Damages

ANNOTATION DAMAGES
By ALICIA B. GONZALEZ-DECANO*
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This is an exhaustive analysis of the law on damages, its concept, its nature, its kinds and how each is recoverable.
Introduction, p. 366
I. Concept and Meaning of Damages, p. 367 II. General Principles as to Recovery of Damages, p. 371 III. Kinds of Damages Generally Recoverable, p. 375
A. Ordinary Damages, p. 375 B. Special Damages, p. 376 C. Compensatory or Actual Damages, p. 377 D. Moral Damages, p. 389 E. Nominal Damages, p. 403 F. Temperate or Moderate Damages, p. 408 G. Liquidated Damages, p. 410 H. Exemplary or Corrective Damages, p. 411
Conclusion, p. 414
_______________________ Introduction
This paper is important not only to the practitioners but also to the Judges, students of law, and bar reviewees. It aids them in ascertaining the damages awardable to every case filed and tried in accordance with law. It affords the lawyers on one hand the opportunity to know the kind of damages they are asking the court to award and the judges on the other hand the kind of
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* Judge, Br. 48, RTC, Urdaneta, Pangasinan.
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damages to award based on the facts, the law and the jurisprudence applicable. I. Concept and Meaning of Damages
General Principles. It is a sound and just principle that where one wrongfully or negligently does an act which in its consequence is injurious to another; he is liable for the damage caused by such wrongful act. The law applies not only to artificial persons but also to natural persons, one cannot always look to others, however, to make compensation for injuries receive, since many accidents occur, the consequences of which the sufferers must bear alone.1
To warrant the recovery the damages in any case, there must be a right of action for a wrong inflicted by the defendant and damages resulting to the plaintiffs therefrom, Wrong without damage, or damage without wrong, does not constitute a cause of action. Nor can the legislature by mere fiat authorize the recovery of damages which the plaintiff, neither in his personal nor in his representative capacity has never sustained.2
Concept of Damages. In England, in the common law courts, it was held that neither in common parlance not in legal phraseology is the word damage used as applicable to injuries done to property.3
The admiralty courts on the other hand, contended that the word did not include claims for personal injury and even for loss of life.4
But the House of Lords construing Section 7 of the Admiralty Court Act, 24 Vict. C.10, providing that the High Court of Admiralty having jurisdiction over any claim for damages done by any ship established the former doctrine, and held that a claim for loss of life under Lord Campbells Act is not a claim for damage within the provisions of the Admiralty Court Act.5 But
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1 15 American Jurisprudence, p. 388.
2 Ibid, p. 389.
3 40 L.J. Q.B 218; 41 L.J.C.P. 128, cited by Bouviers Law Dictionary, 1914, p. 749.
4 37 LJ Am. 14; 38 ID, 12, 50, 48 L.J.P.D. and A, 71; 2 P.D. 8, Ibid.
5 54 L.J.P.D. and A, 9; 10 App. Cas. 59, Ibid.
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SUPREME COURT REPORTS ANNOTATED
Damages
the word may be controlled by the context and can mean personal injury, and there seems in this country to be no distinction between the meaning of the words damages and injury.
Damage to the persons as used in the Massachusetts statute relating to survival of actions, does not extend to torts not directly affecting the person, but includes every action the substantial cause of which is bodily injury, as the negligent sale of deadly poison for a harmless drug as the result of which a man dies; Norton vs. Sewall, 106 Mass. 143, 8 Am Rep. 298.
He who has caused the damage is bound to repair it; and if he has done it maliciously, he may be compelled to pay beyond the actual loss; Fay vs. Parker, 53 N.H. 342 16 Am. Rep. 270. When damage occurs by accident without blame to anyone, the loss is borne by the owner of the thing injured; as, if a horse run away with his rider without any fault of the latter, and injure the property of another
person, the injury is the loss of the owner of the thing. When inevitable accident occurs, as by tempest, earthquake, or other natural cause, the loss must be borne by the owner.6
In legal contemplation, the term damages is the sum of money which the law awards or imposes as pecuniary compensation, recompense, or satisfaction from any injury done or a wrong sustained as a consequence either by a breach of contractual obligation or a tortious act. Expressed in other terms, damages are the pecuniary consequences which the law imposes for the breach of some duty or the violation of some right.7
In a popular sense, the word damages, frequently means depreciation in value, whether such depreciation is caused by a wrongful or a legal act; but in statutes and other legal instrument giving compensation for damages, the word refers to some actionable loss, injury or harm which results from the unlawful act, omission or negligence of another. But when used
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6 See Comyas, Dig; Sedgwick; Mayne; Sutherland; Joyce; Hale; Field; Damages; 1 Rutherf; Inst 399; Compensation; Damages; Measure of Damage, cited by Bouviers Law Dictionary, p. 749.
7 Julius Caesar S. Sangco, Philippine Law on Torts and Damages JMC Press, Inc. Quezon City, 1978, p. 482.
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to signify the money which a plaintiff ought to recover the word damage or damages is never, in any sense synonymous with, or collateral to, the terms example, fine, penalty, punishment, revenge, discipline or chastisement.8
Meaning of Damages. Damages generally, means the compensation which the law will award for an injury done; a compensation, recompense, or satisfaction in money for a loss or injury sustained. It is a comprehensive term, including compensation for the default of the party charged therewith, and all the factors going to make up the total amount which plaintiff may recover under correct principles of law.9
Damages is the sum of money which the law awards or imposes as pecuniary compensation, recompense, or satisfaction for an injury done or a wrong sustained as a consequence either of a breach of a contractual obligation or a tortious act. Expressed in other terms, damages are the pecuniary consequence which the law imposes for the breach of some duty or the violation of some right.10
As used in the Civil Code, damages may mean either; (a) The injury or loss caused to another by the violation of his legal rights; or (b) the sum of money which the law awards or imposes as pecuniary compensation, recompense, or satisfaction for an injury done or a wrong sustained as a consequence either of a breach of contractual obligation or a tortious act.11
To understand more fully the meaning of damages, a distinction should be made from other terms which appear to be synonymous with it or which are used interchangeably with it.
Distinction between Damage and Damages. Damage is defined to be the loss, injury, or deterioration caused by negligence, design, or accident of one person to another in respect of the latters personal property, whereas damages signifies
compensation in money for the loss or damage. In other words, damage is the occasion of the damages. A synonym of damage,
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8 Ibid, p. 483.
9 25 Corpus Juris Secundum, p. 452.
10 15 Am Jur., loc. cit.
11 Hilarion U. Jarencio, Torts and Damages in the Philippine Law Premium Printing Press, Manila, 1972 p. 259.
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Damages
when applied to a person sustaining an injury, is loss. Loss includes more, however, since it is the generic term signifying both the act of losing and the thing lost. Damage (Latin, dannum, from demo, to take away) is a species of loss, signifying the thing taken away, the lost thing which a party is entitled to have restored to him, so that he may be made whole again. A pecuniary loss has been defined as a
loss of money or of something by which money or something of money value may be acquired.12
Damages from Costs. In its early signification, damages was held to include costs, but the word costs is of limited significance, much narrower than damages. Costs are awarded as damages only where the circumstances of the particular case withdraw it from the general rule.13
Damages from verdict. Damages is distinguished from verdict in that a verdict expresses the final decision of a jury, whereas damages expresses in dollars and cents the injury sustained by a plaintiff and includes both the original damage and whatever interest ought to be added to make a just verdict.14
Damages from Debt. Debt does not mean damages and an action to recover damages is not an action to recover a debt.15
Damages from Value. The word damages may mean much more than value, even when the value of property constitute the principal element of damages.16
Damages from Injury. Although the words damages and injury are sometimes used synonymous, there is a material distinction between them. Injury is the wrongful act or tort which causes loss or harm to another. Damages are allowed as an indemnity to the person who suffers loss or harm from the injury. The word injury denotes the illegal act; the term damages means the sum recoverable which amends the wrong. The one is the legal wrong to be redressed, the other, the scale or measure of recovery. There may be damages without an injury, and an injury without damages.
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12 15 Am Jur., op. cit.
13 25 CJS. loc. cit.
14 Ibid, p. 453.
15 Ibid.
16 Ibid.
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Damnum means only harm, hurt, loss, damage; while injuria comes from in, against, and just, right, and means something done against the right of the party, producing damage, and has no reference to the fact or amount of damage. Unless a right is violated, even though there is damage, it is damnum absque injuria.
Where the right of a party is once violated, an injury immediately ensues, and a cause of action arises and a recovery will then embrace such legal damages as may be recovered for the wrong.17
Tolentino gives another distinction between damage and injury. In the work he cited, injury is defined as the wrongful act which causes loss or harm to another; while damages denotes the sum of money recoverable as amends for the wrongful act.
The one is the legal wrong to be redressed; the other is the scale or measure of recovery.18 II. General Principles As to Recovery of Damages
As a general principle, whenever there is a breach of an agreement or the invasion of ones right, the law infers some damage, and he, therefore has his remedy irrespective of the amount or actuality of the damage, unless his right to damage has been waived, in which case, it is clear it should not be awarded. In some cases, of course, the damage resulting may be inappreciable or merely nominal, and the maxim de minimis non curat lex may exclude the recovery of even nominal damages where no unlawful intent or disturbance of a right or possession is shown and where all possible damage expressly disproved.19
The recovery in a civil action of the damages which one sustains as the result of wrongful act of another is not affected by the fact that the particular act is punishable under the criminal law. Civil remedies are, according to the great weight
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17 15 Am Jur., loc. cit.
18 Arturo Tolentino, Civil Code of the Philippines, Acme Publishing Co., Manila, 1959, p. 537.
19 Am Jur., loc. cit.
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of authority, neither merged in the higher offense against public practice nor suspended until the termination of the criminal prosecution of the offender, and a violator of a criminal statute intended for the protection of a class for damages proximately resulting from such violation, even though the statute does not expressly so provide. Also, a person injured for its violation, may recover damages from the offender. Statutes imposing penalties sometimes expressly provide that they shall not affect the right to recover damages, independently thereof, or that a person injured by the violation of a statute may recover from the offender such damages as he may have sustained by reason of the violation, although a penalty or forfeiture, for such violation is thereby imposed.20
One is not necessarily liable in damages for an act by reason of the fact that he might have been indicted for committing it. Where a statute gives a new action with a redress by way of damages in excess of those recoverable at common law, such damages are recoverable only in the statutory action; they can not be recovered in a common law action even though the statutory remedy is regarded as commulative.21
The fundamental principle or theory on which damages are based is just compensation or indemnity for the loss or injury sustained, whether the action is in contract or in tort.
The primary object of an award of damages in a civil action, and the fundamental principle or theory on which it is based, is just compensation or indemnity for the loss or injury sustained by the complainant, and no more.
The purpose of the law in awarding actual damages, is to repair the wrong that has been done or to compensate for the injury inflicted, but not to impose a penalty.22
In Practice. To constitute a right to recover damages; the party claiming damages must have sustained a loss; the party against whom they are claimed must be changeable with a wrong; the loss must be the natural and proximate consequence of the wrong.
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20 Ibid, p. 390.
21 Ibid.
22 25 CJS, p. 461.
