sufficient proof. With respect to the telegram sent to Diane Merger, the court finds that the actual damages amount to P70.00 representing the cost of cablegram. As for attorney's fees, the court finds that the amount of P20,000.00 including litigation expenses are reasonable. (at pp. 396-398)" Upon appeal, the Court of Appeals affirmed the lower court's decision. A motion for reconsideration was denied. Hence, this petition filed by RCPI. The title of the case includes Globe Mackay but the petition proper and the name on counsel show that only RCPI comes to this Court through the petition. Globe Mackay did not join as petitioner and its counsel Atty. Romulo P. Atencia did not sign the petition. The issues raised by petitioner RCPI are two-fold 1) whether or nor petitioner RCPI is responsible for the non-delivery of the two (2) telegrams notwithstanding the fact that RCPI relayed said telegrams to Globe Mackay and 2) whether or not under the attendant facts and circumstances petitioner RCPI is liable for moral damages in the amount of P100,000.00; exemplary damages in the amount of P50,000.00; actual damages in the amount of P43,148.00 and attorney's fees in the amount of P20,000.00.

RCPI insists that its responsibility vis-a-vis the two (2) telegrams ceased after it relayed and transmitted the telegrams on the same day they were filed to Globe Mackay. It argues that it was not incumbent upon RCPI to advise respondent Rodriguez the status of his telegrams because Globe Mackay did not also inform RCPI what happened to the telegrams since the respective operating agency of the country of destination did not also inform Globe Mackay about the non-delivery of the telegrams. Moreover, RCPI blames respondent Rodriguez for the non-delivery of the two telegrams. Regarding the telegram addressed to Elsir Taha, RCPI avers that it has an incomplete address as it did not include P.O. Box 1850 per instruction of Taha in an earlier cable asking for respondent to reply via telex, to wit: ... send me a telegram immediately after receiving this one a telex number if any. Thanks. Mohammed Elsir Taha Regional Director WALS Africa Youth Committee SSU, Khartoum, P.O. Box 1850. (Exhibit D). (Rollo, p. 27) In regard to the telegram addressed to Diane Merger which she did not receive because she had moved, to another place RCPI avers that respondent Rodriguez was partly at fault for not verifying the address of Diane before sending the telegram and that Merger was negligent by not leaving her forwarding address with the present occupant of the apartment she vacated. Petitioner RCPI is a domestic corporation engaged in the business of receiving and transmitting messages. Mr. Alfredo Catolico, Jr., manager, Customer and Relations Office testified that RCPI does not have facilities for foreign countries, hence it has a contract to course all international communications thru Globe Mackay. On the other hand, Wenceslao Felix, the Traffic Operations Manager of Globe Mackay testified that Globe Mackay has an interconnecting agreement with RCPI under which the latter's international messages are coursed thru Globe Mackay in the same way that local and domestic messages received by Globe Mackay are coursed thru RCPI. Respondent Rodriguez and RCPI entered into a contract whereby for a fee RCPI undertook to send the respondent's messages overseas. When, therefore, respondent Rodriguez paid RCPI to deliver his messages overseas by telegram, RCPI obligated itself to transmit the messages to the addressee. Clearly, RCPI reneged on its obligation when it failed to deliver the messages or to inform the sender about the non-delivery, thus making it liable for damages. (Article 1170, Civil Code; Article 2176; see also Telefast Communication/Philippine Wireless, Inc. v. Castro, Sr., 