PNCC vs. APAC MARKETING G.R No. 190957. June 5, 2013.
FACTS:
APAC Marketing Corporation filed with the trial court a complaint against Philippine National
Construction Corporation (PNCC) for collection of sum of money with damages, alleging that PNCC failed
to pay the sum of P782,296.80 as payment for the crushed basalt rock which APAC delivered to PNCC.
The trial court rendered its decision in favor of APAC, ordering PNCC to pay: 1) P782,296.80 as actual
damages; 2) P50,000.00 as attorney’s fees, plus P3,000.00 per court appearance; and 3) Cost of suit. The
trial court explained in its decision that since is it clear that APAC was compelled to hire the services of a
counsel to litigate and to protect his interest by reason of an unsatisfied act of the other party, it is
entitled to recover attorney’s fees. PNCC filed a motion for reconsideration, alleging that during the
pendency of the case, the principal obligation was fully paid and hence, the award by the trial court of
actual damages was without factual and legal bases. The trial court considered PNCC’s claim of full
payment of the principal obligation, but still it ordered them to pay legal interest of 12% per annum. On
appeal, the CA affirmed the modified assailed decision of the trial court. PNCC filed a Motion for
Reconsideration, which raised the lone issue of the propriety of the award of attorney’s fees in favor of
AMAC, but the CA denied the same. Hence, this petition.
ISSUE: WON the CA gravely erred in awarding attorney’s fees to respondent. (YES)
RULING:
As a general rule, the parties may stipulate the recovery of attorney’s fees. In the absence on such
stipulation, Article 2208 of the New Civil Code restrictively enumerates the instances when these fees
may be recovered, to wit: (1) When exemplary damages are awarded; (2) When the defendant’s act or
omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his
interest; (3) In criminal cases of malicious prosecution against the plaintiff; (4) In case of a clearly
unfounded civil action or proceeding against the plaintiff; (5) Where the defendant acted in gross and
evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and demandable claim; (6) In
actions for legal support; (7) In actions for the recovery of wages of household helpers, laborers and
skilled workers; (8) In actions for indemnity under workmen’s compensation and employer’s liability
laws; (9) In a separate civil action to recover civil liability arising from a crime; (10)When at least double
judicial costs are awarded; (11)In any other case where the court deems it just and equitable that
attorney’s fees and expenses of litigation should be recovered. The general rule is that attorney’s fees
cannot be recovered as part of damages because of the policy that no premium should be placed on the
right to litigate. They are not to be awarded every time a party wins a suit. The power of the court to
award attorney’s fees under Article 2208 demands factual, legal, and equitable justification. Even when
a claimant is compelled to litigate with third persons or to incur expenses to protect his rights, still
attorney’s fees may not be awarded where no sufficient showing of bad faith could be reflected in a
party’s persistence in a case other than an erroneous conviction of the righteousness of his cause. In
Benedicto v. Villaflores, the SC explained dual concept of attorney’s fees as ordinary and extraordinary:
Attorney’s fees, as part of damages, are not necessarily equated to the amount paid by a litigant to a
lawyer. In the ordinary sense, attorney’s fees represent the reasonable compensation paid to a lawyer
by his client for the legal services he has rendered to the latter; while in its extraordinary concept, they
may be awarded by the court as indemnity for damages to be paid by the losing party to the prevailing
party. Attorney’s fees as part of damages are awarded only in the instances specified in Article 2208 of
the Civil Code. As such, it is necessary for the court to make findings of fact and law that would bring the
case within the ambit of these enumerated instances to justify the grant of such award, and in all cases
it must be reasonable. The Court has consistently held that an award of attorney’s fees under Article
2208 demands factual, legal, and equitable justification to avoid speculation and Page 24 of 30 TORTS |
DAMAGES conjecture surrounding the grant thereof. Due to the special nature of the award of
attorney’s fees, a rigid standard is imposed on the courts before these fees could be granted. Hence, it is
imperative that they clearly and distinctly set forth in their decisions the basis for the award thereof. It is
not enough that they merely state the amount of the grant in the dispositive portion of their decisions.
It bears reiteration that the award of attorney’s fees is an exception rather than the general rule; thus,
there must be compelling legal reason to bring the case within the exceptions provided under Article
2208 of the Civil Code to justify the award. Here, there is an absence of an independent CA finding of the
factual circumstances and legal or equitable basis to justify the grant of attorney’s fees. The CA merely
adopted the RTC’s rational for the award, which in this case we find to be sorely inadequate. Petition
granted; judgment modified. The award of attorney’s fees in favor of APAC Marketing Incorporated, is
DELETED.
