DEOGRACIAS F. MALONZO, PETITIONER, VS. GREGORIA T. GALANG AND FRANCISCO GALANG, RESPONDENTS.

On October 5, 1946, Gregoria T. Galang, wife of Francisco G. Galang,
received from Deogracias T. Malonzo a loan of P5,000.00 under a check
which Gregoria cashed at the drawee bank National City Bank of New
York, Manila.

Subsequently, on April 17, 1947, the
Rehabilitation Finance Corporation loaned to Francisco G. Galang a
check in the sum of P14,968.00 drawn against the Philippine National
Bank, Galang endorsed the check to Deogracias F. Malonzo, who cashed it
on April 25, 1947. Out of the proceeds of the check, P10,000.00 was
applied to the payment of the share and participation of Francisco
Galang in a fishing venture with Malonzo. The balance of P4,968.00,
together with P32.00 delivered in cash to Malonzo, paid off, according
to Galang, the loan of P5,000.00 extended by the former to Galang’s
wife on October 5, 1946. However, Malonzo alleged that he returned said
of P4,968.00 to Galang, partly in cash (P1,000.00) and partly in a
check for P3,968.00 dated May 19, 1947, made payable to Gregoria T.
Galang and drawn against the Philippine Trust Co.

Claiming
that the P5.000.00 loan obtained from him by Gregoria T. Galang on
October 5, 1946, had remained unpaid, Malonzo sued the Galang spouses
on August 27, 1955 for tile payment thereof, plus interests and
attorney’s fees (C.C. No. 27303, CFI of Manila).

The trial
court refused to believe Malonzo’s version that the loan in question
had not yet been paid: held that the same had already been liquidated
as claimed by the defendant spouses; and found that the check for
P3,968 delivered by Malonzo to Gregorio T. Galang on May 19, 1947 had
nothing to do with said loan and was in payment of another loan which
she extended to Malonzo just a few days before the check was issued.
The lower court also found that the complaint was clearly unfounded,
dismissed the same, and sentenced Malonzo to pay the Galang spouses,
under their counterclaim P500.00 compensatory and moral damages, and
P1,000.00 attorney’s fees.

On appeal to the Court of Appeals by Malonzo, the judgment of the court a quo was affirmed in toto.
From this decision, Malonzo appealed to this Court, urging that there
was no legal basis for the award to respondents of compensatory and
moral damages, and of attorney’s fees.

As to attorney’s
fees, the award is correct and proper, in view of the finding of the
trial court and of the Court of Appeals that petitioner’s action
against respondents is clearly unfounded, since Article 2208, par. (4),
of the New Civil Code authorizes the recovery of attorney’s fees “in
case of a clearly unfounded civil action or proceeding against the
plaintiff”. This provision applies equally in favor of a defendant
under a counterclaim for attorney’s fees (as in this case), considering
that a counterclaim is a complaint by the defendant against the
original plaintiff (Pongos vs. Hidalgo Enterprises, Inc., et.
al., 84 Phil., 499; 47 Off. Gaz., [2] 733), wherein the defendant is
the plaintiff and the original plaintiff the defendant.

In
regard to other items of compensatory damages supposedly suffered by
respondents (i. e., in addition to attorney’s fees and costs that are
also included in the concept of actual or compensatory damages):
assuming that they are recoverable in this case under the theory that
petitioner’s having filed a clearly unfounded suit against respondents
constitutes a tort against the latter that makes the former “liable for
all damages which are the natural and probable consequences of the act
or omission complained of” (Art. 2202, New Code), these damages can
not, however be presumed, but must be duly proved (Art. 2199). Neither
the trial court nor the Court of Appeals has pointed out any specific
facts which afford a basis for measuring whatever compensatory or
actual damages over and above attorney’s fees and costs that
respondents had suffered. Upon the other hand, the award of
compensatory damages to respondents was merged by the trial court in a
round sum (P500.00) that also included moral damages, showing that this
amount was not what respondents had proved to have suffered, but simply
what the court believed to be reasonably due to them for having been
made to defend what the two courts found to be a clearly unfounded
suit. For this reason, we do not think the award of compensatory
damages to respondents should be allowed.

Finally, with
respect to moral damages, we are inclined to agree with petitioner that
these damages are not recoverable herein, notwithstanding the finding
of the trial court and the Court of Appeals that his complaint against
respondents was clearly unfounded or unreasonable. It will be observed
that unlike compensatory or actual damages which are generally
recoverable in tort cases as long as there is satisfactory proof
thereof (Art. 2202), the Code has chosen to enumerate the cases in
which moral damages may be recovered (Art. 2219). A like enumeration is
made in regard to the recovery of attorney’s fees as an item of damage
(Art. 2208). But the two enumerations differ in the case of a clearly
unfounded suit, which is expressly mentioned in Art. 2208 (par. 4), as
justifying for award of attorney’s fees, hut is not included in the
enumeration of Art. 2219 in respect to moral damages. It is true that
Art. 2219 also provides that moral damages may be awarded in “analogous
cases” to those enumerated, but we do not think the Code intended “a
clearly unfounded civil action or proceedings” to be one of these
analogous cases wherein moral damages may be recovered, or it would
have expressly mentioned it in Art. 2219, as it did in Art. 2208; or
else incorporated Art. 2208 by reference in Art. 2219. Besides, Art.
2219 specifically mentions “quasi-delicts causing physical injuries”,
as an instance when moral damages may be allowed, thereby implying that
all other quasi-delicts not resulting in physical injuries are excluded
(Strebel vs. Figueras, 96 Phil., 321), excepting, of course,
the special torts referred to in Art. 309 (par. 9, Art. 2219) and in
Arts. 21, 26, 27, 28, 29, 30, 32, 34 and 35 on the chapter on human
relations (par. 10, Art. 2219).

Furthermore, while no proof
of pecuniary loss is necessary in order that moral damages may be
awarded, the amount of indemnity being left to the discretion of the
court (Art. 2216), it is, nevertheless, essential that the claimant
satisfactorily prove the existence of the factual basis of the damage
(Art. 2217) and its causal relation to defendant’s acts. This is so
because moral damages, though incapable of pecuniary estimation, are in
the category of an award designed to compensate the claimant for actual
injury suffered and not to impose a penalty on the wrongdoer (Algara vs.
Sandejas, 27 Phil., 284). The trial court and the Court of Appeals both
seem to be of the opinion that the mere fact that respondent, were sued
without any legal foundation entitled them to an award of moral
damages, hence they made no definite finding as to what the supposed
moral damages suffered consist of. Such a conclusion would make of
moral damages a penalty, which they are not, rather than a compensation
for actual injury suffered, which they are intended to be. Moral
damages, in other words, are not corrective or exemplary damages.

The foregoing discussion makes it unnecessary to further dwell on the other points raised by the appeal.

Wherefore, the decision appealed from is modified in the sense that the
award of compensatory and moral damages to respondents is eliminated,
but is affirmed in all other respects. No costs.

Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, Barrera, and Gutierrez David, JJ., concur.