Facts:

The case involves Emerita M. De Guzman (petitioner) and Antonio M. Tumolva (respondent), who entered into a Construction Agreement on September 6, 2004, for the construction of an orphanage in Brgy. Pulong Bunga, Purok 4, Silang, Cavite, with a contract price of P15,982,150.39. The agreement included plans and specifications for a perimeter fence. After the project was completed, De Guzman issued a Certificate of Acceptance on September 6, 2005, and Tumolva issued a quitclaim acknowledging the contract's termination and compliance. However, in November 2006, during Typhoon "Milenyo," parts of the perimeter fence collapsed. De Guzman demanded repairs, but Tumolva attributed the damage to an act of God and did not comply. Consequently, on February 14, 2008, De Guzman filed a Request for Arbitration with the Construction Industry Arbitration Commission (CIAC), alleging that Tumolva had defrauded her by using inferior materials and deviating from the agreed specific...

Facts:

Construction Agreement and Deviations

On September 6, 2004, petitioner Emerita M. De Guzman (De Guzman), represented by her attorneys-in-fact, Lourdes Rivera and Dhonna Chan, entered into a Construction Agreement with respondent Antonio Tumolva, doing business under the name A.M. Tumolva Engineering Works (the Contractor). The agreement was for the construction of an orphanage in Silang, Cavite, for a contract price of P15,982,150.39. The agreement included the plan and specifications for the perimeter fence. However, the Contractor deviated from the agreed plan in constructing the perimeter fence.

Completion and Acceptance

On September 6, 2005, after the project's completion, De Guzman issued a Certificate of Acceptance. The Contractor also issued a quitclaim, acknowledging the termination of the contract and full compliance by De Guzman.

Collapse of the Perimeter Fence

In November 2006, during typhoon "Milenyo," a portion of the perimeter fence collapsed, and other portions tilted. De Guzman, through counsel, demanded the repair of the fence in accordance with the plan. The Contractor claimed the destruction was an act of God and expressed willingness to discuss the matter. De Guzman reiterated her demand for restoration without additional cost or compensation for damages, but her demand was not heeded.

Arbitration Proceedings

On February 14, 2008, De Guzman filed a Request for Arbitration before the Construction Industry Arbitration Commission (CIAC). She alleged that the Contractor deliberately defrauded her by using inferior materials and deviating from the plan. She sought actual, moral, and exemplary damages, attorney's fees, and expenses of litigation. The Contractor denied liability, claiming the deviations were made with De Guzman's knowledge and consent through her representatives. He also argued that the claim was barred by the 12-month period from the Certificate of Acceptance.

CIAC Decision

The CIAC ruled in favor of De Guzman, awarding her P187,509.00 as actual damages, P100,000.00 as moral damages, P100,000.00 as exemplary damages, and P50,000.00 for attorney's fees and litigation expenses. The Contractor appealed to the Court of Appeals (CA).

CA Decision

The CA modified the CIAC's decision, deleting the awards for actual, moral, and exemplary damages but awarding P100,000.00 as temperate damages. The CA held that De Guzman failed to prove the extent of actual damages with reasonable certainty and that there was no basis for moral and exemplary damages.

Issue:

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Ruling:

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Actual Damages

The Court agreed with the CA that De Guzman failed to provide concrete evidence to support her claim for actual damages. The handwritten calculation of reconstruction costs by Engineer Santos, attached to his affidavit, was deemed hearsay and lacked probative value since he did not testify in court.

Temperate Damages

The Court awarded temperate damages under Article 2224 of the Civil Code, recognizing that De Guzman suffered pecuniary loss due to the collapse of the perimeter fence. However, since the exact amount of damage could not be proven with certainty, the Court increased the temperate damages to P150,000.00.

Moral and Exemplary Damages

The Court found no basis for awarding moral damages, as De Guzman failed to provide specific evidence of the emotional and mental suffering she allegedly experienced. Similarly, exemplary damages were not warranted, as there was no evidence that the Contractor acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.

Attorney's Fees

The Court upheld the award of attorney's fees, as De Guzman was compelled to litigate due to the Contractor's refusal to satisfy her valid claims.

Ratio:

1. Actual Damages: Actual damages must be proven with reasonable certainty. Mere assertions or hearsay evidence, such as an unverified affidavit, are insufficient to support a claim for actual damages.
2. Temperate Damages: When pecuniary loss is suffered but cannot be proven with certainty, temperate damages may be awarded under Article 2224 of the Civil Code.
3. Moral Damages: Moral damages require clear evidence of emotional or mental suffering. General claims of worry or anxiety, without specific details, are insufficient to justify an award.
4. Exemplary Damages: Exemplary damages are awarded only when the defendant acts in a wanton, fraudulent, reckless, oppressive, or malevolent manner. Mere negligence or breach of contract, without evidence of bad faith, does not warrant exemplary damages.
5. Attorney's Fees: Attorney's fees may be awarded when a party is compelled to litigate due to the unjust refusal of the other party to satisfy a valid claim.

Conclusion:

The Supreme Court affirmed the CA's decision with the modification of increasing the temperate damages to P150,000.00. The awards for actual, moral, and exemplary damages were deleted, while the award for attorney's fees was upheld.