Torts Table of Doctrines Damages

TORTS AND DAMAGES DOCTRINES
X. DAMAGES
A. IN GENERAL
Ong v. Court of Appeals, G.R. No. 117103, January 21, 1999
FAIR AND JUST

COMPENSATION
PRINCIPLE
ACTUAL DAMAGES
DEFINED
DAMAGES NOT
PRESUMED; NOT BASED
ON THE COURTS
PERSONAL OPINION
DAMAGES FOR PHYSICAL

INJURIES
AWARD FOR DAMAGES

ARISING FROM COST OF
MEDICAL PROCEDURE
MUST FIRST BE PROVED
BY EXPERT TESTIMONY
INDEMNIFICATION FOR
UNREALIZED INCOME
Granting arguendo that there was an agreement to submit the case for decision based on the
pleadings, this does not necessarily imply that petitioners are entitled to the award of damages.
The fundamental principle of the law on damages is that one injured by a breach of contract (in
this case, the contract of transportation) or by a wrongful or negligent act or omission shall
have a fair and just compensation, commensurate with the loss sustained as a consequence of
the defendantEs acts. Hence, actual pecuniary compensation is the general rule, except where
the circumstances warrant the allowance of other kinds of damages.
Actual damages are such compensation or damages for an injury that will put the injured party
in the position in which he had been before he was injured. They pertain to such injuries or
losses that are actually sustained and susceptible of measurement. Except as provided by law
or by stipulation, a party is entitled to adequate compensation only for such pecuniary loss as
he has duly proven.
To be recoverable, actual damages must be pleaded and proven in Court. In no instance may
the trial judge award more than those so pleaded and proven. Damages cannot be presumed.
The award thereof must be based on the evidence presented, not on the personal knowledge
of the court; and certainly not on flimsy, remote, speculative and nonsubstantial proof. Article
2199 of the Civil Code expressly mandates that [e]xcept as provided by law or by stipulation,
one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he
has duly proved.
A person is entitled to the physical integrity of his or her body, and if that integrity is violated,
damages are due and assessable. However, physical injury, like loss or diminution of use of an
arm or a limb, is not a pecuniary loss. Indeed, it is not susceptible of exact monetary
estimation. Thus, the usual practice is to award moral damages for physical injuries sustained.
In Mayo v. People, the Court held that the permanent scar on the forehead and the loss of the
use of the right eye entitled the victim to moral damages. The victim, in said case, was
devastated by mental anguish, wounded feelings and shock, which she experienced as a result
of her false eye and the scar on her forehead. Furthermore, the loss of vision in her right eye
hampered her professionally for the rest of her life.
In some instances, the Court awards the cost of medical procedures to restore the injured
person to his or her former condition. However, this award necessitates expert testimony on the
cost of possible restorative medical procedure. In Gatchalian v. Delim, the Court, reasoning that
a scar resulting from the infliction of injury on the face of a woman gave rise to a legitimate
claim for restoration to her conditio ante, granted P15,000 as actual damages for plastic
surgery. It bears emphasis that the said amount was based on expert testimony.
Protesting the deletion of the award for FranciaEs unrealized income, petitioners contend that
FranciaEs injuries and her oral testimony adequately support their claim. The Court disagrees.
Although actual damages include indemnification for profits which the injured party failed to
obtain (lucro cesante or lucrum cesans), the rule requires that said person produce the best
evidence of which his case is susceptible. The bare and unsubstantiated assertion of Francia
that she usually earned P200 a day from her market stall is not the best evidence to prove her
claim of unrealized income for the eight-month period that her arm was in plaster cast. Her
testimony that it was their lessor who filed their income tax returns and obtained business
licenses for them does not justify her failure to present more credible evidence of her income.
LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ
ATTORNEYS FEES
Under the Civil Code, an award of attorneys fees is an indemnity for damages ordered by a
court to be paid by the losing party to the prevailing party, based on any of the cases
authorized by law. It is payable not to the lawyer but to the client, unless the two have agreed
that the award shall pertain to the lawyer as additional compensation or as part thereof. The
Court has established a set of standards in fixing the amount of attorneyEs fees: (1) [T]he
amount and character of the services rendered; (2) labor, time and trouble involved; (3) the
nature and importance of the litigation or business in which the services were rendered; (4) the
responsibility imposed; (5) the amount of money or the value of the property affected by the
controversy or involved in the employment; (6) the skill and experience called for in the
performance of the services; (7) the professional character and social standing of the attorney;
(8) the results secured, it being a recognized rule that an attorney may properly charge a much
larger fee when it is contingent than when it is not.
B. ACTUAL DAMAGES
PNOC Shipping and Transport Corporation v. Court of Appeals, G.R. No. 107518, October 8, 1998
TWO KINDS OF ACTUAL
OR COMPENSATORY
DAMAGES
Under Article 2199 of the Civil Code, actual or compensatory damages are those awarded in
satisfaction of, or in recompense for, loss or injury sustained. They proceed from a sense of
natural justice and are designed to repair the wrong that has been done, to compensate for the
injury inflicted and not to impose a penalty. In actions based on torts or quasi-delicts, actual
damages include all the natural and probable consequences of the act or omission complained
of. There are two kinds of actual or compensatory damages: one is the loss of what a person
already possesses (dano emergente), and the other is the failure to receive as a benefit that
which would have pertained to him (lucro cesante).
DAMAGES CANNOT BE
PRESUMED; MUST BE
PROVED BY BEST
EVIDENCE AVAILABLE
As stated at the outset, to enable an injured party to recover actual or compensatory damages,
he is required to prove the actual amount of loss with reasonable degree of certainty premised
upon competent proof and on the best evidence available. The burden of proof is on the party
who would be defeated if no evidence would be presented on either side. He must establish his
case by a preponderance of evidence which means that the evidence, as a whole, adduced by
one side is superior to that of the other. In other words, damages cannot be presumed and
courts, in making an award must point out specific facts that could afford a basis for measuring
whatever compensatory or actual damages are borne.
PRICE QUOTATIONS ARE

MERELY ORDINARY
PRIVATE WRITINGS
The exhibits were presented ostensibly in the course of Del RosarioEs testimony. Private
respondent did not present any other witnesses especially those whose signatures appear in
the price quotations that became the bases of the award. We hold, however, that the price
quotations are ordinary private writings which under the Revised Rules of Court should have
been proffered along with the testimony of the authors thereof. Del Rosario could not have
testified on the veracity of the contents of the writings even though he was the seasoned owner
of a fishing fleet because he was not the one who issued the price quotations. Section 36, Rule
130 of the Revised Rules of Court provides that a witness can testify only to those facts that he
knows of his personal knowledge.
NO DAMAGES AWARDED
BASED ON HEARSAY
Accordingly, as stated at the outset, damages may not be awarded on the basis of hearsay
evidence.
IN THE ABSENCE OF
PROOF FOR ACTUAL
DAMAGES, INJURED
PARTY IS ENTITLED TO
NOMINAL DAMAGES
Nonetheless, the non-admissibility of said exhibits does not mean that it totally deprives private
respondent of any redress for the loss of its vessel. This is because in Lufthansa German
Airlines v. Court of Appeals, the Court said: In the absence of competent proof on the actual
damage suffered, private respondent is Aentitled to nominal damages which, as the law says,
is adjudicated in order that a right of the plaintiff, which has been violated or invaded by
defendant, may be vindicated and recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered.
NOMINAL DAMAGES
DEFINED
Actually, nominal damages are damages in name only and not in fact. Where these are
allowed, they are not treated as an equivalent of a wrong inflicted but simply in recognition of
the existence of a technical injury. However, the amount to be awarded as nominal damages
shall be equal or at least commensurate to the injury sustained by private respondent
considering the concept and purpose of such damages. The amount of nominal damages to be
awarded may also depend on certain special reasons extant in the case.
ALLEGATIONS IN THE
COMPLAINT MAY BE A
BASIS FOR THE AMOUNT
OF NOMINAL DAMAGES
Applying now such principles to the instant case, we have on record the fact that petitionerEs
vessel Petroparcel was at fault as well as private respondentEs complaint claiming the amount
of P692,680.00 representing the fishing nets, boat equipment and cargoes that sunk with the
M/V Maria Efigenia XV. In its amended complaint, private respondent alleged that the vessel
had an actual value of P800,000.00 but it had been paid insurance in the amount of
P200,000.00 and, therefore, it claimed only the amount of P600,000.00. Ordinarily, the receipt
of insurance payments should diminish the total value of the vessel quoted by private
respondent in his complaint considering that such payment is causally related to the loss for
which it claimed compensation. This Court believes that such allegations in the original and
amended complaints can be the basis for determination of a fair amount of nominal damages
inasmuch as a complaint alleges the ultimate facts constituting the plaintiffEs cause of action.
Private respondent should be bound by its allegations on the amount of its claims.
Algarra v. Sandejas, 27 Phil. 284 (1914)

ACTUAL DAMAGES FOR A
NEGLIGENT ACT OR
OMISSION ARE CONFINED
TO DIRECT AND
IMMEDIATE
CONSEQUENCES
Under both the Spanish Civil Code and American law of damages, actual damages for a
negligent act or omission are confined to those which "were foreseen or might have been
foreseen," or those which were "the natural and probable consequences" or "the direct and
immediate consequences" of the act or omission.
In this jurisdiction the author of a negligent act or omission which causes damage to another is
obliged to repair the damage done. This is practically equivalent to compensatory or actual
damages as those terms are used in American law.
If it is a question of losses occasioned through other causes, except fraud, and the contracting
parties have not covenanted any indemnity for the case of nonfulfillment, then the reparation of
the losses or damages shall only comprise those that are the necessary and immediate
consequence of that fault. This rule may not be very clear, but is the only one possible in a
matter more of the domain of prudence than of law.
Or the calculation of the damages claimed, it is necessary, pursuant to the provisions of article
924 of the Law of Civil Procedure, to give due regard to the nature of the obligation that was
unfulfilled and to the reasonable consequences of its nonfulfillment, because the conviction
sought can be imposed only when there exists a natural and true relation between such
nonfulfillment and the damages, whatever reason there may be to demand them on another
account
"The view which I shall endeavor to justify is that, for only, are deemed 'immediate,' 'proximate,'
or, to anticipate a little, 'natural and probable,' which a person of average competence and
knowledge, being in the like case with the person whose conduct is complained of, and having
the like opportunities of observation, might be expected to foresee as likely to follow upon such
conduct. This is only where the particular consequence is not known to have been intended or
foreseen by the actor. If proof of that be forthcoming, whether the consequence was
'immediate' or not does not matter. That which a man actually foresees is to him, at all events,
natural and probable
PAIN AND SUFFERING ARE

NOT ELEMENTS FO
ACTUAL DAMAGES
Pain and suffering, whether physical or mental, are not elements of actual or compensatory
damages in this jurisdiction. Aside from this exception, the measure of damages in this country
and in the United States is arrived at by the same evidence.
Actual damages, under the American system, include pecuniary recompense for pain and
suffering, injured feelings, and the like. Article 1902, as interpreted by this court in Marcelo vs.
LOSS OF PROFITS: NOT

NECESSARILY
SPECULATIVE EVEN IF IT
CANNOT BE DETERMINED
WITH CERTAINTY
Velasco (11 Phil. Rep., 287), does not extend to such incidents. Aside from this exception,
actual damages, in this jurisdiction, in the sense that they mean just compensation for the loss
suffered, are practically synonymous with actual damages under the American system.
Loss of profits of an established business which was yielding fairly steady returns at the time of
its interruption by defendant's wrongful act is not so speculative or contingent that a court of
justice may refuse to allow the plaintiff any damages at all. When the evidence shows the
previous average income of the plaintiff's business and the reduced receipts therefrom during
or immediately after the interruption, there can be no doubt that a loss of profits has resulted.
The fact that such a loss cannot be determined with exactitude is no reason for refusing to
allow them at all. In such a case damages should be allowed for the diminution in profits from
the time of the interruption until the business has resumed its normal proportions, based upon
the time it has taken or will take the owner to rebuild it by the exercise of proper diligence.
According to the text of article 1106 of the Civil Code, which, according to the decision of
February 7, 1900 (referred to above), is the generic conception of what article 1902 embraces,
actual damages include not only loss already suffered, but loss of profits which may not have
been realized. The allowance of loss of prospective profits could hardly be more explicitly
provided for. But it may not be amiss to refer to the decisions of the supreme court of Spain for
its interpretation of this article Pursuant to articles 1106 and 1107 of the same Code, which
govern in general the matter of indemnity due for the nonfulfillment of obligations, the indemnity
comprises, not only the value of the loss suffered, but also that of the prospective profit that
was not realized, and the obligation of the debtor in good faith is limited to such losses and
damages as were foreseen or might have been foreseen at the time the obligation was incurred
and which are a necessary consequence of his failure of fulfillment. Losses and damages
under such limitations and frustrated profits must, therefore, be proved directly by means of the
evidence the law authorizes."
In Sanz vs. Lavin Bros. (6 Phil. Rep., 299), this court, citing numerous decisions of the supreme
court of Spain, held that evidence of damages "must rest upon satisfactory proof of the
existence in reality of the damages alleged to have been suffered." But, while certainty is an
essential element of an award of damages, it need not be a mathematical certainty. That this is
true is adduced not only from the personal injury cases from the supreme court of Spain which
we have discussed above, but by many cases decided by this court, reference to which has
already been made. As stated in Joyce on Damages, section 75, "But to deny the injured party
the right to recover any actual damages in cases of torts because they are of such a nature as
cannot be thus certainly measured, would be to enable parties to profit by and speculate upon
their own wrongs; such is not the law."
As to the elements to be considered in "estimating the damage done to plaintiff's business by
reason of his accident, this same author, citing numerous authorities, has the following to say:
"It is proper to consider the business the plaintiff is engaged in, the nature and extent of such
business, the importance of his personal oversight and superintendence in conducting it, and
the consequent loss arising from his inability to prosecute it."
The business of the present plaintiff required his immediate supervision. All the profits derived
therefrom were wholly due to his own exertions. Nor are his damages confined to the actual
time during which he was physically incapacitated for work, as is the case of a person working
for a stipulated daily or monthly or yearly salary.
AWARD OF DAMAGES:
INTENTIONAL OR
NEGLIGENT UNDER
AMERICAN LAW
The rules for the measure of damages, once that liability is determined, are, however,
somewhat different, The Civil Code requires that the defendant repair the damage caused by
his fault or negligence. No distinction is made therein between damage caused maliciously and
intentionally and damages caused through mere negligence in so far as the civil liability of the
wrongdoer is concerned. Nor is the defendant required to do more than repair the damage
done, or, in other words, to put the plaintiff in the same position, so far as pecuniary
compensation can do so, that he would have been in had the damage not been inflicted. In this
respect there is a notable difference between the two systems. Under the Anglo-Saxon law,
when malicious or willful intention to cause the damage is an element of the defendant's act, it
is quite generally regarded as an aggravating circumstance for which the plaintiff is entitled to
more than mere compensation for the injury inflicted. These are called exemplary or punitive
damages, and no provision is made for them in article 1902 of the Civil Code.
Again, it is quite common under the English system to award what is called nominal damages
where there is only a technical violation of the plaintiff's rights resulting in no substantial injury
to him. This branch of damages is also unknown under the Civil Code. If no damages have
actually occurred there can be none to repair and the doctrine of nominal damages is not
applicable. Thus it has been often held by the supreme court of Spain that a mere
noncompliance with the obligations of a contract is not sufficient to sustain a judgment for
damages. It must be shown that damages actually existed.
When it is shown that a plaintiff's business is a going concern with a fairly steady average profit
on the investment, it may be assumed that had the interruption to the business through
defendant's wrongful act not occurred, it would have continued producing this average income
"so long as is usual with things of that nature." When in addition to the previous average
income of the business it is further shown what the reduced receipts of the business are
immediately after the cause of the interruption has been removed, there can be no manner of
doubt that a loss of profits has resulted from the wrongful act of the defendant.
That this almost total destruction of his business was directly chargeable to defendant's
wrongful act, there can be no manner of doubt; and the mere fact that the loss can not be
ascertained with absolute accuracy, is no reason for denying plaintiff's claim altogether. As
stated in one case, it would be a reproach to the law if he could not recover damages at all.
"When a regular and established business, the value of which may be ascertained, has been
wrongfully interrupted, the true general rule for compensating the party injured is to ascertain
how much less valuable the business was by reason of the interruption, and allow that as
damages. This gives him only what the wrongf ul act deprived him of. The value of such a
business depends mainly on the ordinary profits derived from it. Such value cannot be
ascertained without showing what the usual profits are; nor are the ordinary profits incident to
such a business contingent or speculative, in the sense that excludes profits from consideration
as an element of damages. What they would have been, in the ordinary course of the business,
for a period during which it was interrupted, may be shown with reasonable certainty. What
effect extraordinary circumstances would have had upon the business might be contingent and
conjectural, and any profits anticipated from such causes would be obnoxious to the objection
that they are merely speculative; but a history of the business, for a reasonable time prior to a
period of interruption, would enable the jury to determine how much would be done under
ordinary circumstances, and in the usual course, during the given period; and the usual rate of
profit being shown, of course the aggregate becomes only a matter of calculation."
EXCEPTION: Business that is not yet established: The plaintiffs' business lacked duration,
permanency, and recognition. It was an adventure, as distinguished from an established
business. Its profits were speculative and remote, existing only in anticipation.
ACTUAL DAMAGES:
COMPENSATORY THAN
PUNITIVE
The purpose of the law in awarding actual damages is to repair the wrong that has been done,
to compensate for the injury inflicted, and not to impose a penalty. Actual damages are not
dependent on nor graded by the intent with which the wrongful act is done.
The words 'actual damages' shall be construed to include all damages that the plaintiff may
show he has suffered in respect to his property, business, trade, profession, or occupation, and
no other damages whatever.
'Compensatory damages' as indicated by the word employed to characterize them, simply
make good or replace the loss caused by the wrong. They proceed from a sense of natural
justice, and are designed to repair that of which one has been deprived by the wrong of
another."
'Compensatory damages' are such as are awarded to compensate the injured party for injury
caused by the wrong, and must be only such as make just and fair compensation, and are due
when the wrong is established, whether it was committed maliciouslythat is, with evil
intentionor not.
"Except in those cases where the law authorizes the imposition of punitive or exemplary
damages, the party claiming damages must establish by competent evidence the amount of
such damages, and courts can not give judgment for a greater amount than those actually
proven
We are of the opinion that the requirements of article 1902, that the defendant repair the
damage done can only mean what is set forth in the above definitions. Anything short of that
would not repair the damages and anything beyond that would be excessive. Actual
compensatory damages are those allowed for tortious wrongs under the Civil Code; nothing
more, nothing less.
DAMAGES: QUESTION OF
FACT
The measure of damages is an ultimate fact, to be determined from the evidence submitted to
the court. The question is sometimes a nice one to determine, whether the offered evidence is
such as ought to be considered by the 'court in fixing the quantum of damages; and while the
complexity of human affairs is such that two cases are seldom exactly alike, a thorough
discussion of each case may permit of their more or less definite classification, and develop
leading principles which will be of great assistance to a court in determining the question, not
only of damages, but of the prior one of negligence. We are of the opinion that as the Code is
so indefinite (even though from necessity) on the subject of damages arising from fault or
negligence, the bench and bar should have access to and avail themselves of those great,
underlying principles which have been gradually and conservatively developed and thoroughly
tested in Anglo- Saxon courts. A careful and intelligent application of these principles should
have a tendency to prevent mistakes in the rulings of the court on the evidence offered, and
should assist in determining damages, generally, with some degree of uniformity.
The law of damages has not, for some reason, proved as favorite a theme with the civil-law
writers as with those of the common-law school. The decisions of the supreme court of Spain,
though numerous on damages arising from contractual obligations, are exceedingly few upon
damages for personal injuries arising ex delicto. The reasons for this are not important to the
present discussion. It is sufficient to say that the law of damages has not received the elaborate
treatment that it has at the hands of the AngloSaxon jurists. If we in this jurisdiction desire to
base our conclusions in damage cases upon controlling principles, we may develop those
principles and incorporate them into our jurisprudence by that difficult and tedious process
which constitutes the centuries-old history of Anglo-Saxon jurisprudence; or we may avail
ourselves of these principles in their present state of development without further effort than it
costs to refer to the works and writings of many eminent text-writers and jurists. We shall not
attempt to say that all these principles will be applicable in this jurisdiction. It must be constantly
borne in mind that the law of damages in this jurisdiction was conceived in the womb of the civil
law and under an entirely different form of government. These influences have had their effect
upon the customs and institutions of the country. Nor are the industrial and social conditions the
same.
The abstract rules for determining negligence and the measure of damages are, however, rules
of natural justice rather than man-made law, and are applicable under any enlightened system
of jurisprudence. There is all the more reason for our adopting the abstract principles of the
AngloSaxon law of damages. when we consider that there are at least two important laws on
our statute books of American origin, in the application of which we must necessarily be guided
by American authorities: they are the Libel Law (which, by the way, allows damages for injured
feelings and reputation, as well as punitive damages, in a proper case), and the Employers'
Liability Act.
Cerrano v. Tan Chuco, G.R. No. 12907, August 1, 1918