158 SCRA 445 [1988]). Parenthetically, RCPI cannot escape liability for damages by passing off the blame for negligence to Globe Mackay. It has an inter-connecting agreement with Globe Mackay. RCPI receives messages for overseas destinations and conducts its business to transmit foreign messages only through Globe Mackay. To allow it to escape liability for damages by attributing sole negligence to Globe Mackay for the expedient reason that it had already delivered the messages to the latter would deprive the general public availing of the services of RCPI of an effective and adequate remedy. (See Radio Communications of the Philippines, Inc. (RCPI) v. Court of Appeals, 143 SCRA 657 [1986]). It cannot simply wash its hands of all responsibility. RCPI's similar attempt to pass the total blame for the non-delivery of the telegram intended for Taha to respondent Rodriguez is not supported by the records. The evidence clearly demonstrates that an earlier cablegram dated July 27, 1978 (Exhibit "E") similarly addressed to Taha, Africa, Youth Committee, Khartoum, SSU and without P.O. Box 1850 was received by Taha. This is conclusively shown by a cable (Exhibit "F") addressed by Taha to respondent Rodriguez acknowledging the receipt of the July 27 cablegram. Evidence was also introduced to show that the Africa Youth Committee is a very important office in Khartoum, Sudan and the building that houses it is a very popular building known to the people. We rule that the arguments about the alleged negligence on the part of respondent Rodriguez in not verifying the address of Diane Merger before sending the telegram and also the alleged negligence on the part of Merger for not leaving a forwarding address do not deserve much consideration. Considering the public utility nature of RCPI's business and its contractual obligation to transmit messages, it should exercise due diligence to ascertain that messages are delivered to the persons at the given address and should provide a system whereby in cases of undelivered messages the sender is given notice of non-delivery. Messages sent by cable or wireless means are usually more important and urgent than those which can wait for the mail. For recovery of damages, Article 2217 of the New Civil Code applies. It is provided therein that: "Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feeling, 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." (Emphasis supplied) There is no doubt that RCPI's failure to deliver the two questioned telegrams resulted in the suffering that respondent Rodriguez, had to undergo. Respondent Rodriguez left Manila for Khartoum, Sudan believing that Taha received his telegram and would meet him at the airport. He related his experience at the airport of Khartoum, Sudan as follows: Q. All right, from 9:30 in the evening up to 12:00 midnight, was there any person or officer of the World Association of Law Students who met you? A. None. Q. Now, inform the Court what was your feeling during that time in a foreign country? A. First of all, when I arrived at 9:30 A.M., I was thinking that Mr. Taha was first late in fetching me but when it was already 10:30 to 11:00 P.M., I was already afraid because there was no one there that I know and it was already late in the evening that I could not go to the address of Mr. Taha. (TSN pages 18 and 19, August 20, 1979). Q. What were you doing at that time from 9:30 in the evening until 6:00 in the morning? A. I was every tired and what I did was pulled five chairs together. I remember there were about ten (10) persons and some tourists in that restaurant. I got five chairs together and laid my baggage trying to sleep but which I was not able to do because of fear and anxiety. (TSN, pages 10 and 11, August 20, 1979). (Rollo, p. 15)