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There is no right to damages, properly so called, where there is no loss. A sum in which a wrong-doer is mulcted simply as punishment for his wrong, and irrespective of any loss caused thereby, is a fine, or a penalty, rather than damages. Damages are based on the idea of a loss to be compensated, a damage to be made good; This loss, however, need not always be distinct and definite, capable, of exact description or of measurement in dollars and cents. A sufficient loss to sustain an action may appear from the mere nature of the case itself. The law in many cases presumes a loss where a wilful wrong is proved; and thus also damages are
awarded for injured feelings, bodily pain, grief of mind, injury to reputation, and for other sufferings which it would be impossible to make subjects of exact proof and computation in respect to the amount of the loss sustained.23
There is no right to damages where there is no wrong. It is not necessary that there should be a tort, strictly so called a wilful wrong, an act involving moral guilt. The wrong may be either a wilful, malicious injury, as in the case of assault and battery, libel, and the like, or one committed through mere motives of interest, as in many cases of conversion of goods, trespasses on land, etc.; or it may consist in a mere neglect to discharge a duty with suitable skill or fidelity, as where a surgeon is held liable for malpractice, a sheriff for the escape of his prisoner, or a carrier for the neglect to deliver goods; or a simple breach of contract, as in case of refusal to deliver goods sold, or to perform services under an agreement; or it may be a wrong of another person for whose act or default a legal liability exists, as where a master is held liable for an injury done by his servant or apprentice, or a railroad company for an accident resulting from the negligence of its engineer. But there must be something which the law recognizes as a wrong, some breach of a legal duty, some violation of a legal right, some default or neglect, some failure in responsibility, sustained by a party claiming damages, for the sufferer by accident or by innocent or rightful acts of another can not claim indemnity for his misfortune. It is called damnum absque injuriaa loss without a wrong, for which the law gives no remedy.24
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23 Bouviers Dictionary, op. cit., p. 751.
24 Ibid.
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One who exercises his rights does no injury. Que jure suo utitur nullium damnum facit. If damage results from a persons exercise of his legal rights, it is damnum absque injuria.25
In the case of Farolan v. Salmac Marketing Corp. G.R. 83589, March 13, 1991, it was held that whatever damage may have been caused an importer as a result of an erroneous interpretation by the Commissioner of Customs if any at all, is in the nature of a damnum absque injuria. Mistakes committed by public officers are not actionable absent any clear showing that they were motivated by malice or gross negligence amounting to bad faith. After all, even under the law of public officers, the acts of petitioners are protected by the presumption of good faith.26
The Supreme Court further held:
There is no convincing proof showing the alleged bad faith of Farolan and Parayno. On the contrary, the evidence bolstered their claim of good faith. First, there was the report of the NIST that, contrary to what Salmosa claimed, the importation was not OPP film scraps but oriented polypropylene, a plastic product of stronger material, whose importation to the Philippines was restricted, if not prohibited. It was on the strength of this finding that they withheld release of the importation for being contrary to law. Second, on many occasions, the Bureau of Customs sought the advise of the BOI on whether the subject importation might be released. Third, up to the time of the trial, there was no clear-cut policy on the part of the BOI of oriented polypropylene.
But even if petitioners committed a mistake in withholding the release of the importation because it was composed of films, scraps, nonetheless, it is the duty of the Court to see to it that public officers are not hampered in the performance of their duties or in making decisions for fear of personal liability for damages due to honest mistake. Whatever damages they may have caused as a result of such an
erroneous interpretation, if any at all, is in the nature of a damnum absque injuria.27
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25 Martinez, Summary of 1990 Supreme Court Rulings, Part II, p. 913; see Saba vs. Court of Appeals, G.R. No. 77950, August 24, 1990.
26 Martinez, Summary of 1991 Supreme Court Rulings, Part I, p. 641.
27 Ibid, p. 642.
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Factual Basis. It is essential before an award of damages be made, that the claimant must satisfactorily prove during the trial the existence of the factual basis of the damages and its causal connection to defendants acts.28
Purpose. The law on damages is intended to repair the damage done by putting the plaintiff in the same position, as far as pecuniary compensation can do, that he
would be, had the damage not been inflicted and the wrong not committed. (Robleza vs. Court of Appeals, G.R. No. 80364, June 28, 1989).29
Generally, there are two kinds of damages. One is ordinary damages and the other, special damages. Ordinary damages are those which necessarily and by implication of law result from the act or default complained of. They are such as the jury may give when the judge can not point out any measure by which they are to be ascertained, except the opinion and judgment of a reasonable man. They are such as by competent evidence are directly traceable to a failure to discharge a contract, obligation, or duty imposed by law.30
A. Ordinary Damages are those generally inherent in a breach of a typical contract. The following are examples of ordinary damages.31
(1) Value of the use of the land if same is withheld, computed for the duration of the withholding. (Daywalt v. Corporation de P.P. Agustinos Recoletos, 39 Phil. 587) (2) Difference in the value of goods at the time of stipulated delivery and the time of actual delivery (common carriers) (Uy Chaco vs. Admiral Line, 46 Phil. 418) (3) Cost of completing or repairing a defective building (in case of building contracts) (Marker v. Garcia, 5 Phil. 551)
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28 Air France v. Court of Appeals, G.R. 76093, March 21, 1989, cited by Martinez, Summary of 1989 Supreme Court Decisions, Central Lawbook Publishing Co., Inc. Quezon City, 1989, p. 349.
29 Ibid.
30 Bank of Commerce vs. Goos, 39 Neb. 437; 58 N.W. 84 L.R.A. 190.
31 Edgardo Paras, Civil Code of the Philippines, Annotated, Rex Book Store, Manila 1982, pp. 538-539.
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(4) The income which an injured bus passenger could have earned (had he finished his medical course and passed the corresponding board examinations) must be deemed within the category of natural and probable consequences which parties should have foreseen by the parties at the moment said passenger boarded the bus. (Carriaga et. al. v. Laguna, Tayabas Bus Co. et al., L-11037 December 29, 1960) (5) Salary for the entire period agreed upon in an employment contract in case the employer breaks it without just cause minus income actually earned or could have been earned during the unexpired period (Lemoine vs. Alkan, 33 Phil. 162; Soleto vs. Behn, Meyer and Co., 57 Phil. 175; Gerbari vs. General Oil Co., 43 Phil. 414. Logan vs. Phil. Acetylene Co., 33 Phil 177)
B. Special Damages are those which arise directly but not necessarily or by implication of law, from the act or default complained of. These are either super added to ordinary damages, arising from an act injuries in itself, as when some particular loss arises from the uttering of slanderous words, actionable in themselves, or such as arise from an act indifferent and not actionable in itself, but injurious only in its consequences as when the words become actionable only by reason of special damages ensuing.32
According to Justice Paras,33 special damages are those which exist because of special circumstances and for which a debtor in good faith can be held liable only if he had been previously informed of such circumstances.
For instance, if a carrier fails to deliver a movie film intended for showing at a fiesta, it can not be held liable for the extraordinary profits realizable at a fiesta showing, if it had not been told that the film had to be delivered in time for said fiesta. (Mendoza vs. Pal, 90 Phil. 836)
If a debtor is in bad faith special damage can be assessed against him even if he had no knowledge of the special circumstances. It is enough that the damage be reasonably attributed to the non-performance of obligation (8 Manresa 103).34
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32 Bouviers Dictionary, p. 750.
33 Edgardo Paras, op. cit., p. 939.
34 Ibid, p. 940.
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Article 2197 of the Civil Code of the Philippines enumerates the kind of damages recoverable which are: actual or compensatory; moral; nominal; temperate or moderate; liquidated; or exemplary or corrective.
Except for actual or compensatory damages which must be proved, (delos Santos v. dela Cruz, 37 SCRA 555), no proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or exemplary damages may be adjudicated. The assessment of such damage, except liquidated ones, is left to the discretion of the Court, according to the circumstances of each case (People vs. Baylon, G.R. No. 56877, April 17, 1984).35
C. Compensatory or Actual Damages
Definition and nature. Actual Damages is a term synonymous with compensatory damages and with general damages, although actual damages may be either general or special. They are substantial as distinguished from nominal. Actual damages are such compensation or damages for an injury and will put the injured party in the position in which he was before he was injured. They are those damages which the injured party is entitled to recover, for the wrong done and injuries received when none was intended. They indicate such losses as are actually sustained and susceptible of measurement, and as used in this sense the phrase, determinate pecuniary loss has been suggested as a more appropriate designation. They include all kinds of damages except exemplary or primitive damages. Compensatory damages are awarded as an equivalent for the injury done. It is synonymous to actual damages.36
One is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved, except as provided by law or by stipulation. Such compensation or indemnification for damages shall comprehend not only the value of the loss suffered, which is referred to as actual, or dao emergente
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35 Jose C. Vitug, Compendium on Civil Law and Jurisprudence, National Book Store Inc., Manila, 1986, p. 601.
36 25 CJS, p. 454.
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or damnum emergens, but also that of the profits which the obligee failed to obtain or what is known as compensatory or lucro cessante or lucrom cesans (Arts. 2199 and 2200, Civil Code; M.D. Transit vs. Court of Appeals, 90 SCRA 542; 22 SCRA 559) which the Court may separately award (RCPI vs. Court of Appeals, L-33128, February 26, 1981)37
Actual or compensatory damages are those recoverable because of pecuniary loss (in business, trade property, profession, job or occupation). (Adgarra v. Sandejas, 27 Phil. 284). They include: (a) the value of the loss suffered (dao emergente) or (b) the profits which were not obtained or realized (lucro cesante, Art. 2199; 8 Manresa 100).38
1. Necessity of Pleading. To be recoverable, actual damages must be pleaded or prayed for. However, when a prayer mentions only exemplary damages, moral damages, and attorneys fees and such further relief as this Honorable Court may deem just and equitable, the phrase such further relief may include actual damages if and when they are proved. (Heirs of Justiva vs. Court of Appeals, L16396, Jan. 31, 1963)39
2. Necessity of Proof. Actual damages must be proved, otherwise, if the proof is flimsy and non-substantial, no damages will be awarded. Actual and compensatory damages require evidential proof. They can not be presumed.40 (Capco vs. Macasaet, G.R. No. 90888, Sept. 13, 1990) In this case, the Supreme Court held:
The Court of Appeals committed no reversible error in holding that Capco failed to support his claim that he suffered damages as a result of Macasaets failure to return Stock Certificate Nos. 002 and 026 upon demand. The alleged unrealized profits representing actual and compensatory damages must be supported by substantial and convincing proof. The records are bereft to such kind of proof. Mere allegation that there was a ready and willing buyer of all Capcos
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37 Jose Vitug, op. cit., pp. 601-602.
38 Paras, op. cit., p. 932.
39 Ibid, p. 933.
40 Martinez, Summary of 1990 Supreme Court Rulings, Part II, page 906.
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shares covered by Stocks Certificates Nos. 002 and 026 for P.014 per share at the time or demand for the return of the said certificates was made can not suffice to allow petitioners claim for unrealized profits to prosper. Such claim is speculative.41
The Court in awarding damages, must point out specific acts which afford a basis for measuring whatever compensatory or actual damage had been suffered (Malonzo Galang et al., L-13851, July 27, 1960). In no instance may the judge give more than the damages proved in court. (Marker vs. Garcia, 5 Phil. 557)
If there be an award for compensatory damages, there can be no grant of nominal damages. The reason is that the purpose of nominal damages is to vindicate or recognize a right that has been violated, in order to preclude further cost thereon, and not for the purpose of indemnifying the plaintiff, for any loss suffered by him. (Medina et al. vs. Cresencia et al., L-8194, July 11 1956)42
The damage given must be based on the evidence presented and not on the personal knowledge of the Court (Villaroman vs. Lastrella, LCA) L-136-R, Feb. 11, 1947); neither must the damages be remote or speculative. (Tomassi v. Villa Abrille, L-7047, August 21, 1958).43
3. Exceptions to the necessity of Proof. In the following cases, actual damages need not be proved:
a) In case liquidated damages had been previously agreed upon (Art. 2216); b) In case of damages other than actual (Article 2216); c) In case loss is presumed as when a child (minor) or a spouse dies (Manzanares v. Moreta, 38 Phil. 821); and d) In case of forfeiture of bonds in favor of the government for the purpose of promoting public interest or policy (like a bond for the temporary stay of an alien). (Far Eastern Surety and Ins. Co. vs. Court of Appeals L-12019, Oct. 16, 1958)44
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41 Ibid, p. 907.
42 Ibid., p. 935.
43 Ibid.
44 Martinez, Summary of 1990 Supreme Court Rulings, page 906.
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4. Kinds of Actual or Compensatory Damages. There are two kinds of actual or compensatory damages, namely:
(a) Losses suffered. (amno vitando or dao emergente; Examples are: (1) destruction of things; (2) fines or penalties that had to be paid; (3) medical and hospitalization expense and (4) rents and agricultural products not received in an agricultural lease.
(b) Unrealized profits (lucro captando or lucro cesante or lucrom cessan) Angeles v. Lerma, CCA, 45 O.G. No. 6, p. 2589. Lucrom cessn is also a basis for indemnification. Hence, if there exists a basis for a reasonable expectation that profits would have continued had there been no breach of contract, indemnification for damages based on such expected profits is proper. For example, in the case of Cheng Sui Yong vs. Intermediate Appellate Court, G.R. No. 64398, Nov. 6, 1990, the sole basis for the award of damages against the petitioner is the alleged unrealized profits of respondents for the non-screening of the seven (7) films. 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 burned, as in the case of one of the films. Besides, no document or proof was presented to prove that respondents really lost such amount daily for the non-exhibition of the films to the public by reason of the action instituted by the petitioner. The Supreme Court held:
The trial court committed grave abuse of discretion in arriving at the amount of P10,000.00 a day as unrealized profits suffered by respondents due to the filing of the present action by the petitioner. The alleged P10,000.00 a day as alleged unrealized profit was arrived at by mere speculation and conjective by the trial court. Hence, the award of damages for the anticipated loss of profits is unwarranted.45
Examples of Lucro Cesante are: (1) profits that could have been earned had there been no interruption in the plaintiffs business as evidenced by the reduced receipts of the enterprise (Algarra v. Sandejas, 27 Phil. 284, Tan Vi vs. Alviar, 26 Phil. 566);
2) Profits because of a proposed future re-sale property being purchased if the existence of a contract there was known to the delinquent seller. (Enriquez dela Caveda v. Diaz, 37 Phil. 982);
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45 Ibid., p. 908.
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3) Interest on rentals that where not paid (T.M. Tuazon, Inc. vs. Santiago, et al., L5079, July 31, 1956)46
If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest which is six per cent per annum (Art. 2209). In the case of Reformina vs. Hon. Tomol (G.R. No. 59096, Oct. 9, 1985) the Supreme Court interpreted the legal rate of interest as that one provided by Art. 2209 and not that one provided by Central Bank Circular 416. The Supreme Court ruled:
The judgments spoken of and referred to are judgments in litigations involving loans or forbearance of any money, goods or credits. Any other kind of monetary judgments which has nothing to do with, nor involving loans or forbearance of any money, goods, or credits does not fall within the coverage of the said law for it is not within the ambit of the authority granted to the Central Bank. x x x
Coming to the case at bar, the decision herein sought to be executed is one rendered in an Action for Damages for injury to persons and loss of property and does not involve any loan, much less forbearance of any money, goods or credits. As correctly agreed by the private respondents, the law applicable to the said case is Article 2209 of the New Civil Code x x x.47
Incidentally Central Bank Circular No. 416 which took effect on July 29, 1974 was issued and promulgated by the Monetary Board pursuant to the Authority granted to the Central Bank by Presidential Decree No. 116, which amended Act No. 2655 otherwise known as the Usury Law. Acting pursuant to this grant of authority, the monetary Board increased the rate of legal interest from that of six (6%) percent per annum originally allowed under Section 1 of Act No. 2655 to twelve (12%) per cent annum. (Phil. Tobacco Adm. vs. Tensuan et al., G.R. 58817, August 20, 1990).48
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47 Vitug, op. cit. p. 605.
48 Martinez, Summary of 1990 Supreme Court Rulings, Part II, op. cit., p. 922.
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Reiterating the doctrine laid down in the Reformina Case mentioned earlier, the Supreme Court in the Phil. Tobacco Corporation above-cited held:
1. Central Bank Circular No. 416 dated July 29, 1974 which fixes the legal rate of interest at 12% per annum is not applicable here, since the circular applies only to loans or forbearance of money, goods or credits and Court judgments thereon. The said circular does not apply to court judgment for damages arising from injury to persons and loss of property which does not involve a loan. Interest by way of damages is governed by Article 2209 of the Civil Code.49
2. The judgments spoken of and referred to are judgments in litigations involving loans or forbearance of any money, goods or credits. Any other kind of monetary judgment which has nothing to do with, nor involving loans or forbearance of any money, goods, or credits does not fall within the coverage of the said law for it is not within the ambit of the authority granted to the Central Bank. The Monetary Board may not tread on forbidden grounds. It can not rewrite other laws. That function is solely within the legislative authority. Statutes should be construed as a whole and not as a series of disconnected articles and phrases.50
Interest, may in the discretion of the court, be allowed upon damages awarded for breach of contract (Art 2210 Civil Code). In crimes and quasi-delicts, interest as a part of the damages may, in a proper case, be adjudicated in the discretion of the Court (Art. 2211, Civil Code).
Interest due, shall earn legal interest from the time it is judicially demanded, although the obligation may be silent on this point. (Art. 2212, Civil Code).
Interest can not be recovered upon unliquidated claims or damages, except when the demand can be established with reasonable certainty. (Art. 2213 Civil Code)51
5. When actual or compensatory Damages be Recovered. Article 2205 of the New Civil Code provides: Damages may be
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49 Tio Khe Chio vs. C.A. G.R. No. 76101-02, Sept. 30, 1991, 202 SCRA 119.
50 Martinez, op. cit, p. 923.
51 Ibid., p. 606.
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recovered (1) for loss or impairment of earning capacity in cases of temporary or permanent personal injury; (2) for injury to the plaintiffs business standing or commercial credit.
The recoverable amount for the loss of earning capacity is the loss of net earnings which is the gross earnings less necessary expenses in the creation of such earnings and less living and other incidental expenses during the victims average life span (Marchan vs. Mendoza, 24 SCRA 888; Davila vs. PAL, 49 SCRA 497)52
6. Extent of Recoverable Damages. The following factors are to be considered in knowing the extent of damages to be awarded:
a) In contracts and quasi contracts, the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have
reasonably forseen at the time the obligation was constituted. In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. (Art. 2201, Civil Code, General Enterprises Inc. vs. Lianga Bay Logging Co., 11 SCRA 733).53 b) In crimes and quasi-delicts, the defendant shall be liable for all damages which are the natural and probable consequences of the act or omission complained of. It is not necessary that such damages have been forseen or could have been forseen by the defendant. (Art. 2202 Civil Code). In crimes, the damages to be adjudicated may be respectively increased or lessened according to the aggravating or mitigating circumstances (Art. 2204 Civil Co; Heirs of Castro vs. Bustos, 27 SCRA 327).54
Article 2206 provides:
The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos,55 even though there may have been mitigating circumstances. In addition:
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52 Vitug, op. cit., p. 602.
53 Ibid.
54 Ibid., p. 603.
55 Now increased to P50,000 by resolution of the Supreme Court en banc dated August 30, 1990.
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1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at the time of his death; 2) If the deceased was obliged to give support according to the provisions of Art. 291, the recipient who is not an heir called to the decedents inheritance by the law of testate or intestate succession, may demand support from the person causing the death, for a period not exceeding five years, the exact duration to be fixed by the court; 3) The spouse, legitimate and illigitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased.
The amount of P3,000.00 is a statutory minimum increased in various instances to P6,000.00, (M. Ruiz Highway Transit vs. Court of Appeals, 11 SCRA 98), then to P12,000 (People vs. Pantoja, 25 SCRA 468). In the case of People vs. dela Fuente (126 SCRA 518, 12 Dec. 1983), the Supreme Court has increased the death penalty for intentional felonies to P30,000.00.56
Lately, the Supreme Court by en banc resolution dated Aug. 30, 1990 the amount of damages in cases of death was raised to P50,000.00.57
c) Attorneys fees. Earlier, mention was made about the damages to be recovered, how about Attorneys fees and litigation expenses?
Article 2208, provides: In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs, can not be recovered except:
1) When exemplary damages are awarded; 2) When the defendants act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protest his interest;
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56 Vitug, loc. cit.
57 People vs. Alberto Rodriguez, G.R. No. 90255, Jan. 23, 1991 and Alexander Lozano vs. Hon. Court of Appeals and the People of the Philippines, G.R. No. 90870, Feb. 5, 1991.
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3) In criminal cases of malicious prosecution against the plaintiff;
4) In case of a clearly unfounded civil action or proceeding against the plaintiff; 5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs plainly valid, just and demandable claim; 6) In actions for legal support; 7) In actions for the recovery of wages of household helpers, laborers and skilled workers; 8) In actions for indemnity under workmens compensation and employers liability laws; 9) In a separate civil action to recover civil liability arising from a crime; 10) When at least double judicial costs are awarded; 11) In any other case where the court deems it just and equitable that attorneys fees and expenses of litigation should be recovered.
In all cases, the attorneys fees and expenses of litigation must be reasonable (Tongoy vs. Court of Appeals, L-45645, June 28, 1983)58
The reason for the award of attorneys fees must be stated in the text of the courts decision; otherwise, if it is stated only in the dispositive portion of the decision, the same must be disallowed on appeal. The award of attorneys fees being an exception rather than the general rule, it is necessary for the court to make findings of facts and law that would bring the case within the exception and justify the grant of such award. (Agustin v. Courts of Appeals, G.R. 84751, June 6, 1990.59
In the absence of any specific allegation on attorneys fees in the complaint, or that the same is covered by any of the eleven (11) exceptions enumerated in Art. 2208 of the New Civil Code, the award on attorneys fees will be eliminated. Even if exercise of judicial discretion is conceded in the award of attorneys fees under Art. 2208, paragraph 11, this provision, demands a factual, legal or equitable justification. Without such justification, the award is a conclusion without a premise, its basis being
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59 Martinez, Summary of 1990 Supreme Court Rulings, Part I, p. 486.
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improperly left to speculation and conjecture. (Bicarme v. Court of Appeals, G.R. 51914, June 6, 1990)60
1) Discretion of the court. The award of attorneys fees lies within the discretion of the Court and depends upon the circumstances of each case. The award of P10,000 as attorneys fees recoverable and justified where the defendant rejected the plaintiffs demand, compelled the latter to litigate and incur expenses to project and enforce just and valid claim (Universal Shipping Lines), Inc. vs. IAC, G.R. 74125, July 31, 1990)61
7. Factors which may be considered in Determining the amount of Damages.62 The following factors should be considered in the determination of the amount of damages to be awarded:
a. Life expectancy (considering the state of health and habit of the deceased; mortality tables are inconclusive evidence) and consequent loss of earning capacity. In the case of Davila vs. Phil. Air Lines, the Supreme Court ruled:
At the age of 30, ones normal life expectancy is 33 1/2 1/3 years more. This is the formula adopted by the Supreme Court in Villa Rey Transit v. Court of Appeals, 31 SCRA 51, based on the American Expectancy Table of mortality, Earning capacity under Art. 2206 means gross earning LESS, the necessary living expenses of the deceased.63
In the case of Philippine Air Lines, Inc. v. Court of Appeals, G.R. 54470, May 8, 1990, the Supreme Court held that the life expectancy is based on that of the deceased and not that of his beneficiary. Following the procedure used by the Supreme Court, the Trial Court determined the victims gross annual income to be P23,100 based on his yearly salaries of P18,000 from the Padilla Shipping Co. and P5,000 from Allied Overseas Trading Corp. Considering that he was single, the Court deducted P9,200 or yearly living expenses resulting in a net income of P13,900. Since Nicanor Padilla was only 29 years
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60 Ibid.
61 Martinez, Summary of 1990 Supreme Court Rulings, Part II, op. cit., 924.
63 Ibid., p. 945.
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multiplying his annual net income of P13,900 by his life expectency of 30 years, the product is P417,000 which is the amount of death indemnity due his mother and only forced heir.64
The amount of loss of earning capacity is based mainly on two factors, namely: 1) the number of years on the basis of which the damages shall be computed; and 2) the rate at which the losses sustained by the heirs should be fixed.65
b. Pecuniary loss, loss of support and service. The surviving heir who depend upon the support of the victim had to be compensate reasonably for the loss of support, caused by the death of the victim.
Article 2206 of the Civil Code provides:
(2) If the deceased was obliged to give support according to the provisions of Art. 291, the recipient who is not an heir called to the decedents inheritance by the law of testate or intestate succession, may demand support from the person causing the death, for a period of not exceeding five years, the exact duration to be fixed by the court.
The usual service that derived from him when he was alive should also be reasonably compensated.
c. Moral and mental suffering.66 This factor should be considered in the award of moral damages. Article 2206 No. 3 provides: The spouse, legitimate and illegitimate descendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased.
8. Mitigation of Damages. Pursuant to Article 2203 of the New Civil Code, the party suffering loss or injury must exercise the diligence of a good father of a family to minimize the damages resulting from the act or omission in question.67 In quasidelicts, the contributory negligence of the plaintiff
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64 Martinez, Summary of 1990 Supreme Court Rulings, Part I, p. 484; See also Alcantara v. Surro, 93 Phil. 474; Davila vs. Phil. Air Lines, 49 SCRA 497.
65 Martinez, Summary of 1990 Supreme Court Rulings, Part II op. cit., p. 921.
66 Martinez, Summary of 1990 Supreme Court Rulings, Part II, p. 82.
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shall reduce the damages that he may recover. (Art. 2214 NCC). In contracts, quasicontracts, and quasi-delicts, the Court may equitably mitigate the damages under circumstances other than the case referred to in Article 2214, as in the following instances:
(1) That the plaintiff himself has contravened the terms of the contract; (2) That the plaintiff had derived some benefit as a result of the contract; (3) In cases where exemplary damages are to awarded, that the defendant acted upon the advice of counsel; (4) That the loss would have resulted in any event; (5) That since the filing of the action, the defendant has done his best to lessen the plaintiffs loss or injury. (Art. 2215)68
9. Subrogatory Rights of Insurer. If the plaintiffs property has been insured, and he has reserved indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. (Art. 2207 Civil Code: Rizal Surety and Insurance Co. vs. MRR, 23 SCRA 205) This provision does not apply to death or injury to natural persons (Catuiza vs. People, 13 SCRA 538)69
Article 2207 of the Civil Code is founded on the principles of subrogation. If the insurance property is destroyed or damaged through the fault or negligence of a party other than the assured, then the insurer, upon payment to the assured, will be subrogated to the rights of the assured to recover from the wrongdoer to the extent that the insurer has been obligated to pay.70
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68 Vitug, loc. cit.
69 Ibid, pp. 606-607; also Martinez, Summary of 1990 Supreme Court Rulings, Part. I, op. cit., p. 473.
70 Pan Malayan Insurance Corp. v. Court of Appeals, G.R. 81026, April 3, 1990, Martinez, loc. cit.
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Payment by the insurer to the assured operates as an equitable assignment to the former of all remedies which the latter may have against the third party whose negligence or wrongful act caused the loss. The right of subrogation is not dependent upon, nor does it grow out of, any privity of contract or upon written assignment of claim. It accrues simply upon payment of the insurance claim by the insurer.71
a. Exceptions. There are few recognized exceptions to this rule. For instance, if the assured by his own act releases the wrongdoer or third party liable for the loss or damage, from liability, the insurers right of subrogation is defeated. Similarly, where the insurer pays the assured the value of the lost goods without notifying the carrier who has in good faith settled the assureds claim for loss, the settlement is binding on both the assured and the insurer, and the latter cannot bring an action against the carrier on his right of subrogation. And where the insurer pays the assured for a loss which is not a risk covered by the policy, thereby affecting
voluntary payment, the former has no right of subrogation against the third party liable for the loss.72
D. Moral Damages
The second kind of damages that may be awarded enumerated in Article 2197 of the New Civil Code is moral Damages.
Meaning of Moral Damages. Art. 2217 of the New Civil Code provides that moral damages includes physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. It is however not enough that such injuries have arisen; it is essential that they have sprung from a wrongful act or commission, fraud, malice, or bad faith which was the proximate cause thereof.73
Purpose in awarding moral damages. Moral damages are not
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71 Ibid, p. 474.
72 Ibid.
73 Guita vs. Court of Appeals, et al., G.R. No. 60409, Nov. 11, 1985, cited by Vitug, op. cit., p. 607.
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intended to penalize the defendant but to compensate the plaintiff for the injuries he may have suffered.74 Moral damages, though incapable of pecuniary estimation are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer.75
In other words, the award of moral damages is aimed at restoration within the limits of the possible of the spiritual status quo ante; and therefore it must be proportionate to the suffering inflicted.76
Moral damages are not intended to enrich a complainant at the expense of a defendant. They are awarded only to enable the injured party to obtain means, diversion, or amusements that will serve to alleviate the moral suffering he has undergone, by reason of the defendants culpable action. The award of moral damages must be proportionate to the suffering inflicted.77 Moral damages maybe awarded in breaches of contract where the defendant cited fraudulently or in bad faith.78 In the case of Pan American World Airways, Inc. the Supreme Court ruled:
Men of reasonable perceptions will not disagree with the conclusion that plaintiff suffered mental anguish, anxiety and shock when he found that his luggage did not travel with him, what traveller would not suffer from such feelings if he found himself in a foreign land without any article of clothing other than what he had on? The injury thus suffered by plaintiff is one that would arise generally, in the special circumstances of this case; it follows as a matter of course, PAN AM breach of contract was the substantial cause in bringing about the harm or injury to the plaintiff. Surely, these acts of callous indifference to the plight of a person in a foreign land could not be less distressing, depressing or disheartening to the latter, or judged less harshly,
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74 Simex Interl. Inc. vs. Court of Appeals, G.R. 88013, March 19, 1990, cited by Martinez, 1990 Summary of Supreme Court Rulings Part I, op. cit.
75 Radio Communications vs. Rodriguez, G.R. 83768, Feb. 28, 1990 cited by Martinez, Ibid, p. 475.
76 Makabali vs. CA, G.R. 46877, Jan. 22, 1988 cited by Martinez in 1988 Supreme Court Rulings, p. 280.
77 Martinez, 1990, op. cit.
78 Pan American World Airways, Inc. vs. IAC, 186 SCRA 687.
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simply because not attend by any dented remarks.79
The yardstick for determining the amount awarded should not be palpably and scandalously excessive; so as indicate that it was the result of passion, prejudice or corruption on the part of the trial judge. Moreover, the actual losses sustained by the aggrieved parties and the gravity of the injuries must be considered in arriving at reasonable levels.80
There is no hard and fast rule in the determination of what would be a fair amount of moral damages, since each case must be governed by its own peculiar circumstances. It shall not exceed that asked for in the complaint.81
Burden of Proof. While no pecuniary loss is necessary in order that moral damages may be awarded, the amount of indemnity being left to the discretion of the Court, it is nevertheless essential that the claimant satisfactorily proves the existence of the factual basis of the damages and its casual relation to defendants acts. This is so because moral damages although incapable of pecuniary estimation, are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer. Moral damages, in other words, are not corrective or exemplary.82
Bases of the Award of Moral Damages. The following factors are determinative of whether or not moral damages are recoverable:
a. Wrongful Act, fraud and bad faith. In order that a person may be made liable to the payment of moral damages, the law requires that his act be wrongful. The adverse result of an action does not per se make the act wrongful and subject the actor to the payment of moral damages. The law could not have meant to impose a penalty on the right to litigate. Such right is so
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79 Ibid.
80 Pleno v. CA, G.R. 56505, May 9, 1988, cited Martinez, Summary of 1988 Supreme Court Rulings (Jan. to June, 1988) 1989, Central Lawbook Pub. Co., Inc., Q.C., p. 279.
81 Makabali v. C.A. G.R. 46877 Jan. 22, 1988 cited by Martinez op. cit., p. 380.
82 PNB vs. C.A. G.R. No. 45776, March 30, 1988, cited by Martinez, 1988, op. cit., p. 281.
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predious that moral damages may not be charged on those who may exercise it erroneously. In the absence of malice and bad faith, the mental anguish suffered by a person for having been made defendant in a civil case is not that kind of anxiety which would warrant the award of moral damages. The worries and anxieties suffered by him were only such as are usually caused to a party haled into Court as a defendant in a litigation. Therefore, there is no sufficient justification for the award of moral damages, more so, exemplary damages.83
In short, moral damages cannot be awarded in the absence of a wrongful act or omission or fraud or bad faith. When the action is filed in good faith there should be no penalty on the right to litigate. One may have erred, but error alone is not a ground for moral damages.84
The filing alone of the foreclosure application should not be a ground for an award of moral damages. In the case of Danao vs. Court of Appeals,85 the creditor not only filed an unwarranted foreclosure proceedings, but also carried out the
proceedings in a manner as to embarrass the debtor by publishing the notice of extra-judicial foreclosure and sale in the society page of a Sunday edition of a widely circulated newspaper, instead of in the legal notices or classified ads sections as usual in these types of notices, in extraordinarily large and boxed advertisements, which allegedly bespoke the banks malicious intent to embarrass and harass the defendant in alleged violation of the canons of conduct provided for in articles 19, 20 and 21 of the Civil Code. Both the Court of Appeals and the lower court took cognizance of the debtors mental anguish, serious anxiety and besmirched reputation traceable to the unfortunate publication. The lower court awarded P100,000.00 moral damages but the court reduced said amount to P60,000.00.
The inordinate amount granted to the plaintiff calls for the moderating hand of the court, that justice may be tempered with
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83 Ibid., p. 281.
84 Filinvest Credit Corp. vs. Mendez, G.R. 66419 July 31, 1987, cited by Martinez, Summary of 1987 Supreme Court Rulings, (July to Dec. 1987) Phoenix Printing.
85 G.R. 48276; Bank of the Phil. Is. vs. CA-G.R. 48980, Sept. 30, 1987, cited by Martinez, loc. cit.
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reason instead of being tainted with what appears to be ruthless vindictiveness. Such improvident generosity is likely to raise eyebrows, if not outright challenge to the motives of some of our courts, and should therefore be scrupulously avoided at all times, in the interest of maintaining popular confidence in the judiciary. In the case of Malaysian Airlines v. Court of Appeals,86 in a suit for damages filed by a Filipino pilot who was recruited by the Malaysian Airlines (MAS) the Court found that the Malaysian Airlines acted in bad faith in inveigling the pilot into signing the renewal of the contract submitting himself to the jurisdiction of Malaysian Courts and that his dismissal was prompted by a letter complaint signed by Filipino and Indonesian pilots, including himself, protesting their discrimination in pay with benefits by MAS. The trial court required MAS to pay as follows: $300,000 Malaysian Dollars representing plaintiffs salary and flight type and P100,000.00 for uprooting his family to Manila plus P200,000.00 representing renewal of his license; P3,000.00 as moral damages; P1,000,000.00 as exemplary damages. The amount equivalent to 25% as attorneys fees, the Supreme Court held:
The inordinate amount granted to plaintiff calls for the moderating hand of the court. The moral and exemplary damages while concededly due are reduced to P500,000.00 and the attorneys fees reduced to the fixed sum of P25,000.00. On the basis of his monthly salary of Malaysian $4,025.00 or P33,567.50, his total unearned salaries will be P402,822. To this should be added the amount of P123,098.40 as allowance for the same period of one year at the rate of P1,230 per month, plus P80,000.00 representing his expenses in transferring his family to the Philippines amounting to the aggregate sum of P605,920.0.87
(1) Illegal Dismissal. The legislative intent is to allow recovery in proceedings before Labor Arbiters of moral and other form of damages in all cases or matter arising from employer-employee relations. This include, instances where an
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86 G.R. 78015, Dec. 11, 1987 cited Martinez, 1987 Supreme Court Rulings, Central Lawbook Pub. Co., Inc., Q.C., 1988, p. 240.
87 Ibid.
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employee has been unlawfully dismissed. In such a case, the Labor Arbiter has jurisdiction to award to the dismissed employee not only the relies specifically provided by labor laws, but also moral and the forms of damages governed by the Civil Code.88
If the evidence adduced by the employee before the Labor Arbiter should establish that the employer did indeed terminate the employees services without just cause or without due process, according to him, the Labor Arbiters judgment shall be for the employer to reinstate the employee to receive separation pay. There are reliefs explicitly prescribed by the Labor Code. But any award of moral damages by the Labor Arbiter obviously can not be based on the Labor Code but should be grounded on the Civil Code.89
Apart from the reliefs expressly set out in the Labor Code flowing from illegal dismissal from employment, no other damages may be awarded to an illegally dismissed employee other than those specified by the Civil Code. Hence, the fact that the issue of whether or not moral or other damages were suffered by an employee and in the affirmative, the amount that should be properly awarded to him in the circumstancesis determined under the provisions of the Civil Code and not the Labor Code.90
(b) Willfully causing loss or injury to another. Under Article 21 of the Civil Code, in relation to Art. 2219 (10) thereof, any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good custom or public policy shall compensate the latter for the damages.91
An unwarranted revocation of a contract of agency by the principal, entitles the agent to an award of moral damages for breach of contract where the principal acts in bad faith. Unlike sample grants of a power of attorney, an agency cannot be revoked at will, where the contract is one that is coupled with an
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88 Suario v. Bank of Philippine Island, G.R. 40459, August 25, 1989, cited by Martinez, Summary of 1989 Supreme Court Rulings, Central Lawbook Pub. Co., Inc., Q.C., 1990, 376.
89 Ibid.
90 Ibid, p. 377.
91 Sevilla v. CA, G.R. 41182-3, April 15, 1988 cited by Martinez, Summary of Supreme Court Rulings, 1988, op. cit., p. 281.
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interest, the agency having been created for the mutual interest of the agent and the principal.92
Requisites for the Recovery of Moral Damages.93
The following factors are necessary in order that moral damages may be recovered:
1. There must be physical suffering, mental anguish, fright, etc.
a. Physical suffering includes pain incident to a surgical operation or medical treatment (Serio vs. American Brewing Co. 141 LA 290), as well as possible future pain (Southern Brewery and Ice Co. v. Schmidt 226 U.S.-162)
As a general rule, if a person himself is not physically hurt, he cannot obtain moral damages. Thus, mere sympathy for a close relatives physical injuries can not grant moral damages to the sympathizer, even if he also suffers mental anguish, as a result of such sympathy (Strebel vs. Figueros, 96 Phil. 321); Thus also, if it is the wife who suffered the physical injuries, moral damages may be recovered only by her, and not by her next of kin or the husband (Sobereno & Sobereno vs. Manila Railroad Co., L-19407, Nov. 23, 1966).94
The exceptions to this rule are found in the last paragraphs of Article 2219 which provides:
The parents of the female seduced, abducted, raped or abused, referred to in No. 3 of this article, may also recover moral damages.
The spouse, descendants, ascendants, and brothers, and sisters may bring the action mentioned in No. 9 of this Article, in the order named.95
(b) Mental anguish is a high degree of mental suffering and not a mere disappointment or regret. (Southwestern Bell Tel. Co. v. Cooks 3 S.W. 497) or form of annoyance or vexation (Johnson v. Western Union Teleg Co. 128 Am. Rep. 905). However, inconvenience amounting to physical discomforts a subject of compensation.
(c) Fright is one form of mental suffering. (Eastern v. United
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92 Ibid.
93 Paras, op. cit., pp. 968-969.
95 Ibid, p. 972.
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Trade School Contracting Co. 77 Am. State Rep. 859)
In the case of Ramos vs. Ramos,96 the Supreme Court in answer to the issue: May moral damages be assessed against unsuccessful plaintiffs? held:
No. Moral Damages can not be awarded in favor of the defendants, and against unsuccessful plaintiffs. The reason is because there was no malice in the institution of the suit for reconveyance. If a case is filed in good faith, and the defendant suffers from worries and anxieties, said mental anguish is not the anguish where the law allows a recovery of moral damages. The law does not impose a penalty on the right to litigate.
2. The suffering etc. must be the proximate result of the wrongful act or omission. Thus, the grant of moral damages is not subject to the whims and caprices of judges or courts. The courts discretion in granting or refusing it is governed by reason and justice. In order that an individual may be made liable, the law requires that his act be wrongful. The adverse result of an action does not per se make the act wrongful and subject the actor to the payment of moral damages. (Barreto vs. Arevalo, et. al., 99 Phil. 771)97
3. There must be clear testimony on the anguish and etc. Thus, if the plaintiff fails to take the witness stand and testify as to her social humiliation, wounded feelings, anxiety, etc. moral damages cannot be recovered. (Francisco vs. GSIS, L-18155, March 30, 1939)98
When may moral damages be recovered?
Article 2219 of the Civil Code provides:
Moral damages may be recovered in the following and analogous cases:
(1) A criminal offense resulting in physical injuries. Examples99 of this instance are the following:
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96 L-19872, Dec. 3, 1974, 61 SCRA 284, cited by Paras, op. cit., p. 971.
98 Ibid.
99 Ibid, 974.
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(a) If a passenger dies or is injured, and a criminal case is brought by herself or by his heirs, in the proper case, moral damages may be recovered;
(b) If there be no death or physical injuries, moral damages can not be recovered (Strebel vs. Figueras, 96 Phil. 921) (c) If a taxi driver was negligent and injures a passenger, he can be liable for moral damages, but not the taxi company for the company did not commit the crime. (Cachero v. Manila Yellow Taxicab Co. Inc., 101 Phil. 523).
(2) Quasi-delicts causing physical injuries.
Article 2176 defines quasi delicts as follows:
Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between parties, is called a quasi-delict.
One who has sustained a personal injury as a result of the negligence of another can recover all damages proximately traceable to the primary negligence, including subsequent aggravation, the probability of which the law regards as a sequence and natural result likely to flow from the original injury. The original wrongful act is deemed the proximate cause of the entire injury, and damages are recoverable therefore, provided the act of the injured person which aggravates the injury is within the course of conduct of a reasonably prudent person under all the circumstances. If on the other hand, the injured person by his own negligence and imprudence after the injury renders the consequences of the injury more severe or injurious or neglects or fails to exert himself reasonably to eliminate the injury and prevent the damage, he can not recover such damages as are to be attributed to such acts or omission.100
The question whether a tortfessor who causes personal injury is civilly liable to the person injured for the consequences of negligence, mistake or lack of skill on the part of the physician or surgeon who treats the original injury, is basically a question of proximate cause. In other words, the question is whether the aggravation of the original injury or a subsequent additional
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100 22 Am Jur.2d., pp. 161-162.
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injury, by improper medical or surgical treatment is a natural and probable consequence, or direct result of the original tortfessors negligence, or, on the other hand whether the negligence, mistake or lack of skill of the attending physician or surgeon is an independent superseding cause.101
Persons suffering from physical injuries resulting from all acts or omissions mentioned in Art. 2176 to 2194 of the Civil Code should be awarded moral damages.
3. Seduction, abduction, rape of other lascivious acts:The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this Article, may also recover moral damages.102
In the Case of People of the Phil. vs. Marino Fontanilla,103 the Supreme Court held:
The award must not be in the alternative, for under Article 2219 of the Civil Code, the parents are ALSO entitled to recover moral damages. The conviction of the
accused suffices as a basis to adjudge him, in the same action, liable for an award of moral damages, without independent proof thereof, to the victim AND her parents, because the law presumes that the parents also naturally suffered besmirched reputation, social humiliation, mental anguish and wounded feelings.
4-6. Adultery or concubinage, etc. Moral damages are also awardable to crimes like adultery, concubinage, Illegal or arbitrary detention or arrest and illegal search (Art. 2219 No. 4, 5 and 6).
7. In libel, slander and defamation, moral damages are awardable. A communication made in good faith upon any subject matter in which the party making the communication has an interest and concerning which he has a duty, is privileged if made to a person having a corresponding interest or duty, although it contains incriminatory or derogatory matter, which without the privilege would be libelous and actionable.104
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101 J. Caesar S. Sangco, Phil. Law on Torts and Damages, JMC Press, Inc. Q.C. 1978, p. 432.
102 Vitug, op. cit., p. 608.
103 L-25354, June 28, 1968, cited by Paras, op. cit., p. 974.
104 Suarez vs. CA, G.R. 80199, June 6, 1990 cited by Martinez,
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Even when the statements are found to be false, if there is probable cause for belief in their truthfulness and the charge is made in good faith, the mental of privilege may still cover the mistakes of the individual. The privilege is not defeated by the mere fact that the communication is made in intemperate terms. A privileged communication should not be subjected to microscopic examination to discover grounds of malice or falsity.105
A privileged communication, maliciously made by one person to another, although in the performance of a legal, moral or social duty is not privileged. Malice is a term used to indicate the fact that the defamer is prompted by personal ill-will or spite and speaks not merely in response to duty, but merely to injure the reputation of the person.106
A slap on the face is an unlawful aggression. The face personifies ones dignity and slapping it is a serious personal affiant. It is a physical assault coupled with a willful disregard of the integrity of ones person. This is specially true if the aggrieved party is a school teacher who in penal law, is a person in authority. Respect for a teacher is required of all, if we are to uphold and enhance the dignity of the teaching profession. The demeaning act of the defendant is virtually inexpiable when done in the presence of the public inside a polling precinct during an electoral exercise. This is one of the extreme circumstances under which ridicule, discredit, and contempt could be cast upon the aggrieved party in the community where she performs her functions as a mentor of their children.107
The Court of Appeals in the case of dela Rosa et. al. vs. Moristela (C.A. 50 O.G. 254) held:
If there is no libel, etc. because of the defense of privileged communication and malice is not proved, there will be no award of moral damages. This is particularly true in the use of court pleadings which may contain libelous remarks.108
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Summary of Supreme Court Rulings, 1990 op. cit., p. 470.
105 Ibid.
106 Ibid., p. 471.
107 Ibid.
108 Ibid.
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On the other hand, the allegation of forgery in a document is all but a defamation, which is the light of Article 2219 could be by analogy be a ground for payment of
moral damages considering the wounded feelings and besmirched reputation of the parties involved. (Heirs of Justiva vs. CA L-16396, Jan. 31, 1963)109
8. Malicious Prosecution may serve as a basis for the recovery of moral damages provided its three elements concur and are proven, viz:110
(1) the fact of the prosecution where the defendant was himself the prosecutor; or instigated its commencement, and which finally terminated with the plaintiffs acquittal; (2) the defendant in bringing the case, had acted without probable cause; and (3) the defendant was actuated by legal malice, i.e., by improper or sinister motives.
In the case of Lao vs. Court of Appeals,111 the petitioner was sued, together with his employer for damages for malicious prosecution, for being a witness is an unsuccessful estafa case, which his employer filed against a debtor who had defaulted in paying his just obligation.
The petitioner failed to attend the 1st and 2nd scheduled pretrial conferences for which reason evidence ex-parte was received. Decision was rendered against the petitioner solidarily liable with St. Joseph Lumber ordering the latter to pay jointly and severally Espiritu, the sum of P100,000 as moral damages. The Supreme Court held:
The petition is meritorious. Lao had a valid defense to the action for malicious prosecution because it was his employer, St. Joseph Lumber, not himself that was the complaint in the estafa case against Espiritu. He had no personal interest in the prosecution of Espiritu for he was not the party defrauded by Espiritu. He executed the affidavit which was used as basis of the criminal charge against Espiritu
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109 Ibid., p. 976.
110 Lao vs. Court of Appeals, G.R. 80808, Jul 11, 1991. 199 SCRA 58.
111 Ibid.
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because he was the salesman who sold the construction materials to Espirit. He was only an agent of St. Joseph Lumber, hence, not personally liable to the party with whom he contracted. x x x Although the prosecution of Espiritu for estafa did not prosper, the unsuccessful prosecution may not be labelled as malicious. Sound principles of justice and public policy dictate that persons shall have free resort to the court for redress of wrongs and vindication of their rights without later having to stand trial for instituting prosecutions in good faith. (Buenaventura vs. Sto. Domingo, 103 Phil. 239)112
9. Moral damages are likewise recoverable in acts mentioned in Article 309 which are: disrespect to the dead, or wrongfully interfering with a funeral. 10. Paragraph 10 Article 2219 enumerates the articles where moral damages may be recovered, namely: Arts. 21, 26, 27, 28, 29, 30, 32, 34, and 35. In the case of Magbanua et. al vs. IAC, G.R. Nos. 66870-72, June 29, 1985)113 the Supreme Court held:
Under the facts of the case, the plaintiffs-petitioners are entitle to a measure of moral damages. Art. 2219 of the Civil Code permits the award of moral damages for acts mentioned in Art. 21 of the same code and the latter stipulates that: Any person who willfully causes loss or injury to another in a matter that is contrary to morals, good customs, or public policy shall compensate the latter for the damage. x x x. It appears that the petitioners were denied irrigation water for their farm lots in order to make them vacate their landholdings. The defendants violated the plaintiffs rights and caused prejudice to the latter by unjustified diversion of the water.
Analogous cases, referred to in Article 2219, appears to indicate that the instances referred to therein are not exclusive in nature. The law itself allows the recovery of moral damages in the law on common carriers in case of death of a passenger caused by the breach of contract (Art. 1764, Martinez v. Gonzales, 6 SCRA 331). In other instances, following the ejusdem generis rule, the case must be similar to those expressly enumerated by the law (Bagumbayan Corp. vs. IAC, G.R. No. 66274, Sept. 30,
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112 Ibid, pp. 60-61.
113 Vitug, op. cit., p. 612.
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1984)114
Analogous cases likewise may refer to instances similar to the case enumerated in Article 2219 and not to ALL causes of mental anguish (People vs. Plaza, CA 52 O.G., 6609). One example is the institution of unfounded suits, one after another, all resulting in the dismissal of the suits; The anguish and embarrassment suffered by the defendant cannot be denied. (Haw Pia v. Court of Appeals, L-20047, June 30, 1967)115
Moral damages can also be recovered under Article 2220 to wit:
Wilful injury to property may be a legal ground for awarding moral damages if the Court should find that under the circumstances, such damages are justly due. The same rule applies to breaches of contract when the defendant acted fraudulently or in bad faith.
Cases when moral damages were not awarded: The following instances show that moral damages were not recovered:116
(a) When no evidence was introduced thereon, and the case was submitted simply on a stipulation of facts (Tabora v. Montelibano, et. al., L-8667, April 3, 1956). (b) When a complaint contained nothing derogatory to the good name or reputation of other party, and bad faith was not shown (Ditan v. Espiritu, et. al. L7644 Nov. 27, 1956). (c) When there was no allegation or proof that a major, in dismissing a policeman, had acted with motives other than the promotion of the public interest (Covacha v. Amante, L-8358, May 25, 1956).
(d) When a brother believed in good faith that he was entitled to a commission for having intervened in a sale, and thus sued unsuccessfully his principal (Worcester v. Lorenzana, 104 Phil. 234). (e) When a common-law wife, Esther Peralta was prohibited by the court to represent herself as Mrs. Saturnino Silva, or as the lawful wife of her paramour. In this case, the court held that the unwarranted misrepresentation had been made in GOOD FAITH, inasmuch as she did NOT know that her common-law mate was already married to
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114 Ibid., p. 609.
115 Paras, op. cit., p. 972.
116 Ibid, pp. 977-979.
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another (Ledesma Silva et. al. vs. Esther Peralta, L-13114, Aug. 29, 1961). (f) In a case of a clearly unfounded or unreasonable suit. Note that in a case like this, attorneys fees may be recovered (Art. 2208, No.4) but not moral damages.
(g) A brother can not recover moral damages for his brothers death because in the last paragraph of Art. 2219, brothers and sisters are not among those who can recover moral damages. (h) If the breach of a contract is neither malicious nor fraudulent, no award of moral damages maybe given. (Francisco vs. GSIS, L-18155, March 30, 1963).
E. Nominal Damages
DefinitionNominal Damages are those recoverable where a legal right is to be vindicated against an invasion that has produced no actual present loss of any kind or where from the nature of the case, some injury has been done the amount of which the proofs fail to show. The law infers some damage from the breach of an agreement or the invasion of a right; and if no evidence is given of any particular amount of loss, it declares the right by awarding what it terms nominal damages.117 Article 2221 provides: Nominal damages are 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 indemnifying the plaintiff for any loss suffered by him.
Nominal damages are a small and trivial sum awarded for technical injury due to a violation of some legal right, and as a consequence of which some damages must be awarded to determine the right.118
Nature of Nominal Damages. The awarding of nominal damages does not run counter to the maxim de minimio non curat lex (the law does not cure or bother with trifles) (Report of the Code Commission, p. 74)119
Some authorities held that nominal damages are actual or
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117 15 Am Jur., p. 390.
118 25 CSJ, p. 458.
119 Paras, op. cit., p. 979.
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compensatory in character. It has been said that nominal damages mean damages in name only and not in amount. Such damages are to be distinguished from small damages, since although they may be small even to insignificance, yet they may be substantial in the sense that a sum may be allowed to the injured party sufficient to compensate him for all the damage actually sustained under the conditions. While the law implies damages from the violation of every right, without proof of actual detriment, it implies the smallest appreciable quality.120 While nominal damages are not strictly compensatory, they are always included in general damages.121
Purpose. The allowance of nominal damages is generally based on the ground either that every injury from its very nature legally imports damage, or that the injury complained of would in the future be evidence in favor of the wrong doer for if continued for a sufficient length of time, the invasion of the plaintiffs rights would ripen into a prescriptive right in favor of the defendant. To authorize recovery of more than nominal damages, facts must exist which afford a basis for measuring the plaintiffs loss with recoverable certainty; the evidence must be such that the jury may find the amount of his loss by recoverable inferences from the facts established, not by conjecture speculation and surmise.122
Nominal damages are given not as an equivalent for the wrong but in recognition of a technical injury, and by way of declaring the right, or as a basis for taxing the defendant with the costs of the suit by way of penalty for the wrong. They are regarded as the subject of a substantial legal claim, and a party is entitled to them in case he can show any invasion of or injury to his legal right. An award of nominal damages is founded on equitable principles and is subject to the maxim that he who comes into equity to obtain it must come with clean hands, and, therefore, even nominal damages will not be awarded, for breach of contract, to one whose intent was to evade the laws of the state.123
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120 Ibid, pp. 391-392.
121 CJS, p. 466.
122 Am Jur., op. cit., p. 391.
123 25 CJS, op. cit., p. 466.
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Nominal damages are adjusted 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 indemnifying the plaintiff for any loss suffered by him (Art. 2221, Civil Code; Manila Bowling Corp. vs. Intermediate Appellate Court, L-66123, August 22, 1984)124
When Nominal Damages are Recoverable. Nominal damages are recoverable whenever there has been a breach of a legal duty or the invasion of a legal right, in other words whenever there has been a violation of an ascertained legal right, although no actual damages resulted or none are shown. Every injury imports damage; and if no other damage is established, the party is entitled to nominal damages. To warrant the recovery of nominal damages, there must, however, be an actual invasion of a right. It is not sufficient that there is a mere trespass on personal property, where no unlawful intent or disturbance of a right or possession is shown and when not only all probable, but all possible, damage is expressly disproved. Damages can not flow from a lawful business or commercial transaction in which a person had a right to engage or from the refusal to do an act where such refusal was, as a matter of law, wholly within his power of law, and voluntary choice.125
According to some of the courts, nominal damages are recoverable only in cases where damages are not the gist of the actionthat is, in cases primarily designed to secure the plaintiffs right from invasion. Under this rule, where the sole object of the action is the recovery of damages, a failure to prove substantial damage is a failure to prove the substance of the issue; and where there is no inherent personal or property right to determine, the plaintiff is not entitled to nominal damages, even though the evidence might justify a verdict for nominal invasion of the plaintiffs right, such damage are allowable even though the invasion may have resulted in a benefit to him; and damages if such rights were involved. Where there is an actual generally under such circumstance, his recovery is limited to nominal damages.126
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124 Vitug, op. cit., p. 612.
125 15 Am Jur., op. cit., p. 392.
126 15 Am Jur., op. cit., p. 392.
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Upon breach of a valid and binding contract, the law infers some damages, and generally the person guilty of the breach is liable a least for nominal damages, if actual damages can not be proved. Nominal damages only are recoverable upon the breach of a contract if no actual or substantial damage resulted from the breach or no damage has been or can be shown as, for example, where actual damage is uncertain or not susceptible of proof or is too remote, conjectural and speculative to form the basis of a legal recovery, where because of indefiniteness in the terms of the contract, there is no basis for establishing any measure of damages, or where the contract contains stipulations which determine the measure of damages for its breach and the injured party fails to bring himself with them. The recovery for breach of a contract may also be limited to nominal damages where the plaintiffs negligence contributed to the loss, where by the exercise of recoverable diligence, he could have prevented any actual loss, or where it would be physically impossible for him to perform the contract on his part. However, the recovery should not be limited to nominal damages, where the plaintiff is shown to have suffered actual damages as the result of the breach; in such case he is entitled to substantial damages.127
The court may award nominal damages in every obligation arising from any source enumerated in Art. 1157, or in every case where any property rights has been
invaded. (Art. 2222 Civil Code). The adjudication of nominal damages shall preclude further contest upon the right involved and all accessory questions, as between the parties to the suit or their respective heirs and assigns (Art. 2223, Civil Code).128
Cases decided where Nominal Damages were Awarded
1. In the case of China Airlines, Ltd. vs. Court of Appeals, G.R. 45985, and Philippine Airlines, Inc. vs. Court of Appeals, G.R. 46036,129 May 18, 1990, the Supreme Court held:
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127 Ibid, pp. 393-394.
128 Vitug, op. cit., p. 613.
129 Martinez, Summary of Supreme Court Rulings 1990, op. cit., p. 483.
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Nominal damages may be awarded to an airplane passenger to vindicate the legal wrong committed against him. It appearing that the wrong committed was immediately rectified when Phil. Airlines promptly booked the passenger for the next mornings flight to Taipei where he arrived before noon and was able to attend his scheduled conference, and considering the concept and purpose of nominal damages, the award of P230,000 must accordingly be reduced to an amount equal to or at least commensurate to the injury sustained.
2. In the case of Ventenilla V. Centino, L-14333, Jan. 28, 1961,130 the Supreme Court held:
A lawyer who through negligence fails to deposit on time the appeal bond, and to file the record of appeal within the extension period asked for by him and granted by the Court, while not liable for actual damages, may nevertheless be liable for nominal damages. This is discretionary on the part of the Court. The award of nominal damages precludes the recovery of actual, moral, temperate or moderate damages.
3. In the case of Go vs. Intermediate Appellate Court, G.R. 68138, May 13, 1991,131 the Supreme Court disallowed the award of moral and exemplary damages but it granted nominal damages instead. It explained this:
While it is true that denouncing a crime is not negligence under which a claim for moral damages is available, still appellants are liable under the law for nominal damages. The fact that the appellee did not suffer any loss is of no moment for nominal damage are 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 indemnifying the plaintiff for any loss suffered by him (Art. 2221 Civil Code) These are damages 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 (Elgara v. Sandejas, 27 Phil. 284) They are not intended for indemnification of loss suffered but for the vindication or recognition of a right violated or invaded. (Ventanilla
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130 Paras, op. cit., p. 980.
131 197 SCRA 22.
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vs. Centeno, L-147333, Jan. 28, 1961, supra.) And, where the plaintiff as in the case at bar, the herein appellee has established a cause of action, but was not able to adduce evidence showing actual damages the nominal damages may be recovered (Sia vs. Espenilla CA-G.R. Nos. 45200-45201-R, April 21, 1975) Consequently, since appellee has no right to claim for moral damages, then he may not likewise be entitled to exemplary damages. (Estopa vs. Pransay, No. L-14503, Sept. 30, 1960).
Instances when Nominal Damages Not Recoverable.
The following instances indicate or show when nominal damages are not recoverable:
1. When there is an award of actual, moral temperate or moderate damages;132 2. When there is breach of Contract, but the breach is excusable or justifiable.133
3. In an action based on negligence, if the plaintiff fails to prove actual damages. 4. Where no unlawful intent or disturbance of a right or possession is shown and where all possible damages are expressly disproved.134 5. In actions to recover damages for ordinary negligence where damages are an element of the cause of action itself, and the plaintiff has failed to prove the same.135
F. Temperate or Moderate Damages
Definition. Article 2224 of the Civil Code defines Temperate or moderate damages as those which are more than nominal but less than compensatory damages, which may be recovered when the Court find that some pecuniary loss has been suffered but its amount can not, from the nature of the case, be proved with certainty. Temperate damages must be reasonable under the circumstances. (Art. 2225) For instance, injury to ones commercial credit or to the produce of a business firm is often
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132 Ibid; also Vda. de Medina vs. Cresencia et al., 99 Phil. 510.
133 25 CJS, p. 467.
134 Ibid., p. 468.
135 22 Am Jur. 2d, p. 25-26.
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hard to show with certainty in terms of money. The judge should be empowered to calculate moderate change in such cases, rather than that the plaintiff should suffer, without redress, from the defendants wrongful act.136 Where the amount of the checks issued by a merchant of long standing and good reputation in the community were wrongfully dishonored, and although the respondent tried to rectify the error soon after it was discovered, the award of P5,000.00 by way of temperate damage may be sufficient. (Araneta vs. Bank of America, 40 SCRA 151-152).
Reason For Allowinng Temperate or Moderate Damages. In some States of the American Union, temperate damages are allowed. There are cases where from the nature of the case, definite proof of pecuniary loss can not be offered, although the Court is convinced that there has been such loss.137
It is imperative under Art. 2224 that some pecuniary loss has been suffered (though uncertain) otherwise temperate damages can not be recovered. (Victorino, et al.) As long however, as there has been an injury (such as physical injury) the fact that the same is incapable of pecuniary estimation does not preclude the right to an indemnity. Here, the judge may calculate moderate damages (Necesito v. Paras, 104 Phil. 75).138
In the case of Pleno v. Court of Appeals, G.R. 56505, May 9, 1988,139 the Supreme Court held:
Temperate damages are included within the context of compensatory damages. In arriving at a reasonable level of temperate damages to be awarded, courts are guided by the ruling that x x x there are cases where from the nature of the case,
definite proof of pecuniary loss can not be offered, although the court is convinced that there has been such loss. For instance, injury to ones commercial credit or to the good will of a business firm is often hard to show certainly terms of money. Should damages be denied for that reason? The judge should be empowered to calculate moderate damages in such case, rather than that the plaintiff should suffer, without redress from the defendants
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136 Paras, op. cit., p. 981.
137 Ibid.
138 Ibid.
139 Martinez, Summary of Supreme Court Rulings, 1988, op. cit., p. 282.
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wrongful act.
G. Liquidated Damages
Definition. Article 2226 of the Civil Code provides: Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof. Liquidated Damages are those the amount whereof has been ascertained by judgment or by the specific agreement of the parties or which are susceptible of being made certain by mathematical calculation from known factors. It is a maximum limitation of liability.140
Nature of Liquidated Damages. In effect, liquidated damages and penalty are the same. Neither required proof of actual damages (Lambert vs. Fax, 26 Phil. 588) After all, they had been previously agreed upon.141
The essence of liquidated damages is a genuine consented preestimate of damages. The parties are bound by a stipulation of liquidated damages. The amount is fixed and is not subject to change. If the stipulated sum is deemed to be a penalty, it is not enforceable and the non-defaulting party is left to recover such actual damages as he can prove.142
The question of whether a stipulated sum is a penalty or for liquidated damages is answered by the application of one or more aspects of the following rule:
A stipulated sum is for liquidated damages only (1) where the damages which the parties might reasonably anticipate are difficult to ascertain because of their indefiniteness or uncertainty, and (2) where the amount stipulated is either a reasonable estimate of the damages which would probably be caused by a breach or is reasonably proportionate to the damage which have actually been caused by the breach.143
Equitable Reduction of Liquidated Damages. Article 2227 provides: liquidated damages whether intended as an indemnity or a penalty, shall be equitably reduced, if they are
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140 25 CJS, p. 458.
141 Paras op. cit., p. 982.
142 Sangco, op. cit., p. 563.
143 Ibid, p. 564.
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iniquitous or unconscionable. The reason is that in both, the stipulation is contra bonos mores. It is a mere technicality to refuse to lessen the damages to their just amount simply because the stipulation is not meant to be a penalty. An immoral stipulation is nonetheless immoral because it is called an indemnity (Report of the Code Commission, p. 75)144
If there is partial or irregular preference, the award of liquidated damages should be equitably reduced. (Joes Electrical Supply vs. Alto Electronics, L-12376, Aug. 22, 1958)145
H. Exemplary or Corrective Damages
Definition. Exemplary damages are damages imposed by way of punishment, and are given for that purpose in addition to compensation for a loss sustained.146 Article 2229 of the Civil Cod defines Exemplary or corrective damages as those which are imposed by way of example or correction for the public good, in addition to the moral, temperate, liquidated, or compensatory damages.
Reason for Imposing Exemplary or Corrective Damages.147
Although, in America, exemplary damages are also called punitive, damages, still the term corrective is in harmony with the modern theory of penology.
Exemplary damages are required by public policy for wanton acts must be suppressed. They are an anti-dote so that the poison of wickedness may not run through the body politic (Report of the Code Commission, pp. 75-76).
In the absence of moral, temperate, liquidated or compensatory damages, no exemplary damages can be granted for exemplary damages are allowed only in ADDITION to any of the four kinds of damages mentioned. Fores vs. Miranda, 105 Phil. 266; Francisco v. GSIS, L-18155, March 30, 1963) It is advisable to
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144 Paras, op. cit., p. 982.
145 Ibid.
146 25 CJS, p. 455.
147 Paras, op. cit., p. 983.
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specifically ask in the complaint for exemplary damages (in the proper cases), but the general prayer in the complaint for other remedies which may be just and equitable in the premises can allow, if warranted, the grant of exemplary damages (Darang vs. Beliza, L-19487, Jan. 31, 1967).
Instances where Exemplary Damages may be Awarded.
1. In criminal cases, exemplary damages as part of the civil liability may be imposed when the crime was committed with one or more aggravating circumstances, distinct from fines and shall be paid to the offended party. (Art. 2230 Civil Code).148
For example, if a driver in a criminal case, is convicted and made civilly liable, but exemplary damages are not imposed, the employer can not, in a subsequent case brought to recover subsidiary civil liability against him,be made liable for exemplary damages. As Justice JBL Reyes has aptly pointed outNo such damages were imposed on the driver, and the master, a person subsidiary liable, can not incur greater civil liability than his convicted employee, any more than a guarantor can be held responsible for more than the principal debtor (Bentoto vs. Bobis and Vallejo, L-18966, Nov. 22, 1966)149
If an employee commits a wrongful act, may his employer be required to pay Exemplary damages? No, except, insofar as said employer had participated in or ratified the act. The rule is that exemplary damages are imposed primarily on the wrongdoer as a deterrent in the commission of similar acts in the future. Since exemplary damages are penal in character, the motive authorizing their infliction will not be imputed by presumption to the principal when the act is committed by an agent or servant. Inasmuch as they are granted not by way of compensation, but as a punishment to the offender and as a warning to others, they can only be awarded against one who has participated in the offense and the principal therefore can not be held liable for them merely by reason of wanton oppressive, or malicious intent, on the part of the agent. Moreover, in this jurisdiction, in
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148 Vitug, op. cit., p. 613.
149 Paras, op. cit., p. 985.
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case of crimes, exemplary damages may be imposed only when the crime is committed with one or more aggravating circumstances. Art. 2230 Civil Code. Roten v. Halili, L-1203, Sept. 30, 1960.150
2. In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence (Art. 2231, Civil Code). In the case of Phil. National Railways vs. Court of Appeals and Rosario Tupang, G.R. No. 55374, Oct. 4, 1985, the Supreme Court held:
But while the petitioner failed to exercise extraordinary diligence as required by law, it appears that the deceased was changeable with contributory negligence. Since he opted to sit on the platform between the coaches of the train, he should have held tightly and tenanciously to the upright metal bar found at the side of said platform to avoid falling off from the speeding train; such contributory negligence, while not exempting the PNR from liability, nevertheless justified the deletion of amount adjudicated as moral damages. By the same token the award of exemplary damages must be set aside. Exemplary damages may be allowed only in cases where the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.151
3. In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless oppressive or malevolent manner152 (Art. 2232, Civil Code).
In the case of Merchan and Phil. Rabbit Bus Co. Inc. vs. Mendoza, et al. L-24471, Jan. 31, 1969, the Supreme Court ruled that the exemplary damages may be awarded in contracts and quasi-contracts if the defendant company, thru its driver, acted in a wanton, fraudulent, reckless aggressive or malevolent manner.153
Exemplary Damages not a matter of Right. Article 2233 provides: Exemplary damages can not be recovered as a matter of right; the court will decide whether or not they should be adjudicated.
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150 Ibid, p. 984.
151 Vitug, p. 615.
152 Ibid.
153 Paras, op. cit., p. 987.
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The right to exemplary damages may not be waived in advance. Any stipulation to this effect is void because exemplary damages are preventive or corrective and therefore their award involves a matter of public policy. (Art. 2235) CONCLUSION
After an incisive analysis of the kinds, concept and nature of damages, it is hoped that practitioners and judges will be guided accordingly, so that in the end, truth and justice will triumph and that the wrong done by another be punished, compensated, or corrected and that the injured feelings of the complainant will come and for all, be, assuaged. [Damages, 207 SCRA 366(1992)]

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ANNOTATION DAMAGES

* Judge, Br. 48, RTC, Urdaneta, Pangasinan.

VOL. 207, MARCH 23, 1992

1 15 American Jurisprudence, p. 388.

5 54 L.J.P.D. and A, 9; 10 App. Cas. 59, Ibid.

SUPREME COURT REPORTS ANNOTATED

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9 25 Corpus Juris Secundum, p. 452.

10 15 Am Jur., loc. cit.

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12 15 Am Jur., op. cit.

13 25 CJS. loc. cit.

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17 15 Am Jur., loc. cit.

19 Am Jur., loc. cit.

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23 Bouviers Dictionary, op. cit., p. 751.

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The Supreme Court further held:

erroneous interpretation, if any at all, is in the nature of a damnum absque injuria.27

26 Martinez, Summary of 1991 Supreme Court Rulings, Part I, p. 641.

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Damages III. Kinds of Damages Generally Recoverable

30 Bank of Commerce vs. Goos, 39 Neb. 437; 58 N.W. 84 L.R.A. 190.

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32 Bouviers Dictionary, p. 750.

33 Edgardo Paras, op. cit., p. 939.

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C. Compensatory or Actual Damages

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37 Jose Vitug, op. cit., pp. 601-602.

38 Paras, op. cit., p. 932.

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44 Martinez, Summary of 1990 Supreme Court Rulings, page 906.

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46 Paras, op. cit., p. 937.

47 Vitug, op. cit. p. 605.

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50 Martinez, op. cit, p. 923.

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Article 2206 provides:

52 Vitug, op. cit., p. 602.

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56 Vitug, loc. cit.

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3) In criminal cases of malicious prosecution against the plaintiff;

58 Vitug, op. cit., p. 604.

59 Martinez, Summary of 1990 Supreme Court Rulings, Part I, p. 486.

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62 Paras, op. cit., p. 944.

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Article 2206 of the Civil Code provides:

66 Martinez, Summary of 1990 Supreme Court Rulings, Part II, p. 82.

67 Vitug, op. cit., p. 606.

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68 Vitug, loc. cit.

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Purpose in awarding moral damages. Moral damages are not

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77 Martinez, 1990, op. cit.

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