20. FRIAS VS.

SAN DIEGO-SISON Contracts; Obligations; Damages; Moral damages may be awarded in culpa
contractual or breach of contract cases when the defendant acted fraudulently or in
244 SUPREME COURT REPORTS ANNOTATED bad faith.—We agree with the findings of the trial court and the CA that
petitioner’s act of trying to deprive respondent of the security of her loan by
Frias vs. San Diego-Sison executing an affidavit of loss of the title and instituting a petition for the issuance
G.R. No. 155223. April 3, 2007. * of a new owner’s duplicate copy of TCT No. 168173 entitles respondent to moral
BOBIE ROSE V. FRIAS, represented by her Attorney-in- fact, MARIE F. damages. Moral damages may be awarded in culpa contractual or breach of
FUJITA, petitioner, vs. FLORA SAN DIEGOSISON, respondent. contract cases when the defendant acted fraudulently or in bad faith. Bad faith
does not simply connote bad judgment or negligence; it imports a dishonest purpose
Civil Law; Contracts; The general rule is that if the terms of an agreement are or some moral obliquity and conscious doing of wrong. It partakes of the nature of
clear and leave no doubt as to the intention of the contracting parties, the literal fraud.
meaning of its stipulations shall prevail.—The Memorandum of Agreement
executed between the petitioner and respondent on December 7, 1990 is the law Damages; The entitlement to moral damages having been established, the
between the parties. In resolving an issue based upon a contract, we must first award of exemplary damages is proper.—The entitlement to moral damages having
examine the contract itself, especially the provisions thereof which are relevant to been established, the award of exemplary damages is proper. Exemplary damages
the controversy. The general rule is that if the terms of an agreement are clear and may be imposed upon petitioner by way of example or correction for the public good.
leave no doubt as to the intention of the contracting parties, the literal meaning of The RTC awarded the amount of P100,000.00 as moral and exemplary damages.
its stipulations shall prevail. It is further required that the various stipulations of While the award of moral and exemplary damages in an aggregate amount may
a contract shall be interpreted together, attributing to the doubtful ones that sense not be the usual way of awarding said damages, no error has been committed by
which may result from all of them taken jointly. CA. There is no question that respondent is entitled to moral and exemplary
damages.
Interest Rates; The payment of regular interest constitutes the price or cost of
the use of money and thus, until the principal sum due is returned to the creditor, Attorney’s Fees; Attorney’s fees as part of the damages are not meant to enrich
regular interest continues to accrue since the debtor continues to use such principal the winning party at the expense of the losing litigant. They are not awarded every
amount.—The payment of regular interest constitutes the price or cost of the use time a party prevails in a suit because of the policy that no premium should be
of money and thus, until the principal sum due is returned to the creditor, regular placed on the right to litigate.—Article 2208 of the New Civil Code enumerates the
interest continues to accrue since the debtor continues to use such principal instances where such may be awarded and, in all cases, it must be reasonable, just
amount. It has been held that for a debtor to continue in possession of the principal and equitable if the same were to be granted. Attorney’s fees as part of damages
of the loan and to continue to use the same after maturity of the loan without are not meant to enrich the winning party at the expense of the losing litigant.
payment of the monetary interest, would constitute unjust enrichment on the part They are not awarded every time a party prevails in a suit because of the policy
of the debtor at the expense of the creditor. that no premium should be placed on the right to litigate. The award of attorney’s
fees is the exception rather than the general rule. As such,
Same; The interest rate of 25% per annum awarded by the Court of Appeals to 246
a P2 million loan is fair and reasonable.—In Bautista v. Pilar Development Corp.,
312 SCRA 611 (1999), we upheld the validity of a 21% per annum interest on a 246 SUPREME COURT REPORTS ANNOTATED
P142,326.43 loan. Frias vs. San Diego-Sison
_______________
it is necessary for the trial court to make findings of facts and law that would
* THIRD DIVISION.
bring the case within the exception and justify the grant of such award. The matter
of attorney’s fees cannot be mentioned only in the dispositive portion of the decision.
245 They must be clearly explained and justified by the trial court in the body of its
decision. On appeal, the CA is precluded from supplementing the bases for
VOL. 520, APRIL 3, 2007 245 awarding attorney’s fees when the trial court failed to discuss in its Decision the
Frias vs. San Diego-Sison reasons for awarding the same. Consequently, the award of attorney’s fees should
be deleted.
In Garcia v. Court of Appeals, 167 SCRA 815 (1988), we sustained the
agreement of the parties to a 24% per annum interest on an P8,649,250.00 loan. PETITION for review on certiorari of the decision and resolution of the
Thus, the interest rate of 25% per annumawarded by the CA to a P2 million loan is
Court of Appeals.
fair and reasonable.
The facts are stated in the opinion of the Court.
Ernesto L. Pineda for petitioner.
Page 1 of 7
 J.V. Natividad and Associates for respondent. P7,000,000.00 should the property be sold at a price more than P7
million.
AUSTRIA-MARTINEZ, J.: 3. 3.That in case the FIRST PARTY has no other buyer within the first six
months from the execution of this contract, no interest shall be charged
by the SECOND PARTY on the P3 million however, in the event that on
Before us is a Petition for Review on Certiorari filed by Bobie Rose V. Frias
the sixth month the SECOND PARTY would decide not to purchase the
represented by her Attorney-in-fact, Marie Regine F. Fujita (petitioner) aforementioned property, the FIRST PARTY has a period of another six
seeking to annul the Decision dated June 18, 2002 and the
1
months within which to pay the sum of P3 million pesos provided that
Resolution dated September 11, 2002 of the Court of Appeals (CA) in CA-
2
the said amount shall earn compounded bank interest for the last six
G.R. CV No. 52839. months only. Under this circumstance, the amount of P3 million given
Petitioner is the owner of a house and lot located at No. 589 Batangas by the SECOND PARTY shall be treated as [a] loan and the property
East, Ayala Alabang, Muntinlupa, Metro Manila, which she acquired from shall be consid
Island Masters Realty and Development Corporation (IMRDC) by virtue of
a Deed of Sale dated Nov. 16, 1990. The property is covered by TCT No.
3
_______________