We are convinced that respondent Rodriguez suffered a certain degree of mental anguish, fear and anxiety considering his experience at the airport of a foreign country. His suffering was caused by the non-appearance of Taha who did not receive the telegram sent by the respondent due to the gross negligence of RCPI. There is moreover, the dismay arising from the fact, that after so much preparation and travel on the part of Rodriguez, his pains were all for nothing. Hence, RCPI is liable for moral damages. Nevertheless, we find the award of P100,000.00 as moral damages in favor of respondent Rodriguez excessive and unconscionable. In the case of Prudenciado v. Alliance Transport System, Inc. (148 SCRA 440 [1987]) we said: ... [I]t is undisputed that the trial courts are given discretion to determine the amount of moral damages (Alcantara v. Surro, 93 Phil. 472) and that the Court of Appeals can only modify or change the amount awarded when they are palpably and scandalously excessive 'so as to indicate that it was the result of passion, prejudice or corruption on the part of the trial court' (Gellada v. Warner Barnes & Co., Inc., 57 O.G. [4] 7347, 7358; Sadie v. Bachrach Motors Co., Inc., 57 O.G. [4] 636 and Adone v. Bachrach Motor Co., Inc., 57 O.G. 656). But in more recent cases where the awards of moral and exemplary damages are far too excessive compared to the actual losses sustained by the aggrieved party, this Court ruled that they should be reduced to more reasonable amounts. Thus, in the case of San Andres v. Court of Appeals (116 SCRA 85 [1982]) the Supreme Court ruled that while the amount of moral damages is a matter left largely to the sound discretion of a court, the same when found excessive should be reduced to more reasonable amounts, considering the attendant facts and circumstances. 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 a much later case (Siguenza v. Court of Appeals, 137 SCRA 578-579 [1985]), the Supreme Court, reiterating the above ruling, reduced the awards of moral and exemplary damages which were far too excessive compared to the actual losses sustained by the aggrieved parties and where the records show that the injury suffered was not serious or gross and, therefore, out of proportion to the amount of damages generously awarded by the trial court. In any case the Court held that 'moral damages are emphatically not intended to enrich a complainant at the expense of a defendant. They are awarded only to enable the injured party to obtain means, diversion or amusements that will serve to alleviate the moral suffering he has undergone, by reason of the defendants' culpable action.' The award of moral damages must be proportionate to the suffering inflicted (R & B Surety & Insurance Co., Inc. v. Intermediate Appellate Court, 129 SCRA 745 [1984] citing Grand Union Supermarket, Inc. v. Espino, Jr., 94 SCRA 966). (Emphasis supplied) The respondent is not entirely blameless for the problems which befell him. Apart from the various arguments raised by RCPI in its petition, there are other factors to be considered in fixing the amount of damages. Anybody who has been involved in international conferences and meetings knows that a telegram is not adequate preparation. Considering the lackaidaisical attitude of public utility employees in the Philippines and presumably in Africa, the head of an international student organization cannot simply send a telegram and nonchalantly assume that every preparation will proceed as he anticipates it. The planning expertise and degree of thoroughness incumbent upon conference organizers is missing from the records. The trial court appears to have been influenced by the impressive title of World Association of Law Students. There is nothing in the records pointing to a certain degree of distinction earned by WALS which would warrant substantial damages because of a failed meeting. Be that as it may, damages are warranted. People depend on telecommunications companies in times of deep emotional stress or pressing financial needs. Knowing that messages about the illnesses or deaths of loved ones, births or marriages in a family, important business transactions, and notices of conferences or meetings as in this case, are coursed through the petitioner and similar corporations, it is incumbent upon them to exercise a greater amount of care and concern than that shown in this case. Every reasonable effort to inform senders of the non-delivery of messages should be undertaken. From the pleadings filed by counsel in this case, RCPI does not seem to be particularly concerned about its responsibility. We rule that the amount of P10,000.00 as moral damages in favor of the respondent would be reasonable considering the facts and circumstances surrounding the petitioner's liability. The award of exemplary damages is not proper considering that there is no showing that RCPI acted in "a wanton, fraudulent, reckless, oppressive, or malevolent manner." (Article 2232, New Civil Code). Respondent Rodriguez was awarded the total amount of P43,148.00 as actual or compensatory damages broken down as follows: (a) P10,000.00 for the preparation of the trip; (b) P20,000.00 for plane fare; (c) P5,000.00 for respondent's stay in transit in Pakistan; (d) P4,000.00 for hotel bills in Khartoum; (e) P78.00 for the telegraphic toll, and P70.00 for the cost of the cablegram sent to Diane Merger. The trial court rejected the expenses allegedly incurred by the respondent for a dinner he tendered for the officers, organizers and students at Khartoum for insufficiency of evidence. It is to be noted that the petitioner does not controvert the amounts. Instead, the petitioner concentrates its opposition to the award of actual damages on the argument that the respondent's expenses were actually paid by the organization and the Sudanese government. The petitioner, however, fails to substantiate its allegations with clear proof. On the other hand, what is evident on record is that due to the non-receipt of the telegram which would have confirmed the scheduled conference on September 20, 1978, Taha cancelled all preparations and stopped the soliciting of funds for the conference which would have included the expenses of the respondent. As a result of the cancellation of the conference, triggered by the non-delivery of the telegrams, the officers were constrained to schedule another meeting in Santiago, Chile in April 1979. Therefore, we see no reason to disturb these findings of the trial court affirmed by the appellate court as these were not sufficiently controverted by the petitioner (See Ganzon v. Court of Appeals, 161 SCRA 646 [1988]). Finally, petitioner RCPI objects to the award of attorney's fees. Citing the case of Mirasol v. De la Cruz (84 SCRA 337 (1987]), RCPI contends that the award of attorney's fees was improper because there was no allegation in the complaint with respect to attorney's fees; respondent Rodriguez did not present any evidence to prove attorney's fees and the decision failed to explain why attorney's fees are being awarded. We agree. In the recent case of Stronghold Insurance Company, Inc. v. Court of Appeals, (G.R. No. 88376, May 29,1989), we ruled: In Abrogar v. Intermediate Appellate Court (G.R. No. 67970, January 15, 1988, 157 SCRA 57) the Court had occasion to state that '[t]he reason for the award of attorney's fees must be stated in the text of the court's decision, otherwise, if it is stated only in the dispositive portion of the decision, the same must be disallowed on appeal. (at p. 61 citing Mirasol v. dela Cruz, G.R. No. L32552, July 31, 1978, 84 SCRA 337).