LOSS OF PROFITS
The plaintiff may recover compensation for any gain which the defendant's act prevented him
from acquiring and which he can make to appear with reasonable certainty.
DAMAGES RESULTING
FROM AVOIDABLE
CONSEQUENCES NOT
RECOVERABLE
It is a well recognized principle of law that damages resulting from avoidable consequences of
the breach of a contract are not recoverable. It is the duty of one injured by the act of another to
take such measures as prudent men usually take under such circumstances to reduce the
damage as much as possible.
Hicks v. Manila Hotel Company, G.R. No. 9973, November 6, 1914

BREACH BY ANTICIPATION
Where a party bound to the future performance of a contract puts it out of his power to perform
it, the other party may treat this as a breach and sue him at once, having thus an immediate
right of action for breach of the contract by anticipation.
DAMAGES IN BREACH OF
CONTRACT
Under articles 1106 and 1107 of the Civil Code the trial court should have found as damages in
favor of the plaintiff the profits which he failed to realize by reason of the refusal of the
defendant to permit him to continue under the contract for the second year, which were
foreseen or might have been foreseen at the time the contract was made and which were a
necessary consequence of the breach. The plaintiff, upon the breach of the contract by the
defendant, was entitled at once to sue for damages, and in that action he was entitled to
recover all that he would have received in the future as well as in the past if the contract had
been kept. In so doing he simply recovers the value of the contract to him at the time of the
breach, including all the damages, past or future, resulting from the total breach of the eontract.
Upon such breach the plaintiff was not bound to wait to see if defendant would change its
decision and take him back in its service or to resort to successive actions for damages from
time to time or leave the whole of his damages to be recovered at the termination of the period
for which the service was contracted.
REDUCTION: The action to recover damages for breach of contract in this case having been
brought before the termination of the period over which the services were to extend, defendant
was entitled to have deducted from plaintifTs damages any sum that plaintiff might have earned
in the past or might earn in the future; but no evidence having been offered upon that subject
by the defendant, no deduction can be made. The opportunity to earn wages or profits in
reduction of damages claimed will not be presumed but must be affirmatively shown by the
defendant.
Justiva v. Gustilo, 7 SCRA 72 (1963)

ATTORNEYS FEES WHEN
MAY BE AWARDED
Generally, the attorneyEs fees are not a proper element of damages, for it is not sound policy
to set a premium on the right to litigate.1 Thus, no right to such fees can accrue merely
because of an adverse decision.2 This is precisely the rationale for taxing costs, in certain
cases, against the losing party. The payment therefor, from the viewpoint of sanction, is
deemed sufficient. Nonetheless, various exceptions are provided for by law.3 Some of these
are: In case of a clearly unfounded civil action or preceeding or where the Court deems it
just and equitable that attorneyEs fees be recovered.
Although generally, attorneys fees are not a proper element of damages, and no right to such
fees can accrue merely because of an adverse decision, they may be awarded in case of a
clearly unfounded civil action or proceeding or where the Court deems it just and equitable.
MORAL DAMAGES: WHEN

IMPOSED
Moral damages may be imposed if the in- sincerity of the various amended complaints is
patent.
The unfounded allegation by the complainants that the documents were forged is all but a
defamation, and could, by analogy, be ground for payment of moral damages.
ACTUAL DAMAGES MAY
BE AWARDED THOUGH
NOT ALLEGED
The prayer for such further relief x x x as this Honorable Court may deem just and equitable,
may include actual damages although not alleged in the answer, if and when they are proved.
De Guia v. The Manila Electric Railroad & Light Company, G.R. No. 14335, January 28, 1920
POWER OF THE COURT
TO MODERATE LIABILITY
In determining the extent of liability for losses or damages resulting from negligence in the
fulfillment of a contractual obligation the courts have a discretionary power to moderate liability
according to the circumstances.
DEBTOR IN GOOD FAITH

ONLY LIMITED TO SUCH
A street- railway company which has exercised due care in the selection and instruction of the
motorman upon one of its cars should be considered a debtor in good faith as regards liability
towards a passenger who is injured by the negligence of the motorman in directing the car; and
the liability of the carrier to the injured party extends to such losses and damages only as could
be reasonably foreseen as a probable consequence of the physical injuries inflicted upon the
passenger and which are in fact a necessary result of those injuries.
LOSSES AND DAMAGES

ONLY AS COULD BE
REASONABLY FORESEEN
AS PROBABLE
CONSEQUENCE
Daywalt: "The extent of the liability for the breach of a contract must be determined in the light
of the situation in existence at the time the contract is made; and the damages ordinarily
recoverable are in all events limited to such as might be reasonably foreseen in the light of the
facts then known to the contracting parties."
MEDICAL SERVICES
GRATUITOUSLY
RENDERED NOT
RECOVERABLE
A person who is entitled to recover expenses of cure as an item of damage in a civil action for
physical injuries cannot recover doctor's bills for services gratuitously rendered; and the claim
must furthermore be limited to medical services reasonably suited to the case. Charges of
professional experts retained merely with a view to promote the success of the action for
damages should not be allowed.
Talisay-Silay Milling Co., Inc., v. Gonzales, G.R. No. 91852, August 15, 1995
UNREALIZED PROFITS
MUST BE REASONABLY
CERTAIN
The familiar rule is that damages consisting of unrealized profits, frequently referred as
Aganancias frustradasE or lucrum cessans, are not to be granted on the basis of mere
speculation, conjecture or surmise but rather by reference to some reasonably definite standard
such as market value, established experience or direct inference from known circumstances.
Uncertainty as to whether or not a claimant suffered unrealized profits at alli.e., uncertainty as
to the very fact of injury will, of course, preclude recovery of this species of damages.
Where, however, it is reasonably certain that injury consisting of failure to realize otherwise
reasonably expected profits had been incurred, uncertainty as to the precise amount of such
unrealized profits will not prevent recovery or the award of damages. The problem then would
be the ascertainment of the amount of such unrealized profits.
Lim v. Court of Appeals, G.R. No. 125817, January 16, 2002

INTEREST FOR DAMAGES
WHICH AMOUNT WAS NOT
KNOWN WILL ACCRUE
ONLY FROM THE DATE OF
THE JUDGMENT
We are constrained to depart from the conclusion of the lower courts that upon the award of
compensatory damages legal interest should be imposed beginning 22 July 1990, i.e. the date
of the accident. Upon the provisions of Art. 2213 of the Civil Code, interest cannot be
recovered upon unliquidated claims or damages, except when the demand can be established
with reasonable certainty. It is axiomatic that if the suit were for damages, unliquidated and
not known until definitely ascertained, assessed and determined by the courts after proof,
interest at the rate of six percent (6%) per annum should be from the date the judgment of the
court is made (at which time the quantification of damages may be deemed to be reasonably
ascertained).
DUTY TO EXERCISE
DILIGENCE TO MINIMIZE
DAMAGE
We have observed that private respondent left his passenger jeepney by the roadside at the
mercy of the elements. Article 2203 of the Civil Code exhorts parties suffering from loss or
injury to exercise the diligence of a good father of a family to minimize the damages resulting
from the act or omission in question. One who is injured then by the wrongful or negligent act of
another should exercise reasonable care and diligence to minimize the resulting damage.
Anyway, he can recover from the wrongdoer money lost in reasonable efforts to preserve the
property injured and for injuries incurred in attempting to prevent damage to it
DEFENDANT LIABLE ONLY

FOR ACTUAL LOSS
In awarding damages for tortuous injury, it becomes the sole design of the courts to provide for
adequate compensation by putting the plaintiff in the same financial position he was in prior to
the tort. It is a fundamental principle in the law on damages that a defendant cannot be held
liable in damages for more than the actual loss which he has inflicted and that a plaintiff is
entitled to no more than the just and adequate compensation for the injury suffered. His
recovery is, in the absence of circumstances giving rise to an allowance of punitive damages,
limited to a fair compensation for the harm done. The law will not put him in a position better
than where he should be in had not the wrong happened.
DAMAGES NOT ONLY

LIMITED TO DAMNUM
EMERGENS BUT ALSO
LUCRUM CESSANS
In the present case, petitioners insist that as the passenger jeepney was purchased in 1982 for
only P30,000.00 to award damages considerably greater than this amount would be improper
and unjustified. Petitioners are at best reminded that indemnification for damages comprehends
not only the value of the loss suffered but also that of the profits which the obligee failed to
obtain. In other words, indemnification for damages is not limited to damnum emergens or
actual loss but extends to lucrum cessans or the amount of profit lost.
Adrian Wilson International Associates, Inc., v. TMX Philippines, Inc., G.R. No. 162608, July 26, 2010
ACTUAL DAMAGES MUST
BE BASED ON EVIDENCE
PRESENTED
Actual damages puts the claimant in the position in which he had been before he was injured.
The award thereof must be based on the evidence presented, not on the personal knowledge
of the court; and certainly not on flimsy, remote, speculative and nonsubstantial proof. Under
the Civil Code, one is entitled to an adequate compensation only for such pecuniary loss
suffered by him as he has duly proved.
People v. Mamaruncas, G.R. No. 179497, January 25, 2012

MORAL DAMAGES ARE
MANDATORY WITHOUT
NEED OF PROOF OTHER
THAN THE DEATH OF THE
VICTIM OWING TO THE
The Court modifies the award of civil indemnity in the amount of P50,000.00. In line with
prevailing jurisprudence, said award is increased to P75,000.00. Anent the award of moral
damages, the CA correctly imposed the amount of P50,000.00. These awards are mandatory
without need of allegation and proof other than the death of the victim, owing to the fact of the
commission of murder or homicide.
COMMISSION OF MURDER
ACTUAL DAMAGES MUST

BE PROVED
Anent the award of actual damages, the victimEs widow testified that the family spent a total of
P66,904.00 relative to the wake and burial of the victim. However, the claim for said amount is
supported merely by a list of expenses personally prepared by the widow instead of official
receipts. To be entitled to an award of actual damages, it is necessary to prove the actual
amount of loss with a reasonable degree of certainty, premised upon competent proof and on
the best evidence obtainable x x x. A list of expenses cannot replace receipts when the latter
should have been issued as a matter of course in business transactions. Thus the Court
deletes the lower courtsE award of actual damages. Nonetheless, since entitlement of the
same is shown under the facts of the case, temperate damages in the amount of P25,000.00
should be awarded in lieu of actual damages to the heirs of the victim pursuant to Article 2224
of the Civil Code which provides that temperate damages may be recovered when the court
finds that pecuniary loss has been suffered but its amount cannot, from the nature of the case,
be proved with certainty.
INDEMNITY FOR LOSS OF

EARNING CAPACITY MAY
The CA correctly deleted the indemnity for loss of earning capacity awarded by the trial court.
Such indemnity cannot be awarded in the absence of documentary evidence except where the
NOT BE AWARDED IN THE
ABSENCE OF
DOCUMENTARY
EVIDENCE
victim was either self-employed or a daily wage worker earning less than the minimum wage
under current labor laws. As testified to by the widow, Florenda Batoon, the victim was earning
a monthly income of P20,000.00 and P90,000.00 as an auto repair shop and a six-wheeler
truck operator, respectively. The trial court made a conservative estimate of P500.00 a day as
the net income from the truck alone after making reasonable deductions from its operation.
Thus, ranged against the daily minimum wage then prevailing in Region X which is P137.00 per
day pursuant to Wage Order No. RX-03, this case undoubtedly does not fall under the
exceptions where indemnity for loss of earning capacity can be given despite the lack of
documentary evidence.
People v. Arellano, G.R. No. 122477, June 30, 2000

TWO FACTORS IN
DETERMINING AMOUNT
OF LOSS OF EARNING
CAPACITY
The amount of loss of earning capacity is based mainly on two factors. These are (1) the
number of years of which the damages shall be computed; and (2) the rate at which the losses
sustained by the respondent should be fixed. Factor number one in this ruling shall be
computed by using the formula based on the American Expectancy Table of Mortality or 2/3 x
[80 - age of the victim at the time of death] = life expectancy in terms of years. Applying this
formula, AndresE life expectancy is 2/3 x (80 - 18) = 41.33. Factor number two is arrived at by
multiplying the life expectancy by the earning of the deceased. As has been settled in the case
of Villa Rey Transit, Inc. v. Court of Appeals, and a long list of cases the computation of the rate
of loss of earnings should be based on the net earnings.
PRESUMPTION TO HAVE
WORKED EVERYDAY
INCLUDING SUNDAYS,
ETC.
In this case, Andres Ventura was eighteen years of age at the time of his death with a life
expectance of 41 years. The undisputed claim of the victimEs mother was that Andres was
employed as a laborer at the Victory Rice Mill at the rate of P100.00 a day, which was,
likewise, admitted by the defense. The crime was committed on a Sunday after the victim and
his co-workers had finished their work for the day. The victim should, therefore, be presumed to
have worked everyday including Sundays or rest days, special days and regular holidays. As
such, under the 1999 Handbook on WorkersE Statutory Monetary Benefits outlining the
minimum legal requirements concerning workersE monetary and non-monetary benefits that
was approved by DOLE Secretary Bienvenido E. Laguesma on December 14, 1999, the victim
is deemed to have worked a total of 391.50 days a year with total wages in the amount of
P39,150.00 per annum (P100/day x 391.50 days). One half of this amount would be considered
as his necessary living expenses. The victimEs loss of earning capacity should, therefore, be
computed as follows: 41.33 x P19,575.00 = P809,034.75.
GENERALLY RECEIPTS
ARE REQUIRED TO PROVE
ACTUAL DAMAGES;
EXCEPTION: WHEN THE
OTHER PARTY DID NOT
OBJECT
Civil indemnity in the amount of P50,000.00 is automatically granted to the heirs of the victim
without need of any evidence other than the fact of the commission of the crime. The heirs of
the victim should also be awarded actual damages in the total amount of P13,000.00 as the
defense admitted that the victimEs family incurred funeral expenses of P6,000.00 and medical
expenses of P7,000.00. Ordinarily, receipts should support claims of actual damages.
However, since the defense did not contest that claim, it should be granted.
People v. Anticamara, G.R. No. 178771, June 8, 2011

MANDATORY CIVIL
INDEMNITY: DEATH
PENALTY CASES
In Criminal Case No. 4498-R, the award of civil indemnity is mandatory and granted to the heirs
of the victim without need of proof other than the commission of the crime. In People v.
Quiachon, 500 SCRA 704 (2006), even if the penalty of death is not to be imposed because of
the prohibition in R.A. 9346, the civil indemnity of P75,000.00 is proper, because it is not
dependent on the actual imposition of the death penalty but on the fact that qualifying
circumstances warranting the imposition of the death penalty attended the commission of the
offense. As explained in People v. Salome, while R.A. No. 9346 prohibits the imposition of the
death penalty, the fact remains that the penalty provided for by law for a heinous offense is still
death, and the offense is still heinous. Accordingly, the award of civil indemnity in the amount of
P75,000.00 is proper.
10
MORAL DAMAGES
MANDATORY IN CASES OF
MURDER
Anent moral damages, the same are mandatory in cases of murder, without need of allegation
and proof other than the death of the victim. However, consistent with recent jurisprudence on
heinous crimes where the imposable penalty is death but reduced to reclusion perpetua
pursuant to R.A. No. 9346, the award of moral damages should be increased from P50,000.00
to P75,000.00.
MANDATORY CIVIL
INDEMNITY FOR VICTIMS
OF RAPE
In addition, AAA is entitled to moral damages pursuant to Article 2219 of the Civil Code, without
the necessity of additional pleadings or proof other than the fact of rape. Moral damages is
granted in recognition of the victimEs injury necessarily resulting from the odious crime of rape.
Such award is separate and distinct from the civil indemnity. However, the amount of
P100,000.00 awarded as moral damages is reduced to P75,000.00, in line with current
jurisprudence.
Cariaga v. Laguna Tayabas Bus Company, G.R. No. L- 11037, December 29, 1960
FACTS:
Bus driven by Moncada and owned by Laguna Tayabas Bus Company bumped against the
engine of a train. Driver instantly died. Its passenger Carriaga, who was a senior student of
medicine, was severely injured including a big hole in his frontal lobe of the brain. Plaintiff sued
(breach of contract).
TC: LTB liable to pay P10,000+ compensatory damages to Carriaga. But dismissed crossclaim
against Manila Railroad. No actual and moral damages awarded.
ISSUE: Were the damages awarded proper? No.
HELD:
SC awarded actual damages (hospitalization expenses, etc); compensatory damages(loss of
earning capacity and P300 minimum monthly salary as attested by witness. No moral
damages.
Upon this premise it claims that only the actual damages suffered by Edgardo Cariaga
consisting of medical, hospital and other expenses in the total sum of P17,719.75 are within
this category. We are of the opinion, however, that the income which Edgardo Cariaga could
earn if he should finish the medical course and pass the corresponding board examinations
must be deemed to be within the same category because they could have reasonably been
foreseen by the parties at the time he boarded the bus No. 133 owned and operated by the
LTB. At that time he was already a fourth-year student in medicine in a reputable university.
While his scholastic record may not be first rate (Exhibits 4, 4-A to 4C), it is, nevertheless,
sufficient to justify the assumption that he could have finished the course and would have
passed the board test in due time. As regards the income that he could possibly earn as a
medical practitioner, it appears that, according to Dr. Amado Doria, a witness for the LTB, the
amount of P300.00 could easily be expected as the minimum monthly income of Edgardo had
he finished his studies.
Upon consideration of all the facts mentioned heretofore, this Court is of the opinion, and so
holds, that the compensatory damages awarded to Edgardo Cariaga should be increased to
P25,000.00.
MORAL DAMAGES
RECOVERABLE ARE
EXCLUSIVE IN ART. 2219
Article 2219 of the Civil Code enumerates the instances when moral damages may be
recovered. Plaintiffs' claim for moral damages not falling under any one of them, the same
cannot be granted.
BAD FAITH NEEDED IN

