Lessons Applicable: Kinds of Damage (Torts and Damages)

Laws Applicable: Article 1583 of the Civil Code

FACTS:

 May 5, 1978: Integrated Packaging Corp agreed to deliver to Fil-

anchor paper co., inc. 3,450 reams of printing paper. Materials were to
be paid within 30-90 days
 June 7, 1978: Integrated entered into a contract with Philippine
Appliance Corporation (Philacor) to print three volumes of "Philacor
Cultural Books"
 July 30, 1979: only 1,097 out of the 3,450 had been delivered so it
wrote to Fil-anchor that delay will prejudice them
 July 23, 1981: Fil-anchor delivered amounting to P766,101.70 of
printing paper
 August 27, 1981: Integrated paid P97,200.00 which was applied to its
back accounts covered by delivery invoices dated September 29-30,
1980 and October 1-2, 1980
 Integrated entered into an additional printing contract with Philacor
but it failed to comply so Philacor demanded compensation for the
delay and damage it suffered on account of Integrated's failure
 Fil-anchor filed a collection suit of P766,101.70 against Integrated
representing unpaid purchase price of printing paper bought on credit
 By way of counterclaim, Fil-anchor alleged the delivery was short of
2,875 reams so it suffered actual damages and failed to realize
expected profits and that complaint was prematurely filed
 RTC: Integrated ordered to pay Fil-anchor P27,222.60 as
compensatory and actual damages after deducting P763,101.70 for
the value of materials received, P100K as moral damages, P30K for
attorney's fees and cost of suit. However, the counterclaim is also
meritorious - Integrated could have sold books to Philacor and realized
profit of P790,324.30 for which the award of moral damages was
justified
 CA: reversed and set aside the judgment of the trial court ordered to
pay Fil-anchor P763,101.70 for unpaid printing paper and deleted the
award of P790,324.30 as compensatory damages as well as the award
of moral damages and attorney's fees, for lack of factual and legal
basis

ISSUE: W/N Integrated should be awarded compensatory and moral

damages.

HELD: YES. CA affirmed

 suspension of its deliveries to Integrated whenever the latter failed to
pay on time, as in this case, is legally justified under the second
paragraph of Article 1583 of the Civil Code hence the Fil-anchor did
not violate the order agreement
 Fil-anchor is not a party to the agreement between Philacor neither is
it a contract pour autrui so no direct bearing
 indemnification for damages comprehends not only the loss suffered,
that is to say actual damages (damnum emergens), but also profits
which the obligee failed to obtain, referred to as compensatory
damages (lucrum cessans). However, to justify a grant of actual or
compensatory damages, it is necessary to prove with a reasonable
degree of certainty, premised upon competent proof and on the best
evidence obtainable by the injured party, the actual amount of loss.
 trial court in arriving at the amount are mere estimates or self-serving
claim of unrealized profitprepared by Integrated
 deletion of the award of moral damages is proper, since private
respondent could not be held liable for breach of contract. Moral
damages may be awarded when in a breach of contract the defendant
acted in bad faith, or was guilty of gross negligence amounting to bad
faith, or in wanton disregard of his contractual obligation. Finally,
since the award of moral damages is eliminated, so must the award for
attorney's fees be also deleted.