A cursory reading of the trial court's decision shows that the award of attorney's fees was stated only once "As for attorney's fees, the court finds that the amount of P20,000.00 including litigation expenses are reasonable" just below the dispositive portion of the decision which reads: "WHEREFORE judgment is hereby rendered ordering the defendants jointly and severally liable to pay the plaintiff the total sum of TWO HUNDRED THIRTEEN THOUSAND ONE HUNDRED FORTY EIGHT PESOS (P213,148.00) by way of damages and to pay the costs of this suit." The trial court failed to justify the payment of attorney's by RCPI, therefore, the award of attorney's fees as part of its liability should be disallowed and deleted. WHEREFORE, the instant petition is PARTLY GRANTED. The questioned decision of the respondent court is MODIFIED. The award directing Radio Communications of the Philippines, Inc., to pay P100,000.00 moral damages is reduced to P10,000.00. The award ordering it to pay exemplary damages and attorney's fees is DELETED. In all other respects, the questioned decision is AFFIRMED. Costs against the petitioner. SO ORDERED. Fernan, C.J. (Chairman), Feliciano, Bidin and Cortes JJ., concur.

JACINTO

TANGUILIG doing business under the name and style J.M.T. ENGINEERING MERCHANDISING, petitioner, vs. COURT OF APPEALS and VICENTE HERCE JR., respondents. DECISION