168173 of the Register of Deeds of Makati in the name of IMRDC. 4

5 Id., at pp. 9-11; Exhibit “A.”
_______________
248
1CA Rollo, pp. 134-144; Penned by Justice Wenceslao I. Agnir, Jr. (retired), concurred in
by Justices B.A. Adefuin-De la Cruz (retired) and Regalado E. Maambong.
248 SUPREME COURT REPORTS ANNOTATED
2Id., at pp. 164-165. Frias vs. San Diego-Sison
3Records, pp. 15-16. Exhibit “C.” ered as the security for the mortgage which can be enforced in accordance with law.
Id., at pp. 13-14; Exhibit “B.”
x x x x.”
4
6

247
Petitioner received from respondent two million pesos in cash and one
VOL. 520, APRIL 3, 2007 247 million pesos in a post-dated check dated February 28, 1990, instead of
Frias vs. San Diego-Sison 1991, which rendered said check stale. Petitioner then gave respondent
7

On December 7, 1990, petitioner, as the FIRST PARTY, and Dra. Flora TCT No. 168173 in the name of IMRDC and the Deed of Absolute Sale over
San Diego-Sison (respondent), as the SECOND PARTY, entered into a the property between petitioner and IMRDC.
Memorandum of Agreement over the property with the following terms:
5
Respondent decided not to purchase the property and notified
“NOW, THEREFORE, for and in consideration of the sum of THREE MILLION petitioner through a letter dated March 20, 1991, which petitioner
8

PESOS (P3,000,000.00) receipt of which is hereby acknowledged by the FIRST received only on June 11, 1991, reminding petitioner of their agreement
9

