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DAMAGES Concept
As used in the Civil Code. Damages may
The Code Commission explains that: mean either:

“The present code (Spanish civil code then 1. The injury or loss caused to another by the
in force) has but a few general principles on the violation of his legal rights; or
measure of damages. Moreover, practically the only 2. The sum of money which the law awards or
damages in the present Code are compensatory imposes as pecuniary compensation,
ones and those agreed upon in a penal clause. recompense, or satisfaction for a injury done
Moral damages are not expressly recognized in the or wrong sustained as a consequence either
present Civil Code, although in one instance – injury of a breach of contractual obligation or a
to reputation - such damages have been allowed by tortious act.
the Supreme Court of Spain, and some Spanish
jurist believe that moral damages are allowable. The
Supreme Court of the Philippines had awarded
moral damages in few cases. Case: Ong vs. Court of Appeals January 21, 1999

“The measure of damages is of far reaching The SC held that the fundamental principle
importance in every legal system. Upon it depends of the law on damages is: that one injured by a
the just compensation for every wrong or breach of breach of contract or by a wrongful or negligent act
contract. or omission shall have a fair and just compensation,
commensurate with the loss sustained as a
“The Commission therefore, deemed it consequence of the defendant’s act.
advisable to include a Title on Damages, which
embodies some principles of the American law on Purpose
the subject. The American courts have developed
Damages are awarded to compensate the
abundant rules and principles upon the adjudication
plaintiff for the loss or injury that he suffered, not to
of damages.”
enrich him, or to impose a penalty on the wrongdoer.
The provisions on Damages are NEW
Law on damages-where found.
except articles 2200, 2201, 2209, and 2212.
The law governing damages is found in
articles 2195 to 2235.
Introduction
The fundamental principle of the law on Damage distinguish from Injury
damages is that one injured by a breach of a
contract and by a wrongful or negligent act or Injury refers to the illegal invasion of a legal
omission shall have a fair and just compensation, right thus the legal wrong to be redressed.
commensurate with the loss sustained as a
consequences of the defendant’s act. Damage is the lost, hurt, or harm which
results from the injury or the amount of money to be
General rule: awarded by the court to compensate for the loss or
injury suffered.
Actual pecuniary compensation, whether the
action is based on a contract or in tort Principle of damnum absque injuria

- Generally, the damages awarded should “damage without injury”

be equal to, and precisely commensurate with the
injury sustained. Case: Farolan vs. SOLMAC March 13, 1991

- Recovery of damages are framed with Facts:

reference to just rights of BOTH PARTIES, not
The Bureau of Customs withheld the release
merely what may be right for an injured person to
of the importation of Solmac’s plastic products
receive, but also what is just to compel the other
considering that the shipment was different from
party to pay, to accord just compensation for the
what was authorized and importation of which is
injury.
restricted, under LOI no. 658-B.
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Thereafter, Solmac filed the action for Raymundo was charged with Conduct
mandamus and injunction with the trial court, which Grossly Prejudicial to the Best Interest of the
ordered Farolan and Parayno to release the Services/Gross Insubordination/Violation of
importation. Reasonable Office Rules and Regulations. The
DOTC exonerated Raymundo of the charges.
The CA ordered Farolan and Parayno
solidarily liable in their personal capacity to pay Raymundo filed an action for damages
Solmac temperate damages, exemplary. arising from Malicious Administrative suit against
Pascual, primarily on the basis of the administrative
Issue: complaint against her. During the trial, Pascual was
represented by the OSG. Raymundo filed a motion
WON they are liable for damages to disqualify the OSG since no right or interest of the
government is involved and that petitioner is sued in
Held: his private capacity.
The SC set aside and annulled the decision The trial court granted the motion of
of the CA. It further ruled that when a public officer Raymundo stating that Pascual is being sued for
takes his oath of office, he binds himself to perform acts which he committed in his official capacity but
the duties of his office faithfully and to use the cause of action is for torts, for which he may be
reasonable skill and diligence and to act primarily for held personally answerable. It is a suit for damages,
the benefit of the public. The petitioners acted in the interest of the government is in no way involved
good faith in not immediately releasing the imported so that the appearance of the SG is unjustified.
goods.
Held:
These cellophane products were competing
with locally manufactured products. Hence, the The SC affirmed the decision of the trial court. The
importation of which is restricted. Petitioners could OSG has no authority to represent Pascual in a civil
not be said to have acted in bad faith in not suit for damages. The law allows a public official to
immediately releasing the imported goods without be represented by the OSG in all civil, criminal and
obtaining the clarificatory guidelines. As public special proceedings, when such proceedings arise
officers, they had the duty to see to it that the law from the former’s acts in his official capacity. In this
there tasked to implement was faithfully complied case, petitioner was actually sued in his personal
with. capacity. The complaint filed by Raymundo merely
identified petitioner as Director of
Whatever damages they may have caused Telecommunications Office, but did not categorically
is in the nature of damnum absque injuria. The law state he was being sued in his official capacity. The
affords no remedy for damages resulting from an act reliefs sought by Raymundo are directed against
that does not amount to a legal wrong. Pascual personally and not his office. Raymundo is
claiming directly from Pascual. Thus, the OSG has
no authority to represent him in such civil suit for
General principles of recovery damages.
To warrant recovery; requisites
2. Damages and its amount must be proved
-there must be both a right of action
-a wrong inflicted by the defendant Every judgment for damages, whether
-a damage resulting to the plaintiff arising from a breach of contract or whether the
result of some provision of law, must rest upon
1. An action for recovery of damages for satisfactory proof of the existence in reality of the
the commission of an injury to a person damages alleged to have been suffered. (Rubiso vs.
is a personal action. Rivera 41 Phil. 39)

Personal Action- one brought for the recovery of Except in those cases where the law
personal property, for the enforcement of some authorizes the imposition of punitive or exemplary
contract of recovery of damages for its breach or for damages, a party claiming damages must establish
the recovery of damages for the commission of an by competent evidence the amount of such
injury to the persons or property. damages and courts cannot give judgment for a
greater amount than that actually prove. (Ventanilla
Case: Pascual vs. Beltran October 27, 2006 vs. Centeno)
Facts: 3. Only proximate, not remote, damages are
recoverable.
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Proximate damages – said to be such as are a family to minimize the damages

the ordinary and natural result of the omission or resulting from the act or omission in
commission of acts of negligence, and such are question. (Article 2203)
usual and might have been reasonably expected or
contemplated. A party cannot recover for loss which s/he
could have avoided or mitigated through his/her
Remote Damages – the unusual unexpected reasonable efforts. A person injured by the wrongful
result not reasonably to be anticipated from an acts of another has a duty to mitigate or minimize
accidental or unusual combination of circumstances- the damages and must protect himself/herself if s/he
a result beyond and over which the negligent party can do so with reasonable effort or at minimal
has no control. expense, and can recover from the delinquent party
only such damages as s/he could not, with
In order to maintain an action for damages reasonable effort, have avoided.
for injuries claimed to have been caused by a
negligent or other tortuous or wrongful act or
omission, it should be made to appear that such act General Provisions
or omission was the proximate cause of the injuries ARTICLE 2195: “The provsions of this Title shall be
complained of. respectively applicable to all obligations mentioned
in article 1157.”
The damages the plaintiff is entitled to
recover in a civil action for damages are, in the Article 1157: sources of obligations
absence of any statutory modification of the rule,
such only as are the natural and probable 1. Law 2. Contracts 3. Quasi-contracts 4.
consequences of the wrongful act or breach of Delicts and 5. Quasi-delicts.
contract. Those which naturally and proximately flow
from the original wrongful act. Classification of Damages:

TEST: whether the facts shown constitute a ARTICLE 2197: Damages may be:
continuous succession of events so linked together
as to make a natural whole or whether there was a 1. Actual or compensatory
new and independent cause intervening between the 2. Moral
wrong and the injury. 3. Nominal
4. Temperate or moderate
4. Speculative damages NOT recoverable 5. Liquated or
6. Exemplary or corrective.
Alleged injuries or losses that are uncertain or
contingent Actual Damages – adequate compensation only for
cannot be used as a basis of recovery for  TORT or pecuniary loss actually suffered by the plaintiff as he
contract actions. has duly proved (Article 2199). The components of
actual damages are: a. value of loss and unrealized
An individual cannot be compensated for profit (Article 2200), b. loss of earning capacity for
mere speculative probability of future loss unless he personal injury suffered (Article 2205), c. injury to
can prove that such negative consequences can plaintiff’s business standing or commercial credit,
reasonably be expected to occur. The amount of attorney’s fees (Article 2208) and d. interest (Article
damages sought in a lawsuit need not be 2209)
established with absolute certainty provided they are
anticipated with reasonable certainty. Moral Damages – damages, though incapable of
pecuniary estimation, are designed to compensate
Thus, in an action of ejectment, damages and alleviate in some way the physical suffering,
claimed by plaintiff on the basis of interest that could mental anguish, fright, serious anxiety, besmirched
have been realized had the lands been converted reputation, wounded feelings, moral shock, social
into a subdivision and sold were too speculative to humiliation, and similar injury unjustly caused a
sustain an award, in the absence of evidence that person. (Article 2217)
the lands could have been sold at the price claimed
and the purchase money collected.(M.M. Tuason & Nominal Damages – adjudicated in order that a
co. vs. De Guzman) right of the plaintiff, which has been violated or
invaded by the defendant, may be vindicated or
5. Duty of the injured party to minimize recognized, and not for the purpose of indemnifying
damages the plaintiff for any loss suffered by him. (Article
“The party suffering loss or injury must 2221)
exercise the diligence of a good father of
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Temperate or moderate damages – damages to deliver them. In a suit for damages by the buyer
which may be recovered when the Court finds that for breach of contract for delivery of goods, it was
some pecuniary loss has been suffered but its held that the measure of damages is the difference
amount cannot, from the nature of the case, be between the contract price and the market price i.e.
proved with certainty. They are more than nominal P5 per bag.
but less than compensatory damages. (Article 2224)
If, however, the thing contracted is not
Liquidated Damages – damages agreed upon by available in the market, the price of the nearest and
the parties to a contract, to be paid in case of breach best available substitute may be taken into account
thereof. (Article 2226) Liquidated damages, whether in calculating damage. In the absence of market at
intended as an indemnity or penalty, shall be the place of delivery, market price of the nearest
equitably reduced if they are iniquitous or place or price prevailing in the controlling market is
unconscionable. (Article 2227) to be considered.

Exemplary Damages – damages imposed by way Special Damages

of example or correction for the public good, in
addition to the moral, temperate, liquidate or  Those which exist because of SPECIAL
compensatory damages (Article 2229). circumstances and for which a debtor in
GOOD FAITH can be held liable only if he
Requirements: had been previously informed of such
circumstances.
1. Imposed by way of example in addition to
other damages. Illustration:

2. Cannot be recovered as a matter of right  A taxi driver gave his taxi for repair to a
mechanic informing him that unreasonable delays
3. The act complained of must be accompanied will result in loss of income of P100 per day. The
by bad faith. mechanic unreasonably delays the repair of the taxi.
The taxi driver is entitled to recover loss of income at
the rate of P100 per day.
Concept of SPECIAL AND ORDINARY damages
If a carrier fails to deliver a movie film
intended for showing at fiesta, it cannot be held
Ordinary Damages liable for the extraordinary profits realizable at a
fiesta showing, if it had not been told that the film
 Found in all breaches of contract where had to be delivered in time for fiesta.(Mendoza vs.
there are no special circumstances to PAL, 90 Phil 836)
distinguish the case specially from other
contracts. In all such cases the damages Note: If a debtor is in BAD FAITH, special
recoverable are such as naturally and damages can be assessed against him even if he
generally would result from such a breach, had NO knowledge of the special circumstances. It
“according to the usual course of things.” is enough that the damage can be reasonably
 These damages constitute the direct loss attributed to the non-performance of obligation.
suffered by the aggrieved party. 
 They are estimated on the basis of
circumstances prevailing on the date of the
breach of the contract.
 Generally inherent in a breach of Typical
contract

Illustration:

In contracts for 'sale and purchase', the

general rule as regards measures of damages is that
the damages would be assessed on the difference
between the contract price and the market price on
the date of breach.

A agreed to deliver 100 bags of rice at P90

per bag on a future date and finding that the market
price on that date has risen to P95 a bag, he refused
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Actual Damages of the RPC which states, “Every person criminally

liable for a felony is also civilly liable.” (People vs
Jose Pepito Combate G.R. No. 189301 December
15, 2010)
Concept
Article 2199. Except as provided by law or by
stipulation, one is entitled to an adequate Requisites
compensation only for such pecuniary loss suffered
1. Plead for/allege actual damages – However,
by him as he has duly proved. Such compensation
when a prayer mentions only exemplary damages,
is referred to as actual or compensatory damages.
moral damages, and attorney’s fees and “such
 Actual or compensatory damages are those further relief that is deemed just and equitable,” such
recoverable because of pecuniary loss phrase may include actual damages if and when
actually suffered and duly proved by the they are proved.
plaintiff.
2. Proof of actual damages suffered – Actual
 Under Article 2199 of the Civil Code, actual damages, to be recoverable, must not only be
or compensatory damages are those capable of proof, but must actually be proved with a
awarded in satisfaction of, or in recompense reasonable degree of certainty.
for, loss or injury sustained. They proceed
from a sense of natural justice and are Cases:
designed to repair the wrong that has been
done, to compensate for the injury inflicted  The rule is long and well settled that there
and not to impose a penalty. In actions must be pleading and proof of actual
based on torts or quasi-delicts, actual damages suffered for the same to be
damages include all the natural and recovered. In addition to the fact that the
probable consequences of the act or amount of loss must be capable of proof, it
omission complained of. (PNOC Shipping must also be actually proven with a
and Transport Corporation vs. CA G.R. No. reasonable degree of certainty, premised
107518 October 8, 1998) upon competent proof or the best evidence
 Actual damages are compensation for an obtainable. The burden of proof of the
injury that will put the injured party in the damage suffered is, consequently, imposed
position where it was before it was on the party claiming the same who should
injured. They pertain to such injuries or adduce the best evidence available in
losses that are actually sustained and support thereof, like sales and delivery
susceptible of measurement. Except as receipts, cash and check vouchers and
provided by law or by stipulation, a party is other pieces of documentary evidence of the
entitled to an adequate compensation only same nature. In the absence of
for such pecuniary loss as it has duly corroborative evidence, it has been held that
proven. (Quisumbing vs MERALCO G.R. self-serving statements of account are not
No. 142943  April 3, 2002) sufficient basis for an award of actual
damages.  Corollary to the principle that a
Actual damages or compensatory damages: Is claim for actual damages cannot be
there a difference? predicated on flimsy, remote, speculative,
and insubstantial proof, courts are, likewise,
In the first place, actual damages are not required to state the factual bases of the
different from compensatory damages. Under award. (Oceaneering Contractors vs.
Chapter 2, Title XVIII, Book IV of the Civil Code, Nestor N. Barretto, doing business as
actual and compensatory damages are N.N.B. Lighterage)
synonymous; hence the title of the Chapter as well
as Article 2199 thereof refer to them as actual or
 The burden of proof is on the party who
compensatory damages. (People vs Laceste, G.R.
would be defeated if no evidence would be
No. 127127 July 30, 1998)
presented on either side. He must establish
Civil Indemnity and Actual Damages his case by a preponderance of evidence
which means that the evidence, as a whole,
Civil indemnity ex delicto is the indemnity adduced by one side is superior to that of
authorized in our criminal law for the offended party, the other. In other words, damages cannot
in the amount authorized by the prevailing judicial be presumed and courts, in making an
policy and apart from other proven actual damages, award must point out specific facts that
which itself is equivalent to actual or compensatory could afford a basis for measuring whatever
damages in civil law. This award stems from Art. 100
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compensatory or actual damages are borne. but also that of the profits which the obligee failed to
(PNOC Shipping vs CA) obtain.

