G.R. No. L-64398 November 6, 1990JOSE CHING SUI YONG,petitioner,vs.INTERMEDIATE APPELLATE COURT (THIRD CIVIL CASES DIVISION) AND INTERCONTINENTAL DISTRIBUTORS (P.I.) CORPORATION, ROBERTO SUAREZ, and INTERCONTINENTAL FILM DISTRIBUTORS, (H.K.) LTD.,respondents.PADILLA,J.:This is a petition for review oncertiorariof the decision of the respondent Intermediate Appellate Court (now Court of Appeals) in AC-G.R. CV No. 58527, dated 14 June 19831affirmingin totothe decision of the lower court rendered in favor of private respondents.The antecedent facts that gave rise to this case are as follows:Petitioner bought from a certain Norberto Concepcion for the total sum of P75,000.00 seven (7) foreign cinematographic films, as evidenced by four (4) receipts of payment duly signed by said Norberto Concepcion who was allegedly the authorized agent and representative of private respondent Intercontinental Film Distributors (P.I.) Corporation and its managing director, respondent Roberto Suarez.It was stated in the said receipts that private respondents Intercontinental Film Distributors (P.I.) Corporation (Intercontinental (P.I.), for brevity) and Roberto Suarez agreed that all the seven (7) films would be sent and delivered directly to petitioner upon their arrival in the Philippines. However, the films were not delivered to petitioner despite repeated demands, as a result of which, the latter filed an action for replevin with damages before the Court of First Instance of Rizal, Branch XXII, docketed as Civil Case No. 12578.2Upon petitioner's filing of the necessary bond in the amount of P150,000. 00, the courta quoissued a writ of seizure ordering the Sheriff of Manila to take immediate possession of the seven (7) films. Six (6) films were seized by the Sheriff of Manila from the Board of Censors, while the seventh film was seized by Special Sheriff Gregorio Guido. All the seven (7) cinematographic films had been delivered by Intercontinental (P.I.) to the Board of Censors prior to their seizure.Informed of the seizure of the seven (7) films by the Sheriffs, Intercontinental Film Distributors (H.K.) Ltd (Intercontinental (H.K.), for brevity) filed a third-party claim, alleging ownership and asserting the right to possess the said seven (7) cinematographic films, and stating in its claim that the value of the said films was P250,000.00. Notified by the Sheriff of the third-party claim, petitioner filed anex-parte motionto quash the third-party claim and for the delivery of the said films to him (petitioner), instead of filing an indemnity bond as required by the Sheriff. Theex-parte motionwas granted and the films were delivered to the petitioner. Subsequently, Intercontinental (H.K.) filed a motion praying to the Court that it be allowed to intervene in the case as party defendant, which motion was granted. It did intervene as defendant-intervenor and filed its answer to the complaint.After trial on the merits, the courta quodismissed the complaint and set aside the writ of seizure it had issued earlier. The dispositive part of the lower court's decision,3which respondent appellate court later affirmedin totoreads as follows:WHEREFORE, judgment is rendered:1. Dismissing plaintiff s complaint, and the writ of seizure issued by this Court in favor of the plaintiff is hereby set aside;2. Ordering plaintiff to return to defendants and intervenor the seven (7) cinematographic films, namely, Venus in Furs; Girl with Hungry Eyes; Free Love Confidential, Cool It Baby; Mondo Mod; Secret Sex Lives of Romeo and Juliet; Mantis in Lace, in the same condition as they were taken by and delivered to plaintiff on December 22, 1969 and in the event that delivery cannot be made, plaintiff shall pay defendants and intervenor the sum of P250,000.00 representing the value of said seven (7) cinematographic films; and3. Sentencing plaintiff to pay defendants and defendant intervenor the sum of P10,000.00 a day as damages commencing from December 23, 1969 until the aforesaid seven (7) cinematographic films are delivered or returned to defendants and defendant-intervenor or the sum of P250,000.00 is fully paid to defendants and defendant-intervenor, and to pay further the amount of P10,000.00 by way of attorney's fees.With costs of suit against the plaintiff.SO ORDERED.As already stated, the Court of Appeals affirmed the above judgment in its entirety. Not satisfied, petitioner interposed the present petition for review, raising the following issues:(a) whether or not the plaintiff has a valid cause of action against the defendants and the defendant-intervenor;(b) whether or not Norberto Concepcion is the authorized agent and representative of the defendant Intercontinental Film Distributors (P.I.) Corporation and its Managing Director, defendant Roberto Suarez;(c) whether or not the award of damages of P10,000.00 a day commencing from December 23, 1969 until the aforesaid seven (7) cinematographic films are delivered or returned to defendants and defendant-intervenor or the sum of P250,000.00 is fully paid to defendants and defendant-intervenor and to pay further the amount of P10,000.00 by way of attorney's fees, are supported by evidence and the law on the matter.4At the outset, it would appear that the above-stated issues involve a review mainly of factual findings of respondent appellate court. We have repeatedly held that in a petition for review oncertiorarionly legal questions should be raised before this Court and that findings of fact of the Court of Appeals are conclusive on the parties and on this Court, absent any showing of grave error or abuse of discretion.5We note further that the issues raised and the arguments adduced by petitioner in the present petition for review are reiterations of those submitted by him to the Court of Appeals. The first two (2) issues were resolved by the appellate court to which we agree in this wise:A study of the evidence viz a viz (sic) the arguments supporting the errors imputed to the trial court in its decision