AND

GENERAL

BELLOSILLO, J.: This case involves the proper interpretation of the contract entered into between the parties. Sometime in April 1987 petitioner Jacinto M. Tanguilig doing business under the name and style J. M. T. Engineering and General Merchandising proposed to respondent Vicente Herce Jr. to construct a windmill system for him. After some negotiations they agreed on the construction of the windmill for a consideration of P60,000.00 with a one-year guaranty from the date of completion and acceptance by respondent Herce Jr. of the project. Pursuant to the agreement respondent paid petitioner a down payment of P30,000.00 and an installment payment ofP15,000.00, leaving a balance of P15,000.00. On 14 March 1988, due to the refusal and failure of respondent to pay the balance, petitioner filed a complaint to collect the amount. In his Answer before the trial court respondent denied the claim saying that he had already paid this amount to the San Pedro General Merchandising Inc. (SPGMI) which constructed the deep well to which the windmill system was to be connected. According to respondent, since the deep well formed part of the system the payment he tendered to SPGMI should be credited to his account by petitioner. Moreover, assuming that he owed petitioner a balance of P15,000.00, this should be offset by the defects in the windmill system which caused the structure to collapse after a strong wind hit their place.[1] Petitioner denied that the construction of a deep well was included in the agreement to build the windmill system, for the contract price of P60,000.00 was solely for the windmill assembly and its installation, exclusive of other incidental materials needed for the project. He also disowned any obligation to repair or reconstruct the system and insisted that he delivered it in good and working condition to respondent who accepted the same without protest. Besides, its collapse was attributable to a typhoon, a force majeure, which relieved him of any liability. In finding for plaintiff, the trial court held that the construction of the deep well was not part of the windmill project as evidenced clearly by the letter proposals submitted by petitioner to respondent. [2] It noted that "[i]f the intention of the parties is to include the construction of the deep well in the project, the same should be stated in the proposals. In the absence of such an agreement, it could be safely concluded that the construction of the deep well is not a part of the project undertaken by the plaintiff." [3] With respect to the repair of the windmill, the trial court found that "there is no clear and convincing proof that the windmill system fell down due to the defect of the construction."[4] The Court of Appeals reversed the trial court. It ruled that the construction of the deep well was included in the agreement of the parties because the term "deep well" was mentioned in both proposals. It also gave credence to the testimony of respondent's witness Guillermo Pili, the proprietor of SPGMI which installed the deep well, that petitioner Tanguilig told him that the cost of constructing the deep well would be deducted from the contract price of P60,000.00. Upon these premises the appellate court concluded that respondent's payment of P15,000.00 to SPGMI should be applied to his remaining balance with petitioner thus effectively extinguishing his contractual obligation. However, it rejected petitioner's claim of force majeure and ordered the latter to reconstruct the windmill in accordance with the stipulated one-year guaranty. His motion for reconsideration having been denied by the Court of Appeals, petitioner now seeks relief from this Court. He raises two issues: firstly, whether the agreement to construct the windmill system included the installation of a deep well and, secondly, whether petitioner is under obligation to reconstruct the windmill after it collapsed. We reverse the appellate court on the first issue but sustain it on the second. The preponderance of evidence supports the finding of the trial court that the installation of a deep well was not included i n the proposals of petitioner to construct a windmill system for respondent. There were in fact two (2) proposals: one dated 19 May 1987 which pegged the contract price at P87,000.00 (Exh. "1"). This was rejected by respondent. The other was submitted three days later, i.e., on 22 May 1987 which contained more specifications but proposed a lower contract price of P60,000.00 (Exh. "A"). The latter proposal was accepted by respondent and the construction immediately followed. The pertinent portions of the first letter-proposal (Exh. "1") are reproduced hereunder In connection with your Windmill System and Installation, we would like to quote to you as follows: One (1) Set - Windmill suitable for 2 inches diameter deepwell, 2 HP, capacity, 14 feet in diameter, with 20 pieces blade, Tower 40 feet high, including mechanism which is not advisable to operate during extra-intensity wind. Excluding cylinder pump. UNIT CONTRACT PRICE P87,000.00 The second letter-proposal (Exh. "A") provides as follows: In connection with your Windmill system Supply of Labor Materials and Installation, operated water pump, we would like to quote to you as follows -