 No official receipts were, however, Value of the loss suffered

presented to substantiate the claim. The (daño emergente) – loss of
victim’s wife’s testimony cannot thus be what a person already
considered as competent proof and cannot possesses
replace the probative value of official
receipts to justify the award of actual
damages, for jurisprudence instructs that the Example:
same must be duly substantiated by
receipts. (People vs Sara G.R. No. 140618  Destruction of things
Dec. 10, 2003)  Fines or penalties that had to be paid
 Rents and agricultural products not received
 The photographs the petitioners presented  Cost of medical procedures to restore the injured
as evidence show the extent of the damage person to his or her former condition (this award
done to the house, the tailoring shop and the necessitates expert testimony on the cost of possible
petitioners’ appliances and restorative medical procedure.)
equipment. Irrefutably, this damage was  A scar resulting from the infliction of injury on the
directly attributable to the driver’s gross face of a woman gave rise to a legitimate claim for
negligence in handling OMC’s truck. restoration to her conditio ante, granted P15,000 as
Unfortunately, these photographs are not actual damages for plastic surgery. It bears
enough to establish the amount of the loss emphasis that the said amount was based on expert
with certainty. (Tan vs OMC Carriers G.R. testimony. (Gatchalian v. Delim)
No. 190521 January 12, 2011)
Note:
 The claim of P70,000 as actual damages is
Where goods are destroyed by the wrongful act of
supported merely by a list of expenses
the defendant, the plaintiff is entitled to their value at
instead of official receipts. A list of expenses
the time of destruction, that is, normally, the sum of
cannot replace receipts when the latter
money which he would have to pay in the market for
should have been issued as a matter of
identical or essentially similar goods, plus in a proper
course in business transactions. Neither can
case damages for the loss of use during the period
the mere testimony on the amount spent
before replacement. (PNOC Shipping and Transport
suffice. It is necessary for a party seeking an
Corporation vs. Court of Appeals and Maria Efigenia
award for actual damages to produce
Fishing Corporation)
competent proof or the best evidence
obtainable to justify such award. (People vs Profits which are not
Guillera G.R. No. 175829 March 20, 2009)
obtained or realized (lucro
cesante) – failure to receive
 An estimate of the damage cost will not
suffice. Private respondents failed to adduce as a benefit that which
adequate and competent proof of the would have pertained to him
pecuniary loss they actually incurred. Private
respondents merely sustained an estimated
Example:
amount needed for the repair of the roof of
their subject building. What is more, whether  Profits that could have been earned had there been
the necessary repairs were caused only by no interruption on the plaintiff’s business
petitioner’s alleged negligence in the  Interest on rentals not paid
maintenance of its school building, or  Lost income because the self-employed plaintiff
included the ordinary wear and tear of the cannot work
house itself, is an essential question that
remains indeterminable. (Southeastern
College, Inc. v. Court of Appeals)
Note:

Components There are two kinds of actual or compensatory

Article 2200. Indemnification for damages shall damages one is the loss of what a person already
comprehend not only the value of the loss suffered, possesses, and the other is the failure to receive as
a benefit that which would have pertained to him. In
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the latter instance, the familiar rule is that damages (Magbanua vs Tabusares citing Villa Rey Transit,
consisting of unrealized profits, frequently referred Inc. vs. CA)
as "ganacias frustradas" or "lucrum cessans," are
not to be granted on the basis of mere speculation,  By way of exception, damages for loss of earning
conjecture, or surmise, but rather by reference to capacity may be awarded despite the absence of
some reasonably definite standard such as market documentary evidence when:
value, established experience, or direct inference
from known circumstances. However, when the 1. The deceased is self-employed and earning
existence of a loss is established, absolute less than the minimum wage under current labor
certainty as to its amount is not required. The laws, in which case, judicial notice may be taken of
benefit to be derived from a contract which one of the fact that in the deceased's line of work no
the parties has absolutely failed to perform is of documentary evidence is available; or
necessity to some extent, a matter of speculation,
2. The deceased is employed as a daily wage
but the injured party is not to be denied for that
worker earning less than the minimum wage under
reason alone. He must produce the best evidence
current labor laws.
of which his case is susceptible and if that
evidence warrants the inference that he has been Injury to plaintiff’s business
damaged by the loss of profits which he might
standing or commercial
with reasonable certainty have anticipated but for
the defendant's wrongful act, he is entitled to credit (Art. 2205)
recover. (Producers Bank of the Philippines vs. CA
and Spouses Chua) "The financial credit of a businessman is a prized
and valuable asset, it being a significant part of the
Loss of earning capacity for
foundation of his business. Any adverse reflection
personal injury suffered thereon constitutes some financial loss to him."
(Art. 2205) (Leopoldo Araneta vs. Bank of America)

Attorney’s fees (Art. 2208)

Note:

Article 2205 of the New Civil Code allows the 2 Concepts:

recovery of damages for "loss or impairment of
earning capacity in cases of temporary or permanent 1. Ordinary concept – reasonable
personal injury." Such damages covers the loss compensation paid to a lawyer by his client for the
sustained by the dependents or heirs of the legal services rendered.
deceased, consisting of the support they would have
received from him had he not died because of the 2. Extraordinary concept – awarded by the
negligent act of another. The loss is not equivalent to court as indemnity for damages to be paid by the
the entire earnings of the deceased, but only that losing party to the prevailing party, such that, in any
portion that he would have used to support his of the cases provided by law where such award can
dependents or heirs. Hence, we deduct from his be made (Art. 2208), the amount is payable not to
gross earnings the necessary expenses supposed to the lawyer but to the client, unless they have agreed
be used by the deceased for his own needs. In fixing that the award shall pertain to the lawyer as
the amount of that support, we must reckon with the additional compensation or as part thereof.
‘necessary expenses of his own living’, which should
be deducted from his earnings. Thus, it has been Article 2208. In the absence of stipulation,
consistently held that earning capacity, as an attorney's fees and expenses of litigation, other
element of damages to one’s estate for his death by than judicial costs, cannot be recovered, except:
wrongful act is necessarily his net earning capacity
or his capacity to acquire money, ‘less the 1. When exemplary damages are awarded;
necessary expense for his own living.’ Stated 2. When the defendant's act or omission has
otherwise, the amount recoverable is not loss of compelled the plaintiff to litigate with third
the entire earning, but rather the loss of persons or to incur expenses to protect his
that portion of the earnings which the beneficiary interest;
would have received. In other words, only net 3. In criminal cases of malicious prosecution against
earnings, not gross earning are to be considered the plaintiff;
that is, the total of the earnings less expenses 4. In case of a clearly unfounded civil action or
necessary in the creation of such earnings or income proceeding against the plaintiff;
and less living and other incidental expenses.
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5. Where the defendant acted in gross and evident  Even when a claimant is compelled to litigate with
bad faith in refusing to satisfy the plaintiff's third persons or to incur expenses to protect his
plainly valid, just and demandable claim; rights, still attorney’s fees may not be awarded
6. In actions for legal support; where no sufficient showing of bad faith could be
7. In actions for the recovery of wages of household reflected in a party’s persistence in a case other than
helpers, laborers and skilled workers; an erroneous conviction of the righteousness of his
8. In actions for indemnity under workmen's cause. (DBP vs Traverse Development Corp. G.R.
compensation and employer's liability laws; No. 169293 October 5, 2011)
9. In a separate civil action to recover civil liability
arising from a crime;  The Court has established a set standards in fixing
10. When at least double judicial costs are awarded; the amount of attorney's fees:
11. In any other case where the court deems it just
and equitable that attorney's fees and expenses of 1. Amount and character of the services
litigation should be recovered. rendered;

In all cases, the attorney's fees and expenses of 2. Labor, time and trouble involved;
litigation must be reasonable.
3. The nature and importance of the litigation
Note: or business in which the services were rendered;

 Generally, attorney’s fees are not a proper element 4. The responsibility imposed;
of damages, for it is not a sound public policy to
5. The amount of money or the value of the
place a premium on the right to litigate.
property affected by the controversy or involved in
 An award of attorney’s fees lies within the discretion the employment;
of the court and depends upon the circumstances of
6. The skill and experience called for in the
each cases. However, it requires factual, legal and
performance of the services;
equitable justification; its basis cannot be left to
speculation or conjecture. (Dutch Boy Philippines vs 7. The professional character and social
Seniel G.R. No. 170008 January 19, 2009) standing of the attorney;
 Attorney's fees as part of damages are not meant to 8. The results secured, it being a recognized
enrich the winning party at the expense of the losing rule that an attorney may properly charge a much
litigant. They are not awarded every time a party larger fee when it is contingent than when it is not.
prevails in a suit because of the policy that no
premium should be placed on the right to litigate. (These factors approximate those enumerated in
The award of attorney's fees is the exception rather Rule 20.01 of the Code of Professional
than the general rule. Consequently, the reason for Responsibility)
the award must be stated in the text of the court’s
decision. If it is stated only in the dispositive portion
of the decision, the same must be disallowed.
(Madrid vs Mapoy, G.R. No. 150887 August 14,
Interest (Art. 2209)
2009)