PARTY from the SECOND PARTY, the parties have agreed as follows: that the amount of two million pesos which petitioner received from
respondent should be considered as a loan payable within six months.
1. 1.That the SECOND PARTY has a period of Six (6) months from the date Petitioner subsequently failed to pay respondent the amount of two million
of the execution of this contract within which to notify the FIRST PARTY pesos.
of her intention to purchase the aforementioned parcel of land together
On April 1, 1993, respondent filed with the Regional Trial Court (RTC)
within (sic) the improvements thereon at the price of SIX MILLION
FOUR HUNDRED THOUSAND PESOS (P6,400,000.00). Upon notice to of Manila, a complaint for sum of money with preliminary attachment
10

the FIRST PARTY of the SECOND PARTY’s intention to purchase the against petitioner. The case was docketed as Civil Case No. 93-65367 and
same, the latter has a period of another six months within which to pay raffled to Branch 30. Respondent alleged the foregoing facts and in
the remaining balance of P3.4 million. addition thereto averred that petitioner tried to deprive her of the security
2. 2.That prior to the six months period given to the SECOND PARTY within for the loan by making a false report of the loss of her owner’s copy of TCT
11

which to decide whether or not to purchase the above-mentioned No. 168173 to the Tagig Police Station on June 3,
property, the FIRST PARTY may still offer the said property to other _______________
persons who may be interested to buy the same provided that the amount
of P3,000,000.00 given to the FIRST PARTY BY THE SECOND PARTY 6Id., at pp. 9-10.
shall be paid to the latter including interest based on prevailing 7Respondent did not correct or replace the post-dated check. Records also do not show
compounded bank interest plus the amount of the sale in excess of that petitioner demanded its correction or replacement.
8Id., at p. 17, Annex “D.”
Page 2 of 7
 9 Exhibit “D-1,” folder of exhibits. and the IMRDC from Atty. Lozada, the latter gave her these documents in
Records, pp. 3-8.
a brown envelope on May 5, 1991 which her secretary placed in her attache
10

11 Id., at p. 18, Annex “E.”

case; that the envelope together with her other personal things were lost
249 when her car was forcibly opened the following day; that she sought the
VOL. 520, APRIL 3, 2007 249 help of Atty. Lozada who advised her to secure a police report, to execute
Frias vs. San Diego-Sison an affidavit of loss and to get the services of another lawyer to file a petition
1991, executing an affidavit of loss and by filing a petition for the issuance
12
for the issuance of an owner’s duplicate copy; that the petition for the
of a new owner’s duplicate copy of said title with the RTC of Makati, issuance of a new owner’s duplicate copy was filed on her behalf without
Branch 142; that the petition was granted in an Order dated August 31,
13
her knowledge and neither did she sign the petition nor testify in court as
1991; that said Order was subsequently set aside in an Order dated April falsely claimed for she was abroad; that she was a victim of the
10, 1992 where the RTC Makati granted respondent’s petition for relief
14
manipulations of Atty. Lozada and respondent as shown by the filing of
from judgment due to the fact that respondent is in possession of the criminal charges for perjury and false testimony against her; that no
owner’s duplicate copy of TCT No. 168173, and ordered the provincial interest could be due as there was no valid mortgage over the property as
public prosecutor to conduct an investigation of petitioner for perjury and the principal obligation is vitiated with fraud and deception. She prayed
false testimony. Respondent prayed for the ex parte issuance of a writ of for the dismissal of the complaint, counter-claim for damages and
preliminary attachment and payment of two million pesos with interest at attorney’s fees.
36% per annum from December 7, 1991, P100,000.00 moral, corrective and Trial on the merits ensued. On January 31, 1996, the RTC issued a
exemplary damages and P200,000.00 for attorney’s fees. decision, the dispositive portion of which reads:
17

“WHEREFORE, judgment is hereby RENDERED:

In an Order dated April 6, 1993, the Executive Judge of the RTC of
Manila issued a writ of preliminary attachment upon the filing of a bond
1. 1)Ordering defendant to pay plaintiff the sum of P2 Million plus interest
in the amount of two million pesos. 15

thereon at the rate of thirty two (32%) per cent per annum beginning
Petitioner filed an Amended Answer alleging that the Memorandum of
16

December 7, 1991 until fully paid.