appealed from convinces Us that the trial court did not err in holding "the plaintiff-appellant as plainly has no cause of action against defendants and defendant-intervenor" as it found that Norberto Concepcion was not the duly authorized agent or representative of the Intercontinental Film Distributors (P.I.) Corporation and Roberto Suarez, the Managing Director, (who) denied having authorized Norberto Concepcion to enter into contract with the plaintiff-appellant.Let it be admitted that the cause of action of the plaintiff-appellant in his complaint for replevin (to take possession of the seven cinematographic films) is based on the alleged sales of the films in question to plaintiff-appellant by defendants thru Norberto Concepcion for the total sum of P75,000 as evidenced by Exhibits "A", "B", "C" and "D" and the alleged agency instituted by Roberto Suarez in favor of Norberto Concepcion as shown by said Exhibits.The trial court, however, found and We agree that plaintiff-appellant failed to prove that Norberto Concepcion was the duly authorized agent or representative of the Intercontinental Films Distributors (P.I.) Corporation and Roberto Suarez. In fact, the lower court went further stating that Exhibits "A", "B", "C" and "D" are fictitious contracts, a forgery undertaken merely to promote the scheme of the plaintiff-appellant to take possession of the cinematographic films in question. On the other hand, the Intercontinental Films Distributors (H.K.) Ltd., intervenors, has established that it owns the said films. ...6We agree with the foregoing findings and conclusions. As private respondents correctly observed, despite petitioner's claim that he paid Norberto Concepcion, the alleged agent of Roberto Suarez, the sum of P75,000.00 as evidenced by the four (4) receipts of payment, and despite the trial court's suggestion that Norberto Concepcion be included as a defendant, petitioner failed to implead said Norberto Concepcion. Neither was Concepcion presented as a witness. Thus, the courta quocorrectly resolved that:... The failure of Concepcion to testify and clear the doubt that surrounded the alleged execution by Suarez of the receipt Exhibit E, considerably weakened the claim of plaintiff that defendants and defendant-intervenor sold to him the films in question for which Concepcion was duly authorized by defendant and intervenor, and the proceeds of the sale was later turned allegedly over by Concepcion to Suarez. ...7In short, the failure of petitioner to produce the person to whom he allegedly paid P75,000.00 for the seven (7) films, rendered his claim untenable. For, when a party has it in his possession or power to produce the best evidence of which the case in its nature is susceptible and withholds it, the fair presumption is that the evidence is withheld for some sinister motive and that its production would thwart his evil or fraudulent lent purpose.8However, we resolve the third issue raised by petitioner, in his favor.The sole basis for the award of damages against the petitioner is the alleged unrealized profits of private respondents for the non-screening of the seven (7) films. We believe that respondent court committed grave abuse of discretion in arriving at the amount ofP10,000.00 a dayas unrealized profits suffered by private respondents due to the filing of the present action by the petitioner. As correctly averred by petitioner, the films had yet to be passed by the Board of Censors and being "bold" or so called "bomba" films, there was the probability that some scenes therein would have been cut or censored or the films totally banned, as in the case of one of the films.Besides, no document or proof was presented to prove that private respondents really lost such amount daily for non-exhibition of the films to the public by reason of the action instituted by petitioner. The amount of P10,000.00 a day as alleged unrealized profit was arrived at by mere speculation and conjecture by respondent court. Hence, the award of damages for the anticipated loss of profits is unwarranted.It is a settled rule that in order for damages to be recovered, the best evidence obtainable by the injured party must be presented.9Actual or compensatory damages cannot be presumed, but must be duly proved, and proved with a reasonable degree of certainty. A court cannot rely on speculation, conjecture or guesswork as to the fact and amount of damages, but must depend upon competent proof that they have been suffered and on evidence of the actual amount thereof. If the proof is flimsy and unsubstantial, no damages will be awarded.10WHEREFORE, the appealed decision is hereby AFFIRMED with the modification that the award of damages in the amount of P10,000. 00 a day for alleged unrealized profits is eliminated. Costs against petitioner.SO ORDERED.[G.R. No. 118342.January 5, 1998]DEVELOPMENT BANK OF THE PHILIPPINES,petitioner, vs. COURT OF APPEALS and LYDIA CUBA,respondents.[G.R. No. 118367.January 5, 1998]LYDIA P. CUBA,petitioner,vs. COURT OF APPEALS, DEVELOPMENT BANK OF THE PHILIPPINES and AGRIPINA P. CAPERAL,respondents.D E C I S I O NDAVIDE, JR.,J.:These two consolidated cases stemmed from a complaint[1]filed against the Development Bank of the Philippines (hereafter DBP) and Agripina Caperal filed by Lydia Cuba (hereafter CUBA) on 21 May 1985 with the Regional Trial Court of Pangasinan, Branch 54.The said complaint sought (1) the declaration of nullity of DBPs appropriation of CUBAs rights, title, and interests over a 44-hectare fishpond located in Bolinao, Pangasinan, for being violative of Article 2088 of the Civil Code; (2) the annulment of the Deed of Conditional Sale executed in her favor by DBP; (3) the annulment of DBPs sale of the subject fishpond to Caperal; (4) the restoration of her rights, title, and interests over the fishpond; and (5) the recovery ofdamages, attorneys fees, and expenses of litigation.After the joinder of issues following the filing by the parties of their respective pleadings, the trial court