 It is true that, in No. 11 of Article 2208, recovery of Kinds:

counsel fees is allowed "where the court deems it
just and equitable that attorneys' fees and expenses 1. Agreed interest – provided for by the terms of a
of litigation should be recovered", but even in such contract to be paid before its breach. Also called
cases the conclusion must be borne out by findings contractual interest or monetary interest (interest for
of facts and law. What is just and equitable in a the use of money)
given case is not a mere matter of feeling but of 2. Interest by way of damages – interest allowed in
demonstration. This is especially true since the last actions for breach of contract or tort for the unlawful
part of Article 2208 expressly adds that the detention of money already due. It is allowed as a
"attorneys' fees and expenses of litigation must be result of the justice of the individual case and as
reasonable". Hence, the exercise of judicial compensation to the injured party. Often called
discretion in the award of attorneys' fees under moratory interest (interest for the delay)
Article 2208 (11) of the Civil Code demands a
factual, legal, or equitable justification upon the basis General Rule:
of which the court exercises its discretion. (Buan vs
Camaganacan G.R. No. L-21569 February 28, 1966)  Interest is allowed as a matter of right for failure to
pay liquidated claims when due
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 Unliquidated claims will bar the granting of interest

Reason: Moral Damages

The person liable did not know what amount he

owed and therefore should not be charged interest
for not paying an unknown sum A. Concept
Article 2217 of the New Civil Code:
Exception: HOWEVER, if a claim otherwise
unliquidated is ascertainable by mathematical Moral damages includes physical suffering,
computation, interest is allowed as though the claim mental anguish, freight, serious anxiety, besmirched
were “liquidated” (Sunga-Chan vs CA GR 164401 reputation, wounded feelings, moral shock, social
June 25, 2008) humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be
Rate of Interest recovered if they are the proximate result of the
defendant’s wrongful act or omission.
(EASTERN SHIPPING LINES vs CA, G.R. No.
97412 July 12, 1994)
B. Purpose of Awarding Moral Damages:
With regard particularly to an award of interest in the To compensate the claimant for the injury suffered
concept of actual and compensatory damages, the and not to impose penalty on the wrongdoer.
rate of interest, as well as the accrual thereof, is
imposed, as follows: It is not meant to enrich a person at the
expense of the other, but are awarded to enable the
1. When the obligation is breached, and it consists in injure party to obtain means, diversions, or
the payment of a sum of money, i.e., a loan or amusement that will serve to alleviate the moral
forbearance of money, the interest due should be suffering the person has undergone.
that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal It is aimed at restoration, as much as
interest from the time it is judicially demanded. In the possible, of the spiritual status quo ante.
absence of stipulation, the rate of interest shall be
12%  per annum to be computed from default, i.e.,
from judicial or extrajudicial demand under and C. Requisites:
subject to the provisions of Article 1169 of the Civil
1. Evidence that plaintiff suffered:
Code.
2. When an obligation, not constituting a loan or  physical suffering,
forbearance of money, is breached, an interest on
 mental anguish,
the amount of damages awarded may be imposed at
 freight
the discretion of the court at the rate of 6% per
annum. No interest, however, shall be adjudged on  serious anxiety
unliquidated claims or damages except when or until  besmirched reputation,
the demand can be established with reasonable  wounded feelings,
certainty. Accordingly, where the demand is  moral shock,
established with reasonable certainty, the interest  social humiliation,
shall begin to run from the time the claim is made  similar injury
judicially or extrajudicially (Art. 1169, Civil Code) but
when such certainty cannot be so reasonably 2. Culpable act or omission factually established
established at the time the demand is made, the
interest shall begin to run only from the date the 3. Proof that the wrongful act or omission of the
judgment of the court is made (at which time the defendant is the proximate cause of the
quantification of damages may be deemed to have damages sustained by the claimant.
been reasonably ascertained). The actual base for
If there is no proof upon which the claim for
the computation of legal interest shall, in any case,
moral damages could be based, it could not be out
be on the amount finally adjudged.
rightly awarded.
3. When the judgment of the court awarding a sum of
money becomes final and executory, the rate of 4. The case is predicated on any of the instances
legal interest, whether the case falls under expressed or envisioned by Article 2219 and
paragraph 1 or paragraph 2, above, shall be Article 2220 of the Civil Code.
12%  per annum from such finality until its
satisfaction, this interim period being deemed to be Illustrative Cases
by then an equivalent to a forbearance of credit.
 10

Pagsuyuin vs IACGR No. 72121, February 6, 1991 to pay. They disconnected the electric supply.
Defendant filed for a complaint for damages. The
Facts: RTC ruled in favor of TEAM and ordered MERALCO
to pay among others, moral damages of P500,
A certain Mrs. Schlander was able to secure 000.00. The CA affirmed the RTC.
a loan from Manila Banking Corporation secured by
real estate mortgage of two properties of Salud Issue: Whether or not damages moral damages
Pagsuyuin upon a forged power of attorney allegedly should be awarded.
signed by the latter.
Ruling:
Thereafter, Salud’s cousins Rafael and
Peregrina offered to settle the loan if Salud will allow No. The claim of moral damages was
Peregrina to stay free of charge in the leased premised on the damage to its goodwill and
premises and Salud will repay the amount with reputation. A corporation can recover moral damage
interest. Consequently two documents were when its reputation is debased, resulting in its
allegedly executed involving the transfer of humiliation in the business realms. However it is
properties of Salud to Peregrina and Rafael. Salud imperative for the claimant to present proof to justify
denied having executed the deeds alleging that she the award. It is essential to prove the existence of
was in Batangas at that time. Furthermore, the the factual basis of the damage and its causal
witnesses to the instrument also denied their relation to petitioner’s acts. In the present case, the
signatures. records are bereft of any evidence that the name or
reputation has been debased as a result of
Salud then filed for a complaint against her petitioner’s acts. Besides, the trial court simply
two cousins alleging that her signature and those of awarded moral damages in the dispositive portion of
the witnesses were obtained thru fraud and trickery. its decision without stating the basis thereof.
The RTC ruled in favor of Salud. Among others, it
awarded the award of P20,000.00 as moral
damages. The IAC affirmed the decision but reduced D. When Can Moral Damages be Recovered:
the award of moral damages to P5,000.00.
Article 2219
Issue:
1. A criminal offense resulting in physical injuries
Whether or not the award of moral damages
Illustrative Case:
is warranted

Ruling: Ferrer vs People, February 22, 2006

Yes. For moral damages to be awarded, it Facts:

is essential that the claimant must have satisfactorily
Tommy Ferrer was found guilty attempted
proved during trial the existence of the factual basis
homicide for attacking Ricardo Ferrer and frustrated
of the damages and its causal connection with
homicide for his attack on Roque Ferrer. Among
adverse party’s acts. The wrongful act attributable to
others, he was ordered to pay moral damages of
the petitioners which is the employment of fraud is
P10,000.00 to Roque and P8,000.00 to Ricardo.
the proximate cause of the mental anguish suffered
by Salud. Issue:

Whether the awards are proper.

Ruling:

MERALCO vs TEAM Electronics Corp, GR No. While no proof of pecuniary loss is

131723, December 13, 2007 necessary, it is essential that the claimant should
satisfactorily provide factual basis for the alleged
Facts: moral injury.
MERALCO is the supplier of electricity to In the case of Roque, the award is in order
two of TEAM’s buildings. A surprise inspection by since he testified that suffered pain even at the time
petitioner was conducted wherein they found out that that he was being discharged from the hospital.
two meter were tampered and did not register the
actual power consumption. Petitioner then However, in the case of Ricardo, the award
demanded payment and when the respondent failed is unsubstantiated, because he did not satisfy on
 11

any emotional distress, mental anguish or even Facts:

physical suffering which he suffered as a result of
the crime. Grace sent a telegram to her sister Zenaida
through petitioner company. She was asking for
2. Quasi-delicts causing physical injuries financial assistance for their mother. RCPI failed to
deliver the telegram.
Illustrative Case:
Issue:
RT Transport Corporation vs Pante, September 15,
2009 Whether there is basis for moral damages.

