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Torts and Damages Case Digest: DBP v. CA (1998)

G.R.No. 118367  January 5, 1998
Lessons Applicable: Certainty (Torts and Damages)
Laws Applicable: Article 1245, Article 1255, Article 2087, Art. 2088 of the Civil Code


  • Lydia P. Cuba is a grantee of a Fishpond Lease Agreement from the Government
  • Cuba obtained loans from DBP stated under promissory notes dated September 6, 1974; August 11, 1975; and April 4, 1977 executing 2 Deeds of Assignment of her Leasehold Rights as security
  • Upon failure to pay, without foreclosure proceedings it was appropriated and DBP executed in turn a Deed of Conditional Sale of the Leasehold Rights in her favor 
  • Her offer to repurchase was accepted and a new Fishpond Lease Agreement was issued by the Ministry of Agriculture and Food in her favor alone excluding her husband
  • Failing to pay her amortizations, she entered into a temporary agreement with DBP 
  • Soon, she was sent a Notice of Rescission and DBP took possession of the Leasehold Rights of the fishpond
  • After the public bidding, DBP executed a Deed of Conditional Sale in favor of defendant Agripina Caperal 
  • Cuba filed against DBP since no foreclosure proceedings was done thus, contrary to Article 2088 of the Civil Code
  • RTC: favored Cuba, it being a pactum commissorium  
    • return leasehold rights to Cuba
    • entitling P1,067,500 actual damages, P100,000 moral and P50,000 exemplary damages and P100,000 attorney’s fees
  • CA:  leasehold rights to Caperal as valid but same damages 
ISSUE: W/N Cuba should be awarded with actual and compensatory damages

HELD: NO. CA reversed except the P50,000 as moral damages. REMANDED to the trial court for the reception of the income statement of DBP, as well as the statement of the account of Lydia P. Cuba, and for the determination of each party’s financial obligation to one another

  • assignment of leasehold rights was a mortgage contract (Article 2087) 
    • not novated, cession (Article 1255 of the Civil Code), dation in payment (Article 1245 of the civil Code), pactum commissorium
  • condition no. 12 did not provide that CUBA’s default would operate to vest in DBP ownership of the said rights
  • The fact that CUBA offered and agreed to repurchase her leasehold rights from DBP did not estop her from questioning DBP’s act of appropriation. 
    • estoppel cannot give validity to an act that is prohibited by law or against public policy
  • alleged loss of personal belongings and equipment was not proved by clear evidence. Other than the testimony of CUBA and her caretaker, there was no proof as to the existence of those items before DBP took over the fishpond in question. Neither was a single receipt or record of acquisition presented.
    • dated 17 May 1985, CUBA included “losses of property” as among the damages resulting from DBP’s take-over of the fishpond.  Yet, it was only in September 1985 when her son and a caretaker went to the fishpond and the adjoining house that she came to know of the alleged loss of several articles
  • bangus which died also not duly proved nor was it expressed in her later 7 months after DBP took over
  • The award of actual damages should, therefore, be struck down for lack of sufficient basis
  • Exemplary or corrective damages in the amount of P25,000 should likewise be awarded by way of example or correction for the public good. There being an award of exemplary damages, attorney’s fees are also recoverable