conducted a pre-trial where CUBA and DBP agreed on the following facts, which were embodied in the pre-trial order:[2]1.Plaintiff Lydia P. Cuba is a grantee of a Fishpond Lease Agreement No. 2083 (new) dated May 13, 1974 from the Government;2.Plaintiff Lydia P. Cuba obtained loans from the Development Bank of the Philippines in the amounts ofP109,000.00;P109,000.00; andP98,700.00 under the terms stated in the Promissory Notes dated September 6, 1974; August 11, 1975; and April 4, 1977;3.As security for said loans, plaintiff Lydia P. Cuba executed two Deeds of Assignment of her Leasehold Rights;4.Plaintiff failed to pay her loan on the scheduled dates thereof in accordance with the termsof the Promissory Notes;5.Without foreclosure proceedings, whether judicial or extra-judicial, defendant DBP appropriated the Leasehold Rights of plaintiff Lydia Cuba over the fishpond in question;6.After defendant DBP has appropriated the Leasehold Rights of plaintiff Lydia Cuba over the fishpond in question, defendant DBP, in turn, executed a Deed of Conditional Sale of the Leasehold Rights in favor of plaintiff Lydia Cuba over the same fishpond in question;7.In the negotiation for repurchase, plaintiff Lydia Cuba addressed two letters to the Manager DBP, Dagupan City dated November 6, 1979 and December 20, 1979.DBP thereafter accepted the offer to repurchase in a letter addressed to plaintiff dated February 1, 1982;8.After the Deed of Conditional Sale was executed in favor of plaintiff Lydia Cuba, a new Fishpond Lease Agreement No. 2083-A dated March 24, 1980 was issued by the Ministry of Agriculture and Food in favor of plaintiff Lydia Cuba only, excluding her husband;9.Plaintiff Lydia Cuba failed to pay the amortizations stipulated in the Deed of Conditional Sale;10.After plaintiff Lydia Cuba failed to pay the amortization as stated in Deed of Conditional Sale, she entered with the DBP a temporary arrangement whereby in consideration for the deferment of the Notarial Rescission of Deed of Conditional Sale, plaintiff Lydia Cuba promised to make certain payments as stated in temporary Arrangement dated February 23, 1982;11.Defendant DBP thereafter sent a Notice of Rescission thru Notarial Act dated March 13, 1984,and which was received by plaintiff Lydia Cuba;12.After the Notice of Rescission, defendant DBP took possession of the Leasehold Rights of the fishpond in question;13.That after defendant DBP took possession of the Leasehold Rights over the fishpond in question, DBP advertised in the SUNDAY PUNCH the public bidding dated June 24, 1984, to dispose of the property;14.That the DBP thereafter executed a Deed of Conditional Sale in favor of defendant Agripina Caperal on August 16, 1984;15. Thereafter, defendant Caperal was awarded Fishpond Lease Agreement No. 2083-A on December 28, 1984 by the Ministry of Agriculture and Food.Defendant Caperal admitted only the facts stated in paragraphs 14 and 15 of the pre-trial order.[3]Trial was thereafter had on other matters.The principal issue presented was whether the act of DBP in appropriating to itself CUBAs leasehold rights over the fishpond in question without foreclosure proceedings was contrary to Article 2088 of the Civil Code and, therefore, invalid.CUBA insisted on an affirmative resolution.DBP stressed that it merely exercised its contractual right under the Assignments of Leasehold Rights, which was not a contract of mortgage.Defendant Caperal sided with DBP.The trial court resolved the issue in favor of CUBA by declaring that DBPs taking possession and ownership of the property without foreclosure was plainly violative of Article 2088 of the Civil Code which provides as follows:ART. 2088.The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them.Any stipulation to the contrary is null and void.It disagreed with DBPs stand that the Assignments of Leasehold Rights were notcontracts of mortgage because (1) they were given as security for loans, (2) although the fishpond land in question is still a public land, CUBAs leasehold rights and interest thereon are alienable rights which can be the proper subject of a mortgage; and (3) the intention of the contracting parties to treat the Assignment of Leasehold Rights as a mortgage was obvious and unmistakable; hence, upon CUBAs default, DBPs only right was to foreclose the Assignment in accordance with law.The trial court also declared invalid condition no. 12 of the Assignment of Leasehold Rights for being a clear case ofpactum commissoriumexpressly prohibited and declared null and void by Article 2088 of the Civil Code.It then concluded that since DBP never acquired lawful ownership of CUBAs leasehold rights, all acts of ownership and possession by the said bank were void.Accordingly, the Deed of Conditional Sale in favor of CUBA, the notarial rescission of such sale,and the Deed of Conditional Sale in favor of defendant Caperal, as well as the Assignment of Leasehold Rights executed by Caperal in favor of DBP, were also void and ineffective.As to damages, the trial court found ample evidence on record that in 1984 the representatives of DBPejected CUBA and her caretakers not only from the fishpond area but also from the adjoining big house; and that when CUBAs son and caretaker went there on 15 September 1985, they found the said house unoccupied and destroyed and CUBAs personal belongings, machineries, equipment, tools, and other articles used in fishpond operation which were kept in the house were missing.The missing items were valued at aboutP550,000.It further found that when CUBA and her men were ejected by DBP for the first time in 1979, CUBA had stocked the fishpond with 250,000 pieces of bangus fish (milkfish), all of which died because the DBP representatives prevented CUBAs men from feeding the fish.At the conservative price ofP3.00 per fish, the gross value would have beenP690,000, and after deducting 25% of said value as reasonable allowance for the cost of feeds, CUBA suffered a loss ofP517,500.It then set the aggregate