Due to a vehicular incident, the respondent Ruling:

sustained a laceration in the frontal area with
fracture of the right humerus. He underwent an Yes. The source is not Article 26: Meddling
operation for the fracture, and after a few years of with or disturbing the private life or family relations
rest, he had to undergo a second operation. He of another.
suffered physical pain, mental anguish and anxiety
The negligence of RCPI disturbed the peace
as a result of the vehicular accident. The Court
of mind not only of Grace but of the whole family. It
awarded P50,000.00
disrupted the “filial tranquility” among them as they
blamed each other for “failing to respond swiftly to
3. Seduction, abduction, rape, or other lascivious
an emergency. The tortuous omissions complained
acts
were therefore e analogous to the acts mentioned in
Note: Victim may recover Article 26.

Parents may also recover c. Article 27 malfeasance, misfeasance,

nonfeasance of official duty
4. Adultery or concubinage
d. Article 28: unfair competition
5. Illegal or arbitrary detention or arrest
e. Article 29: filing of a dependent civil
6. Illegal search action because of an acquittal in the
criminal case based on reasonable
7. Libel, slander, or any other forms of defamation doubt

8. Malicious prosecution f. Article 30: filing of a dependent civil

action arising from criminal offense, and
9. Article 309: no criminal proceedings are
instituted during the pendency of the civil case
Any person who shows disrespect to the
dead, or wrongfully interferes with a funeral shall be g. Article 32: violations of constitutional
liable to the family of the deceased for damages, rights
material and moral.
h. Article 34: refusal or failure of a police
Note: Action may be brought by the following officer to render aid and protection in
persons in this particular order: spouse; case of danger to life or property
descendants; ascendants; brothers and sisters.
i. Article 35: in case of non-prosecution
10. Acts referred in the following articles: of a criminal offense

a. Article 21: Willful cause of loss or 11. Article 2220:

injury in a manner contrary to public policy,
good customs, or public Willful injury to property may be a legal
policy ground for awarding damages if the court should find
that, under the circumstances, such damages are
b. Article 26: Interference justly due. The same rule applies to breaches of
contract where the defendant acted fraudulently of in
Illustrative Case bad faith.

Radio Communications of the Philippines vs Illustrative Case

Verchez, January 31, 2006
 12

Enrico Villanueva and Ever Pawnshop vs said tickets and were assure that the tickets will be
Spouses Salvador delivered to the children. When Annette and Marilou
claimed the ticket, they found our that there was a
Facts: miscomputation and they have to pay additional
$261.60 per ticket. They requested that the Manila
Spouses Salvador secured two loans from Office be contacted but they were arrogantly
Ever pawnshop secured by two pledges. The rejected in the presence of may persons. Having no
Salvadors failed to redeem the pawned jewelry. other choice, they paid.
Thereafter, Ever Pawnshop issued a notice in Manila
Bulletin announcing an auction sale on the very day Issue:
of auction itself.
Whether moral damages should be
The Salvador filed a complaint for damages awarded.
arising from the sale without notice of the two sets of
jewelry pledged. Petitioner alleged that they Ruling:
reminded the Salvadors of the maturity date and
redemption period of their loans. Also, they issued a Yes. While the miscomputation was not
notice in the Manila Bulletin. unfamiliar, the negligence imposed upon them a
needless burden who had gone on their trio
The RTC, among others, moral damages of precisely to enjoy themselves. Worse, the manner of
P20, 000.00 . The CA affirmed in toto. treatment was far from acceptable. The employees
should have been polite if not sympathetic to the two
Issue: young girls in the foreign land. Instead, they were
hostile, overbearing. The girls testified that they were
Whether moral damages should be treated coldly and arrogantly. They were not
awarded. accorded courtesy but were humiliated.
Ruling: These acts taken in totality constitutes more
than mere negligence and assumed the dimension
No. Moral damages are not generally of bad faith. There is clear malice, manifested in the
recoverable in culpa contractual except when bad contemptuous disregard of the passenger’s protest
faith supervenes and is proven. It may be that gross and the abrupt rejection of their request.
negligence may sometimes amount to bad faith.

In the present case, the cause of action of

the respondents arose merely from simple E. Considerations in Awarding Damages
negligence. The trial court categorically found that General Rule: Each case must be governed by its
due to an oversight, the defendants mistakenly peculiar circumstances. there is no hard and fast
renewed the first loan. rules in determining the proper amount.

Defendant’s action must be vitiated by bad

faith or that there is willful intent to injure. Moral
damages cannot arise from simple negligence. Guidelines Used by Supreme Court in some
cases (Jurisprudence):

1. Moral damages must be proportionate to the

suffering inflicted.

Northwest Oreint Philippines vs CA, June 8, 1990

Facts: RCPI and Globe Mackay and Radio Corporation

vs Rufus Rodriguez, GR No. 83768, February 28,
As a graduation gift from their parents, 1990
Annette, Joy, and Marilou were given a trip abroad.
They flew to Hongkong where they will wait for their Facts:
plane tickets to Tokyo and US. In Manila, the
parents went to the agent of petitioner to purchase Rufus Rodriguez sent two telegrams via
RCPI. The first was sent to Sudan advising Taha of
 13

his arrival in Sudan for an international conference. Bankard vs Dr. Antonio Novak Feliciano
The second was sent to US addressed to Merger,
the Secretary of the organization. These two Facts:
telegrams were not delivered and RCPI did not
inform Rodriguez of non-delivery. When Rodriguez Dr. Feliciano is the holder of PCIBank
arrived in Sudan, nobody was waiting for him and Mastercard with an extension line issued to his wife,
was forced to sleep at the airport by lining five (5) Marietta. While in Canada, he tried to use the card to
chairs together and lay down his luggage near him. pay for breakfast bill but it was dishonored. Thus, it
The conference also had to be cancelled because was the guests doctors who had to pay for the bill.
the Merger was absent. He immediately inquired on the cause of dishonor
and denied not having paid his bills. The next day,
RCPI blames Rodriguez for the non-delivery he met with one of the doctors to reimburse the bill
of the two telegrams. Regarding the first telegram, and thereafter went to a prestigious mall.
the complete address was not given. As to the Respondent again tried to use his card but was
second telegram, Merger already moved from her dishonored to his embarrassment. The card was
old address and it was Rodriguez’s fault for not confiscated.
verifying the address.
Respondent filed for complaint for damages
Rodriguez filed for complaint for damages. for breach of contractual rights and damages. He
alleged that as a result of the incident, he suffered
The RTC, among others awarded P100, social humiliation, embarrassment and besmirched
000.00. The CA affirmed. reputation.

Issue: Petitioner claimed that they were diligent

before suspending the use of card. They alleged that
Whether moral damages should be awarded. there was a report of counterfeit transaction of the
extension line, thus they cancelled it as well as the
Ruling: principal line. They also tried to call the respondent
but he was not home.
Yes. Records show that an earlier telegram
to Taha bearing the incomplete address was The RTC awarded, among others, moral
received by the latter. As to the second telegram, the damages of P1,000,000.00. The CA reduced the
company as a public utility should ascertain that same to P800, 000.00.
messages are delivered and in cases of undelivered
messages, the sender must be given notice of non- Issue:
delivery.
Whether moral damages should be
However, the amount awarded is awarded.
unconscionable and excessive. Moral damages are
emphatically not intended to enrich a complainant at Ruling:
the expense of defendant. They are awarded only to
enable the injured party to obtain means, diversion Yes. Moral damages by be recovered in
or amusements that will serve to alleviate the moral culpa contractual when the defendant acted in bad
suffering he has undergone, by reason of the faith or with malice in the breach of contract.
defendant’s culpable action. The award of moral
damages must be proportionate to the suffering Malice or bad faith implies moral obliquity or
inflicted. a conscious design to do a wrongful act for a
dishonest purpose. However, intentional design
The respondent is not entirely blameless. need not to be always present. Bad faith under Art
Anybody who is involved in international conference 2220 includes gross negligence amounting to bad
and meetings knows that a telegram is not adequate faith or in wanton disregard of his contractual
preparation. He cannot simply send a telegram and obligation.
assume that every preparation will proceed as he
anticipates it. Petitioner was not diligent in its efforts at
personally contacting the respondent. It only tried to
The amount of P10,000.00 as moral call once, and contended to leave a message.
damages in favor of the respondent would be Before the incident, the petitioner still has three days
reasonable considering the facts and circumstances. to inform the respondent.