One (1) set - Windmill assembly for 2 inches or 3 inches deep-well pump, 6 Stroke, 14 feet diameter, 1-lot blade materials, 40 feet Tower complete with standard appurtenances up to Cylinder pump, shafting U.S. adjustable International Metal. One (1) lot - Angle bar, G. I. pipe, Reducer Coupling, Elbow Gate valve, cross Tee coupling. One (1) lot - Float valve. One (1) lot - Concreting materials foundation. F. O. B. Laguna Contract Price P60,000.00 Notably, nowhere in either proposal is the installation of a deep well mentioned, even remotely. Neither is there an itemization or description of the materials to be used in constructing the deep well. There is absolutely no mention in the two (2) documents that a deep well pump is a component of the proposed windmill system. The contract prices fixed in both proposals cover only the features specifically described therein and no other. While the words "deep well" and "deep well pump" are mentioned in both, these do not indicate that a deep well is part of the windmill system. They merely describe the type of deep well pump for which the proposed windmill would be suitable. As correctly pointed out by petitioner, the words "deep well" preceded by the prepositions "for" and "suitable for" were meant only to convey the idea that the proposed windmill would be appropriate for a deep well pump with a diameter of 2 to 3 inches. For if the real intent of petitioner was to include a deep well in the agreement to construct a windmill, he would have used instead the conjunctions "and" or "with." Since the terms of the instruments are clear and leave no doubt as to their meaning they should not be disturbed. Moreover, it is a cardinal rule in the interpretation of contracts that the intention of the parties shall be accorded primordial consideration[5] and, in case of doubt, their contemporaneous and subsequent acts shall be principally considered. [6] An examination of such contemporaneous and subsequent acts of respondent as well as the attendant circumstances does not persuade us to uphold him. Respondent insists that petitioner verbally agreed that the contract price of P60,000.00 covered the installation of a deep well pump. He contends that since petitioner did not have the capacity to install the pump the latter agreed to have a third party do the work the cost of which was to be deducted from the contract price. To prove his point, he presented Guillermo Pili of SPGMI who declared that petitioner Tanguilig approached him with a letter from respondent Herce Jr. asking him to build a deep well pump as "part of the price/contract which Engineer (Herce) had with Mr. Tanguilig."[7] We are disinclined to accept the version of respondent. The claim of Pili that Herce Jr. wrote him a letter is unsubstantiated. The alleged letter was never presented in court by private respondent for reasons known only to him. But granting that this written communication existed, it could not have simply contained a request for Pili to install a deep well; it would have also mentioned the party who would pay for the undertaking. It strains credulity that respondent would keep silent on this matter and leave it all to petitioner Tanguilig to verbally convey to Pili that the deep well was part of the windmill construction and that its payment would come from the contract price of P60,000.00. We find it also unusual that Pili would readily consent to build a deep well the payment for which would come supposedly from the windmill contract price on the mere representation of petitioner, whom he had never met before, without a written commitment at least from the former. For if indeed the deep well were part of the windmill project, the contract for its installation would have been strictly a matter between petitioner and Pili himself with the former assuming the obligation to pay the price. That it was respondent Herce Jr. himself who paid for the deep well by handing over to Pili the amount of P15,000.00 clearly indicates that the contract for the deep well was not part of the windmill project but a separate agreement between respondent and Pili. Besides, if the price of P60,000.00 included the deep well, the obligation of respondent was to pay the entire amount to petitioner without prejudice to any action that Guillermo Pili or SPGMI may take, if any, against the latter. Significantly, when asked why he tendered payment directly to Pili and not to petitioner, respondent explained, rather lamely, that he did it "because he has (sic) the money, so (he) just paid the money in his possession."[8] Can respondent claim that Pili accepted his payment on behalf of petitioner? No. While the law is clear that "payment shall be made to the person in whose favor the obligation has been constituted, or his successor in interest, or any person authorized to receive it,".[9] It does not appear from the record that Pili and/or SPGMI was so authorized. Respondent cannot claim the benefit of the law concerning "payments made by a third person."[10] The Civil Code provisions do not apply in the instant case because no creditor-debtor relationship between petitioner and Guillermo Pili and/or SPGMI has been established regarding the construction of the deep well. Specifically, witness Pili did not testify that he entered into a contract with petitioner for the construction of respondent's deep well. If SPGMI was really commissioned by petitioner to construct the deep well, an agreement particularly to this effect should have been entered into. The contemporaneous and subsequent acts of the parties concerned effectively belie respondent's assertions. These circumstances only show that the construction of the well by SPGMI was for the sole account of respondent and that petitioner merely supervised the installation of the well because the windmill was to be connected to it. There is no legal nor factual basis by which this Court can impose upon petitioner an obligation he did not expressly assume nor ratify. The second issue is not a novel one. In a long line of cases[11] this Court has consistently held that in order for a party to claim exemption from liability by reason of fortuitous event under Art. 1174 of the Civil Code the event should be the sole and proximate cause of the loss or destruction of the object of the contract. In Nakpil vs. Court of Appeals,[12] four (4) requisites must concur: (a) the cause of the breach of the obligation must be independent of the will of the debtor; (b) the event must be either unforeseeable or unavoidable; (c) the event must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and, (d) the debtor must be free from any participation in or aggravation of the injury to the creditor. Petitioner failed to show that the collapse of the windmill was due solely to a fortuitous event. Interestingly, the evidence does not disclose that there was actually a typhoon on the day the windmill collapsed. Petitioner merely stated that there was a "strong wind." But a strong wind in this case cannot be fortuitous - unforeseeable nor unavoidable. On the contrary, a strong wind should be present in places where windmills are constructed, otherwise the windmills will not turn. The appellate court correctly observed that "given the newly-constructed windmill system, the same would not have collapsed had there been no inherent defect in it which could only be attributable to the appellee." [13] It emphasized that respondent had in his favor the presumption that "things have happened according to the ordinary course of nature and the ordinary habits of life." [14] This presumption has not been rebutted by petitioner. Finally, petitioner's argument that private respondent was already in default in the payment of his outstanding balance of P15,000.00 and hence should bear his own loss, is untenable. In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him.[15] When the windmill failed to function properly it became incumbent upon petitioner to institute the proper repairs in accordance with the guaranty stated in the contract. Thus, respondent cannot be said to have incurred in delay; instead, it is petitioner

who should bear the expenses for the reconstruction of the windmill. something fails to do it, the same shall be executed at his cost.