of the actual damages sustained by CUBA atP1,067,500.The trial court further found that DBP was guilty of gross bad faith in falsely representing to the Bureau of Fisheries that it had foreclosed its mortgage on CUBAs leasehold rights.Such representation induced the said Bureau to terminate CUBAs leasehold rights and to approve the Deed of Conditional Sale in favor of CUBA.And considering that by reason of her unlawful ejectment by DBP, CUBA suffered moral shock, degradation, social humiliation, and serious anxieties for which she became sick and had to be hospitalized the trial court found her entitled to moral and exemplary damages.The trial court also held that CUBA was entitled toP100,000 attorneys fees in view of the considerable expenses she incurred for lawyers fees and in view of the finding that she was entitled to exemplary damages.In its decision of 31 January 1990,[4]the trial court disposed as follows:WHEREFORE,judgment is hereby rendered in favor of plaintiff:1.DECLARINGnull and void and without any legal effect the act of defendant Development Bank of the Philippines in appropriating for its own interest, without any judicial or extra-judicial foreclosure, plaintiffs leasehold rights and interest over the fishpond land in question under her Fishpond Lease Agreement No. 2083 (new);2.DECLARING the Deed of Conditional Sale dated February 21, 1980 by and between the defendant Development Bank of the Philippines and plaintiff (Exh. E and Exh. 1) and the acts of notarial rescission of the Development Bank of the Philippines relative to said sale (Exhs. 16 and26) as void and ineffective;3.DECLARINGthe Deed of Conditional Sale dated August 16, 1984 by and between theDevelopment Bank of the Philippines and defendant Agripina Caperal (Exh. F and Exh. 21), the Fishpond Lease Agreement No. 2083-A dated December 28, 1984 of defendant Agripina Caperal (Exh. 23) and the Assignment of Leasehold Rights dated February 12, 1985 executed by defendant Agripina Caperal in favor of the defendant Development Bank of the Philippines (Exh. 24) asvoid ab initio;4. ORDERINGdefendant Development Bank of the Philippines and defendant Agripina Caperal, jointly and severally, to restore to plaintiff the latters leasehold rights and interests and right of possession over the fishpond land in question, without prejudice to the right of defendant Development Bank of the Philippines to foreclose the securities given by plaintiff;5.ORDERING defendant Development Bank of the Philippines to pay to plaintiff the following amounts:a)The sum of ONE MILLION SIXTY-SEVEN THOUSAND FIVE HUNDRED PESOS (P1,067,500.00), as and for actual damages;b) The sum of ONE HUNDRED THOUSAND (P100,000.00) PESOS as moral damages;c) The sum of FIFTY THOUSAND (P50,000.00) PESOS, as and for exemplary damages;d) And the sum of ONE HUNDRED THOUSAND (P100,000.00) PESOS, as and for attorneys fees;6.And ORDERING defendant Development Bank of the Philippines to reimburse and pay to defendant Agripina Caperal the sum of ONE MILLION FIVE HUNDRED THIRTY-TWO THOUSAND SIX HUNDRED TEN PESOS AND SEVENTY-FIVE CENTAVOS (P1,532,610.75) representing the amounts paid by defendant Agripina Caperal to defendant Development Bank of the Philippines under their Deed of Conditional Sale.CUBA and DBP interposed separate appeals from the decision to the Court of Appeals.The former sought an increase in the amount of damages, while the latter questioned the findings of fact and law of the lower court.In its decision[5]of 25 May 1994, the Court of Appeals ruled that (1)the trial court erred in declaring that the deed of assignment was null and void and that defendant Caperal could not validly acquire the leasehold rights from DBP; (2) contrary to the claim of DBP, the assignment was not a cession under Article 1255 of the Civil Code because DBP appeared to be the sole creditor to CUBA - cession presupposes plurality of debts and creditors; (3) the deeds of assignment represented the voluntary act of CUBA in assigning her property rights in payment of her debts, which amounted to a novation of the promissory notes executed by CUBA in favor of DBP; (4) CUBA was estopped from questioning the assignment of the leasehold rights, since she agreed to repurchase the said rights under a deed of conditional sale; and (5) condition no. 12 of the deed of assignment was an express authority from CUBA for DBP to sell whatever right she had over the fishpond.It also ruled that CUBA was not entitled to loss of profits for lack ofevidence, but agreed with the trial court as to the actual damages ofP1,067,500. It, however, deleted the amount of exemplary damages and reduced the award of moral damages fromP100,000 toP50,000 and attorneys fees, fromP100,000 toP50,000.The Court of Appeals thus declared as valid the following: (1) the act of DBP in appropriating Cubas leasehold rights and interest under Fishpond Lease Agreement No. 2083;(2) the deeds of assignment executed by Cuba in favor of DBP; (3) the deed of conditional sale between CUBA and DBP; and (4) the deed of conditional sale between DBP and Caperal, the Fishpond Lease Agreement in favor of Caperal, and the assignment of leasehold rightsexecuted by Caperal in favor of DBP.It then ordered DBP to turn over possession of the property to Caperal as lawful holder of the leasehold rights and to pay CUBA the following amounts: (a)P1,067,500 as actual damages;P50,000 as moral damages; andP50,000 as attorneys fees.Since their motions for reconsideration were denied,[6]DBP and CUBA filed separate petitions for review.In its petition (G.R. No. 118342), DBP assails the award of actual and moral damages and attorneys fees in favor of CUBA.Upon the other hand, in her petition (G.R. No. 118367), CUBA contends that the Court of Appeals erred (1) in not holding that the questioned deed of assignment was apactum commissoriumcontrary to Article 2088 of the Civil Code; (b) in holding that the deed of assignment effected a novation of the promissory notes;(c) in holding that CUBA was estopped from questioningthe validity of the deed of assignment when she agreed to repurchase her leasehold rights under a deed of conditional sale;and (d) in reducing the amounts of moral damages and attorneys fees, in deleting the award of exemplary damages, and in not increasing the amount of damages.We agree with CUBA that the assignment of leasehold rights was a mortgage contract.It is undisputed that CUBA obtained from DBP three separate loans totallingP335,000, each of which was covered by a promissory note.In all of these notes, there was a provision that: In the event of foreclosure of the mortgage securing this notes, I/We further bind myself/ourselves, jointly and severally, to pay the deficiency, if any.[7]Simultaneous with the execution of the notes was the execution of Assignments of Leasehold Rights[8]where CUBA assigned her leasehold rights and interest on a 44-hectare fishpond, together with the improvements thereon.As pointed out by CUBA, the deeds of assignment constantly referred to the assignor (CUBA) as borrower; the assigned rights, as mortgaged properties; and the instrument itself, as mortgage contract.Moreover, under condition no. 22 of the deed, it was provided that failure to comply with the terms and condition of any of the loans shall cause all other loans to become due and demandable and all mortgages shall be foreclosed.And, condition no. 33 provided that if foreclosure is actually accomplished, the usual 10% attorneys fees and 10% liquidated damages of the total obligation shall be imposed.There is, therefore, no shred of doubt that a mortgage was intended.Besides, in their stipulation of facts the parties admitted that the assignment was by way of security for the payment of the loans; thus:3.As security for said loans, plaintiff Lydia P. Cuba executed two Deeds of Assignment of her Leasehold Rights.InPeoples Bank & Trust Co. vs. Odom,[9]this Court had the occasion to rule that an assignment to guarantee an obligation is in effect a mortgage.We find no merit in DBPs contention that the assignment novated the promissory notes in that the obligation to pay a sum of money the loans (under the promissory notes) was substituted by the assignment of the rights over the fishpond (under the deed of assignment).As correctly pointed out by CUBA, the said assignment merely complemented or supplemented the notes; both could stand together.The former was only an accessory to the latter.Contrary to DBPs submission, the obligation to pay a sum of money remained, and the assignment merely served as security for the loans covered by the promissory notes.Significantly, both the deeds of assignment and the promissory notes were executed on the same dates the loans were granted.Also, the last paragraph of the assignment stated: The assignor further reiterates and states all terms, covenants, and conditions stipulated in the promissory note or notes covering the proceeds of this loan, making said promissory note or notes, to all intent and purposes, an integral part hereof.Neither did the assignment amount to payment bycessionunder Article 1255 of the Civil Code for the plain and simple reason that there was only one creditor, the DBP.Article 1255 contemplates the existence of two or more creditors and involves the assignment of all the debtors property.Nor did the assignment constitutedationin payment under Article 1245 of the civil Code, which reads: Dationin payment, whereby property is alienated to the creditor in satisfaction of a debt in money, shall be governed by the law on sales.It bears stressing that the assignment, being in its essence a mortgage, was but a security and not a satisfaction of indebtedness.[10]We do not, however, buy CUBAs argument that condition no. 12 of the deed of assignment constitutedpactum commissorium.Said condition reads:12.That effective upon the breach of any condition of this assignment, the Assignor hereby appoints the Assignee his Attorney-in-fact with full power and authority to take actual possession of the property above-described, together with all improvements thereon, subject to the approval of the Secretary of Agriculture and Natural Resources, to lease the same or any portion thereof and collect rentals, to make repairs or improvements thereon and pay the same, to sell or otherwise dispose of whatever rights the Assignor has or might have over said property and/or its improvements and perform any other act which the Assignee may deem convenient to protect its interest.All expenses advanced by the Assignee in connection with purpose above indicated which shall bear the same rate of interest aforementioned are also guaranteed by this Assignment.Any amount received from rents, administration, sale or disposal of said property may be supplied by the Assignee to the payment of repairs, improvements, taxes, assessments and other incidental expenses and obligations and the balance, if any, to the payment of interest and then on the capital of the indebtedness secured hereby.If after disposal or sale of said property and upon application of total amounts received there shall remain a deficiency, said Assignor hereby binds himself to pay the same to the Assignee upon demand, together with all interest thereon until fully paid.The power herein granted shall not be revoked as long as the Assignor is indebted to theAssignee and all acts that may be executed by the Assignee by virtue of said power are hereby ratified.The elements ofpactum commissoriumare as follows: (1) there should be a property mortgaged by way of security for the payment of the principal obligation, and (2) there should be a stipulation for automatic appropriation by the creditor of the thing mortgaged in case of non-payment of the principal obligation within the stipulated period.[11]Condition no. 12 did not provide that the ownership over the leasehold rights would automatically pass to DBP upon CUBAs failure to pay the loan on time.It merely provided for the appointment of DBP as attorney-in-fact with authority, among other things, to sell or otherwise dispose of the said real rights, in case of default by CUBA, and to apply the proceeds to the payment of the loan.This provision is a standard condition in mortgage contracts and is in conformity with Article 2087 of the Civil Code, which authorizes the mortgagee to foreclose the mortgage and alienate the mortgaged property for the payment of the principal obligation.DBP, however, exceeded the authority vested by condition no. 12 of the deed of assignment.As admitted by it during the pre-trial, it had [w]ithout foreclosure proceedings, whether judicial or extrajudicial, appropriated the [l]easehold [r]ights of plaintiff Lydia Cuba over the fishpond in question.Its contention that it limited itself to mere administration by posting caretakers is further belied by the deed of conditional sale it executed in favor of CUBA.The deed stated:WHEREAS, the Vendor [DBP]by virtue of a deed of assignmentexecuted in its favor by the herein vendees [Cuba spouses] the formeracquired all the rights and interestof the latter over the above-described property;Thetitleto the real estate property [sic] and all improvements thereonshall remain in the name of the Vendoruntil after the purchase price, advances and interest shall have been fully paid.(Emphasis supplied).It is obvious from the above-quoted paragraphs that DBP had appropriated and taken ownership of CUBAs leasehold rights merely on the strength of the deed of assignment.DBP cannot take refuge in condition no. 12 of the deed of assignment to justify its act of appropriating the leasehold rights.As stated earlier, condition no. 12 did not provide that CUBAs default would operate to vest in DBP ownership of the said rights.Besides, an assignment to guarantee an obligation, as in the present case, is virtually a mortgage and not an absolute conveyance of title which confers ownership on the assignee.[12]At any rate, DBPs act of appropriating CUBAs leasehold rights was violative of Article 2088 of the Civil Code, which forbids a creditor from appropriating, or disposing of, the thing given as security for the payment of a debt.The fact that CUBA offered and agreed to repurchase her leasehold rights from DBP did not estop her from questioning DBPs act of appropriation.Estoppel is unavailing in this case.As held by this Court in some cases,[13]estoppel cannot give validity to an act that is prohibited by law or against public policy.Hence, the appropriation of the leasehold rights, being contrary to Article 2088 of the Civil Code and to public policy, cannot be deemed validated by estoppel.Instead of taking ownership of the questioned real rights upon default by CUBA, DBP should have foreclosed the mortgage, as has been stipulated in condition no. 22 of the deed of assignment.But, as admitted by DBP, there was no such foreclosure.Yet, in its letter dated 26 October 1979, addressed to the Minister of Agriculture and Natural Resources and coursed through the Director of the Bureau of Fisheries and Aquatic Resources, DBP declared that it had foreclosed the mortgage and enforced the assignment of leasehold rights on March 21, 1979 for failure of said spouses [Cuba spouces] to pay their loan amortizations.[14]This only goes to show that DBP was aware of the necessity of foreclosure proceedings.In view of the false representation of DBP that it had already foreclosed the mortgage, the Bureau of Fisheries cancelled CUBAs original lease permit, approved the deed of conditional sale, and issued a new permit in favor of CUBA.Said acts which were predicated on such false representation, as well as the subsequent acts emanating from DBPs appropriation of the leasehold rights, should therefore be set aside.To validate these acts would open the floodgates to circumvention of Article 2088 of the Civil Code.Even in cases where foreclosure proceedings were had, this Court had not hesitated to nullify the consequent auction sale for failure to comply with the requirements laid down by law, such as Act No. 3135, as amended.[15]With more reason that the sale of property given as security for the payment of a debt be set aside if there was no prior foreclosure proceeding.Hence, DBP should render an accounting of the income derived from the operation of the fishpond in question and apply the said income in accordance with condition no. 12 of the deed of assignment which provided: Any amount received from rents, administration, may be applied to the payment of repairs, improvements, taxes, assessment, and other incidental expenses and obligations and the balance, if any, to the payment of interest and then on the capital of the indebtedness.We shall now take up the issue of damages.Article 2199 provides:Except asprovided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved.Such compensation is referred to as actual or compensatory damages.Actual or compensatory damages cannot be presumed, but must be proved with reasonable degree of certainty.[16]A court cannot rely on speculations, conjectures, or guesswork as to the fact and amount of damages, but must depend upon competent proof that they have been suffered by the injured party and on the best obtainable evidence of the actual amount thereof.[17]It must point out specific facts which could afford a basis for measuring whatever compensatory or actual damages are borne.