2. Social and financial standing Evidence show that respondent is a

cardholder in good standing for 10 years. The
 14

attendant circumstances show that there is gross or where, from the nature of the case, there
negligence amounting to bad faith has been some injury arising from a breach
of contract or legal duty but the amount
As to the amount, it is reduce to thereof has not been or cannot be shown.
P500,000.00. Moral damages are not meant to
enrich the complainant at the expense of the  The law infers some damage from the
defendants and should be commensurate with the breach of an agreement or invasion of a
actual loss or injury suffered right, and if no evidence is given of any
particular amount of loss, it declares the
4. Moral feelings and personal pride of claimant right by awarding what it terms “nominal
damages.” Its allowance is generally based
on the ground that every injury from its very
nature legally imports damage.
5. Discretion of the court but said discretion should
be just and reasonable, not founded upon the whims  Any award which is not of any significant
and caprices of the judge. amount but is given primarily as a court’s
recognition of the justness or rightness of a
Illustrative Case claim is a “nominal” award.
Siga-an vs Villanueva, January 20, 2009  The assessment of nominal damages is left
to the discretion of the court according to the
Respondent testified that she experienced
circumstances of the case.
sleepless nights and wounded feelings when
petitioner refused to return the around paid as
interest despite repeated demands. Moral damages  Generally, nominal damages by their nature
is justified. However the P300,000.00 is exorbitant are small sums fixed by the court without
and must be equitably reduced. regard to the extent of the harm done to the
injured party.
The assessment of damages is left to the
discretion of the court but this discretion is limited by  Nominal damages is a substantial claim, if
the principle that the amount awarded should not be based upon the violation of a legal right; in
palpably excessive as to indicate that it was the such case, the law presumes damage
result of prejudice or corruption on the part of the although actual or compensatory damages
trial court. The amount of P150,000.00 as moral are not proven.
damages was declared to be fair, reasonable, and
proportionate to the injury suffered.  Nominal damages are damages in name
only and not in fact, and are allowed, not as
Article 2218: an equivalent of wrong inflicted, but simply
in recognition of the existence of a technical
In the adjudication of moral damages, the injury.
sentimental value of property, real or personal may
be considered.  Nominal damages are really a symbolic
award given to the plaintiff when liability of
the defendant is established but the amount
NOMINAL DAMAGES of the harm done is not measurable or even
demonstrable. The award indicates that the
defendant committed a wrong and it serves
Concept: to clarify or vindicate the rights of the
Article 2221. Nominal damages are plaintiff.
adjudicated in order that a right of the
plaintiff, which has been violated or invaded
by the defendant, may be vindicated or
recognized, and not for the purpose of When Awarded:
indemnifying the plaintiff for any loss Article 2222. The court may award nominal
suffered by him. damages in every obligation arising from
any source enumerated in Art. 1157 (law,
 They are those recoverable where a legal contracts, quasi-contracts, acts or omissions
right is technically violated and must be punished by law, and quasi-delicts), or in
vindicated against an invasion that has every case where any property right has
produced no actual present loss of any kind, been invaded.
 15

registered in her name; the award of attorney’s fees

 Obligations for violation of which NOMINAL of not less than P50,000; and the costs of suit.
DAMAGES may be awarded: Private respondent said she purchased the subject
1) Invasion of a legal right. property for value and in good faith and had been in
2) Torts. possession thereof. Private respondent insisted that
3) Breach of contract. she had a better title to the subject property, since
4) Personal injury action. she was the first registrant of its sale.
5) Invasion of property.
6) Breach of duty by a public officer. Issue:

A. Adjudication of NOMINAL DAMAGES: Whether or not petitioners are entitled to

Article 2223. The adjudication of nominal nominal damages
damages shall preclude further contest upon the
right involved and all accessory questions, as Ruling:
between the parties to the suit, or their
Yes. Evidence on record reveals that the
respective heirs and assigns.
spouses Cuevas, the previous owners of the subject
property, did not sell the said property to private
 Effect of adjudication of NOMINAL
respondent. Private respondent’s unabashed
DAMAGES:
confession that she knew of the dubiousness of her
1) Nominal damages cannot co-exist with actual or
title from the very beginning is contrary to the
compensatory damages. They are awarded only
concept of good faith. Since private respondent’s
if there is no proof of actual damages.
fraudulent registration of the subject property in her
2) Where the court has already award
name violated petitioners’ right to remain in peaceful
compensatory damages, the award of nominal
possession of the subject property, petitioners are
damages is unnecessary and improper.
entitled to nominal damages under Article 2221 of
3) Where the interests of the stockholders were
the Civil Code, which provides: Nominal damages
already represented by the corporation itself,
are adjudicated in order that a right of the
which was the proper party plaintiff, and no
plaintiff which has been violated or invaded by
cause of action accruing to them separately from
the defendant, may be vindicated or recognized,
the corporation is alleged in the complaint, other
and not for the purpose of indemnifying the
than for moral damages to the corporation and
plaintiff for any loss suffered by him.
no appeal from such ruling has been taken, also
rules out the claim for nominal damages and
exemplary damages to the stockholders. TEMPERATE OR MODERARE DAMAGES
ILLUSTRATIVE CASES:

SPS. EMMA VER REYES and RAMON REYES, Concept:

Petitioners, vs. IRENE MONTEMAYOR and THE Article 2224. Temperate or moderate
REGISTER OF DEEDS OF CAVITE, Respondents. damages, which are more than nominal
but less than compensatory damages,
Facts: may be recovered when the court finds
that some pecuniary loss has been
On 18 February 1994, petitioners filed a
suffered but its amount can not, from the
Complaint for Reconveyance. They alleged in their
nature of the case, be prove with
Complaint that they were the owners of a parcel of
certainty.
land and that they consistently paying real estate
taxes of said property since their acquisition.
 Reason for allowing Temperate or
Petitioners asserted that private respondent was
Moderate Damages.
able to cause the issuance of TCT No. T-369793 in
her name by presenting a simulated and fictitious “In some States of the American Union,
Deed of Absolute Sale. The signatures of the sellers, temperate damages are allowed. There are cases
spouses Cuevas were forged in the said Deed. where from the nature of the case, definite proof of
Hence, petitioners prayed for the cancellation of TCT pecuniary loss cannot be offered, although the court
No. T-369793 in private respondent’s name; the is convinced that there has been such loss. For
issuance of a new certificate of title in petitioners’ instance, injury to one’s commercial credit or to the
names; the award of nominal damages of goodwill of a business firm is often hard to show with
P50,000.00 and exemplary damages of certainty in terms of money. Should damages be
P100,000.00, by reason of the fraud employed by denied for that reason? The judge should be
private respondent in having the subject property empowered to calculate moderate damages in such
 16

cases, rather than that the plaintiff should suffer, PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
without redress, from the defendant’s wrongful act.” vs. HONORATO C. BELTRAN, JR., accused-
appellant.
Article 2225. Temperate damages must be
reasonable under the circumstances. Facts:

 Amount of temperate or moderate Appellant was found guilty beyond

damages. reasonable doubt of the crime of murder. Appellant
is further directed to indemnify the heirs of the victim
1) Reasonable under the in the sum of P61,000.00 as actual damages, among
circumstances. others.

2) Evidence of some pecuniary On appeal, the CA affirmed with modification

loss. the decision of the RTC. Appellant is ordered to pay
the heirs P18,525.00 as actual damages.
3) In case of death without
evidence to prove damages. Issue:

ILLUSTRATIVE CASES: Whether or not the CA gravely erred in

modifying the actual damages
PHILIPPINE NATIONAL RAILWAYS, Petitioner,
vs. ETHEL BRUNTY and JUAN MANUEL M. Ruling:
GARCIA, Respondents.
Normita claimed that she spent a total
Facts: amount of P61,080 for the burial and funeral
expenses of Norman. However, the receipts on
Rhonda Brunty together with her Filipino record shows that only an amount of P18,420.82
host Garcia, traveled to Baguio City on board a was spent. Her claim of expenses for the food,
Mercedes Benz sedan, driven by Mercelita. On the drinks, flowers, chairs and tables during the funeral
way, their car collided with PNR Train No. T-71. and burial of Norman, as well as the traditional 40
Mercelita and Brunty were killed. Garcia suffered days prayer thereafter, were not supported by any
severe head injuries. Thereafter, Ethel Brunty, sent a receipts. These expenses are merely written, listed,
letter to PNR demanding payment of actual, and signed by her in one sheet of yellow paper, and
compensatory, and moral damages, as a result of submitted as evidence in the trial court. Thus, as
her daughter’s death. When PNR did not respond, general rule, she is entitled only to an amount of
Ethel Brunty and Garcia, filed a complaint for P18,420.82 since actual damages may be awarded
damages against the PNR before the RTC of Manila. only if there are receipts to support the same.
Issue: However, in the case of People v. Dela
Cruz, this Court declared that when actual damages
Whether or not the respondents are entitled proven by receipts during the trial amount to less
to temperate or moderate damages. than P25,000.00, such as in the present case, the
award of temperate damages for P25,000.00, is
Ruling:
justified in lieu of actual damages for a lesser
Yes. This Court has previously determined amount. This Court ratiocinated therein that it was
the liability of the PNR for damages for its failure to anomalous and unfair that the heirs of the victim who
put warning devices. Such failure is evidence of tried but succeeded in proving actual damages to
negligence and disregard of the safety of the public. less P25,000.00 only would be in a worse situation
In view of the foregoing, this court affirms the than those who might have presented no receipts at
decision of the CA as well as its conclusion to all but would be entitled to P25,000.00 temperate
petitioner’s negligence. As the heirs of Rhonda damages. Thus, instead of P18,420.82, an amount
Brunty undeniably incurred expenses for the wake of P25,000.00 as temperate damages should be
and burial of the latter, this Court deem it proper to awarded to the heirs of Norman.
award temperate damages in the amount of
LIQUIDATED DAMAGES
P25,000.00 pursuant to prevailing jurisprudence.
This is in lieu of actual damages as it would be unfair
for the victim’s heirs to get nothing, despite the death
of their kin, for the reason alone that they cannot Concept:
produce receipts. Article 2227. Liquidated damages, whether
intended as an indemnity or a penalty, shall
 17

be equitably reduced if they are iniquitous or a. Where it is an evident that the sum was
unconscionable. fixed to evade the usury laws, or any other
statute, or to cloak oppression;
Article 2228. When the breach of the
contract committed by the defendant is not b. Where the defaulting party is rendered
the one contemplated by the parties in liable for the same amount whether the
agreeing upon the liquidated damages, the breach is total or partial, or where the sum is
law shall determine the measure of set without regard to the extent of
damages, and not the stipulation. performance where, in the nature of
promises, the extent of the performance
would be important in determining the
Liquidated Damages distinguished from Penalty amount of actual damages which would
Clause: result; and
 As distinguished from liquidated
damages, a “penalty” is a sum c. Where the contract provides for the
inserted in a contract, not as the payment of a fine in addition to the amount
measure of compensation for its of any damage caused by a breach, such
breach, but rather as a punishment fine cannot be considered as liquidated
for default, or by way of security for damages but must be regarded as penalty
actual damages which may be which cannot be recovered.
sustained by reason of non-
performance. It involves the idea of (3)PARTLY LIQUIDATED DAMAGES AND
punishment. PARTLY PENALTY.
 A penalty is an agreement to pay a A stipulation in a contract to
stipulated sum on breach of forfeit a certain sum for a breach of its terms
contract, irrespective of the damage cannot be separated, and a part discarded
sustained. Its essence is a payment as a penalty, and the remainder treated as
of money stipulated as a deterrent liquidated damages. But the parties to a
to the offending party, while the contract may agree that certain elements for
essence of liquidated damages is damages for its breach which are difficult to
genuine covenanted pre-estimate of estimate shall be covered by a provision for
damages. liquidated damages and that other elements
shall be ascertained in the usual manner.
A. Determining Character of stipulated sum:
The question of whether a stipulated sum is
a penalty or for liquidated damages is ILLUSTRATIVE CASE:
answered by the application of one or more
aspects of the following rule:
H.L. CARLOS CONSTRUCTION, INC.,
petitioner, vs. MARINA PROPERTIES
(1)LIQUIDATED DAMAGES.
CORPORATION, JESUS K. TYPOCO SR.
A stipulated sum is for
and TAN YU, respondents.
liquidated damages only:
Facts:
a. Where the damages which the parties
Marina Properties Corporation
might reasonably anticipate are difficult to
(MPC) entered into a contract with H.L.
ascertain because of their indefiniteness or
Carlos Construction, Inc. (HLC) to construct
uncertainty; and
Phase III of a condominium complex for a
total consideration of P38,580,609.00,
b. Where the mount stipulated is either
within  a period of 365 days from receipt of
reasonable estimate of the damages which
‘Notice to Proceed’.  The original completion
would probably be caused by a breach or is
date of the project was May 16, 1989, but it
reasonably proportionate to the damages
was extended to October 31, 1989 with a
which have actually been caused by the
grace period until November 30, 1989.
breach.
On December 15, 1989, HLC
instituted a case for sum of money against
(2) PENALTY.
MPC seeking the payment of various sums
Ordinarily, a stipulated sum
with an aggregate amount of P14 million
will be regarded as a penalty:
pesos for unpaid labor escalation costs,
change orders and material price
 18

escalations. This was granted by the RTC. Nature of Exemplary Damages

On appeal, the CA held that respondents 1. Accessory Damage
were not liable for escalations in the cost of
labor and construction materials, because - A mere accessory to other forms of
the contract between the parties was for a damages except to nominal.
lump sum consideration, which did not allow
for cost escalation, and petitioner failed to 2. May or May not be granted
show any basis for the award
sought. Furthermore, the CA ruled that - Depends upon the necessity of setting an
petitioner was liable for actual and liquidated example for public good
damages.  The latter had abandoned the
project prior to its completion; hence, MPC 3. Form of deterrent
contracted out the work to another entity and
- To avoid repetition of the same act by
incurred actual damages in excess of the
anyone
remaining balance of the contract price.  In
addition, the Construction Contract had
stipulated payment of liquidated damages in
an amount equivalent to 1/1000 of the Purpose
contract price for each calendar day of To deter the commission of similar acts in
delay. Hence, this Petition. future and to allow the courts to correct behavior that
can have grave and deleterious consequences to
Issue: society and not to enrich one party or impoverish
Whether or not the petitioner is another.
liable for liquidated damages
Ruling:
Yes. Liquidated damages are those When Recoverable
that the parties agree to be paid in case of a Art. 2230. In criminal offenses, exemplary damages
breach. As worded, the amount agreed upon as a part of the civil liability may be  imposed when
answers for damages suffered by the owner the crime was  committed with one or
due to delays in the completion of the more  aggravating circumstances. Such damages
project.  Under Philippine laws, these are separate and distinct from fines and shall be
damages take the nature of penalties. A paid to the offended party.
penal clause is an accessory undertaking to
assume greater liability in case of a breach.  Generally Exemplary Damages cannot be
It is attached to an obligation in order to awarded in criminal offences if there is no
ensure performance. Thus, as held by the aggravating circumstance.
CA, petitioner is bound to pay liquidated
damages for 92 days, or from the expiration Also known as “punitive” or “vindictive”
of the grace period in the Amended Contract damages, exemplary or corrective damages are
until February 1, 1990, when it effectively intended to serve as a deterrent to serious wrong
abandoned the project. doings, and as a vindication of undue sufferings and
wanton invasion of the rights of an injured or a
punishment for those guilty of outrageous conduct.
Exemplary/Corrective Damages
Being corrective in nature, exemplary
damages, therefore, can be awarded, not only in the
Art. 2229. Exemplary or corrective damages are presence of an aggravating circumstance, but also
imposed, by way of example or  correction for the where the circumstances of the case show the highly
public good, in addition to the moral, temperate, reprehensible or outrageous conduct of the offender.
liquidated or compensatory damage In much the same way as Article 2230 prescribes an
instance when exemplary damages may be
Exemplary or corrective damages are awarded, Article 2229, the main provision, lays down
generally defined or described as damages which the very basis of the award.
are given in enhancement merely of the ordinary
damages on account of the wanton, reckless, Cases:
malicious or oppressive character of the acts
complained of. Such damages go beyond the actual People of the Philippines v.
damages suffered in the case; they are allowed as a Tubongbanua
punishment of the defendant and as a deterrent to
others. Facts:
 19

The lower court found the accused guilty for • Fines - imposed by the court w/c is payable
the crime of murder and order the award of actual, to the State
moral, exemplary, and temperate. The CA
appreciated the aggravating circumstances of • Exemplary - one payable to the injured
evident premeditation and abuse of superior strength party
but disregarded dwelling and insult to rank, sex and
age of the victim for this are amendments to the B. Art. 2231- In quasi-delicts exemplary damages
information after the presentation of the prosecution may be granted if the defendant acted with gross
of its evidence. negligence.