Agreement was conceived and arranged by her lawyer, Atty. Carmelita 2. 2)Ordering defendant to pay plaintiff the sum of P70,000.00 representing
Lozada, who is also respondent’s lawyer; that she was asked to sign the premiums paid by plaintiff on the attachment bond
agreement without being given the chance to read the same; that the title
to the property and the Deed of Sale between her and the IMRDC were _______________
entrusted to Atty. Lozada for safekeeping and were never turned over to
respondent as there was no consummated sale yet; that out of the two 17 Id., at pp. 286-292; Branch 30, Penned by Judge Senecio O. Ortile.

million pesos cash paid, Atty. Lozada took the one million pesos which has 251
not been VOL. 520, APRIL 3, 2007 251
_______________
Frias vs. San Diego-Sison
12 Id., at pp. 20-22; Docketed as LRC Case No. M-2282; Annex “G.”
Id., at pp. 23-24; Penned by Judge Salvador P. De Guzman, Jr.; Annex “H.”
1. with legal interest thereon counted from the date of this decision until fully
13

14 Id., at pp. 25-27; Annex “I.”

15 Id., at p. 28. Per Judge Rosalio G. Dela Rosa. paid.
16 Id., at pp. 130-141. 2. 3)Ordering defendant to pay plaintiff the sum of P100,000.00 by way of
moral, corrective and exemplary damages.
250 3. 4)Ordering defendant to pay plaintiff attorney’s fees of P100,000.00 plus
250 SUPREME COURT REPORTS ANNOTATED cost of litigation.” 18

Frias vs. San Diego-Sison

returned, thus petitioner had filed a civil case against her; that she was The RTC found that petitioner was under obligation to pay respondent the
never informed of respondent’s decision not to purchase the property amount of two million pesos with compounded interest pursuant to their
within the six month period fixed in the agreement; that when she Memorandum of Agreement; that the fraudulent scheme employed by
demanded the return of TCT No. 168173 and the Deed of Sale between her petitioner to deprive respondent of her only security to her loaned money
when petitioner executed an affidavit of loss and instituted a petition for
Page 3 of 7
the issuance of an owner’s duplicate title knowing the same was in Bank, that in fairness to petitioner, the rate to be charged should be 25%
21

respondent’s possession, entitled respondent to moral damages; and that only.

petitioner’s bare denial cannot be accorded credence because her testimony Petitioner’s motion for reconsideration was denied by the CA in a
and that of her witness did not appear to be credible. Resolution dated September 11, 2002.
The RTC further found that petitioner admitted that she received from _______________
respondent the two million pesos in cash but the fact that petitioner gave
CA Rollo, p. 165.
the one million pesos to Atty. Lozada was without respondent’s knowledge
19