[18]In the present case, the trial court awarded in favor of CUBAP1,067,500 as actual damages consisting ofP550,000 which represented the value of the alleged lost articles of CUBA andP517,500 which represented the value of the 230,000 pieces of bangus allegedly stocked in 1979 when DBP first ejected CUBA from the fishpond and the adjoining house.This award was affirmed by the Court of Appeals.We find that the 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.As pointed out by DBP, there was not inventory of the alleged lost items before the loss which is normal in a project which sometimes, if not most often, is left to the care of other persons.Neither was a single receipt or record of acquisition presented.Curiously, in her complaint dated 17 May 1985, CUBA included losses of property as among the damages resulting from DBPs 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. Such claim for losses of property, having been made before knowledge of the alleged actual loss, was therefore speculative.The alleged loss could have been a mere afterthought or subterfuge to justify her claim for actual damages.With regard to the award ofP517,000 representing the value of the alleged 230,000 pieces of bangus which died when DBP took possession of the fishpond in March 1979, the same was not called for.Such loss was not duly proved; besides, the claim therefor was delayed unreasonably.From 1979 until after the filing of her complaint in court in May 1985, CUBA did not bring to the attention of DBP the alleged loss.In fact, in her letter dated 24 October 1979,[19]she declared:1.That from February to May 1978, I was then seriously ill in Manila and within the same period I neglected the management and supervision of the cultivation and harvest of the produce of the aforesaid fishpond thereby resulting to the irreparable loss in the produce of the same in the amount of aboutP500,000.00 to my great damage and prejudice due to fraudulent acts of some of my fishpond workers.Nowhere in the said letter, which was written seven months after DBP took possession of the fishpond, did CUBA intimate that upon DBPs take-over there was a total of 230,000 pieces of bangus, but all of which died because of DBPs representatives prevented her men from feeding the fish.The award of actual damages should, therefore, be struck down for lack of sufficient basis.In view, however, of DBPs act of appropriating CUBAs leasehold rights which was contrary to law and public policy, as well as its false representation to the then Ministry of Agriculture and Natural Resources that it had foreclosed the mortgage, an award of moral damages in the amount ofP50,000 is in order conformably with Article 2219(10), in relation to Article 21, of the Civil Code.Exemplary or corrective damages in the amount ofP25,000 should likewise be awarded by way of example or correction for the public good.[20]There being an award of exemplary damages, attorneys fees are also recoverable.[21]WHEREFORE, the 25 May 1994 Decision of the Court of Appeals in CA-G.R. CV No. 26535 is hereby REVERSED, except as to the award ofP50,000 as moral damages, which is hereby sustained.The 31 January 1990 Decision of the Regional Trial Court of Pangasinan, Branch 54, in Civil Case No. A-1574 is MODIFIED setting aside the finding that condition no. 12 of the deed of assignment constitutedpactum commissoriumand the award of actual damages; and by reducing the amounts of moral damages fromP100,000 toP50,000; the exemplary damages, fromP50,000 toP25,000; and the attorneys fees, fromP100,000 toP20,000.The Development Bank of the Philippines is hereby ordered to render an accounting of the income derived from the operation of the fishpond in question.Let this case be 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 partys financial obligation to one another.SO ORDERED.G.R. No. L-48895 July 16, 1943In re Guardianship of Luis Ribaya. ADELA CARBONELL VDA. DE RIBAYA,petitioner-appellant,vs.AGUSTINA R. VDA. DE RIBAYA,oppositor-appellee.Ramon Imperial for appellant.A.R. Ronin for appellee.OZAETA,J.:Adela Carbonell Vda. de Ribaya (now Mrs. Ricardo Mirasol), the mother and judicial guardian of the minor Luis Ribaya, appeals from certain orders of the Court of First Instance of Albay (1) approving her accounts as such guardian and ordering her to deposit the balance of P1,574.30 in favor of said minor in the Legaspi branch of the Philippine National Bank, and (2) removing her as such guardian and appointing in her stead Agustina Vda. de Ribaya, paternal grandmother and said minor.Vicente Ribaya died intestate on September 29, 1935, leaving as his only legal heirs his minor son Luis and his widow Adela Carbonell. No intestate proceeding has been instituted for the settlement of the estate. On July 21, 1936, Adela Carbonell applied for her appointment as guardian of the person and property of her minor son Luis Ribaya, stating in her application that said minor had property worth about P10,000. On July 25, 1936, the court appointed her guardian of the person and property of said minor.On August 7, 1937, in compliance with an order of the court, the guardian presented her first annual account, which shows an income of P1,500.55 for the period from August 2, 1936, to July 12, 1937, and expenses of P1453.11 during the same period, leaving a balance of P47.44 in favor of the minor. Agustina Vda. de Ribaya, grandmother of the minor, opposed the approval of said account on the ground that various items of income, which she specified, had not been included or accounted for therein. On January 4, 1940, the guardian presented her second annual account covering the period up to December 31, 1939, and which, including the balance of the first account, showed a total balance of P1,574.30 in favor of the minor. Agustina R. Vda. de Ribaya, in a writing entitled "Motion," manifested to the court (1) that the expenses appearing in said No. 2 account of the guardian were excessive; (2) that the said guardian had contracted a second marriage with Mr. Ricardo Mirasol, and that consequently (sic) the usufruct which she had as widow on sixty hectares of coconut land situated in the barrios of Cullat, Pistola, Tinampo, and Allang, municipalities of Oas and Ligao, should be considered terminated; and (3) that, it appearing from the guardian's accounts that there exists a balance of P1,574.30 in favor the minor, the said amount should be ordered deposited in the Legaspi branch of the Philippine National Bank.On April 5, 1940, the court passed upon the said two accounts of the guardian and resolved that, although it found some of the items of the expenses to be excessive, it approved the same with a balance of P1,574.30 in favor of the minor, and ordered the guardian to deposit said balance within ten days in the Legaspi branch of the Philippine National Bank. Regarding the motion for the extinction of the widow's usufruct on sixty hectares of coconut land, the court in the same order required her to show cause within five days why all the fruits of the said sixty hectares of land should not be credited in favor of the minor in view of the fact that she had contracted a second marriage. Instead of complying with the said order the guardian, through her counsel, filed a motion on June 13, 1940, asking that the effectivity of said order be suspended pending negotiations for amicable settlement with the oppositor, and announcing her intention to present an amended account. On July 8, 1940, the court entered an order (a) denying the petition for suspension of the order of April 5, 1940, and (b) declaring extinguished the usufructuary right of the widow over the paraphernal properties of her deceased husband, on account of her having contracted a second marriage.On July 22, 1940, the guardian through her counsel filed a motion for the reconsideration of the last-mentioned order. In the meantime, and on July 17 of the same year, the oppositor Agustina R. Vda. de Ribaya had filed a motion for the removal of Adela Carbonell as guardian of the property of the minor, on the grounds that her management and administration had been wasteful and extravagant, and that she had refused to obey the order of the court of April 5, 1940, to deposit the sum of P1,574.30 with the Philippine National Bank.On August 30, 1940, the court resolved the guardian's motion for reconsideration and the oppositor's motion for removal and substitution of said guardian by denying the first and granting the second. With respect, however, to the usufructuary right of the widow, the court declared that the same should be resolved in an interstate proceeding in accordance with articles 834-839 of the Civil Code.From the three orders of the court above-mentioned, dated respectively April 5, July 8, and August 30, 1940, Adela Carbonell appealed, but the court allowed the appeal only as to the last-mentioned order and declared that those of April 5 and July 8 had become final.The order of the court of April 5, 1940, was notified to appellant on April 20, 1940. She did not file her motion to suspend its effectivity until June 13, 1940, that is to say, after the lapse of 54 days. The court was, therefore, right in declaring said order final and unappealable.As to the order of July 8, 1940, whereby the widow's usufruct was declared extinguished, the same was set aside by the court in its order of August 30, 1940, by declaring that the matter should be resolved in an intestate proceeding. Hence it only remains for us to review the last-mentioned order whereby the appellant was removed as guardian of the property of the minor Luis Ribaya, and Agustina Vda. de Ribaya was appointed in her stead.We deduce from the record that the deceased Vicente Ribaya left considerable properties and assets and some debts, and that without instituting intestate proceedings his widow Adela Carbonell appears to have assigned to herself the usufruct of some sixty hectares of coconut land belonging to the deceased, leaving the rest of the decedent's assets with the liabilities to his only son, the minor in question. For the guidance of the parties and of the trial court, we declare such extrajudicial settlement void and of the no legal effect. The widow, as legal heir of her deceased husband, could not validly enter into an agreement with herself as natural guardian of her minor son for the determination and apportionment of their respective shares in the inheritance. Moreover, the widow's usufructuary share cannot be determined until after the debts of the estate are liquidated. It is imperative that she institute intestate proceedings in court so that the debts may be paid and the net assets distributed to the heirs in accordance with law. The right of the widow is governed by the second paragraph of article 834 of the Civil Code, which reads as follows:If only one legitimate child or descendant survives, the widower or widow shall have the usufruct of the third available for betterment, such child or descendant to have the naked ownership until, on the death of the surviving spouse, the whole title is merged in him.The record of this case evinces a conflict of interests between the appellant and the minor as heirs of the deceased. This fact alone, independently of the five grounds specified by the trial court in its order substituting the appellant as guardian of the property of the minor, suggests the property and advisability of relieving appellant as such guardian. (Gabrielvs. Sotelo, 2 Off. Gaz., 172.)The appellant also assigns as error the refusal of the trial court to allow her to present an additional account and a final account before her removal as guardian. We note in this connection that the two accounts she presented to the court as well as her proposed additional account consist mostly of items that should be presented to and passed upon by the court in the administration and settlement of the intestate of the deceased rather than in this guardianship proceeding. As to the final account, the trial court in the order appealed from did not refuse to allow the appellants to present it. On the contrary, it is understood that before the appellant could be relieved as guardian of the property of her ward and her bond cancelled, she has to present a final account covering the period from January 1, 1940, to the date on which she delivers the properties of the ward to the new guardian.The order of August 30, 1940, is affirmed with the direction made in the body of this decision regarding the institution by the appellant of intestate proceedings for the settlement and adjudication of the estate of the deceased Vicente Ribaya, Appellant shall pay the costs.