BREACH OF CONTRACT
CASES (MORAL
Neither could defendant LTB be held liable to pay moral damages to plaintiffs under Art. 2220
of the Civil Code on account of breach of its contract of carriage because said defendant did
not act fraudulently or in bad faith in connection therewith.
11
DAMAGES)
ONLY CONTRACTUAL
PARTIES ARE ENTITLED
TO COMPENSATORY
DAMAGES
Since the present action is based upon a breach of contract of carriage and plaintiff's parents
were not a party thereto and were not themselves injured as a result of the collision, their claim
for actual and compensatory damages is without merit.
Villa Rey Transit v. Court of Appeals, G.R. No. L-25499, February 18, 1970
FACTS:
Bus owned by Villa Rey and driven by Calim slammed a bullcart full of hay and bamboo poles.
The pole gored through passenger Quintos left eye and fractured that part of his skull. He
eventually died. Siblings as heirs sued for damages based breach of contract of carriage.
TC: Awarded an aggregate sum of P63,700 including attorneys fees. It also said that the
funeral expenses and attorneys fees would entitle them in the amount of P73,000+ but still
awarded P63,700 (ang labo).
CA: Affirmed TCs decision. It pointed out that TC was correct in computing the loss of earning
capacity of victim.
ISSUE: Were damages awarded correct?
HELD:
CA and TC are correct.
Thus, life expectancy is, not only relevant, but, also, an important element in fixing the amount
recoverable by private respondents herein. In short, the Court of Appeals has not erred in
basing the computation of petitionerEs liability upon the life expectancy of Policronio Quintos,
Jr.
With respect to the rate at which the damages shall be computed, petitioner impugns the
decision appealed from upon the ground that the damages awarded therein will have to be paid
now, whereas most of those sought to be indemnified will be suffered years later: This
argument is basically true, and this is, perhaps, one of the reasons why the Alcantara case
points out the absence of a AAfixed basis for the ascertainment of the damages recoverable
in litigations like the one at bar. Just the same, the force of the said argument of petitioner
herein is offset by the fact that, although payment of the award in the case at bar will have to
take place upon the finality of the decision therein, the liability of petitioner herein had been
fixed at the rate only of P2,184.00 a year, which is the annual salary of Policronio Quintos, Jr.
at the time of his death, as a young training assistant in the Bacnotan Cement Industries,
Inc.
At this juncture, it should be noted, also, that We are mainly concerned with the determination
of the losses or damages sustained by the private respondents, as dependents and intestate
heirs of the deceased, and that said damages consist, not of the full amount of his earnings,
but of the support they received or would have received from him had he not died in
consequence of the negligence of petitionerEs agent. In fixing the amount of that support, We
must reckon with the necessary expenses of his own living, which should be deducted from
his earnings. Thus, it has been consistently held that earning capacity, as an element of
damages to oneEs estate for his death by wrongful act is necessarily his net earning capacity
or his capacity to acquire money, less the necessary expense for his own living3 Stated
otherwise, the amount recoverable is not loss of the entire earning, but rather the loss of that
portion of the earnings which the beneficiary would have received.4 In other words, only net
earnings, not gross earning, are to be considered5 that is, the total of the earnings less
expenses necessary in the creation of such earnings or income6 and less living and other
incidental expenses
12
LIFE EXPECTANCY AS
BASIS FOR RECOVERY
Life expectancy of the victim is, not only relevant, but also an important element in fixing the
amount recoverable as damages. Although it is not the sole element determinative of said
amount no cogent reason has been given to warrant its disregard and the adoption of a purely
arbitrary standard such as a four-year rule.
The ruling in Alcantara v. Surro in which the damages were computed on a four-year basis,
despite the fact that the victim therein was 39 years old at the time of his death and had a life
expectancy of 28.90 years, does not apply in the instant ease. In the first case, none of the
parties had questioned the propriety of the four-year basis adopted by the trial court in making
its award of damages, but in the instant case, the question was squarely presented as issue.
NET EARNINGS AND NOT

GROSS EARNING
CAPACITY; HOW
COMPUTED
In the determination of the losses or damages sustained by dependents and intestate heirs of
the deceased, said damages consist not of the full amount of his earnings, but of the support
they received or would have received from him had he not died in consequence of the
negligence of defendant. In fixing the amount of that support, the necessary expenses of
deceased of his own living should be deducted from his earnings?. Thus, it has been
consistently held that earning capacity, as an element of damages to oneEs estate for his
death by wrongful act is necessarily his net earning capacity, or his capacity to acquire money
less than the necessary expense for his own living. Stated otherwise, the amount recoverable
is not the loss of the entire earning, but rather the loss of that portion of the earnings which the
beneficiary would have received. In other words, only net earnings not gross earning, are to be
considered, that is, the total of the earnings less expenses necessary in the creation of such
earning or income and less living and other incidental expenses.
Cruz v. Sun Holidays, Inc., G.R. No. 186312, June 29, 2010
FACTS:
Newly-wed couple Cruz, while enjoying their vacation in Coco Beach, decided to participate in
a scuba diving activity conducted by Coco Beach instructors. Despite the inclement weather
condition, Coco Beach management still decided to pursue such. Due to strong winds and
heavy rains, M/V Coco Beach, in which Sps. Cruz were onboard, capsized. Sps. Cruz died.
Parents sued for damages (breach of contract).
TC: Sun Holidays not liable. It exercised due diligence as a private carrier.
CA: Affirmed.
SC:
First, they are a common carrier. The law makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one who does such carrying
only as an ancillary activity (in local idiom, as a sideline). Article 1732 also carefully avoids
making any distinction between a person or enterprise offering transportation service on a
regular or scheduled basis and one offering such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services
to the general public, i.e., the general community or population, and one who offers services
or solicits business only from a narrow segment of the general population. We think that Article
1733 deliberately refrained from making such distinctions.
Second, they are liable as common carrier. Extraordinary diligence not proved.
LIABILITY OF A COMMON
CARRIER FOR BREACH OF
CONTRACT
Third, (1) P50,000 as indemnity for the death of Ruelito Cruz; (2) P8,316,000 as indemnity for
RuelitoEs loss of earning capacity; (3) P100,000 as moral damages; (4) P100,000 as
exemplary damages; (5) 10% of the total amount adjudged against respondent as attorneys
fees.
Article 1764 vis-a-vis Article 2206 of the Civil Code holds the common carrier in breach of its
contract of carriage that results in the death of a passenger liable to pay the following: (1)
indemnity for death, (2) indemnity for loss of earning capacity and (3) moral damages
13
LOSS OF EARNING
CAPACITY, HOW
COMPUTED
The first factor, i.e., life expectancy, is computed by applying the formula (2/3 x [80 age at
death]) adopted in the American Expectancy Table of Mortality or the Actuarial of Combined
Experience Table of Mortality.
The second factor is computed by multiplying the life expectancy by the net earnings of the
deceased, i.e., the total earnings less expenses necessary in the creation of such earnings or
income and less living and other incidental expenses. The loss is not equivalent to the entire
earnings of the deceased, but only such portion as he would have used to support his
dependents or heirs. Hence, to be deducted from his gross earnings are the necessary
expenses supposed to be used by the deceased for his own needs.
In computing the third factor necessary living expense, Smith Bell Dodwell Shipping Agency
Corp. v. Borja teaches that when, as in this case, there is no showing that the living expenses
constituted the smaller percentage of the gross income, the living expenses are fixed at half of
the gross income.
De Caliston v. Court of Appeals, G.R. No. L-63135, June 24, 1983

FACTS:
Bus driver Dalamacia ran over Juana Vda. Darrocha, who was a USVA pensioner. She
instantly died. Her daughter sued. Driver Dalamacia was charged of Reckless Imprudence
resulting in homicide.
TC: Driver is guilty. Ordered P15,000.00 for the death of the victim, P5,000.00 as moral
damages, P5,000.00 for burial expenses and P10,000.00 for loss of pension which the
deceased had failed to receive.
CA: Absolved Dalmacio from the payment of the P10,000.00 for loss of pension and credited
him for the amount of P5,000.00 previously paid to the herein petitioner under a vehicular
insurance policy obtained by the bus owner.
SC:
The removal of the P10,000.00 awarded for loss of pension is unjustified. Under Article 2206 of
the Civil Code. The pension of the decedent being a sure income that was cut short by her
death for which Dalmacio was responsible, the surviving heir of the former is entitled to the
award of P10,000.00 which is just equivalent to the pension the decedent would have received
for one year if she did not die (see doctrine).
AWARD FOR PENSION
DEMANDABLE
The pension of the decedent being a sure income that was cut short by her death for which
Dalmacio was responsible, the surviving heir of the former is entitled to the award of
P10,000.00 which is just equivalent to the pension the decedent would have received for one
year if she did not die.
Metro Manila Transit Corporation v. Court of Appeals, G.R. No. 116617, November 16, 1998
FACTS:
rd
Bus no. 27 owned by MMTC and driven by Musa hit Liza Rosalie, a 3 year HS student of
UPIS, while she was crossing Katipunan Ave. She died. Driver was charged of Reckless
Imprudence Resulting in Homicide. Parents filed an independent civil action against MMTC and
GSIS (quasi-delict).
TC: Found MMTC liable. Ordered to pay
1. Actual damages in the amount of P150,000.00;
2. Moral damages in the amount of P500,000.00;
3. Exemplary damages in the amount of P100,000.00;
4. Attorneys fees in the amount of P50,000.00
14
CA: Deleted 150k as actual and replaced it with 30k (increased to 50k) as indemnity for death.
SC:
Awarded:
1) death indemnity in the amount of fifty thousand pesos (P50,000.00);
2) actual damages in the amount of sixty thousand two hundred twenty six pesos and sixty five
centavos (P60,226.65);
3) moral damages in the amount of one million pesos (P1,000,000.00);
4) exemplary damages in the amount of five hundred thousand pesos (P500,000.00);
5) attorneyEs fees in the amount of fifty thousand pesos (P50,000.00);
6) compensation for loss of earning capacity in the amount of three hundred twenty-one
thousand eight hundred seventy pesos and twelve centavos (P321,870.12)
The argument for allowing compensation for loss of earning capacity of a minor is even
stronger if he or she was a student, whether already training for a specific profession or still
engaged in general studies.
In sharp contrast with the situation obtaining in People v. Teehankee, where the prosecution
merely presented evidence to show the fact of the victimEs graduation from high school and
the fact of his enrollment in a flying school, the spouses Rosales did not content themselves
with simply establishing Liza RosalieEs enrollment at UP Integrated School. They presented
evidence to show that Liza Rosalie was a good student, promising artist, and obedient child.
She consistently performed well in her studies since grade school.42 A survey taken in 1984
when Liza Rosalie was twelve years old showed that she had good study habits and
attitudes.43 Cleofe Chi, guidance counselor of the University of the Philippines Integrated
School, described Liza Rosalie as personable, well-liked, and with a balanced personality.44
Professor Alfredo Rebillon, a faculty member of the University of the Philippines College of Fine
Arts, who organized workshops which Liza Rosalie attended in 1982 and 1983, testified that
Liza Rosalie had the potential of eventually becoming an artist.45 Professor RebillonEs
testimony is more than sufficiently established by the 51 samples of Liza RosalieEs watercolor,
charcoal, and pencil drawings submitted as exhibits by the spouses Rosales.46 Neither MMTC
nor Pedro Musa controverted this evidence. Considering her good academic record, extracurricular activities, and varied interests, it is reasonable to assume that Liza Rosalie would
have enjoyed a successful professional career had it not been for her untimely death. Hence, it
is proper that compensation for loss of earning capacity should be awarded to her heirs in
accordance with the formula established in decided cases
INDEMNITY FOR DEATH:
FIXED AMOUNT
Art. 2206 provides for the payment of indemnity for death caused by a crime or quasi-delict.
Initially fixed in said article of the Civil Code at P3,000.00, the amount of the indemnity has
through the years been gradually increased based on the value of the peso. At present, it is
fixed at P50,000.00. To conform to this new ruling, the Court of Appeals correctly increased the
indemnity it had originally ordered the spouses Rosales to be paid from P30,000.00 to
P50,000.00 in its resolution, dated September 12, 1996.
REIMBURSEMENT UNDER
ART. 2181
As already stated, MMTC is primarily liable for damages for the negligence of its employee in
view of Art. 2180. Pursuant to Art. 2181, it can recover from its employee what it may pay. This
does not make the employeeEs liability subsidiary. It only means that if the judgment for
damages is satisfied by the common carrier, the latter has a right to recover what it has paid
from its employee who committed the fault or negligence which gave rise to the action based
on quasi-delict. Hence, the spouses Rosales have the option of enforcing the judgment against
either MMTC or Musa.
Tamayo v. Senora, G.R. No. 176946, November 15, 2010

FACTS:
A tricycle driven by Amparo bumped from behind the motorcycle ridden by Seora, a police
15
chief inspector of the PNP, which resulted in the encroachment of another lane. Because of
this, Seora was ran over by an Isuzu van driven by Polloso and registered to Tamayo. Victims
heir sued Polloso, Tamayo and Amparo.
TC: Held them solidarily liable as joint tortfeasors and ordered to pay the latter the amounts of
P105,100.00 for actual damages, P50,000.00 for loss of life, P1,152,360.00 for loss of earnings
and P30,000.00 for attorneys fees.
CA: Affirmed the decision but modified damages for loss of earnings to P1,887,847.00 on the
basis of the formula
SC:
The CA correctly modified the RTCs computation. The RTC had misapplied the formula
generally used by the courts to determine net earning capacity, which is:
Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary
living expenses).
Life expectancy shall be computed by applying the formula (2/3 x [80 - age at death]) adopted
from the American Expectancy Table of Mortality or the Actuarial of Combined Experience
Table of Mortality.
LOSS OF EARNING
CAPACITY
The Court sustains the award for loss of earning capacity by the CA. The award of damages for
loss of earning capacity is concerned with the determination of losses or damages sustained by
respondents, as dependents and intestate heirs of the deceased. This consists not of the full
amount of his earnings, but of the support which they received or would have received from him
had he not died as a consequence of the negligent act. Thus, the amount recoverable is not the
loss of the victimEs entire earnings, but rather the loss of that portion of the earnings which the
beneficiary would have received. Indemnity for loss of earning capacity is determined by
computing the net earning capacity of the victim.
Philippine Hawk Corporation v. Lee, G.R. No. 166869, February 16, 2010
FACTS:
A jeepney, a bus driven by Margarito Avila and owned by Phil Hawk, and Silvio Tans
motorcycle figured in an accident. Silvio Tan died. Vivian Lee, who also suffered injuries, sued
for damages (QD).
TC: Bus company and driver liable. Philippine Hawk Corporation and Margarito Avila must pay
them jointly and solidarily the sum of P745,575.00 representing loss of earnings and actual
damages plus P50,000.00 as moral damages
CA: Modified (a) P168,019.55 as actual damages; (b) P10,000.00 as temperate damages; (c)
P100,000.00 as moral damages; (d) P590,000.00 as unearned income; and (e) P50,000.00 as
civil indemnity.
SC:
Modified loss of earning capacity to P1,000,000.
In this case, the records show that respondents husband was leasing and operating a Caltex
gasoline station in Gumaca, Quezon. Respondent testified that her husband earned an annual
income of one million pesos. Respondent presented in evidence a Certificate of Creditable
Income Tax Withheld at Source for the Year 1990. It is reasonable to use the Certificate and
respondents testimony as bases for fixing the gross annual income of the deceased at one
million pesos before respondents husband died. However, no documentary evidence was
presented regarding the income derived from their copra business; hence, the testimony of
respondent as regards such income cannot be considered.
16
LOSS OF EARNING
CAPACITY WITHOUT
DOCUMENTARY
EVIDENCE (EXCEPTIONS)
The indemnity for loss of earning capacity of the deceased is provided for by Article 2206 of the
Civil Code. Compensation of this nature is awarded not for loss of earnings, but for loss of
capacity to earn money. As a rule, documentary evidence should be presented to substantiate
the claim for damages for loss of earning capacity.
By way of exception, damages for loss of earning capacity may be awarded despite the
absence of documentary evidence when:
(1) the deceased is self- employed and earning less than the minimum wage under current
labor laws, in which case, judicial notice may be taken of the fact that in the deceasedEs line of
work no documentary evidence is available; or
(2) the deceased is employed as a daily wage worker earning less than the minimum wage
under current labor law
ONLY NET EARNINGS

COMPUTED
In the computation of loss of earning capacity, only net earnings, not gross earnings, are to be
considered; that is, the total of the earnings less expenses necessary for the creation of such
earnings or income, less living and other incidental expenses. In the absence of documentary
evidence, it is reasonable to peg necessary expenses for the lease and operation of the
gasoline station at 80 percent of the gross income, and peg living expenses at 50 percent of
the net income (gross income less necessary expenses).
OMC Carriers, Inc., v. Nabua, G.R. No. 148974, July 2, 2010
MORAL DAMAGES
Death indemnity has been fixed by jurisprudence at P50,000.00. Hence, the amount awarded
by the RTC and the CA must be reduced accordingly. On the issue of moral damages,
prevailing jurisprudence fixes moral damages of P50,000.00 for death. It must be stressed that
moral damages are not intended to enrich a plaintiff at the expense of the defendant. They are
awarded to allow the plaintiff to obtain means, diversion or amusements that will serve to
alleviate the moral suffering he/she has undergone due to the defendantEs culpable action and
must, perforce, be proportional to the suffering inflicted. Thus, given the circumstances of the
case at bar, an award of P50,000.00 as moral damages is proper.
ATTORNEYS FEES
The rule on the award of attorneyEs fees is that there must be a justification for the same. In
the absence of a statement why attorneyEs fees were awarded, the same should be
disallowed. On this note, after reading through the text of the CA decision, this Court finds that
the same is bereft of any findings of fact and law to justify the award of attorneyEs fees. While it
may be safe to surmise that the RTC granted attorneyEs fees as a consequence of its grant of
exemplary damages, such cannot be said for the CA, since the same deleted the award of
exemplary damages after finding that petitioner Analucas was not grossly negligent. The CA
did not explain why it was still awarding attorneyEs fees to respondents, therefore, such an
award must be deleted.
ACTUAL DAMAGES
While petitioners did not put in error the award of actual damages, this Court feels that the
same should nevertheless be reviewed as an appellate court is clothed with ample authority to
review rulings even if they are not assigned as errors. This is especially so if the court finds that
their consideration is necessary in arriving at a just decision of the case before it. For one to be
entitled to actual damages, it is necessary to prove the actual amount of loss with a reasonable
degree of certainty, premised upon competent proof and the best evidence obtainable by the
injured party. Actual damages are such compensation or damages for an injury that will put the
injured party in the position in which he had been before he was injured. They pertain to such
injuries or losses that are actually sustained and susceptible of measurement. To justify an
award of actual damages, there must be competent proof of the actual amount of loss.
Credence can be given only to claims which are duly supported by receipts.
LOSS OF EARNING
CAPACITY
Although respondents did not appeal the CA Decision, they now pray in their Memorandum that
this Court reinstate the RTC award of P2,000,000.00 as compensatory damages which was
deleted by the CA. Respondents point out that the victim, Reggie Nabua, was 18 years old and
17
at the time of his death, a freshman taking up Industrial Engineering. On this point, Metro
Manila Transit Corporation v. Court of Appeals, 298 SCRA 495 (1998), is instructive, to wit: x x
x Art. 2206 of the Civil Code provides that in addition to the indemnity for death caused by a
crime or quasi delict, 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; . . . Compensation of this
nature is awarded not for loss of earnings but for loss of capacity to earn money. Evidence
must be presented that the victim, if not yet employed at the time of death, was reasonably
certain to complete training for a specific profession. In People v. Teehankee, no award of
compensation for loss of earning capacity was granted to the heirs of a college freshman
because there was no sufficient evidence on record to show that the victim would eventually
become a professional pilot. But compensation should be allowed for loss of earning capacity
resulting from the death of a minor who has not yet commenced employment or training for a
specific profession if sufficient evidence is presented to establish the amount thereof
Spouses Perena v. Spouses Zarate, G.R. No. 157917, August 29, 2012
EARNING CAPACITY
The fact that Aaron was then without a history of earnings should not be taken against his
parents and in favor of the defendants whose negligence not only cost Aaron his life and his
right to work and earn money, but also deprived his parents of their right to his presence and
his services as well. Our law itself states that the loss of the earning capacity of the deceased
shall be the liability of the guilty party in favor of the heirs of the deceased, and 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. Accordingly, we emphatically hold in favor of the indemnification for AaronEs loss of
earning capacity despite him having been unemployed, because compensation of this nature is
awarded not for loss of time or earnings but for loss of the deceasedEs power or ability to earn
money.
MORAL DAMAGES
The moral damages of P2,500,000.00 were really just and reasonable under the established
circumstances of this case because they were intended by the law to assuage the ZaratesE
deep mental anguish over their sonEs unexpected and violent death, and their moral shock
over the senseless accident. That amount would not be too much, considering that it would
help the Zarates obtain the means, diversions or amusements that would alleviate their
suffering for the loss of their child. At any rate, reducing the amount as excessive might prove
to be an injustice, given the passage of a long time from when their mental anguish was
inflicted on them on August 22, 1996.
EXEMPLARY DAMAGES
Anent the P1,000,000.00 allowed as exemplary damages, we should not reduce the amount if
only to render effective the desired example for the public good. As a common carrier, the
Perenas needed to be vigorously reminded to observe their duty to exercise extraordinary
diligence to prevent a similarly senseless accident from happening again. Only by an award of
exemplary damages in that amount would suffice to instill in them and others similarly situated
like them the ever-present need for greater and constant vigilance in the conduct of a business
imbued with public interest.
Victory Liner, Inc. v. Gammad, G.R. No. 159636, November 25, 2004
COMMON CARRIER:
WHEN LIABLE FOR
DAMAGES
Article 1764 in relation to Article 2206 of the Civil Code, holds the common carrier in breach of
its contract of carriage that results in the death of a passenger liable to pay the following: (1)
indemnity for death, (2) indemnity for loss of earning capacity, and (3) moral damages.
LOSS OF EARNING
CAPACITY
The award of compensatory damages for the loss of the deceasedEs earning capacity should
be deleted for lack of basis. As a rule, documentary evidence should be presented to
substantiate the claim for damages for loss of earning capacity. By way of exception, damages
for loss of earning capacity may be awarded despite the absence of documentary evidence
when (1) the deceased is self-employed earning less than the minimum wage under current
18
labor laws, and judicial notice may be taken of the fact that in the deceasedEs line of work no
documentary evidence is available; or (2) the deceased is employed as a daily wage worker
earning less than the minimum wage under current labor laws.
MORAL DAMAGES
In culpa contractual or breach of contract, moral damages may be recovered when the
defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in
wanton disregard of contractual obligations and, as in this case, when the act of breach of
contract itself constitutes the tort that results in physical injuries. By special rule in Article 1764
in relation to Article 2206 of the Civil Code, moral damages may also be awarded in case the
death of a passenger results from a breach of carriage. On the other hand, exemplary
damages, which are awarded by way of example or correction for the public good may be
recovered in contractual obligations if the defendant acted in wanton, fraudulent, reckless,
oppressive, or malevolent manne
ACTUAL DAMAGES
The actual damages awarded by the trial court reduced by the Court of Appeals should be
further reduced. In People v. Duban, it was held that only substantiated and proven expenses
or those that appear to have been genuinely incurred in connection with the death, wake or
burial of the victim will be recognized. A list of expenses (Exhibit J), and the contract/receipt
for the construction of the tomb (Exhibit F) in this case, cannot be considered competent
proof and cannot replace the official receipts necessary to justify the award. Hence, actual
damages should be further reduced to P78,160.00, which was the amount supported by official
receipts.
Daywalt v. Corporacion de PP Agustinos Recoletos, 39 Phil. 587 (1919)

MEASURE OF DAMAGES
FOR BREACH OF
CONTRACT
The damages recoverable upon breach of contract are, primarily, the ordinary, natural and in a
sense the necessary damage resulting from the breach. Other damages, known as special
damages, are recoverable where it appears that the particular conditions which made such
damages a probable consequence of the breach were known to the delinquent party at the time
the contract was made. This proposition must be understood with the qualification that, if the
damages are in the legal sense remote or speculative, knowledge of the special conditions
which render such damages possible will not make them recoverable. Special damages of this
character cannot be recovered unless made the subject of special stipulation.
BOK FOR SALE OF LAND
The damages ordinarily recoverable against a vendor or failure to deliver land which he has
contracted to deliver is the value of the use and occupation of the land for the time during which
it is wrongfully withheld.
Consolidated Dairy Products Co. v. Court of Appeals, G.R. No. 100401, August 24, 1992
INDEMNIFICATION FOR
DAMAGES: NOT ONLY
LOSS ACTUALLY
SUFFERED BUT THOSE
WHICH THE OBLIGEE
FAILED TO OBTAIN
EXEMPLARY DAMAGES
WHEN PROPER
FACTS:
1956 Consolidated Dairy Products Com
Indemnification for damages shall comprehend not only the value of the loss suffered, but also
that of the profits which the obligee failed to obtain (Art. 2200 NCC). The presumption that
Standard would earn exactly the same profit as it did five (5) years before its closure is
speculative. A more reasonable amount would be the average of the yearly profit for the five
years preceding the closure (1971-1975) multiplied by the number of years remaining as
provided for in the contract. The average yearly profit for 1971 to 1975 is P1,041,095.76 (p.
280, Records). This amount multiplied by five (years) amounts to P5,205,478.80.
There is no doubt that the breach committed by the petitioners was made in a wanton and
fraudulent manner. There was no reason for petitioners to terminate the can supply contract
with Standard. The latter was purposely organized for the benefit of Consolidated Philippines.
Neither was there a need to close Consolidated Philippines because Consolidated Seattle had
all the intentions of continuing its usiness only this time to be undertaken by its sole subsidiary,
Dexco to the prejudice of Standard. Where a defendant violates a contract with plaintiff, the
19
court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless,
oppressive and malevolent manner.
Continental Cement Corporation v. ASEA Brown Boveri, Inc., G.R. No. 171660, October 17, 2011
Mendoza v. Philippine Air Lines, 90 Phil. 836 (1952)

DAMAGES
The defendant company can not be held liable for damages where it could not have forseen the
damages that would be suffered by the plaintiff upon failure to deliver the can of film for reason
that the plans of the plaintiff to exhibit that film during the town fiesta and his preparation,
specially the announcement of said exhibition by poster and advertisement in the newspapers
were not called to the defendant's attention.
PROMPT DELIVERY
Where failure to exhibit films on a certain day would spell substantial damages or considerable
loss of profits, including waste of efforts on preparations and expense incurred in
advertisements, exhibitors, for their security, may either get hold of the films well ahead of the
time of exhibition in order to rnake allowances for any hitch in the delivery, or else enter into a
special contract or make a suitable arrangement with the common carrier for the prompt
delivery of the fihns, calling the attention of the carrier to the circumstances surrounding the
case and the approximate amount of damages to be suffered in case of delay.
Araneta v. Bank of America, G.R. No. L-25414, July 30, 1971

CONCEPT OF TEMPERATE
DAMAGES
The financial credit of a businessman is a prized and valuable asset, it being a significant part
of the foundation of his business. Any adverse reflection thereon constitutes some material loss
to him. As stated in the case of Atlanta National Bank vs. Davis, 96 Ga 334, 23 SE 190, citing 2
Morse Banks, Sec. 458, it can hardly be possible that a customerEs check can be wrongfully
refused payment without some impeachment of his credit, which must in fact be an actual
injury, though he cannot, from the nature of the case, furnish independent, distinct proof
thereof.
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 cannot be offered, although
the court is convinced that there has been such loss. For instance, injury to oneEs commercial
credit or to the goodwill of a business firm is often hard to show with certainty in terms of
money. Should damages be denied for that reason? The judge should be empowered to
calculate moderate damages in such cases, rather than that the plaintiff should suffer, without
redress from the defendantEs wrongful act.
ATTORNEYS FEES
Considering the nature and extent of the services rendered by the petitionerEs counsel both in
the trial and appellate courts, the amount should be increased to P4,000. This may be done
motu proprio by this Court under Article 2208 of the Civil Code, which provides that attorneyEs
fees may be recovered in the instances therein enumerated and in any other case where the
Court deems it first and equitable that attorneyEs fees. . . should be recovered, provided the
amount thereof be reasonable in all cases.
Simex International (Manila), Incorporated v. Court of Appeals, G.R. No. 88013, March 19, 1990
MORAL DAMAGES
We agree that moral damages are not awarded to penalize the defendant but to compensate
the plaintiff for the injuries he may have suffered. In the case at bar, the petitioner is seeking
such damages for the prejudice sustained by it as a result of the private respondentEs fault.
The respondent court said that the claimed losses are purely speculative and are not supported
by substantial evidence, but it failed to consider that the amount of such losses need not be
20
established with exactitude, precisely because of their nature. Moral damages are not
susceptible of pecuniary estimation. Article 2216 of the Civil Code specifically provides that no
proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or
exemplary damages may be adjudicated. That is why the determination of the amount to be
awarded (except liquidated damages) is left to the sound discretion of the court, according to
the circumstances of each case.
Considering all this, we feel that the award of nominal damages in the sum of P20,000.00 was
not the proper relief to which the petitioner was entitled. Under Article 2221 of the Civil Code,
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. As we have found that the petitioner
has indeed incurred loss through the fault of the private respondent, the proper remedy is the
award to it of moral damages, which we impose, in our discretion, in the same amount of
P20,000.00.
EXEMPLARY DAMAGES
BANKS
The point is that as a business affected with public interest and because of the nature of its
functions, the bank is under obligation to treat the accounts of its depositors with meticulous
care, always having in mind the fiduciary nature of their relationship. In the case at bar, it is
obvious that the respondent bank was remiss in that duty and violated that relationship. What is
especially deplorable is that, having been informed of its error in not crediting the deposit in
question to the petitioner, the respondent bank did not immediately correct it but did so only
one week later or twenty-three days after the deposit was made. It bears repeating that the
record does not contain any satisfactory explanation of why the error was made in the first
place and why it was not corrected immediately after its discovery. Such ineptness comes
under the concept of the wanton manner contemplated in the Civil Code that calls for the
imposition of exemplary damages.
National Power Corporation v. Court of Appeals, G.R. No. L-43814, April 16, 1982
DAMAGES CANNOT BE
BASED ON SPECULATIVE
EVIDENCE
Damages must be shown by actual proof with a reasonable degree of certainty and cannot be
based on speculation and conjecture. Here, so many factors militate against the appellate and
trial courtEs finding that the cleared area yielded a treasure trove of commercial timber valued
at P15,497 million.
DAMAGES FOR LOSS OF

CREDIT REPUTATION
The provisions allowing recovery of damages [f]or injury to the plaintiffEs business standing or
commercial credit fall under the chapter on actual or compensatory damages of Title XVIII on
damages of the new Civil Code. And such [a]ctual or compensatory damages must be
established by clear evidence. In justifying its award of damages in the amount of
P500,000.00 for alleged injury to WILMAGEs business standing or commercial credit, the
appellate court merely took as good WILMAGEs bare assertion that its credit standing in the
community were [sic] completely shattered, its entire business destroyed and its mortgages
lost but cites no evidence whatsoever to support the same. More importantly, these damages
have no legal basis in view of our finding that WILMAG has no cause of action against NPC As
NPC submits in its brief, WILMAG has no business reputation or commercial credit standing in
the community (in its decision, the Court of Appeals did not even mention or discuss the
business reputation or standing of WILMAG). WILMAGEs own evidence showed that
multifarious complaints or charges have been filed against it and its officials with the courts and
other government agencies. This contradicts any pretension of said corporation to probity and
integrity.
DAMAGES NOT
DEMANDABLE DUE TO
RD
SUITS BROUGHT BY 3
PARTIES
he litany of 34 civil and 2 criminal cases for estafa filed against WILMAG and its controlling
stockholder Natividad M. Fajardo by third parties, as enumerated by itself in seeking to justify
the present action for damages against NPC allegedly because it could not as a result pay its
loans to banks and fulfill its obligations to their subdivision buyers is reproduced in the footnote
below. Suffice it to state that NPC has nothing whatever to do with such suits and certainly
cannot be held in any way liable for WILMAGEs (apparently known to its creditors also as
21
RAMAWIL) failure to live up to their contractual undertakings with them.
Padilla Machine Shop v. Javilgas, G.R. No. 175960, February 19, 2008
ATTORNEYS FEES:
EXTRAORDINARY
CONCEPT
There is no merit in petitionersE claim that attorneyEs fees may not be awarded to the
respondent since his case was being handled pro bono by the U.P. Office of Legal Aid, which
provides free legal assistance to indigent litigants. In this jurisdiction, there are two concepts of
attorneyEs fees. In the ordinary sense, attorneyEs fees represent the reasonable
compensation paid to a lawyer by his client for the legal services he has rendered to the latter.
On the other hand, in its extraordinary concept, attorneyEs fees may be awarded by the court
as indemnity for damages to be paid by the losing party to the prevailing party, and not
counsel. In its extraordinary sense, attorneyEs fees as part of damages is awarded only in the
instances specified in Article 2208 of the Civil Code, among which are the following which
obtain in the instant case: (7) In actions for the recovery of wages of household helpers,
laborers and skilled workers; (8) In actions for indemnity under workmenEs compensation and
employerEs liability laws; x x x x (11) In any other case where the court deems it just and
equitable that attorneyEs fees and expenses of litigation should be recovered.
David v. Misamis Occidental II Electric Cooperative, Inc., G.R. No. 194785, July 11, 2012
INTEREST
That being said, the Court now comes to DavidEs prayer that MOELCI be made to pay the total
sum of P5,472,722.27 plus the stipulated interest at 24% per annum from the filing of the
complaint. Although the Court agrees that MOELCI should pay interest, the stipulated rate is,
however, unconscionable and should be equitably reduced. While there is no question that
parties to a loan agreement have wide latitude to stipulate on any interest rate in view of the
Central Bank Circular No. 905 s. 1982 which suspended the Usury Law ceiling on interest
effective January 1, 1983, it is also worth stressing that interest rates whenever unconscionable
may still be reduced to a reasonable and fair level. There is nothing in the said circular which
grants lenders carte blanche authority to raise interest rates to levels which will either enslave
their borrowers or lead to a hemorrhaging of their assets.16 Accordingly, the excessive interest
of 24% per annum stipulated in the sales invoice should be reduced to 12% per annum.
ATTORNEYS FEES
Indeed, David was compelled to file an action against MOELCI but this reason alone will not
warrant an award of attorneyEs fees. It is settled that the award of attorneyEs fees is the
exception rather than the rule. CounselEs fees are not awarded every time a party prevails in a
suit because of the policy that no premium should be placed on the right to litigate. AttorneyEs
fees, as part of damages, are not necessarily equated to the amount paid by a litigant to a
lawyer. In the ordinary sense, attorneyEs fees represent the reasonable compensation paid to
a lawyer by his client for the legal services he has rendered to the latter; while in its
extraordinary concept, they may be awarded by the court as indemnity for damages to be paid
by the losing party to the prevailing party. AttorneyEs fees as part of damages are awarded
only in the instances specified in Article 2208 of the Civil Code17 which demands factual, legal,
and equitable justification. Its basis cannot be left to speculation or conjecture. In this regard,
none was proven.
Moreover, in the absence of stipulation, a winning party may be awarded attorneyEs fees only
in case plaintiffEs action or defendantEs stand is so untenable as to amount to gross and
evident bad faith.
Lacson v. Reyes, 182 SCRA 729 (1990)

ATTORNEYS FEES AND
DOCKET FEES
Anent docket fees, it has been held that the court acquires jurisdiction over any case only upon
payment of the prescribed docket fee. Although the rule has since been tempered, that is, there
must be a clear showing that the party had intended to evade payment and to cheat the courts,
22
it does not excuse him from paying docket fees as soon as it becomes apparent that docket
fees are indeed payable. In the case at bar, the motion for attorneyEs fees was clearly in the
nature of an action commenced by a lawyer against his clients for attorneyEs fees. The very
decision of the court states: This case is an out-growth from SP. Proc. No. 127-87 of same
Court which was long decided (sic). It resulted from the filing of a petition for attorneyEs fees by
the lawyer of the petitionerEs heirs in the case against the latter. Upon the filing of the petition
for attorneyEs fees, the heir-respondents (sic) were accordingly summoned to answer the
petition as if it were a complaint against said heirs who retained the petitioner as their lawyer in
the said case. In that event, the parties should have known, the respondent court in particular,
that docket fees should have been priorly paid before the court could lawfully act on the case,
and decide it. It may be true that the claim for attorneyEs fees was but an incident in the main
case, still, it is not an escape valve from the payment of docket fees because as in all actions,
whether separate or as an offshoot of a pending proceeding, the payment of docket fees is
mandatory. Assuming, therefore, ex gratia argumenti, that Atty. SerquinaEs demand for
attorneyEs fees in the sum of P68,000.00 is valid, he, Atty. Serquina, should have paid the fees
in question before the respondent court could validly try his motion.
In that connection, attorneyEs fees are in the nature of actual damages, which must be duly
proved. They are also subject to certain standards, to wit: (1) they must be reasonable, that is
to say, they must have a bearing on the importance of the subject matter in controversy; (2) the
extent of the services rendered; and (3) the professional standing of the lawyer. In all cases,
they must be addressed in a full-blown trial and not on the bare word of the parties. And
always, they are subject to the moderating hand of the courts.
Petron Corporation v. National College of Business and Arts, 516 SCRA 168 (2007)
ATTORNEYS FEES
Article 2208(5) contemplates a situation where one refuses unjustifiably and in evident bad faith
to satisfy anotherEs plainly valid, just and demandable claim, compelling the latter needlessly
to seek redress from the courts. In such a case, the law allows recovery of money the plaintiff
had to spend for a lawyerEs assistance in suing the defendantexpenses the plaintiff would not
have incurred if not for the defendantEs refusal to comply with the most basic rules of fair
dealing. It does not mean, however, that the losing party should be made to pay attorneyEs
fees merely because the court finds his legal position to be erroneous and upholds that of the
other party, for that would be an intolerable transgression of the policy that no one should be
penalized for exercising the right to have contending claims settled by a court of law. In fact,
even a clearly untenable defense does not justify an award of attorneyEs fees unless it
amounts to gross and evident bad faith.
EXEMPLARY DAMAGES
With respect to the award of exemplary damages, the rule in this jurisdiction is that the plaintiff
must show that he is entitled to moral, temperate or compensatory damages before the court
may even consider the question of whether exemplary amages should be awarded. In other
words, no exemplary damages may be awarded without the plaintiffEs right to moral,
temperate, liquidated or compensatory damages having first been established. Therefore, in
view of our ruling that Petron cannot be made liable to NCBA for compensatory damages (i.e.,
attorneyEs fees), Petron cannot be held liable for exemplary damages either.
Buan v. Camaganacan, 16 SCRA 321 (1966

ATTORNEYS FEES :
GENERAL RULE AND
EXCEPTIONS
The text of the decision should state the reason why attorneysE fees are being awarded,
otherwise the award is disallowed (Federation of United Namarco Distributors, Inc. vs. National
Marketing Corporation, L-17819, and National Marketing Corporation vs. Tan, L-17768, 31
March 1962; Jimenez vs. Bucoy, L-10221, 28 February 1959; Castillo vs. Samonte, L-13146,
30 January 1960).
The general rule is that it is not sound public policy to place a penalty on the right to litigate
(Tan Ti vs. Alvear, 26 Phil. 568) ; nor should counsel fees be awarded every time a party wins
23
a lawsuit (Jimenez vs. Bucoy, supra). The award of attorneysE fees remains exceptional and it
is up to the court to make an express finding of facts that justify the grant of counsel fees.
The exercise of judicial discretion in the award of attorneysE fees under No. 11 of Article 2208
of the New Civil Code demands a factual, legal or equitable justification upon the basis of which
the court exercises its discretion. Without such justification, the award is a conclusion without a
premise, its basis being improperly left to speculation and conjecture.
Villanueva v. Salvador, 480 SCRA 39 (2006)

MORAL DAMAGES
While proof of pecuniary loss is unnecessary to justify an award of moral damages, the amount
of indemnity being left to the sound discretion of the court, it is, nevertheless, essential that the
claimant satisfactorily proves the existence of the factual basis of the damages and its causal
connection to defendantEs wrongful act or omission. This is so because moral damages, albeit
incapable of pecuniary estimation, are designed to compensate the claimant for actual injury
suffered and not to impose a penalty on the wrongdoer. There is thus merit on petitionersE
assertion that proof of moral suffering must precede a moral damage award.
MORAL DAMAGES
REQUIRED CONDITIONS
The conditions required in awarding moral damages are: (1) there must be an injury, whether
physical, mental or psychological, clearly sustained by the claimant; (2) there must be a
culpable act or omission factually established; (3) the wrongful act or omission of the defendant
must be the proximate cause of the injury sustained by the claimant; and (4) the award of
damages is predicated on any of the cases stated in Article 2219 of the Civil Code.
MORAL DAMAGES IN
CULPA CONTRACTUAL GENERAL RULE AND
EXCEPTIONS
While there need not be a showing that the defendant acted in a wanton or malevolent manner,
as this is a requirement for an award of exemplary damages, there must still be proof of
fraudulent action or bad faith for a claim for moral damages to succeed. Then, too, moral
damages are generally not recoverable in culpa contractual except when bad faith supervenes
and is proven. Bad faith does not simply connote bad judgment or negligence; it imports a
dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known
duty through some motive or interest or ill-will that partakes of the nature of the fraud. And to
the person claiming moral damages rests the onus of proving by convincing evidence the
existence of bad faith, for good faith is presumed.
ATTORNEYS FEES
As a matter of sound practice, an award of attorneyEs fee has always been regarded as the
exception rather than the rule. CounselEs fees are, to be sure, not awarded every time a party
prevails in a suit because of the policy that no premium should be placed on the right to litigate.
AttorneyEs fees, as part of damages, are assessed only in the instances specified in Article
2208 of the Civil Code. And it is necessary for the trial court to make express findings of fact
and law that would bring the case within the exception. In short, the factual, legal or equitable
justification for the award must be set forth in the text of the decision. The matter of attorneyEs
fees cannot be touched only in the fallo of the decision, else the award should be thrown out for
being speculative and conjectural.
Eastern Shipping v. Court of Appeals, 234 SCRA 78 (1994)

RULES OF THUMB
FOR DAMAGES AND
INTEREST
The ostensible discord is not difficult to explain. The factual circumstances may have called for
different applications, guided by the rule that the courts are vested with discretion, depending
on the equities of each case, on the award of interest. Nonetheless, it may not be unwise, by
way of clarification and reconciliation, to suggest the following rules of thumb for future
guidance.
When an obligation is breached, the contravenor can be held liable for damages.When
an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasidelicts is breached, the contravenor can be held liable for damages. The provisions under Title
24
XVIII on Damages of the Civil Code govern in determining the measure of recoverable
damages.
Interests in the Concept of Actual and Compensatory Damages; In a loan or forbearance
of money, the interest due should be that stipulated in writing, and in the absence
thereof, the rate shall be 12% per annum.With regard particularly to an award of interest in
the concept of actual and compensatory damages, the rate of interest, as well as the accrual
thereof, is imposed, as follows: 1. When the obligation is breached, and it consists in the
payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be
that which may have been stipulated in writing. Furthermore, the interest due shall itself earn
legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of
interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial
demand under and subject to the provisions of Article 1169 of the Civil Code.
In case of other obligations, the interest on the amount of damages may be imposed at
the discretion of the court at the rate of 6% per annum.When an obligation, not
constituting a loan or forbearance of money, is breached, an interest on the amount of
damages awarded may be imposed at the discretion of the court at the rate of 6% per annum.
No interest, however, shall be adjudged on unliquidated claims or damages except when or
until the demand can be established with reasonable certainty. Accordingly, where the demand
is established with reasonable certainty, the interest shall begin to run from the time the claim is
made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so
reasonably established at the time the demand is made, the interest shall begin to run only
from the date the judgment of the court is made (at which time the quantification of damages
may be deemed to have been reasonably ascertained). The actual base for the computation of
legal interest shall, in any case, be on the amount finally adjudged.
When the judgment of the court awarding a sum of money becomes final and executory,
the rate of legal interest shall be 12% per annum from such finality until its satisfaction,
this interim period being deemed to be by then an equivalent to a forbearance of
credit.When the judgment of the court awarding a sum of money becomes final and executory,
the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall
be 12% per annum from such finality until its satisfaction, this interim period being deemed to
be by then an equivalent to a forbearance of credit.
Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013

PREVAILING INTEREST
RATE
In the absence of an express stipulation as to the rate of interest that would govern the parties,
the rate of legal interest for loans or forbearance of any money, goods or credits and the rate
allowed in judgments shall no longer be twelve percent (12%) per annum as reflected in the
case of Eastern Shipping Lines, Inc. v. Court of Appeals, 234 SCRA 78 (1994) and Subsection
X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of
the Manual of Regulations for Non-Bank Financial Institutions, before its amendment by BSPMB Circular No. 799 but will now be six percent (6%) per annum effective July 1, 2013. It
should be noted, nonetheless, that the new rate could only be applied prospectively and not
retroactively. Consequently, the twelve percent (12%) per annum legal interest shall apply only
until June 30, 2013. Come July 1, 2013 the new rate of six percent (6%) per annum shall be the
prevailing rate of interest when applicable.
AUTHORITY OF THE BSP

TO PRESCRIBE MAXIMUM
RATE
In the recent case of Advocates for Truth in Lending, Inc. and Eduardo B. Olaguer v. Bangko
Sentral Monetary Board, 688 SCRA 530 (2013), this Court affirmed the authority of the BSPMB to set interest rates and to issue and enforce Circulars when it ruled that the BSP-MB may
prescribe the maximum rate or rates of interest for all loans or renewals thereof or the
forbearance of any money, goods or credits, including those for loans of low priority such as
consumer loans, as well as such loans made by pawnshops, finance companies and similar
credit institutions. It even authorizes the BSP-MB to prescribe different maximum rate or rates
25
for different types of borrowings, including deposits and deposit substitutes, or loans of financial
intermediaries.
INTEREST FOR LOAN OR
FORBEARANCE OF
MONEY CIVIL CODE
When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan
or forbearance of money, the interest due should be that which may have been stipulated in
writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of interest shall be 6% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
INTEREST FOR THOSE

OTHER THAN LOAN OR
FORBEARANCE OF
MONEY CIVIL CODE
When an obligation, not constituting a oan or forbearance of money, is breached, an interest on

the amount of damages awarded may be imposed at the discretion of the court at the rate of
6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages,
except when or until the demand can be established with reasonable certainty. Accordingly,
where the demand is established with reasonable certainty, the interest shall begin to run from
the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such
certainty cannot be so reasonably established at the time the demand is made, the interest
shall begin to run only from the date the judgment of the court is made (at which time the
quantification of damages may be deemed to have been reasonably ascertained). The actual
base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
RECKONING POINT
When the judgment of the court awarding a sum of money becomes final and executory, the
rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be
6% per annum from such finality until its satisfaction, this interim period being deemed to be by
then an equivalent to a forbearance of credit.
C. MORAL DAMAGES
Mayo v. People, G.R. No. 91201, December 5, 1991
MINUTE DIGEST
FACTS:
Philippine Rabbit Bus driver, Estaquio Mayo, collided with a Lancer driven and owned by Linda
Navarette. Linda suffered injuries and loss of vision in the right eye. Noel Navarette, June
Navaerrete and Mae Custodio also suffered injuries. Linda filed a criminal case for Reckless
Imprudence Resulting in Damage to Property and Multiple Physical Injuries. Civil liability ex
delicto was also heard in the same case. Plaintiff initially claimed P1 million for moral damages
but was changed to 500k.
Trial Court: RTC found him guilty beyond reasonable doubt. Phil Rabbit was also found
subsidiarily liable. It awarded the following:
1. Actual damages
2. Expenses for the Repair of the Cars
3. Attorneys fees
4. Moral damages (P700,00; P60,000; P5,000, P5,000)
CA: CA affirmed decision. It maintained the amounts.
ISSUE: Is the amount of moral damages set by TC and affirmed by CA justifiable? No,
excessive and unconscionable.
HELD:
SC agrees Linda is entitled to moral damages. Her permanent scar on the forhead and the loss
of vision in her right eye prove shock and wounded feelings. Loss of boyfriend as a result of
physical injuries is not a ground for granting moral damages. Neither is it an analogous
circumstance. However, TC and CAs award is unconscionable and excessive (see doctrines).
MORAL DAMAGES IN
GENERAL
There is no question that moral damages include physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and
26
similar injury. Though incapable of pecuniary computation, moral damages may be recovered if
they are the proximate result of the defendantEs wrongful act or omission.
MORAL DAMAGES
The well-entrenched principle is that moral damages depend upon the discretion of the trial
courts based on the facts and circumstances of each case. x x x This discretion is, however,
conditioned in that the amount awarded should not be palpably and scandalously excessive
so as to indicate that it was the result of prejudice or corruption on the part of the trial court x
x x In determining the amount of moral damages, the actual losses sustained by the aggrieved
party and the gravity of the injuries must be considered. Finally, moral damages are
emphatically not intended to enrich a complainant at the expense of the 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 defendantEs As
culpable action.
DEPEND ON THE
DISCRETION BASED ON
THE FACTS AND CISTUM
Samson v. Bank of the Philippine Islands, G.R. No. 150487, July 10, 2003
MINUTE DIGEST
FACTS:
Gerardo Samson is a depositor of BPI. He had 367k in his account. One day, he instructed his
daughter to withdraw 2k from the account to pay for an obligation to a creditor who was waiting
in his residence. The request was denied twice due to insufficient funds. Feeling embarrassed,
Samson went to the bank and found out that the check he previously deposited was not
credited yet. Worse, there was an unauthorized encashment of Samsons check by BPIs
security guard. BPI did not report this nor did it notice any irregularity. Samson filed an action
for damages against BPI (breach of contract).
TC: BPI was liable. Awarded P200k as moral damages.
CA: CA affirmed TC. But reduced the award to 50k. Banks liability was mitigated by the fact
that they already credited 3.5k (the amount of the check) in Samsons account. It found 200k
excessive.
ISSUE: Is the reduction proper? NO (partly). 100k proper.
HELD:
SC held the award should be increased to P100k considering:
(1) that petitioner was a businessman and was the highest lay person in the United Methodist
Church;
(2) that he was regarded by respondent and its officers with arrogance and a condescending
manner; and
(3) that respondent successfully postponed compensating him for more than a decade.
This amount is more than the P50,000 granted by the CA, but not as much as the P200,000
granted by the RTC. The bank only credited the amount because Samson prompted the to do
so. In the cases of Prudential Bank, PNB and Metropolitan Bank, 100k was proper amount for
damages to social standing. (see doctrines)
MORAL DAMAGES ARE

NOT PUNITIVE IN NATURE.
Moral damages are meant to compensate the claimant for any physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation and similar injuries unjustly caused. Although incapable of pecuniary estimation, the
amount must somehow be proportional to and in approximation of the suffering inflicted. Moral
damages are not punitive in nature and were never intended to enrich the claimant at the
expense of the defendant.
FAIR AND REASONABLE

AMOUNT OF MORAL
DAMAGES: LIMITATION
There is no hard-and-fast rule in determining what would be a fair and reasonable amount of
moral damages, since each case must be governed by its own peculiar facts. Trial courts are
given discretion in determining the amount, with the limitation that it should not be palpably
and scandalously excessive. Indeed, it must be commensurate to the loss or injury suffered.
27
SOCIAL STANDING IS
ESSENTIAL TO THE
DETERMINATION OF
AWARD
The social standing of the aggrieved party is essential to the determination of the proper
amount of the award. Otherwise, the goal of enabling him to obtain means, diversions, or
amusements to restore him to the status quo ante would not be achieved.
Villanueva v. Salvador, G.R. No. 139436, January 25, 2006 (see supra)
Mahinay v. Velasquez, G.R. No. 152753, January 13, 2004

MINUTE DIGEST
FACTS:
Iglecerio Mahinay told Machete Your master, a candidate for Congressman, Ben Velasquez, is
a land grabber. Machete subsequently told Velasquez. Velasquez sued for damages (quasidelict) claiming that his statement besmirched his family reputation, wounded his feelings and
caused him mental anguish and sleepless nights.
TC: TC found Mahinay liable solely on the basis of Machetes testimony. It awarded 100k for
moral damages and 50k as exemplary damages.
CA: CA noted TC lacked factual basis. It modified the award to 50k as moral damages and 25k
as exemplary damages.
ISSUE: W/N Mahinay is liable and if the damages were correct despite having no sufficient
bases.
HELD:
Not liable. No damages due. SC noted that there was no clear showing of suffering and that the
testitmony of Machete was insufficient (see doctrines).
MORAL DAMAGES TO BE
AWARDEDMUST BE
PLEADING AND PROOF OF

SUFFERING ETC.
In order that moral damages may be awarded, there must be pleading and proof of moral
suffering, mental anguish, fright and the like. While respondent alleged in his complaint that he
suffered mental anguish, serious anxiety, wounded feelings and moral shock, he failed to prove
them during the trial. Indeed, respondent should have taken the witness stand and should have
testified on the mental anguish, serious anxiety, wounded feelings and other emotional and
mental suffering he purportedly suffered to sustain his claim for moral damages. Mere
allegations do not suffice; they must be substantiated by clear and convincing proof. No other
person could have proven such damages except the respondent himself as they were
extremely personal to him.
MORAL DAMAGES MUST

BE ANCHORED ON CLEAR
SHOWING OF SUFFERING
The testimony of Machete was not enough evidence of the moral damages that the respondent
supposedly suffered. Machete may have clearly testified on the specific words uttered by
petitioner against respondent but he could not have testified on the wounded feelings
respondent allegedly went through by reason of petitionerEs slanderous remark. The award of
moral damages must be anchored to a clear showing that respondent actually experienced
mental anguish, besmirched reputation, sleepless nights, wounded feelings or similar injury.
There was no better witness to this experience than respondent himself. Since respondent
failed to testify on the witness stand, the trial court did not have any factual basis to award
moral damages to him.
NO EXEMPLARY WITHOUT
FIRST SHOWING MORAL
DAMAGES ARE DUE
Neither is respondent entitled to exemplary damages. If the court has no proof or evidence
upon which the claim for moral damages could be based, such indemnity could not be
outrightly awarded. The same holds true with respect to the award of exemplary damages
where it must be shown that the party acted in a wanton, oppressive or malevolent manner.
Furthermore, this specie of damages is allowed only in addition to moral damages such that no
exemplary damages can be awarded unless the claimant first establishes his clear right to
moral damages.
28
Mercury Drug Corporation v. Huang, G.R. No. 172122, June 22, 2007
MINUTE DIGEST
FACTS:
The truck driven by Del Rosario and owned by Mercury Drug figured in an accident with a
sedan driven by Stephen Huang. Huang became paralyzed. Parents of Huang sued Mercury
Drug and Del Rosario for damages (quasi-delict).
TC: TC found Mercury and Del Rosario liable. Awarded the following:
1. 2.9 Million actual
2. 23 Million death
3. 10 Million earning capacity
4. 4 Million moral damages
5. 2 Million exemplary
6. 1 Million attorneys fees
CA: Affirmed the decision but reduced moral to 1 Million.
ISSUE: W/N the award for damages was proper YES.
HELD:
SC affirmed the awards in toto.
Quoted portion:
In the instant case, respondent Stephen Huang and respondent spouses Richard and Carmen
Huang testified to the intense suffering they continue to experience as a result of the accident.
Stephen recounted the nightmares and traumas he suffers almost every night when he relives
the accident. He also gets depression when he thinks of his bleak future. He feels frustration
and embarrassment in needing to be helped with almost everything and in his inability to do
simple things he used to do. Similarly, respondent spouses and the rest of the family undergo
their wn private suffering. They live with the day-to-day uncertainty of respondent Stephen
HuangEs condition. They know that the chance of full recovery is nil. Moreover, respondent
Stephen HuangEs paralysis has made him prone to many other illnesses. His family, especially
respondent spouses, have to make themselves available for Stephen twenty-four hours a day.
They have patterned their daily life around taking care of him, ministering to his daily needs,
altering the lifestyle to which they had been accustomed.
Maybe words cannot describe the anger that we feel towards the defendants. All the
time that we were going through the crisis, there was none (sic)a single sign of nor
offer of help, any consolation or anything whatsoever. It is funny because, you know, I
have many colleagues, business associates, people even as far as United States,
Japan, that I probably met only once, when they found out, they make a call, they sent
card, they write small notes, but from the defendant, absolute silence. They didnEt
care, and worst, you know, this is a company that have (sic) all the resources to help
us.
MORAL DAMAGES ARE

RESTORATIVE NOT
PUNITIVE
The award of moral damages is aimed at a restoration, within the limits of the possible, of the
spiritual status quo ante. Moral damages are designed to compensate and alleviate in some
way the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, ocial humiliation, and similar injury unjustly caused a person.
Although incapable of pecuniary computation, they must be proportionate to the suffering
inflicted. The amount of the award bears no relation whatsoever with the wealth or means of
the offender.
EXEMPLARY DAMAGES
ARE DUE IF DEFENDANT
ACTED WITH GROSS
On the matter of exemplary damages, Art. 2231 of the Civil Code provides that in cases of
quasidelicts, exemplary damages may be granted if the defendant acted with gross negligence.
The records show that at the time of the accident, petitioner Del Rosario was driving without a
29
NEGLIGENCE
license because he was previously ticketed for reckless driving. The evidence also shows that
he failed to step on his brakes immediately after the impact. Had petitioner Del Rosario done
so, the injuries which respondent Stephen sustained could have been greatly reduced. Wanton
acts such as that committed by petitioner Del Rosario need be suppressed; and employers like
petitioner Mercury Drug should be more circumspect in the observance of due diligence in the
selection and supervision of their employees. The award of exemplary damages in favor of the
respondents is therefore justified.
Kierulf v. Court of Appeals, 269 SCRA 433 (1997)

FACTS:
Pantranco bus bumped the front portion of the Isuzu pickup truck driven by Legaspi (and Kierulf
was a passenger in that vehicle). Despite this incident, the bus did not stop and rammed a
nearby Caltex station. Husband of Kierulf sued for damages (quasi-delict).
TC: Not mentioned.
CA: Awarded the following to Lucila:
1. 240+K actual damages
2. 200k Moral damages
3. 100k exemplary damages
ISSUE: W/N petitioner Victor is entitled to moral damages? No.
HELD:
SC increased moral damages (pertaining to Lucila) to P400k.
SC disallowed the claiming of moral damages for Victor, the husband of the victim Lucila,
because of the loss of marital consortium. SC said Victor failed to prove that the accident was
the cause of such denial or that it cannot be automatically gleaned that the accident will result
in the loss of marital consortium (see doctrines).
SOCIAL STANDING MAY
BE CONSIDERED IF THERE
WAS A CONTEMPTUOUS
CONDUCT COMMITTED
MORAL DAMAGES: LOSS

OF THE RIGHT TO
MARITAL CONSORTIUM
The social and financial standing of Lucila cannot be considered in awarding moral damages.
The factual circumstances prior to the accident show that no rude and rough reception, no
menacing attitude, no supercilious manner, no abusive language and highly scornful
reference was given her. The social and financial standing of a claimant of moral damages
may be considered in awarding moral damages only if he or she was subjected to
contemptuous conduct despite the offenderEs knowledge of his or her social and financial
standing.
The Kierulf spouses add that the Respondent Court should have considered another factor: the
loss of their conjugal fellowship and the impairment or destruction of their sexual life.
The spouses aver that the disfigurement of LucilaEs physical appearance cannot but affect
their marital right to consortium which would have remained normal were it not for the
accident. Thus, the moral damages awarded in favor of Lucila should be increased to
P1,000,000.00, not only for Lucila but also for her husband Victor who also suffered
Psychologically. A California case, Rodriguez vs. Bethlehem Steel Corporation,20 is cited as
authority for the claim of damages by reason of loss of marital consortium, i.e. loss of conjugal
fellowship and sexual relations.21 The Court notes that the Rodriguez case clearly reversed the
original common law view first enunciated in the case of Deshotel vs. Atchison,23 that a wife
could not recover for the loss of her husbandEs services by the act of a third party. Rodriguez
ruled that when a person is injured to the extent that he/she is no longer capable of giving love,
affection, comfort and sexual relations to his or her spouse, that spouse has suffered a direct
and real personal loss. The loss is immediate and consequential rather than remote and
unforeseeable; it is personal to the spouse and separate and distinct from that of the injured
30
person.
Rodriguez involved a couple in their early 20s, who were married for only 16 months and full of
dreams of building a family of their own, when the husband was struck and almost paralyzed by
a falling 600-pound pipe.
The wife testified how her life had deteriorated because her husband became a lifelong invalid,
confined to the home, bedridden and in constant need of assistance for his bodily functions;
and how her social, recreational and sexual life had been severely restricted. It also deprived
her of the chance to bear their children. As a constant witness to her husbandEs pain, mental
anguish and frustration, she was always nervous, tense, depressed and had trouble sleeping,
eating and concentrating. Thus, the California court awarded her damages for loss of
consortium.
Whether Rodriguez may be cited as authority to support the award of moral damages to Victor
and/or Lucila Kierulf for loss of consortium, however, cannot be properly considered in this
case.
VictorEs claim for deprivation of his right to consortium, although argued before Respondent
Court, is not supported by the evidence on record. His wife might have been badly disfigured,
but he had not testified that, in consequence thereof, his right to marital consortium was
affected.
EXEMPLARY DAMAGES
CANNOT BE RECOVERED
AS A MATTER OF RIGHT
MORAL DAMAGES ARE

DESIGNED TO
COMPENSATE AND NOT
TO ENRICH PLAINTIFF AT
THE EXPENSE OF THE
DEFENDANT
Exemplary damages are designed to permit the courts to mould behavior that has socially
deleterious consequences, and its imposition is required by public policy to suppress the
wanton acts of an offender. However, it cannot be recovered as a atter of right. It is based
entirely on the discretion of the court. Jurisprudence sets certain requirements before
exemplary damages may be awarded, to wit: (1)(T)hey may be imposed by way of example or
correction only in addition, among others, to compensatory damages, and cannot be recovered
as a matter of right, their determination depending upon the amount of compensatory damages
that may be awarded to the claimant; (2) the claimant must first establish his right to moral,
temperate, liquidated or compensatory damages; and (3) the wrongful act must be
accompanied by bad faith, and the award would be allowed only if the guilty party acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner.
Lost income in the amount of P16,500.00 is also claimed by Legaspi stating that his whole
future has been jeopardized. This, in turn, is not rebutted by Pantranco. It should be noted
that Respondent Court already considered this when it stated that the award of P25,000.00
included compensation for mental anguish and emotional strain of not earning anything with a
family to support. Moral damages, though incapable of pecuniary estimation, are in the
category of an award designed to compensate the claimant for actual injury and are not meant
to enrich complainant at the expense of defendant.
People v. Iroy, G.R. No. 187743, March 3, 2010

MINUTE DIGEST
FACTS:
Sarmiento, a lessee of a room in Iroys house, saw the latter having sex with his daughter. After
he reported this to proper authorities, an information for qualified rape was filed against Iroy.
TC: Found Iroy guilty of qualified rape. Awarded P75k as moral damages.
CA: Affirmed the conviction but added the following:
1. Civil indemnity P75k
2. Moral damages P75k
3. Exemplary damages P25k
ISSUE: W/N Moral damages were properly awarded YES.
31
HELD:
CA correctly awarded moral damages. Moral damages in cases of rape are mandatory without
need of proof upon the finding the fact of rape (see doctrine).
It is settled that sexual intercourse in a standing position, while perhaps uncomfortable, is not
improbable (Oh settled na daw sabi ng SC! Was it disputed before?).
MORAL DAMAGES ARE
AUTOMATICALLY
GRANTED IN RAPE CASES

WITHOUT NEED OF
PROOF.
The appellate court correctly ruled when it modified that, in addition to the award of civil
indemnity of Seventy-Five Thousand Pesos (P75,000.00), appellant is likewise ordered to pay
the victim, AAA, another Seventy-Five Thousand Pesos (P75,000.00) as moral damages. Civil
indemnity, which is actually in the nature of actual or compensatory damages, is mandatory
upon the finding of the fact of rape. Moral damages are automatically granted in a rape case
without need of further proof other than the fact of its commission. For it is assumed that a rape
victim has actually suffered moral injuries entitling her to such an award.
People v. Pareja, G.R. No. 188979, September 5, 2012

FACTS:
Pareja tried to have sex with AAA, a 13 year-old girl, but was only halted by the latters loud
cry. He was charged of rape.
TC: Guilty of Rape
CA: Affirmed TC. Awarded 50k as moral damages.
ISSUE:
W/N Pareja is guilty for rape?
HELD:
He is guilty of attempted rape only. The
AMOUNTS
Moral Damages for Attempted Rape 25,000

Notes.The victim of Rape through sexual assault is entitled to recover civil indemnity in the
amount of P30,000.00 for each count. (Flordeliz vs. People, 614 SCRA 225 [2010] The very
definition of Rape through Sexual Assault under Article 266-A (2) or the Anti-Rape Law of
1997 specifically includes the insertion of any instrument into the genital orifice of another
person. (People vs. Subesa, 660 SCRA 390 [2011]).
People v. Rarugal, G.R. No. 188603, January 16, 2013

MINUTE DIGEST
FACTS:
While cycling, Florendo was stabbed by Rarugal and took his bicycle. Florendo was rushed to
the hospital but unfortunately died 7 days later. An information for the crime of murder was filed
against Rarugal.
TC: RTC found Rarugal guilty. Awarded actual damages, 50k as civil indemnity and 50k as
moral damages.
CA: Modified actual damages and added 25k as exemplary damages.
ISSUE: W/N the damages awarded were proper.
HELD:
32
SC agreed with the CA but increased civil indmenity to 75k and 30k for exemplary damages to
reflect recent jurisprudence. SC sustains the RTCs award for moral damages in the amount of
P50,000.00 even in the absence of proof of mental and emotional suffering of the victims heirs.
As borne out by human nature and experience, a violent death invariably and necessarily
brings about emotional pain and anguish on the part of the victims family.
Please see rules in the doctrine part.
AWARD OF DAMAGES
WHEN DEATH RESULTS
FROM A CRIME
Anent the award of damages, when death occurs due to a crime, the following may be
recovered: (1) civil indemnity ex delicto for the death of the victim; (2) actual or compensatory
damages; (3) moral damages; (4) exemplary damages; (5) attorneyEs fees and expenses of
litigation; and (6) interest, in proper cases.
Moreover, we agree with the Court of Appeals that the award of exemplary damages is proper
in this case. We have stated that:
Unlike the criminal liability which is basically a State concern, the award of damages,
however, is likewise, if not primarily, intended for the offended party who suffers
thereby. It would make little sense for an award of exemplary damages to be due the
private offended party when the aggravating circumstance is ordinary but to be
withheld when it is qualifying. Withal, the ordinary or qualifying nature of an aggravating
circumstance is a distinction that should only be of consequence to the criminal, rather
than to the civil, liability of the offender. In fine, relative to the civil aspect of the case,
an aggravating circumstance, whether ordinary or qualifying, should entitle the
offended party to an award of exemplary damages within the unbridled meaning of
Article 2230 of the Civil Code.
Fores v. Miranda, G.R. No. L-12163, March 4, 1959

MINUTE DIGEST
FACTS:
A jeepney driven by Eugenia Luga slammed a bridge wall due to overspeeding. Five
passengers were injured including Miranda who suffered a fracture. The driver was charged
with Reckless Imprudence Resulting in Serious Physical Injuries. Luga pleaded guilty and was
sentenced accordingly.
TC: awarded actual damages.
CA: Included attorneys fees and added moral damages
ISSUE:
W/N the award of moral damages was proper.
ATTORNEYS FEES
RECOVERABLE MORAL
DAMAGES; GENERAL
RULE AND EXCEPTIONS
HELD:
No. Absent any bad faith, moral damages are not recoverable. SC deleted moral damages.
(see doctrine)
Although the Court of First Instance did not provide for attorney's fees in the sum of P3,000 and
no appeal to the 'Court of Appeals was interposed on the point, it was not an error for the Court
of Appeals to award them motu propio because attorney's fees are included in the concept of
actual damages under the Civil Code and may be awarded whenever the court deems it just
and equitable.
Moral damages are generally not recoverable in damage actions predicated on a breach of
contract of transportation in view of the provisions of Articles 2218 and 2220 of the new Civil
Code.
The exception to the basic rule of damages is a mishap resulting in the death of a passenger,
in which case Article 1764 makes the common carrier expressly subject to the rule of Art. 2206,
of the Civil Code that entitles the spouse, descendants and ascendants of the deceased
33
IF DEATH WAS NOT THE

OUTCOME, THEN VICTIM
MUST PROVE BAD FAITH
passenger to "demand moral damages for mental anguish by reason of the death of the
deceased."
Where the injured passenger does not die, moral damages are not recoverable unless it is
proved that the carrier was guilty of malice or bad faith. The mere carelessness of the carrier's
driver does not per se constitute or justify an inference of malice or bad faith on the part of the
carrier.
While it is true that negligence may be occasionally so gross as to amount to malice, that fact
must be shown in evidence. A carrier's bad faith is not to be lightly inferred from a mere finding
that the contract was breached through negligence of the carrier's employees.
The distinction between fraud, bad faith or malice in the sense of deliberate or wanton wrong
doing and negligence (as mere carelessness) is too fundamental in our law to be ignored
Two rules:
1. In case of breach of contract (including one of transportation) proof of bad faith or fraud
(dolus), i.e., wanton or deliberately injurious conduct, is essential to justify an award of moral
damages; and
2. That a breach of contract can not be considered included in the descriptive term "analogous
cases" used in Art. 2219; not only because Art. 2220 specifically provides for the damages that
are caused by contractual breach, but because the definition of quasi-delict in Art. 2176 of the
Code expressly excludes the cases where there is a "preexisting contractual relation between
the parties."
DUTY TO SAFELY
TRANSPORT
The theory that carrier's violation of its engagement to safely transport the passenger involves
a breach of the passenger's confidence, and therefore should be regarded as a breach of
contract in bad faith, justifying recovery of moral damages, under Article 2220 of the New Civil
Code is untenable, for under it the carrier would always be deemed in bad faith in every case
its obligation to the passenger is infringed and it would never be accountable for simple
negligence while under Article 1756 of the Civil Code the presumption is that common carriers
acted negligently and not maliciously, and Article 1762 speaks of negligence of the common
carrier.
Sulpicio Lines, Inc., v. Curso, G.R. No. 157009, March 17, 2010
MINUTE DIGEST
FACTS:
M/V Doa Marilyn, a vessel owned by petitioner, sank due to inclement weather conditions
brought by Typhoon Unsang. Dr. Curso was aboard the ill-fated vessel and the Coast Guard
was unable to recover his body. His family sued for damages based on breach of contract of
carriage by sea.
TC: Dismissed the complaint due to force majeure.
CA: Reversed RTC because Sulpicio failed to show the exercise of the requisite diligence.
Awarded the following:
1. Death indemnity 50k
2. Loss of earning capacity 504k
3. Moral Damages 50k
ISSUE:
W/N brothers/sisters could claim moral damages for the victim? - No
W/N Moral damages awarded were proper? No.
HELD:
1.The omission from Article 2206 (3) of the brothers and sisters of the deceased passenger
reveals the legislative intent to exclude them from the recovery of moral damages for mental
34
anguish by reason of the death of the deceased. (see doctrine)

BROTHERS AND SISTERS
NOT ENTITLED TO MORAL
DAMAGES
As a general rule, moral damages are not recoverable in actions for damages predicated on a
breach of contract, unless there is fraud or bad faith. As an exception, moral damages may be
awarded in case of breach of contract of carriage that results in the death of a passenger, in
accordance with Article 1764, in relation to Article 2206 (3), of the Civil Code, which provide: x x
x The foregoing legal provisions set forth the persons entitled to moral damages. The omission
from Article 2206 (3) of the brothers and sisters of the deceased passenger reveals the
legislative intent to exclude them from the recovery of moral damages for mental anguish by
reason of the death of the deceased. Inclusio unius est exclusio alterius. The solemn power
and duty of the courts to interpret and apply the law do not include the power to correct the law
by reading into it what is not written therein. Thus, the CA erred in awarding moral damages to
the respondents.
PURPOSE OF MORAL
DAMAGES
The purpose of moral damages is indemnity or reparation, that is, to enable the injured party to
obtain the means, diversions, or amusements that will serve to alleviate the moral suffering he
has undergone by reason of the tragic event. According to Villanueva v. Salvador, 480 SCRA
39 (2006), the conditions for awarding moral damages are: (a) there must be an injury, whether
physical, mental, or psychological, clearly substantiated by the claimant; (b) there must be a
culpable act or omission factually established; (c) the wrongful act or omission of the defendant
must be the proximate cause of the injury sustained by the claimant; and (d) the award of
damages is predicated on any of the cases stated in Article 2219 of the Civil Code. To be
entitled to moral damages, the respondents must have a right based upon law. It is true that
under Article 1003 of the Civil Code they succeeded to the entire estate of the late Dr. Curso in
the absence of the latterEs descendants, ascendants, illegitimate children, and surviving
spouse. However, they were not included among the persons entitled to recover moral
damages, as enumerated in Article 2219 of the Civil Code.
Article 2219 circumscribes the instances in which moral damages may be awarded. The
provision does not include succession in the collateral line as a source of the right to recover
moral damages. The usage of the phrase analogous cases in the provision means simply that
the situation must be held similar to those expressly enumerated in the law in question
following the ejusdem generis rule. Hence, Article 1003 of the Civil Code is not concerned with
recovery of moral damages.
RECOVERABLE MORAL
DAMAGES IN BREACH OF
CONTRACT CASES
In fine, moral damages may be recovered in an action upon breach of contract of carriage only
when: (a) where death of a passenger results, or (b) it is proved that the carrier was guilty of
fraud and bad faith, even if death does not result.
Bagumbayan v. Intermediate Appellate Court, 132 SCRA 441 (1984)

FACTS:
Lelisa and Arturo Sea were at Tropical Palace Hotel. While Baez, a waiter, was serving them
drinks, a tray full of drinks overturned and fell on her. She was shocked and her dress was
destroyed. She also sensed that people laughed at or pitied her. She was escorted to the
restroom where she had to remover all her clothes. Embarrassed, she sued.
TC: Awarded actual damages, 50k as moral damages,10k as exemplary and 5k as attorneys
fees.
CA: Reduced moral damages to 15k and 5k for exemplary.
ISSUE: Is she entitled to moral damages?
HELD:
We hold that the embarrassment to which Mrs. Sena was exposed by the incident is not the
mental anguish contemplated in article 2217 for which moral damages can be recovered. (see
35
doctrines)
CASES MENTION IN 2219
AND 2220 ARE EXCLUSIVE
While the award for actual damages has some basis, the grant of moral and exemplary
damages is devoid of legal justification because it was not predicated upon any of the cases
enumerated in the Civil Code (Ventanilla vs. Centeno, 110 Phil. 811, 816). Generally, there can
be no recovery of moral damages if the case is not mentioned in articles 2219 and 2220
MORAL DAMAGES ARE
What we call moral damages are treated in American jurisprudence as compensatory damages
awarded for mental pain and suffering or mental anguish resulting from a wrong (25 C.J.S.
815).
TREATED AS
COMPENSATORY
DAMAGES UNDER
AMERICAN
JURISPRUDENCE
EMBARRASSMENT BY
CUSTOMERS DUE TO
We hold that the embarrassment to which Mrs. Sena was exposed by the incident is not the
mental anguish contemplated in article 2217 for which moral damages can be recovered.
NEGLIGENT ACTS OF
WAITER
EXEMPLARY DEPENDS IF
MORAL DAMAGES
AWARDED
In this case, it would not be just and proper to include moral damages in the corporations
vicarious liability as employer. The award of P5,000 as exemplary or corrective damages
cannot also be sustained because there was no gross negligence in this case.
United Coconut Planters Bank v. Ramos, 415 SCRA 596 (2003)

MINUTE DIGEST
FACTS:
UCPB granted a loan to ZDC with Sps. Ramos as sureties but defaulted. UCPB sued for
collection. TC ruled in favor of UCPB. UCPB moved to levy the property and caused its
annotation thereto. Ram Industrial (Ramos as President) applied for a loan with UCPB, it later
granted on the premise that UCPB remove the annotation. Ram defaulted and applied for
another loan from PDC to pay for UCPB. PDC disapproved because the land still had the
annotation. Ramos claimed that he almost suffered a heart attack when he learned the
situation. Ramos sued.
TC: UCPB is liable. Awarded the following:
1. 3 M moral damages
2. 500k exemplary
3. 200k attys fees
REQUISITES FOR THE

AWARD OF MORAL
DAMAGES
BAD FAITH REQUIRED IN

EXEMPLARY DAMAGES
CA:
For the award of moral damages to be granted, the following must exist: (1) there must be an
injury clearly sustained by the claimant, whether physical, mental or psychological; (2) there
must be a culpable act or omission factually established; (3) the wrongful act or omission of the
defendant is the proximate cause of the injury sustained by the claimant; and (4) the award for
damages is predicated on any of the cases stated in Article 2219 of the Civil Code.
Although the respondent was able to establish the petitionerEs negligence, we cannot,
however, allow the award for exemplary damages, absent the private respondentEs failure to
show that the petitioner acted with malice and bad faith. It is a requisite in the grant of
exemplary damages that the act of the offender must be accompanied by bad faith or done in
wanton, fraudulent or malevolent manner.
Filipinas Broadcasting Network, Inc., v. AGO Medical and Educational Center, G.R. No. 141994, January 17, 2005
MINUTE DIGEST
JURIDICAL PERSON
GENERALLY NOT
ENTITLED TO MORAL
To follow
A juridical person is generally not entitled to moral damages because, unlike a natural person, it
cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety,
mental anguish or moral shock. The Court of Appeals cites Mambulao Lumber Co. v. PNB, et
36
DAMAGES; EXCEPTIONS
al. to justify the award of moral damages. However, the CourtEs statement in Mambulao that a
corporation may have a good reputation which, if besmirched, may also be a ground for the
award of moral damages is an obiter dictum.
JURIDICAL PERSON MAY

CLAIM UNDER THE CIVIL
CODE
AMECEs claim for moral damages falls under item 7 of Article 2219 of the Civil Code. This
provision expressly authorizes the recovery of moral damages in cases of libel, slander or any
other form of defamation. Article 2219(7) does not qualify whether the plaintiff is a natural or
juridical person. Therefore, a juridical person such as a corporation can validly complain for
libel or any other form of defamation and claim for moral damages.
HONEST MISTAKE GOES
Where the broadcast is libelous per se, the law implies damages. In such a case, evidence of
an honest mistake or the want of character or reputation of the party libeled goes only in
mitigation of damages. Neither in such a case is the plaintiff required to introduce evidence of
actual damages as a condition precedent to the recovery of some damages. In this case, the
broadcasts are libelous per se. Thus, AMEC is entitled to moral damages. However, we find the
award of P300,000 moral damages unreasonable. The record shows that even though the
broadcasts were libelous per se, AMEC has not suffered any substantial or material damage to
its reputation. Therefore, we reduce the award of moral damages from P300,000 to P150,000.
ONLY IN THE MITIGATION

OF DAMAGES
City Government of Tagaytay v. Guerrero, G.R. Nos. 140743 & 140745, September 17, 2009
MINUTE DIGEST
GROSS TO NEGLIGENCE
AMOUNTS TO BAD FAITH
THEREFORE LIABLE FOR
MORAL DAMAGES
To follow
The gross negligence of the City of Tagaytay in levying taxes and auctioning properties to
answer for real property tax deficiencies outside its territorial jurisdiction amounts to bad faith
that calls for the award of moral damages. Moral damages are meant to compensate the
claimant for any physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation and similar injuries unjustly
caused. Although incapable of pecuniary estimation, the amount must somehow be
proportional to and in approximation of the suffering inflicted. Moral damages are awarded to
enable the injured party to obtain means, diversions or amusements that will serve to alleviate
the moral suffering the person has undergone, by reason of defendantEs culpable action. The
award is aimed at restoration, as much as possible, of the spiritual status quo ante. Thus, it
must be proportionate to the suffering inflicted. Since each case must be governed by its own
peculiar circumstances, there is no hard and fast rule in determining the proper amount.
The social standing of the aggrieved party is essential to the determination of the proper
amount of the award. Otherwise, the goal of enabling him to obtain means, diversions, or
amusements to restore him to the status quo ante would not be achieved. The Melencios are
likewise entitled to exemplary damages. Exemplary or corrective damages are imposed by way
of example or correction for the public good, in addition to the moral, temperate, liquidated, or
compensatory damages. Article 2229 of the Civil Code grants the award of exemplary or
corrective damages in order to deter the commission of similar acts in the future and to allow
the courts to mould behavior that can have grave and deleterious consequences to society. In
the instant case, the gross negligence of the City of Tagaytay in erroneously exacting taxes and
selling properties outside its jurisdiction, despite the clear mandate of statutory law, must be
rectified.
Philtranco Service Enterprises, Inc. v. Paras, G.R. No. 161909, April 25, 2012
MINUTE DIGEST
MORAL DAMAGES IN
BREACH OF CONTRACT,
GENERAL RULE;
EXCEPTIONS
To follow
As a general rule, indeed, moral damages are not recoverable in an action predicated on a
breach of contract. This is because such action is not included in Article 2219 of the Civil Code
as one of the actions in which moral damages may be recovered. By way of exception, moral
damages are recoverable in an action predicated on a breach of contract: (a) where the mishap
results in the death of a passenger, as provided in Article 1764, in relation to Article 2206, (3),
of the Civil Code; and (b) where the common carrier has been guilty of fraud or bad faith, as
37
provided in Article 2220 of the Civil Code.

TEMPERATE DAMAGES
There is no question that Article 2224 of the Civil Code expressly authorizes the courts to
award temperate damages despite the lack of certain proof of actual damages, to wit: Article
2224. Temperate or moderate damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds that some pecuniary loss has
been suffered but its amount cannot, from the nature of the case, be proved with certainty.
D. NOMINAL DAMAGES
Ventanilla v. Centeno, G.R. No. L-14333, January 28, 1961
FACTS:
Oscar Ventanilla hired Atty. Gregorio Centeno to represent him in Civil Case Ventenilla v.
Alejandrino. Ventanilla received an unfavorable decision so Atty. Centeno filed a notice of
appeal (to which Ventanilla subsequently acceded). Ventanilla, because of his initial reluctance
to pay the premium on the appeal bond, filed a cash appeal bond of P60.00. He issued the
check for P60.00 as appeal bond and delivered it to a certain Leonardo Sanchez with
instruction to give the same to Atty. Centeno upon his arrival. Centeno encashed the check and
went to the Clerk of Court to file an appeal bond. The record on appeal was accepted but no
appeal bond was recorded. Consequently, the record on appeal was disallowed because it was
filed out of time and no appeal bond had been filed by the plaintiff.
ISSUE:
W/N Centeno may be held liable for [nominal] damages? - Yes liable for nominal only.
HELD:
Actual and compensatory damages were disallowed because the claim of the petitioner that
were it not for the negligence of Centeno, he would have recovered the P4,000 (the amount
claimed in their previous Civil Case) was speculative.
Moral damages may not be had because the mental anguish that plaintiff suffered when he
learned that his appeal was not perfected did not fall under those listed in the Civil Code.
For temperate or moderate damages, that the trial court awarded nominal damages precludes
recovery of temperate damages.
For exemplary, the petitioner cannot allege entitlement to such as a matter of right. Exemplary
damages are discretionary.
As for attorneys fees, it was not proven that petitoners case fell under the circumstances listed
in 2208.
AWARD OF NOMINAL
The assessment of nominal damages is left to the discretion of the court, according to the
circumstances of the case. Considering the circumstances, as found by the trial court, and the
degree of negligence committed by the appellee, a lawyer, in not depositing on time the appeal
bond and filing the record on appeal within the extension period granted by the court, which
brought about the refusal by the trial court to allow the record on appeal, the amount of P200.
awarded by the trial court to the appellant as nominal damages may seem exiguous.
Nevertheless, considering that nominal damages are not for indemnification of loss suffered but
for the vindication or recognition of a right violated or invaded; and that even if the appeal in
civil case No. 18833 had been duly perfected, it was not an assurance that the appellant would
succeed in recovering the amount he had claimed in his complaint, the amount of P2,000 the
appellant seeks to recover as nominal damages is excessive. After weighing carefully all the
considerations, the amount awarded to the appellant for nominal damages should not be
disturbed.
When the claimant is not entitled to actual or compensatory damages but has been awarded
38
EXCLUDES TEMPERATE
OR MODERATE DAMAGES
nominal damages by the trial court, such award precludes the recovery of temperate or
moderate damages.
BURDEN OF PROOF
He who claims actual or compensatory damages must establish and prove by competent
evidence actual pecuniary loss
DEATH OF A PASSENGER:
MORAL DAMAGES
RECOVERABLE
Moral damages are recoverable only when physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury are the proximate result of a criminal offense resulting in physical injuries quasi-delicts
causing physical injuries, seduction, abduction, rape, or other lascivious acts, adultery or
concubinage, illegal or arbitrary detention or arrest, illegal search, libel, slander or any other
form of defamation, malicious prosecution disrespect for the dead or wrongful interference with
funerals, violation of specific provisions of the Civil Code on human relations, and willful injury
to property.
Where a mishap occurs resulting in the death of a passenger being transported by a common
carrier the spouse, descendants and ascendants of the deceased passenger are entitled to
demand moral damages for mental anguish by reason of the passenger's death.
EXEMPLARY OR
CORRECTIVE DAMAGES
ARE DISCRETIONARY
Exemplary or corrective damages cannot be recovered as a matter of right and the Court will
decide whether or not they should be adjudicated, if the defendants acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner.
Vda. De Medina v. Cresencia, G.R. No. L-8194, July 11, 1956

FACTS:
A jeepney driven by Avorque and owned & operated by Cresencia slammed into a Meralco
post. This resulted to the death of its passenger, Vicente Medina. A case of homicide through
reckless imprudence was filed against Avorque to which he pleaded guilty. The heirs reserved
their right to file a separate action for damages (breach of contract) against the registered
owner. Cresencia disclaimed liability on the ground that he had sold the jeepney to a certain
Cudiamat, and after a series of subsequent sale, was finally passed on to Rosario Avorque, the
owner at the time of the accident.
TC: as far as the public is concerned, Cresencia was still the registered owner. Ordered that he
bejointly and severally with the driver Brigido Avorque, for P6,000 compensatory damages,
P30,000 moral damages, P10,000 exemplary datmages, P10,000 nominal damages, P5,000
attorneys fees, and costs, while defendant Rosario Avorque was absolved from liability.
ISSUE:
Should cresencia be held liable? Yes. But nominal damages deleted.
HELD:
YES.
Registered owner
The law requires' the approval of the Public Service Commission in order that a franchise, or
any privilege pertaining thereto, may be sold or leased without in fringing the certificate
issued to the grantee; and that if property covered by the franchise is transferred or leased
without this requisite approval, the transfer is not binding against the public or the Service
Commission; and in contemplation of law, the grantee of record continues to be responsible
under the franchise in relation to the Commission and to the public.
Breach of Contract not Ex-Delicto
Appellant also argues that the basis of plaintiffs' action being the employer's subsidiary liability
under the Revised Penal Code for damages arising from his employee's criminal acts, it is
39
defendant Rosario Avorque who should answer subsidiarily for the damages sustained by
plaintiffs, since she admits that she, and not appellant, is the employer of the negligent driver
Brigido Avorque. The argument is untenable, because plaintiffs' action for damages is
independent of the criminal case filed against Brigido Avorque, and based, not on the
employer's subsidiary liability under the Revised Penal Code, but on a breach of the carrier's
contractual obligation to carry his passengers safely to their destination
Nominal Damages improper (important!)
The propriety of the damages awarded has not been questioned. Nevertheless, it is patent
upon the record that the award of Pl0,000 by way of nominal damages is untenable as a matter
of law, since nominal damages can not co-exist with compensatory damages. The purpose of
nominal damages is to vindicate or recognize a right that has been violated, in order to
preclude further contest thereon; "and not for the purpose of indemnifying the plaintiff for any
loss suffered by him." Since the court below has alteady awarded compensatory and exemplary
damages that are in themselves a judicial recognition that plaintiff's right was violated, the
award of nominal damages is unnecessary and improper. Anyway, ten thousand pesos cannot,
in common sense, be deemed "nominal".
WHEN NOMINAL
DAMAGES ARE IMPROPER
Where the court has already awarded compensatory and exemplary damages that are in
themselves a judicial recognition that plaintiffs' right was violated, the award of nominal
damages is unnecessary and improper. Nominal damages can not coeyist with compensatory
damages.
F. TEMPERATE DAMAGES
Equitable PCI Bank v. Tan, G.R. No. 165339, August 23, 2010
FACTS:
Tan, a depositor of PCIB now Equitable PCI Bank, issued a PCIB Check in favor of Sulpicio
Lines. Sulpicio Lines deposited the check to its account with Solid Bank. Equitable debited
Tans account thus leaving a balance of P558.87. Subsequently, Tan issued three more checks
Upon presentment, all were dishonored for being drawn against insufficient funds. As a result,
the electric power supply for the two mini-sawmills owned and operated by respondent, was cut
off. Tan claimed that he issued a postdated check (5/3/0/92 was unclear) and that he had
sufficient funds to cover payment of the other checks were it not for Equitables hasty debiting
of his account.
TC: Ruled in favor of Equitable. Complaint was dismissed.
CA: Reversed. Ordered to pay respondent the sum of P1,864,500.00 as actual damages,
P50,000.00 by way of moral damages, P50,000.00 as exemplary damages and attorneyEs
fees in the amount of P30,000.00.
ISSUE:
W/N Equitable was negligent?
HELD:
Petitioner was confused on whether the check was dated May 3 or May 30 because of the /
which allegedly separated the number 3 from the 0, petitioner should have required
respondent drawer to countersign the said / in order to ascertain the true intent of the drawer
before honoring the check. As a matter of practice, bank tellers would not receive nor honor
such checks which they believe to be unclear, without the counter-signature of its drawer.
Petitioner should have exercised the highest degree of diligence required of it by ascertaining
from the respondent the accuracy of the entries therein, in order to settle the confusion, instead
of proceeding to honor and receive the check.Further, petitionerEs branch manager, Pedro D.
Tradio, in a letter22 addressed to ANECO, explained the circumstances surrounding the
dishonor of PCIB Check No. 275097.
40
RespondentEs claim for damages was based on purchase orders from various customers
which were allegedly not met due to the disruption of the operation of his sawmills. However,
aside from the purchase orders and his testimony, respondent failed to present competent
proof on the specific amount of actual damages he suffered during the entire period his power
was cut off. No other evidence was provided by respondent to show that the foregoing
purchase orders were not met or were canceled by his various customers. The Court cannot
simply rely on speculation, conjecture or guesswork in determining the amount of damages
Moreover, an examination of the purchase orders and job orders reveal that the orders were
due for delivery prior to the period when the power supply of respondentEs two sawmills was
cut off on June 1, 1992 to July 20, 1992 and May 28, 1992 to August 24, 1992, respectively.
Purchase Order No. 990629 delivery date is May 4, 1992; Purchase Order No. 926930 delivery
date is March 19, 1992; Purchase Order No. 14779631 is due for delivery on January 31, 1992;
Purchase Order No. 7600032 delivery date is February and March 1992; and Job Order No.
1824,33 dated March 18, 1992, has a 15 days duration of work. Clearly, the disconnection of
his electricity during the period May 28, 1992 to August 24, 1992 could not possibly affect his
sawmill operations and prior orders therefrom.
Given the dearth of respondentEs evidence on the matter, the Court resolves to delete the
award of actual damages rendered by the CA in favor of respondent for his unrealized income.
Nonetheless, in the absence of competent proof on the actual damages suffered, respondent is
entitled to temperate damages. Under Article 2224 of the Civil Code of the Philippines,
temperate or moderate damages, which are more than nominal but less than compensatory
damages, may be recovered when the court finds that some pecuniary loss has been suffered
but its amount cannot, from the nature of the case, be proved with certainty. The allowance of
temperate damages when actual damages were not adequately proven is ultimately a rule
drawn from equity, the principle affording relief to those definitely injured who are unable to
prove how definite the injury. It is apparent that respondent suffered pecuniary loss. The
negligence of petitioner triggered the disconnection of his electrical supply, which temporarily
halted his business operations and the consequent loss of business opportunity. However, due
to the insufficiency of evidence before Us, We cannot place its amount with certainty. Article
2216 of the Civil Code instructs that assessment of damages is left to the discretion of the court
according to the circumstances of each case. Under the circumstances, the sum of P50,000.00
as temperate damages is reasonable.
Anent the award of moral damages, it is settled that moral damages are meant to compensate
the claimant for any physical suffering, mental anguish, fright, serious anxiety, besmirched
caused. In this case, the unexpected cutting off of respondentEs electricity, which resulted in
the stoppage of his business operations, had caused him to suffer humiliation, mental anguish
and serious anxiety. The award of P50,000.00 is reasonable, considering the reputation and
social standing of respondent.
WHEN TEMPERATE
DAMAGES
In the absence of competent proof on the actual damages suffered, respondent is entitled to
temperate damages. Under Article 2224 of the Civil Code of the Philippines, temperate or
moderate damages, which are more than nominal but less than compensatory damages, may
be recovered when the court finds that some pecuniary loss has been suffered but its amount
cannot, from the nature of the case, be proved with certainty. The allowance of temperate
damages when actual damages were not adequately proven is ultimately a rule drawn from
equity, the principle affording relief to those definitely injured who are unable to prove how
definite the injury.
ACTUAL AND
COMPENSATORY SHOULD
Actual or compensatory damages are those awarded in order to compensate a party for an
injury or loss he suffered. They arise out of a sense of natural justice and are aimed at repairing
the wrong done. Except as provided by law or by stipulation, a party is entitled to an adequate
compensation only for such pecuniary loss as he has duly proven. To recover actual damages,
NOT BE BASED ON
CONJECTURES
41
not only must the amount of loss be capable of proof; it must also be actually proven with a
reasonable degree of certainty, premised upon competent proof or the best evidence
obtainable. Respondents claim for damages was based on purchase orders from various
customers which were allegedly not met due to the disruption of the operation of his sawmills.
However, aside from the purchase orders and his testimony, respondent failed to present
competent proof on the specific amount of actual damages he suffered during the entire period
his power was cut off. No other evidence was provided by respondent to show that the
foregoing purchase orders were not met or were canceled by his various customers. The Court
cannot simply rely on speculation, conjecture or guesswork in determining the amount of
damages.
MORAL DAMAGES
DEMANDABLE
Anent the award of moral damages, it is settled that moral damages are meant to compensate
the claimant for any physical suffering, mental anguish, fright, serious anxiety, besmirched
caused. In Philippine National Bank v. Court of Appeals, 315 SCRA 309 (1999), the Court held
that a bank is under obligation to treat the accounts of its depositors with meticulous care
whether such account consists only of a few hundred pesos or of millions of pesos.
Responsibility arising from negligence in the performance of every kind of obligation is
demandable. While petitionerEs negligence in that case may not have been attended with
malice and bad faith, the banksE negligence caused respondent to suffer mental anguish,
serious anxiety, embarrassment and humiliation. In said case, We ruled that respondent therein
was entitled to recover reasonable moral damages. In this case, the unexpected cutting off of
respondentEs electricity, which resulted in the stoppage of his business operations, had
caused him to suffer humiliation, mental anguish and serious anxiety. The award of P50,000.00
is reasonable, considering the reputation and social standing of respondent. As found by the
CA, as an accredited supplier, respondent had been reposed with a certain degree of trust by
various reputable and well-established corporations.
EXEMPLARY DAMAGES
The law allows the grant of exemplary damages to set an example for the public good. The
Banking system has become an indispensable institution in the modern world and plays a vital
role in the economic life of every civilized society. Whether as mere passive entities for the
safekeeping and saving of money or as active instruments of business and commerce, banks
have attained an ubiquitous presence among the people, who have come to regard them with
respect and even gratitude and most of all, confidence. For this reason, banks should guard
against injury attributable to negligence or bad faith on its part. Without a doubt, it has been
repeatedly emphasized that since the banking business is impressed with public interest, of
paramount importance thereto is the trust and confidence of the public in general.
Consequently, the highest degree of diligence is expected, and high standards of integrity and
performance are even required of it. Petitioner, having failed in this respect, the award of
exemplary damages in the amount of P50,000.00 is in order.
People v. Murcia, G.R. No. 182460, March 9, 2010

FACTS:
In 2004, accused Jessie Murcia was charged of Arson (burning and killing of a certain Felicidad
Quilates and nine other houses) and of Frustrated Homicide (stabbed Alicia Manlupig).
TC First case: Guilty. Ordered to indemnify the heirs of the victim Felicidad Quilates, the
amount of Php50,000.00 as moral damages; Php50,000.00 as death indemnity; Php10,000.00
as actual damages and another Php10,000.00 as temperate damages. the accused is ordered
to indemnify Eulogio Quilates the amount of P250,000.00, representing the value of the burned
house. Second case: to pay the victim Alicia Q. Manlupig the amount of Php10,000.00 as
temperate damages; and to pay the costs.
CA: Affirmed.
SC:
42
This Court, however, takes exception to the trial courtEs award of damages.
With respect to the heirs of Felicidad, We modify the amount of temperate damages from
P10,000.00 to P 25,000.00, and accordingly delete the amount of actual damages, in line with
the ruling in People v. Villanueva.33 In said case, the Court held that when actual damages
proven by receipts during the trial amount to less than P25,000.00, the award of temperate
damages for P25,000.00 is justified in lieu of actual damages of a lesser amount.34Anent the
actual damages awarded to Eulogio amounting to P250,000.00, as indemnification for the
burned house, We note that said amount representing the value of the burned house was
merely given by Eulogio as an estimate. It was not substantiated by any document or receipt.
For one to be entitled to actual damages, it is necessary to prove the actual amount of loss with
a reasonable degree of certainty, premised upon competent proof and the best evidence
obtainable by the injured party.
Instead, We award temperate damages in accordance with Art. 2224 of the Civil Code,
providing that temperate damages may be recovered when the court finds that some pecuniary
loss has been suffered but its amount cannot, from the nature of the case, be proven with
certainty.36 It is thus reasonable to expect that the value of the house burned down amounted
to at least P200,000.00.
WHEREFORE, the appealed decision finding appellant JESSIE VILLEGAS MURCIA guilty
beyond reasonable doubt of the crime of arson and sentencing him to reclusion perpetua is
AFFIRMED with MODIFICATIONS:
1. Appellant is ordered to indemnify the heirs of Felicidad Quilates the amount of P50,000.00 as
moral damages; P50,000.00 as death indemnity; and P25,000.00 as temperate damages.
2. The award of P10,000.00 as actual damages in favor of the heirs of Felicidad Quilates is
deleted.
3. Appellant is ordered to pay Eulogio Quilates the amount of P200,000.00 as temperate
damages.
The award of P250,000.00 as actual damages in favor of Eulogio Quilates is deleted.
TEMPERATE DAMAGES
We award temperate damages in accordance with Art. 2224 of the Civil Code, providing that
temperate damages may be recovered when the court finds that some pecuniary loss has been
suffered but its amount cannot, from the nature of the case, be proven with certainty. It is thus
reasonable to expect that the value of the house burned down amounted to at least P200,000
People v. Gutierrez, G.R. No. 188602, February 4, 2010