Article 1167 of the Civil Code is explicit on this point that if a person obliged to do

WHEREFORE, the appealed decision is MODIFIED. Respondent VICENTE HERCE JR. is directed to pay petitioner JACINTO M. TANGUILIG the balance of P15,000.00 with interest at the legal rate from the date of the filing of the complaint. In return, petitioner is ordered to "reconstruct subject defective windmill system, in accordance with the one-year guaranty"[16]and to complete the same within three (3) months from the finality of this decision. SO ORDERED. Padilla, (Chairman), Vitug, Kapunan, and Hermosisima, JJ., concur.

G.R. No. 73867 February 29, 1988 TELEFAST COMMUNICATIONS/PHILIPPINE WIRELESS, INC., petitioner, vs. IGNACIO CASTRO, SR., SOFIA C. CROUCH, IGNACIO CASTRO JR., AURORA CASTRO, SALVADOR CASTRO, MARIO CASTRO, CONRADO CASTRO, ESMERALDA C. FLORO, AGERICO CASTRO, ROLANDO CASTRO, VIRGILIO CASTRO AND GLORIA CASTRO, and HONORABLE INTERMEDIATE APPELLATE COURT, respondents.

PADILLA, J.: Petition for review on certiorari of the decision * of the Intermediate Appellate Court, dated 11 February 1986, in AC-G.R. No. CV-70245, entitled "Ignacio Castro, Sr., et al., Plaintiffs-Appellees, versus Telefast Communication/Philippine Wireless, Inc., Defendant-Appellant." The facts of the case are as follows: On 2 November 1956, Consolacion Bravo-Castro wife of plaintiff Ignacio Castro, Sr. and mother of the other plaintiffs, passed away in Lingayen, Pangasinan. On the same day, her daughter Sofia C. Crouch, who was then vacationing in the Philippines, addressed a telegram to plaintiff Ignacio Castro, Sr. at 685 Wanda, Scottsburg, Indiana, U.S.A., 47170 announcing Consolacion's death. The telegram was accepted by the defendant in its Dagupan office, for transmission, after payment of the required fees or charges. The telegram never reached its addressee. Consolacion was interred with only her daughter Sofia in attendance. Neither the husband nor any of the other children of the deceased, then all residing in the United States, returned for the burial. When Sofia returned to the United States, she discovered that the wire she had caused the defendant to send, had not been received. She and the other plaintiffs thereupon brought action for damages arising from defendant's breach of contract. The case was filed in the Court of First Instance of Pangasinan and docketed therein as Civil Case No. 15356. The only defense of the defendant was that it was unable to transmit the telegram because of "technical and atmospheric factors beyond its control." 1 No evidence appears on record that defendant ever made any attempt to advise the plaintiff Sofia C. Crouch as to why it could not transmit the telegram. The Court of First Instance of Pangasinan, after trial, ordered the defendant (now petitioner) to pay the plaintiffs (now private respondents) damages, as follows, with interest at 6% per annum: 1. Sofia C. Crouch, P31.92 and P16,000.00 as compensatory damages and P20,000.00 as moral damages. 2. Ignacio Castro Sr., P20,000.00 as moral damages. 3. Ignacio Castro Jr., P20,000.00 as moral damages. 4. Aurora Castro, P10,000.00 moral damages. 5. Salvador Castro, P10,000.00 moral damages. 6. Mario Castro, P10,000.00 moral damages. 7. Conrado Castro, P10,000 moral damages. 8. Esmeralda C. Floro, P20,000.00 moral damages. 9. Agerico Castro, P10,000.00 moral damages. 10. Rolando Castro, P10,000.00 moral damages. 11. Virgilio Castro, P10,000.00 moral damages.