Issue: Gross Negligence – Tantamount to bad faith

Is the award of exemplary damages proper? Exemplary damages are granted if the
defendant is shown to have been guilty of gross
Held: negligence as to approximate malice. Even if there is
gross negligence the grant is not automatic. It is still
Yes. Article 2230 of the Civil Code subject to the discretion of the court.
specifically states that exemplary damages may be
imposed when the crime was committed with one or Can an employer be held liable for the acts of his
more aggravating circumstances, as in this case. employees?
Moreover, as an example and deterrent to future
similar transgressions, the court finds that an award As a general rule an employer is not liable
of P25,000.00 for exemplary damages is proper. for exemplary damages based upon the wrongful act
of his employee because exemplary damages
Palaganas vs. People of the Philippines punish the intent and this cannot be presumed on
the part of the employer.
As was previously established, a special
aggravating circumstance cannot be offset by an Exception: when he participated in the
ordinary mitigating circumstance. Voluntary doing of such wrongful act, has previously
surrender of petitioner in this case is merely an authorized or subsequently ratified it with full
ordinary mitigating circumstance. Thus, it cannot knowledge of the fact and if it was found out that he
offset the special aggravating circumstance of use of was negligent in the selection and supervision of its
unlicensed firearm. employees.

Exemplary damages should be awarded in In Construction Development vs.

this case since the presence of special aggravating Estrella, the petitioner’s driver was found driving
circumstance of use of unlicensed firearm was recklessly at the time its truck rammed the BLTB
already established. Based on prevailing bus. Petitioner, who has direct and primary liability
jurisprudence, the award of exemplary damages for for the negligent conduct of its subordinates, was
homicide is P25,000.00. also found negligent in the selection and supervision
of its employees. Thus the award of exemplary
People of the Philippines v. Gannaban damages was held proper.

Facts:

The trial court found the accused to be guilty

for the rape and death of the victim and ordered him
to pay, among others, exemplary damages.

Issue:

Is the award of the trial court of exemplary Case:

damages proper?
German Marine Agencies Inc. Vs NLRC, 350
Held: SCRA 641

No. The exemplary damages of P 50,000.00 Facts: 

awarded by the trial court should be deleted there
being no proof of aggravating circumstance. The ship radio officer was taken ill while the
ship was in New Zealand. Despite notice thereof by
NOTE: the ship’s captain, the ship proceeded with the
voyage and reached the Philippines in 10 days and
 20

yet the sick radio officer was not immediately taken The RTC dismissed Salvador’s complaint. 
to hospital for medical treatment. The trial court observed that it was not indicated in
the documentary evidence presented by Salvador
Held:  that the money and construction materials were
intended as payment for the subject property. The
Ship owner is liable for moral damages for CA reversed the decision of the RTC and ordered
the physical suffering and mental anguish caused to the petitioners to execute a Deed of Sale in favor of
Radio Officer. P50,000 in moral damages is proper. Salvador. The court likewise order the payment of
damages (P100,000.00 as moral damages
As the fact of negligence of the ship’s P100,000.00 as exemplary damages and costs of
captain was not only shown to have existed but it suits).
was deliberately perpetrated by the arbitrary refusal
to commit the ailing radio officer to a hospital in New Issue:
Zealand or at the nearest port resulting to his
permanent partial disability, the award of exemplary Was the award of exemplary damages
damages for P50,000 is adequate and reasonable. proper?

In this case the awarding of the exemplary Held:

damages is to serve a correction as well as an
example for ship owners to look after the welfare of Absent the valid sale agreement between
their employees first to that of their customers-cargo- Salvador and Judge Amado, the former’s
owner. possession of the subject property hinges on the
permission and goodwill of Judge Amado and the
C. Art. 2232 -In contracts and quasi-contracts, the petitioners, as his successors-in-interest. Thus, there
court may award exemplary damages if the is no more basis for Salvador and his brother,
defendant acted in a wanton fraudulent, reckless, Lamberto Salvador, to retain possession over it, and
oppressive, or malevolent manner. such possession must now be fully surrendered to
the petitioners.
Fraudulent – if act is tainted with deception
or injurious misrepresentation of which the plaintiff is The award of exemplary damages is
unaware. improper.  Exemplary damages are awarded only
when a wrongful act is accompanied by bad faith or
Oppressive – when it is arbitrary when the guilty party acted in a wanton, fraudulent,
compulsive reckless or malevolent manner. Moreover, where a
party is not entitled to actual or moral damages, an
Malevolent – done in bad faith award of exemplary damages is likewise baseless.
As this Court has found, petitioners’ refusal to turn
Case:
over the subject property to Salvador is justified and
Adelaida Amado and Heirs of Amado v. Salvador cannot be the basis for the award of exemplary
damages.
Facts:

Salvador alleges that in or around Requisites

September 1979, Judge Amado agreed to sell to him Art. 2233. Exemplary damages cannot be recovered
the subject property for P60.00 per square meter, or as a matter of  right; the court will decide whether or
in the total sum of P66,360.00, payable in cash or not  they should be adjudicated.
construction materials which would be delivered to
Judge Amado, or to whomsoever the latter wished Art. 2234. While the amount of the  exemplary
during his lifetime. Salvador though failed to state damages need not be proved, the plaintiff must
the terms of payment, such as the period within show that he is entitled to  moral, temperate or
which the payment was supposed to be completed, compensatory damages before the court may
or how much of the payment should be made in consider the question of whether or  not exemplary
cash. damages should be awarded.

The petitioners maintain that the cash In case liquidated damages have been
advances and the various construction materials agreed upon, although no proof of loss is necessary
were received by Judge Amado from Salvador in in order that such liquidated damages may be
connection with a loan agreement, and not as recovered, nevertheless, before the court may
payment for the sale of the subject property. consider the question of granting exemplary in
addition to the liquidated damages, the plaintiff must
show that he would been titled to moral, temperate
 21

or compensatory damages were it not for the On October 22, 1996, petitioners filed a
stipulation for liquidated damages. Complaint against respondent for unfair labor
practice and illegal dismissal with claims for
First  regularization, recovery of benefits under the
Collective Bargaining Agreement (CBA), moral and
They may be imposed by way of example or exemplary damages, and attorney's fees.
correction only in addition, to compensatory
damages, and cannot be recovered as a matter Issues: Is the award of damages proper?
of right, their determination depending upon the
amount of compensatory damages that may be Held:
awarded to the claimant.
On the claim for moral and exemplary
Exemplary damages cannot be claimed as a damages, there is no basis to award the same.
matter of right. It is a mere additional to other forms Moral and exemplary damages are recoverable only
of damages which the court may or may not grant. where the dismissal of an employee was attended
by bad faith or fraud, or constituted an act
The amount of exemplary damages need oppressive to labor, or were done in a manner
not be proven because its determination depends contrary to morals, good customs or public
upon the amount of compensatory damages that policy. The person claiming moral damages must
may be awarded to the claimant. If the amount of prove the existence of bad faith by clear and
exemplary damages need not be proved, it need not convincing evidence, for the law always presumes
also be alleged, and the reason is obvious because good faith. Petitioners failed to prove bad faith, fraud
it is merely incidental or dependent upon what the or ill motive on the part of respondent. Moral
court may award as compensatory damages. It damages cannot be awarded. Without the award of
follows as a necessary consequence that the moral damages, there can be no award of exemplary
amount of exemplary damages need not be pleaded damages, or attorney's fees.
in the complaint because the same cannot be
predetermined. Art. 2235. A stipulation whereby exemplary
damages are renounced in advance shall be null
*Second  and void.

The claimant must first establish his right to Impliedly, exemplary damages already
moral, temperate, liquidated or compensatory determined and granted by the court in a final
damages. judgment may be renounced by the winning party in
the case.
While the court has discretion to grant it is
however, required of the aggrieved party to establish
evidence that he is entitled to compensatory, moral
or temperate damages.

Third 

The wrongful act must be accompanied by

bad faith, and the award should be allowed only if
the guilty party acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner.

Case:

PACQUING, CENTENO, GUERRA, DUPILAD, JR.,

CENTENO, REBLORA and
RAYMUNDO ANDRADE v. COCA-COLA
PHILIPPINES, INC.

Facts: