CASE DIGEST: One Network Rural Bank vs. Baric

G.R. No. 193684 March 5, 2014

ONE NETWORK RURAL BANK, INC. Petitioner, v. DANILO G. BARIC, Respondent.



Jaime Palado (Palado) was the registered owner of real property with a building containing commercial spaces for lease (subject property), located in Barangay Piapi, Davao City. Respondent Danilo G. Baric (Baric) was a lessee therein, operating a barber shop on one of the commercial spaces. In December 2000, Baric received a written notice from Palado demanding the return of the leased commercial space within 40 days from December 15, 2000.

Baric took the matter to the office of the barangay Lupong Tagapamayapa (Lupon). However, on the scheduled dates of conciliation/mediation hearing held on January 19 and 24, 2001, Baric failed to attend, which prompted the Barangay Chairman to issue a Certificate to Bar Action.

In the meantime, it appears that the building was demolished. In February 2001, Baric filed a case for forcible entry with prayer for injunctive relief against Palado and herein petitioner One Network Rural Bank, Inc. (Network Bank).

MTCC rendered its decision dismissing Barics complaint for forcible entry stating that his voluntary departure from the premises and the posting of a signboard that his barber shop has already transferred to a different area constituted clear and categorical evidence of his departure to voluntarily vacate the premises. On appeal, the RTC sustained the decision of the MTCC. On appeal to the CA however, the court reversed the decision of the lower courts and ordered herein petitioner to be solidarily liable for nominal damages with Palado.

ISSUE: Whether or not petitioner may be held liable for nominal damages

HELD: No. CA decision modified

Civil Law- A third party who did not commit a violation or invasion of the plaintiff or aggrieved party's rights may not be held liable for nominal damages.

The CA gravely erred in holding Network Bank solidarily liable with Palado for the payment of nominal damages. Nominal damages are recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no actual present loss of any kind or where there has been a breach of contract and no substantial injury or actual damages whatsoever have been or can be shown. Under Article 2221 of the Civil Code, nominal damages may be awarded to a plaintiff whose right has been violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, not for indemnifying the plaintiff for any loss suffered

Network Bank did not violate any of Baric's rights; it was merely a purchaser or transferee of the property. Surely, it is not prohibited from acquiring the property even while the forcible entry case was pending, because as the registered owner of the subject property, Palado may transfer his title at any time and the lease merely follows the property as a lien or encumbrance. Any invasion or violation of Baric's rights as lessee was committed solely by Palado, and Network Bank may not be implicated or found guilty unless it actually took part in the commission of illegal acts, which does not appear to be so from the evidence on record. On the contrary, it appears that Barie was ousted through Palado's acts even before Network Bank acquired the subject property or came into the picture. Thus, it was error to hold the bank liable for nominal damages.