20The date when the second six-month period commences under the Memorandum of
thus it is not binding on respondent; that respondent had also proven that Agreement dated December 7, 1990.
in 1993, she initially paid the sum of P30,000.00 as premium for the 21Exhibit “L,” folder of exhibits.
issuance of the attachment bond, P20,000.00 for its renewal in 1994, and
253
P20,000.00 for the renewal in 1995, thus plaintiff should be reimbursed
considering that she was compelled to go to court and ask for a writ of VOL. 520, APRIL 3, 2007 253
preliminary attachment to protect her rights under the agreement. Frias vs. San Diego-Sison
Petitioner filed her appeal with the CA. In a Decision dated June 18, Hence the instant Petition for Review on Certiorari filed by petitioner
2002, the CA affirmed the RTC decision with modification, the dispositive raising the following issues:
portion of which reads:
_______________ 1. (A)WHETHER OR NOT THE COMPOUNDED BANK INTEREST
SHOULD BE LIMITED TO SIX (6) MONTHS AS CONTAINED
18 Id., at p. 292.
IN THE MEMORANDUM OF AGREEMENT.
252 2. (B)WHETHER OR NOT THE RESPONDENT IS ENTITLED TO
252 SUPREME COURT REPORTS ANNOTATED MORAL DAMAGES.
Frias vs. San Diego-Sison 3. (C)WHETHER OR NOT THE GRANT OF CORRECTIVE AND
“WHEREFORE, premises considered, the decision appealed from is MODIFIED in EXEMPLARY DAMAGES AND ATTORNEY’S FEES IS
the sense that the rate of interest is reduced from 32% to 25% per annum, effective PROPER EVEN IF NOT MENTIONED IN THE TEXT OF THE
June 7, 1991 until fully paid.” 19 DECISION. 22

The CA found that: petitioner gave the one million pesos to Atty. Lozada Petitioner contends that the interest, whether at 32% per annum awarded
partly as her commission and partly as a loan; respondent did not replace by the trial court or at 25% per annum as modified by the CA which should
the mistakenly dated check of one million pesos because she had decided run from June 7, 1991 until fully paid, is contrary to the parties’
not to buy the property and petitioner knew of her decision as early as April Memorandum of Agreement; that the agreement provides that if
1991; the award of moral damages was warranted since even granting respondent would decide not to purchase the property, petitioner has the
petitioner had no hand in the filing of the petition for the issuance of an period of another six months to pay the loan with compounded bank
owner’s copy, she executed an affidavit of loss of TCT No. 168173 when she interest for the last six months only; that the CA’s ruling that a loan always
knew all along that said title was in respondent’s possession; petitioner’s bears interest otherwise it is not a loan is contrary to Art. 1956 of the New
claim that she thought the title was lost when the brown envelope given to Civil Code which provides that no interest shall be due unless it has been
her by Atty. Lozada was stolen from her car was hollow; that such deceitful expressly stipulated in writing.
conduct caused respondent serious anxiety and emotional distress. We are not persuaded.
The CA concluded that there was no basis for petitioner to say that the While the CA’s conclusion, that a loan always bears interest otherwise
interest should be charged for six months only and no more; that a loan it is not a loan, is flawed since a simple loan may be gratuitous or with a
always bears interest otherwise it is not a loan; that interest should stipulation to pay interest, we find no error committed by the CA in
23

commence on June 7, 1991 with compounded bank interest prevailing at

20

awarding a 25% interest per annum on the two-million peso loan even
the time the two million was considered as a loan which was in June 1991; beyond the second six months stipulated period.
that the bank interest rate for loans secured by a real estate mortgage in _______________
1991 ranged from 25% to 32% per annum as certified to by Prudential

Page 4 of 7
 22 Rollo, p. 14. stipulated. Considering that petitioner failed to pay the amount given
CIVIL CODE, Article 1933.
which under the Memorandum of Agreement shall be considered as a loan,
23

254 the monetary interest for the last six months continued to accrue until
254 SUPREME COURT REPORTS ANNOTATED actual payment of the loaned amount.
The payment of regular interest constitutes the price or cost of the use
Frias vs. San Diego-Sison
of money and thus, until the principal sum due is returned to the creditor,
The Memorandum of Agreement executed between the petitioner and regular interest continues to accrue since the debtor continues to use such
respondent on December 7, 1990 is the law between the parties. In principal amount. It has been held that for a debtor to continue in
28

resolving an issue based upon a contract, we must first examine the possession of the principal of the loan and to continue to use the same after
contract itself, especially the provisions thereof which are relevant to the maturity of the loan without payment of the monetary interest, would
controversy. The general rule is that if the terms of an agreement are clear
24

constitute unjust enrichment on the part of the debtor at the expense of

and leave no doubt as to the intention of the contracting parties, the literal the creditor. 29

meaning of its stipulations shall prevail. It is further required that the

25

Petitioner and respondent stipulated that the loaned amount shall earn
various stipulations of a contract shall be interpreted together, attributing compounded bank interests, and per the certification issued by Prudential
to the doubtful ones that sense which may result from all of them taken Bank, the interest rate for loans in 1991 ranged from 25% to 32% per
jointly. 26

annum. The CA reduced the interest rate to 25% instead of the 32%
In this case, the phrase “for the last six months only” should be taken awarded by the trial court which petitioner no longer assailed.
in the context of the entire agreement. We agree with and adopt the CA’s In Bautista v. Pilar Development Corp., we upheld the validity of a 21%
30

interpretation of the phrase in this wise: per annum interest on a P142,326.43 loan. In
“Their agreement speaks of two (2) periods of six months each. The first six-month _______________
period was given to plaintiff-appellee (respondent) to make up her mind whether
or not to purchase defendant-appellant’s (petitioner’s) property. The second six- State Investment House, Inc. v. Court of Appeals, G.R. No. 90676, June 19, 1991, 198
28

month period was given to defendant-appellant to pay the P2 million loan in the SCRA 390, 398.
event that plaintiff-appellee decided not to buy the subject property in which case State Investment House, Inc. v. Court of Appeals, supra note 28, at p. 399.
29

interest will be charged “for the last six months only,” referring to the second six- 371 Phil. 533, 544; 312 SCRA 611, 622 (1999).
30

month period. This means that no interest will be charged for the first six-month
period while appellee was making up her mind whether to buy the property, but 256
only for the second period of six months after appellee had decided not to buy the 256 SUPREME COURT REPORTS ANNOTATED
property. This is the meaning of the phrase “for the last six months only.” Certainly, Frias vs. San Diego-Sison
there is nothing in their agreement that suggests that interest will be charged for
Garcia v. Court of Appeals, we sustained the agreement of the parties to a
six months only even if it takes defendant-appellant an eternity to pay the loan.”
31

27

24% per annum interest on an P8,649,250.00 loan. Thus, the interest rate
_______________ of 25% per annum awarded by the CA to a P2 million loan is fair and
reasonable.
Milwaukee Industries Corporation v. Pampanga III Electric Cooperative, Inc., G.R. No.
24
Petitioner next claims that moral damages were awarded on the
152569, May 31, 2004, 430 SCRA 389, 396.
CIVIL CODE, Article 1370.
25
erroneous finding that she used a fraudulent scheme to deprive respondent
CIVIL CODE, Article 1374.
26 of her security for the loan; that such finding is baseless since petitioner
CA Rollo, pp. 164-165.
27
was acquitted in the case for perjury and false testimony filed by
255
respondent against her.
We are not persuaded.
VOL. 520, APRIL 3, 2007 255
Article 31 of the Civil Code provides that when the civil action is based
Frias vs. San Diego-Sison on an obligation not arising from the act or omission complained of as a
The agreement that the amount given shall bear compounded bank felony, such civil action may proceed independently of the criminal
interest for the last six months only, i.e., referring to the second six-month proceedings and regardless of the result of the latter. 32

period, does not mean that interest will no longer be charged after the While petitioner was acquitted in the false testimony and perjury cases
second six-month period since such stipulation was made on the logical and filed by respondent against her, those actions are entirely distinct from the
reasonable expectation that such amount would be paid within the date
Page 5 of 7
collection of sum of money with damages filed by respondent against 33Abando v. Lozada, G.R. No. 82564, October 13, 1989, 178 SCRA 509, 516, citing Board
of Liquidators v. Kalaw, G.R. No. L-18805, August 14, 1967, 20 SCRA 987, 1007.
petitioner. 34TSN, July 17, 1995, p. 5.
We agree with the findings of the trial court and the CA that 35TSN, August 21, 1995, pp. 7-10.
petitioner’s act of trying to deprive respondent of the security of her loan
by executing an affidavit of loss of the title and instituting a petition for 258
the issuance of a new owner’s duplicate copy of TCT No. 168173 entitles 258 SUPREME COURT REPORTS ANNOTATED
respondent to moral damages. Moral damages may be awarded in culpa Frias vs. San Diego-Sison
contractual or breach of contract cases when the defendant acted the latter passed it on to her and she placed it in petitioner’s attaché
fraudulently or in bad faith. Bad faith does not simply connote bad case and did not bother to look at the envelope.
36 37