12. Gloria Castro, P10,000.00 moral damages. Defendant is also ordered to pay P5,000.00 attorney's fees, exemplary damages in the amount of P1,000.00 to each of the plaintiffs and costs.
2

On appeal by petitioner, the Intermediate Appellate Court affirmed the trial court's decision but eliminated the award of P16,000.00 as compensatory damages to Sofia C. Crouch and the award of P1,000.00 to each of the private respondents as exemplary damages. The award of P20,000.00 as moral damages to each of Sofia C. Crouch, Ignacio Castro, Jr. and Esmeralda C. Floro was also reduced to P120,000. 00 for each. 3 Petitioner appeals from the judgment of the appellate court, contending that the award of moral damages should be eliminated as defendant's negligent act was not motivated by "fraud, malice or recklessness." In other words, under petitioner's theory, it can only be held liable for P 31.92, the fee or charges paid by Sofia C. Crouch for the telegram that was never sent to the addressee thereof. Petitioner's contention is without merit. Art. 1170 of the Civil Code provides that "those who in the performance of their obligations are guilty of fraud, negligence or delay, and those who in any manner contravene the tenor thereof, are liable for damages." Art. 2176 also provides that "whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done." In the case at bar, petitioner and private respondent Sofia C. Crouch entered into a contract whereby, for a fee, petitioner undertook to send said private respondent's message overseas by telegram. This, petitioner did not do, despite performance by said private respondent of her obligation by paying the required charges. Petitioner was therefore guilty of contravening its obligation to said private respondent and is thus liable for damages. This liability is not limited to actual or quantified damages. To sustain petitioner's contrary position in this regard would result in an inequitous situation where petitioner will only be held liable for the actual cost of a telegram fixed thirty (30) years ago. We find Art. 2217 of the Civil Code applicable to the case at bar. It states: "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 results of the defendant's wrongful act or omission ." (Emphasis supplied). Here, petitioner's act or omission, which amounted to gross negligence, was precisely the cause of the suffering private respondents had to undergo. As the appellate court properly observed: [Who] can seriously dispute the shock, the mental anguish and the sorrow that the overseas children must have suffered upon learning of the death of their mother after she had already been interred, without being given the opportunity to even make a choice on whether they wanted to pay her their last respects? There is no doubt that these emotional sufferings were proximately caused by appellant's omission and substantive law provides for the justification for the award of moral damages. 4 We also sustain the trial court's award of P16,000.00 as compensatory damages to Sofia C. Crouch representing the expenses she incurred when she came to the Philippines from the United States to testify before the trial court. Had petitioner not been remiss in performing its obligation, there would have been no need for this suit or for Mrs. Crouch's testimony. The award of exemplary damages by the trial court is likewise justified and, therefore, sustained in the amount of P1,000.00 for each of the private respondents, as a warning to all telegram companies to observe due diligence in transmitting the messages of their customers. WHEREFORE, the petition is DENIED. The decision appealed from is modified so that petitioner is held liable to private respondents in the following amounts: (1) P10,000.00 as moral damages, to each of private respondents; (2) P1,000.00 as exemplary damages, to each of private respondents; (3) P16,000.00 as compensatory damages, to private respondent Sofia C. Crouch; (4) P5,000.00 as attorney's fees; and (5) Costs of suit. SO ORDERED. Yap (Chairman), Paras and Sarmiento, JJ., concur.

Separate Opinions

MELENCIO-HERRERA, J., concurring. [I] concur.In addition to compensatory and exemplary damages, moral damages are recoverable in actions for breach of contract, as in this case, where the breach has been wanton and reckless, tantamount to bad faith.

Separate Opinions MELENCIO-HERRERA, J., concurring. [I] concur.In addition to compensatory and exemplary damages, moral damages are recoverable in actions for breach of contract, as in this case, where the breach has been wanton and reckless, tantamount to bad faith. Footnotes * Penned by Justice Serafin E. Camilon, with the concurrence of Justices Crisolito Pascual, Jose C. Campos, Jr. and Desiderio P. Jurado. 1 Rollo at 8. 2 Rollo at 9-10. 3 Rollo at 14, 4 Rollo at 13.