judgment or negligence; it imports a dishonest It is clear therefrom that petitioner’s execution of the affidavit of loss
_______________
became the basis of the filing of the petition with the RTC for the issuance
of new owner’s duplicate copy of TCT No. 168173. Petitioner’s actuation
31 G.R. Nos. L-82282-83, November 24, 1988, 167 SCRA 815, 830.
32 Gorospe v. Nolasco, 114 Phil. 614, 618; 4 SCRA 684, 688 (1962). would have deprived respondent of the security for her loan were it not for
respondent’s timely filing of a petition for relief whereby the RTC set aside
257 its previous order granting the issuance of new title. Thus, the award of
VOL. 520, APRIL 3, 2007 257 moral damages is in order.
Frias vs. San Diego-Sison The entitlement to moral damages having been established, the award
purpose or some moral obliquity and conscious doing of wrong. It partakes of exemplary damages is proper. Exemplary damages may be imposed
38

of the nature of fraud. 33

upon petitioner by way of example or correction for the public good. The 39

The Memorandum of Agreement provides that in the event that RTC awarded the amount of P100,000.00 as moral and exemplary
respondent opts not to buy the property, the money given by respondent to damages. While the award of moral and exemplary damages in an
petitioner shall be treated as a loan and the property shall be considered aggregate amount may not be the usual way of awarding said damages, no 40

as the security for the mortgage. It was testified to by respondent that after error has been committed by CA. There is no question that respondent is
they executed the agreement on December 7, 1990, petitioner gave her the entitled to moral and exemplary damages.
owner’s copy of the title to the property, the Deed of Sale between petitioner Petitioner argues that the CA erred in awarding attorney’s fees because
and IMRDC, the certificate of occupancy, and the certificate of the the trial court’s decision did not explain the findings of facts and law to
Secretary of the IMRDC who signed the Deed of Sale. However, 34
justify the award of attorney’s fees as the same was mentioned only in the
notwithstanding that all those documents were in respondent’s possession, dispositive portion of the RTC decision.
petitioner executed an affidavit of loss that the owner’s copy of the title and We agree.
_______________
the Deed of Sale were lost.
Although petitioner testified that her execution of the affidavit of loss 36TSN, October 2, 1995, p. 10.
was due to the fact that she was of the belief that since she had demanded 37Id., at p. 16.
from Atty. Lozada the return of the title, she thought that the brown 38Bert Osmeña & Associates, Inc. v. Court of Appeals, 205 Phil. 328, 334; 120 SCRA 395,
envelope with markings which Atty. Lozada gave her on May 5, 1991 400 (1983); Kapoe v. Masa, 219 Phil. 204, 208; 134 SCRA 231, 234 (1985).
CIVIL CODE, Article 2229.
already contained the title and the Deed of Sale as those documents were
39

40Philippine Airlines, Inc. v. Court of Appeals, G.R. Nos. 50504-05, August 13, 1990, 188
in the same brown envelope which she gave to Atty. Lozada prior to the SCRA 461, 474.
transaction with respondent. Such statement remained a bare statement.
35

It was not proven at all since Atty. Lozada had not taken the stand to 259
corroborate her claim. In fact, even petitioner’s own witness, Benilda VOL. 520, APRIL 3, 2007 259
Ynfante (Ynfante), was not able to establish petitioner’s claim that the title Frias vs. San Diego-Sison
was returned by Atty. Lozada in view of Ynfante’s testimony that after the Article 2208 of the New Civil Code enumerates the instances where such
41

brown envelope was given to petitioner, may be awarded and, in all cases, it must be reasonable, just and equitable
_______________
if the same were to be granted. Attorney’s fees as part of damages are not
42

meant to enrich the winning party at the expense of the losing litigant.
Page 6 of 7
They are not awarded every time a party prevails in a suit because of the Judgment and resolution affirmed with modification.
policy that no premium should be placed on the Notes.—Loans are transactions wherein the owner of a property allows
_______________ another party to use the property and where customarily, the latter
promises to return the property after a
41ART. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other _______________
than judicial costs, cannot be recovered, except:
43Id. citing Country Bankers Insurance Corporation v. Lianga Bay and Community Multi-
1. (1)When exemplary damages are awarded; purpose Cooperative, Inc., 425 Phil. 511, 525; 374 SCRA 653, 666 (2002); Ibaan Rural Bank,
2. (2)When the defendant’s act or omission has compelled the plaintiff to litigate with Inc. v. Court of Appeals, 378 Phil. 707, 714; 321 SCRA 88, 94-95 (1999).
third persons or to incur expenses to protect his interest; 44Samatra v. Vda. de Pariñas, 431 Phil. 255, 267; 381 SCRA 522, 533 (2002); Development
3. (3)In criminal cases of malicious prosecution against the plaintiff; Bank of the Philippines v. Court of Appeals, 330 Phil. 801, 810; 262 SCRA 245, 254 (1996).
4. (4)In case of a clearly unfounded civil action or proceeding against the plaintiff;
5. (5)Where the defendant acted in gross and evident bad faith in refusing to satisfy 261
the plaintiff’s plainly valid, just and demandable claim;
6. (6)In actions for legal support; VOL. 520, APRIL 3, 2007 261
7. (7)In actions for the recovery of wages of household helpers, laborers and skilled
workers; NS Transport Services, Inc. vs. Zeta
8. (8)In actions for indemnity under workmen’s compensation and employer’s liability specified period with payment for its use called interest. (Constantino, Jr.
laws; vs. Cuisia, 472 SCRA 505 [2005])
9. (9)In a separate civil action to recover civil liability arising from a crime;
10. (10)When at least double judicial costs are awarded;
Nowhere in jurisprudence has a legal rate interest been imposed as a
11. (11)In any other case where the court deems it just and equitable that attorney’s flat rate rather than on a per annum basis. (DSM Construction and
fees and expenses of litigation should be recovered. Development Corporation vs. Court of Appeals, 478 SCRA 618 [2005])

In all cases, the attorney’s fees and expenses of litigation must be reasonable. ——o0o——
Citibank, N.A. v. Cabamongan, G.R. No. 146918, May 2, 2006, 488 SCRA 517, 535-536.
42

260
260 SUPREME COURT REPORTS ANNOTATED
Frias vs. San Diego-Sison
right to litigate. The award of attorney’s fees is the exception rather than
43

the general rule. As such, it is necessary for the trial court to make findings
of facts and law that would bring the case within the exception and justify
the grant of such award. The matter of attorney’s fees cannot be mentioned
only in the dispositive portion of the decision. They must be clearly
44

explained and justified by the trial court in the body of its decision. On
appeal, the CA is precluded from supplementing the bases for awarding
attorney’s fees when the trial court failed to discuss in its Decision the
reasons for awarding the same. Consequently, the award of attorney’s fees
should be deleted.
WHEREFORE, in view of all the foregoing, the Decision dated June 18,
2002 and the Resolution dated September 11, 2002 of the Court of Appeals
in CA-G.R. CV No. 52839 are AFFIRMED with MODIFICATION that the
award of attorney’s fees is DELETED.
No pronouncement as to costs.
SO ORDERED.
Ynares-Santiago (Chairperson), Callejo,
Sr., ChicoNazario and Nachura, JJ., concur.
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