FACTS:
Ford Gutierrez was accused of Murder, Frustrated Murder and 3 counts of Attempted Murder.
(Gutierrez shot the victims). Accused raised self-defense.
RTC:
For murder of Leo Salvador E. Regis - to pay the heirs of the victim the sum of P50,000.00 as
civil indemnity and the amount of Php 102,337.25 as actual damages For the frustrated murder
committed against Alexis B. Dalit to indemnify the sum of Php 22,596.50, representing the
victimEs expenses for medical services and medicine.
CA:
Affirmed. The award of actual damages in favor of the heirs of Leo Salvador E. Regis is
reduced to P42,337.25. Moral damages of P50,000.00, temperate damages of P10,000.00, and
exemplary damages of P10,000.00 are additionally awarded to the heirs of Leo Salvador E.
Regis.
43
SC:
The CA awarded P42,337.25 as actual damages and P10,000.00 as temperate damages to the
heirs of Regis. In People v. Villanueva26 and People v. Abrazaldo,27 we ruled that temperate
and actual damages are mutually exclusive in that both may not be awarded at the same time.
Hence, no temperate damages may be awarded if actual damages have already been granted.
The award of P10,000.00 as temperate damages must, therefore, be deleted.
The grant of P50,000.00 as civil indemnity and P50,000.00 as moral damages is proper, and
thus, we sustain the same. In murder, the grant of civil indemnity, which has been fixed by
jurisprudence at P50,000.00, requires no proof other than the fact of death as a result of the
crime and proof of the accusedEs responsibility therefor.28 Moral damages, on the other hand,
are awarded in view of the violent death of the victim. There is no need for any allegation or
proof of the emotional sufferings of the heirs.29
Likewise, the award of exemplary damages is warranted when the commission of the offense is
attended by an aggravating circumstance, whether ordinary or qualifying,30 as in this case.
Accordingly, we sustain the CAEs award of exemplary damages to the heirs of Regis, but we
increase the award to P30,000.00.
Similarly, we affirm the award of P22,596.50 as actual damages to Dalit, who is, likewise,
entitled to moral damages, which this Court fixes in the amount of P40,000.00. Ordinary human
experience and common sense dictate that the wounds inflicted on the surviving victims would
naturally cause physical suffering, fright, serious anxiety, moral shock, and similar injuries.
Finally, the award in the amount of P20,000.00, as exemplary damages to Dalit, is also in order
considering that the crime was attended by the qualifying circumstance of treachery.31
TEMPERATE AND ACTUAL
DAMAGES ARE MUTUALLY
EXCLUSIVE. BOTH MAY
NOT BE AWARDED AT THE
SAME TIME
The CA awarded P42,337.25 as actual damages and P10,000.00 as temperate damages to the
heirs of Regis. In People v. Villanueva, 408 SCRA 571 (2003) and People v. Abrazaldo, 397
SCRA 137 (2003) we ruled that temperate and actual damages are mutually exclusive in that
both may not be awarded at the same time. Hence, no temperate damages may be awarded if
actual damages have already been granted. The award of P10,000.00 as temperate damages
must, therefore, be deleted.
DAMAGES RECOVERABLE
WHEN DEATH OCCURS
When death occurs due to a crime, the following may be recovered: (1) civil indemnity ex
delicto for the death of the victim; (2) actual or compensatory damages; (3) moral damages; (4)
exemplary damages; (5) attorneyEs fees and expenses of litigation; and (6) interest, in proper
cases.
CIVIL INDEMNITY
The grant of P50,000.00 as civil indemnity and P50,000.00 as moral damages is proper, and
thus, we sustain the same. In murder, the grant of civil indemnity, which has been fixed by
jurisprudence at P50,000.00, requires no proof other than the fact of death as a result of the
crime and proof of the accusedEs responsibility therefor. Moral damages, on the other hand,
are awarded in view of the violent death of the victim. There is no need for any allegation or
proof of the emotional sufferings of the heirs.
EXEMPLARY DAMAGES
The award of exemplary damages is warranted when the commission of the offense is
attended by an aggravating circumstance, whether ordinary or qualifying, as in this case.
Accordingly, we sustain the CAEs award of exemplary damages to the heirs of Regis, but we
increase the award to P30,000.00.
Ramos v. Court of Appeals, 321 SCRA 584 (1999)

EXCEPTION TO THE
ACTUAL DAMAGES
PRECLUDE TEMPERATE
DAMAGES
Our rules on actual or compensatory damages generally assume that at the time of litigation,
the injury suffered as a consequence of an act of negligence has been completed and that the
cost can be liquidated. However, these provisions neglect to take into account those situations,
as in this case, where the resulting injury might be continuing and possible future complications
directly arising from the injury, while certain to occur, are difficult to predict.
44
In these cases, the amount of damages which should be awarded, if they are to adequately and
correctly respond to the injury caused, should be one which compensates for pecuniary loss
incurred and proved, up to the time of trial; and one which would meet pecuniary loss certain to
be suffered but which could not, from the nature of the case, be made with certainty. In other
words, temperate damages can and should be awarded on top of actual or compensatory
damages in instances where the injury is chronic and continuing. And because of the unique
nature of such cases, no incompatibility arises when both actual and temperate damages are
provided for. The reason is that these damages cover two distinct phases.
As it would not be equitable and certainly not in the best interests of the administration of
justice for the victim in such cases to constantly come before the courts and invoke their aid
in seeking adjustments to the compensatory damages previously awarded temperate
damages are appropriate. The amount given as temperate damages, though to a certain extent
speculative, should take into account the cost of proper care.
In the instant case, petitioners were able to provide only home-based nursing care for a
comatose patient who has remained in that condition for over a decade. Having premised our
award for compensatory damages on the amount provided by petitioners at the onset of
litigation, it would be now much more in step with the interests of justice if the value awarded
for temperate damages would allow petitioners to provide optimal care for their loved one in a
facility which generally specializes in such care. They should not be compelled by dire
circumstances to provide substandard care at home without the aid of professionals, for
anything less would be grossly inadequate. Under the circumstances, an award of
P1,500,000.00 in temperate damages would therefore be reasonable.
WHEREFORE, the decision and resolution of the appellate court appealed from are hereby
modified so as to award in favor of petitioners, and solidarily against private respondents the
following: 1) P1,352,000.00 as actual damages computed as of the date of promulgation of this
decision plus a monthly payment of P8,000.00 up to the time that petitioner Erlinda Ramos
expires or miraculously survives; 2) P2,000,000.00 as moral damages; 3) P1,500,000.00 as
temperate damages; 4) P100,000.00 each as exemplary damages and attorneyEs fees; and, 5)
the costs of the suit.
F. LIQUIDATED DAMAGES
Azcuna v. Court of Appeals, G.R. No. 116665, March 20, 1996
FACTS:
Under a one (1) year lease contract, Azcuna, Jr., as lessee, occupied three (3) units of the
building owned by respondent Barcelona's family. Despite demands after expiration and failure
of renewal, Azcuna did not vacate the subject property. A case for ejectment was filed.
TC:
Ernesto E. Barcelona, ordering the defendant Melquiades D. Azcuna, Jr., and all persons
claiming rights under him to vacate the premises known as Units C, E and F, in the building
owned by plaintiffEs family located along Congressional Avenue, Quezon City.
CA: Affirmed.
SC:
Petitioner now comes to the Court to contest the respondent CA's decision insofar as it affirmed
the municipal trial court's award of P3,000.00 per day as damages. It is petitioner's claim that
such award, in addition to the fair rental value or reasonable compensation for the use and
occupation of the premises, is improper in the light of the doctrine enunciated in the cases of
"Felesilda v. Villanueva," "Shoemart, Inc. v. CA" and "Hualam Construction and Development
Corp. v. CA" cited by petitioner, that "the only damages that can be recovered in an ejectment
suit are the fair rental value or the reasonable compensation for the use and occupation of the
45
real property. Other damages must be claimed in an ordinary action".

Petitioner's reliance on such doctrine is misplaced, inasmuch as the "Felesilda," "Shoemart"
and "Hualam" cases dealt with additional damages and charges other than liquidated damages,
defined as ". . . those agreed upon by the parties to a contract, to be paid in case of breach
thereof ". Here, the municipal trial court, in making the "P3,000.00 per day" award, was merely
enforcing what was stipulated upon in black and white by private respondent-lessor and
petitioner-lessee appearing in the lease contract.
There is clearly an agreement for liquidated damages entitling private respondent to claim a
stipulated amount by way of damages (correctly totalling P3,000.00 per day as there were three
(3) units being leased by petitioner) over and above other damages still legally due him, i.e., the
fair rental value for the use and occupation of the property.
Petitioner cannot now evade further liability for liquidated damages, for "after entering into such
an agreement, petitioner cannot thereafter turn his back on his word with a plea that on him
was inflicted a penalty shocking to the conscience and impressed with iniquity as to call for the
relief sought on the part of a judicial tribunal."
EJECTMENT CASES: FAIR
RENTAL VALUE OR
REASONABLE
COMPENSATION FOR USE
OF PREMISES.
It is petitionerEs claim that such award, in addition to the fair rental value or reasonable
compensation for the use and occupation of the premises (sub- paragraph 1), is improper in the
light of the doctrine enunciated in the cases of Felesilda v. Villanueva, Shoemart, Inc. v.
CA and Hualam Construction and Development Corp. v. CA cited by petitioner, that the
only damages that can be recovered in an ejectment suit are the fair rental value or the
reasonable compensation for the use and occupation of the real property. Other damages must
be claimed in an ordinary action. PetitionerEs reliance on such doctrine is misplaced,
inasmuch as the Felesilda, Shoemart and Hualam cases dealt with additional
damages and charges other than liquidated damages, defined as x x x those agreed upon by
the parties to a contract, to be paid in case of breach thereof. Here, the municipal trial court,
in making the P3,000.00 per day award, was merely enforcing what was stipulated upon in
black and white by private respondent-lessor and petitioner-lessee appearing in paragraph 10
of the lease contract.
LIQUIDATED DAMAGES
This is clearly an agreement for liquidated damagesentitling private respondent to claim a

stipulated amount by way of damages (correctly totalling P3,000.00 per day as there were three
(3) units being leased by petitioner) over and above other damages still legally due him, i.e., the
fair rental value for the use and occupation of the property as provided for in Section 8, Rule 70
of the Rules of Court. The freedom of the contracting parties to make stipulations in their
contract provided they are not contrary to law, morals, good customs, public order or public
policy is so settled, and the Court finds nothing immoral or illegal with the indemnity/penalty
clause of the lease contract (paragraph 10) which does not appear to have been forced upon or
fraudulently foisted on petitioner. Petitioner cannot now evade further liability for liquidated
damages, for after entering into such an agreement, petitioner cannot thereafter turn his back
on his word with a plea that on him was inflicted a penalty shocking to the conscience and
impressed with inequity as to call for the relief sought on the part of a judicial tribunal.
Filinvest Land, Inc. v. Court of Appeals, G.R. No. 138980, September 20, 2005
FACTS:
Filinvest entered intro an agreement with Pacific to develop residential subdivisions. Despite
three extensions of the deadline, Pacific still failed to complete its obligations under the
contract. Filinvest sued.
ISSUE:
Hence, the instant petition grounded solely on the issue of whether or not the liquidated
damages agreed upon by the parties should be reduced considering that: (a) time is of the
essence of the contract; (b) the liquidated damages was fixed by the parties to serve not only
46
as penalty in case Pecorp fails to fulfill its obligation on time, but also as indemnity for actual
and anticipated damages which Filinvest may suffer by reason of such failure; and (c) the total
liquidated damages sought is only 32% of the total contract price, and the same was freely and
voluntarily agreed upon by the parties.
HELD:
Coming now to the main matter, Filinvest argues that the penalty in its entirety should be
respected as it was a product of mutual agreement and it represents only 32% of the
P12,470,000.00 contract price, thus, not shocking and unconscionable under the
circumstances. Moreover, the penalty was fixed to provide for actual or anticipated liquidated
damages and not simply to ensure compliance with the terms of the contract; hence, pursuant
to Laureano v. Kilayco, courts should be slow in exercising the authority conferred by Art. 1229
of the Civil Code.
We are not swayed.
There is no question that the penalty of P15,000.00 per day of delay was mutually agreed upon
by the parties and that the same is sanctioned by law. A penal clause is an accessory
undertaking to assume greater liability in case of breach. It is attached to an obligation in order
to insure performance and has a double function:
1. To provide for liquidated damages, and
2. To strengthen the coercive force of the obligation by the threat of greater responsibility
in the event of breach.
Courts may equitably reduce a stipulated penalty in the contract in two instances:
1. If the principal obligation has been partly or irregularly complied; and
2. Even if there has been no compliance if the penalty is iniquitous or unconscionable in
accordance with Article 1229 of the Civil Code.
We are hamstrung to reverse the Court of Appeals as it is rudimentary that the application of
Article 1229 is essentially addressed to the sound discretion of the court. As it is settled that the
project was already 94.53% complete and that Filinvest did agree to extend the period for
completion of the project, which extensions Filinvest included in computing the amount of the
penalty, the reduction thereof is clearly warranted.
Filinvest, however, hammers on the case of Laureano v. Kilayco, decided in 1915, which
cautions courts to distinguish between two kinds of penalty clauses in order to better apply their
authority in reducing the amount recoverable. We held therein that:
. . . [I]n any case wherein there has been a partial or irregular compliance with the provisions in
a contract for special indemnification in the event of failure to comply with its terms, courts will
rigidly apply the doctrine of strict construction against the enforcement in its entirety of the
indemnification, where it is clear from the terms of the contract that the amount or character of
the indemnity is fixed without regard to the probable damages which might be anticipated as a
result of a breach of the terms of the contract; or, in other words, where the indemnity provided
for is essentially a mere penalty having for its principal object the enforcement of compliance
with the contract. But the courts will be slow in exercising the jurisdiction conferred upon them
in article 1154 so as to modify the terms of an agreed upon indemnification where it appears
that in fixing such indemnification the parties had in mind a fair and reasonable compensation
for actual damages anticipated as a result of a breach of the contract, or, in other words, where
the principal purpose of the indemnification agreed upon appears to have been to provide for
the payment of actual anticipated and liquidated damages rather than the penalization of a
breach of the contract.
Filinvest contends that the subject penalty clause falls under the second type, i.e., the principal
purpose for its inclusion was to provide for payment of actual anticipated and liquidated
damages rather than the penalization of a breach of the contract. Thus, Filinvest argues that
47
had Pecorp completed the project on time, it (Filinvest) could have sold the lots sooner and
earned its projected income that would have been used for its other projects.
Unfortunately for Filinvest, the above-quoted doctrine is inapplicable to herein case. The
Supreme Court in Laureano instructed that a distinction between a penalty clause imposed
essentially as penalty in case of breach and a penalty clause imposed as indemnity for
damages should be made in cases where there has been neither partial nor irregular
compliance with the terms of the contract. In cases where there has been partial or irregular
compliance, as in this case, there will be no substantial difference between a penalty and
liquidated damages insofar as legal results are concerned. The distinction is thus more
apparent than real especially in the light of certain provisions of the Civil Code of the
Philippines such as Articles 2226 and Article 2227.
Finally, Filinvest advances the argument that while it may be true that courts may mitigate the
amount of liquidated damages agreed upon by the parties on the basis of the extent of the work
done, this contemplates a situation where the full amount of damages is payable in case of total
breach of contract. In the instant case, as the penalty clause was agreed upon to answer for
delay in the completion of the project considering that time is of the essence, the parties thus
clearly contemplated the payment of accumulated liquidated damages despite, and precisely
because of, partial performance. In effect, it is Filinvests position that the first part of Article
1229 on partial performance should not apply precisely because, in all likelihood, the penalty
clause would kick in in situations where Pecorp had already begun work but could not finish it
on time, thus, it is being penalized for delay in its completion.
The above argument, albeit sound, is insufficient to reverse the ruling of the Court of Appeals. It
must be remembered that the Court of Appeals not only held that the penalty should be
reduced because there was partial compliance but categorically stated as well that the penalty
was unconscionable. Otherwise stated, the Court of Appeals affirmed the reduction of the
penalty not simply because there was partial compliance per se on the part of Pecorp with what
was incumbent upon it but, more fundamentally, because it deemed the penalty
unconscionable in the light of Pecorps 94.53% completion rate.
In Ligutan v. Court of Appeals, we pointed out that the question of whether a penalty is
reasonable or iniquitous can be partly subjective and partly objective as its resolution would
depend on such factors as, but not necessarily confined to, the type, extent and purpose of the
penalty, the nature of the obligation, the mode of breach and its consequences, the
supervening realities, the standing and relationship of the parties, and the like, the application
of which, by and large, is addressed to the sound discretion of the court.
In herein case, there has been substantial compliance in good faith on the part of Pecorp which
renders unconscionable the application of the full force of the penalty especially if we consider
that in 1979 the amount of P15,000.00 as penalty for delay per day was quite steep indeed.
Nothing in the records suggests that Pecorps delay in the performance of 5.47% of the
contract was due to it having acted negligently or in bad faith. Finally, we factor in the fact that
Filinvest is not free of blame either as it likewise failed to do that which was incumbent upon it,
i.e., it failed to pay Pecorp for work actually performed by the latter in the total amount of
P1,881,867.66. Thus, all things considered, we find no reversible error in the Court of Appeals
exercise of discretion in the instant case.
Philippines which provides in Articles 2226 and Article 2227 thereof: Art. 2226. Liquidated
damages are those agreed upon by the parties to a contract to be paid in case of breach
48
thereof. Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall
be equitably reduced if they are iniquitous or unconscionable. Thus, we lamented in one case
that (t)here is no justification for the Civil Code to make an apparent distinction between a
penalty and liquidated damages because the settled rule is that there is no difference between
penalty and liquidated damages insofar as legal results are concerned and that either may be
recovered without the necessity of proving actual damages and both may be reduced when
proper.
DOUBLE FUNCTION OF
PENAL CLAUSE
There is no question that the penalty of P15,000.00 per day of delay was mutually agreed upon
by the parties and that the same is sanctioned by law. A penal clause is an accessory
undertaking to assume greater liability in case of breach. It is attached to an obligation in order
to insure performance and has a double function: (1) to provide for liquidated damages, and (2)
to strengthen the coercive force of the obligation by the threat of greater responsibility in the
event of breach.
EQUITABLE REDUCTION
As a general rule, courts are not at liberty to ignore the freedom of the parties to agree on such
terms and conditions as they see fit as long as they are not contrary to law, morals, good
customs, public order or public policy. Nevertheless, courts may equitably reduce a stipulated
penalty in the contract in two instances: (1) if the principal obligation has been partly or
irregularly complied; and (2) even if there has been no compliance if the penalty is iniquitous or
unconscionable in accordance with Article 1229 of the Civil Code which provides: Art. 1229.
The judge shall equitably reduce the penalty when the principal obligation has been partly or
irregularly complied with by the debtor. Even if there has been no performance, the penalty
may also be reduced by the courts if it is iniquitous or unconscionable.
PENALTY AND
LIQUIDATED DAMAGES
DISTINGUISHED
Philippines which provides in Articles 2226 and Article 2227 thereof: Art. 2226. Liquidated
damages are those agreed upon by the parties to a contract to be paid in case of breach
thereof. Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall
be equitably reduced if they are iniquitous or unconscionable. Thus, we lamented in one case
that (t)here is no justification for the Civil Code to make an apparent distinction between a
penalty and liquidated damages because the settled rule is that there is no difference between
penalty and liquidated damages insofar as legal results are concerned and that either may be
recovered without the necessity of proving actual damages and both may be reduced when
proper.
Development Bank of the Philippines v. Family Foods Manufacturing Co., Ltd., G.R. No. 180458, July 30, 2009
FACTS:
Family Foods obtained Industrial Loan from DBP worth 500k. The loan was evidenced by a
promissory note dated September 15, 1982 and payable in seven (7) years, with quarterly
amortizations of P31,760.40. The loan carried an interest rate of 18% per annum, and penalty
charge of 8% per annum. Parcels of land were mortgaged to secure this loan. Family Foods
defaulted and DBP foreclose the property. Subsequently, FF entered into a lease agreement
with DBP (the highest bidder) before the end of the redemption period. Unable to pay rentals,
DBP sought to consolidate its properties.
FF sued DBP for annulment of Sale for excessive interests and other charges.
49
ISSUE:
W/N the interests and charges are valid. YES.
HELD:
Stipulations are valid. FF cannot avoid payment. Interests were not usurious and penalty
charges were not excessive (see doctrine).
INTEREST AND PENALTIES
RespondentsE own evidence shows that they agreed on the stipulated interest rates of 18%
and 22%, and on the penalty charge of 8%, in each promissory note. It is a basic principle in
civil law that parties are bound by the stipulations in the contracts voluntarily entered into by
them. Parties are free to stipulate terms and conditions that they deem convenient, provided
these are not contrary to law, morals, good customs, public order, or public policy.
This Court sustained the interest rates of 18% and 24% per annum on the loans obtained by
Chemark from Security Bank. In Garcia v. Court of Appeals, 167 SCRA 815, 1988, this Court
sustained the interest rates of 18% and 24% per annum on the loans obtained by Chemark
from Security Bank. Also, in Bautista v. Pilar Development Corporation, 312 SCRA 611, 621
(1999), the validity of the 21% interest rate was upheld. Thus, the stipulated rates on
respondentsE promissory notes cannot be stricken down for being contrary to public policy. We
uphold the validity of the 8% penalty charge.
In Development Bank of the Philippines v. Go, 533 SCRA 460, 2007, this Court had the
occasion to state that the 8% penalty charge is valid, viz.: This Court has recognized a penalty
clause as an accessory obligation which the parties attach to a principal obligation for the
purpose of insuring the performance thereof by imposing on the debtor a special prestation
(generally consisting in the payment of a sum of money) in case the obligation is not fulfilled or
is irregularly or inadequately fulfilled. The enforcement of the penalty can be demanded by the
creditor only when the non-performance is due to the fault or fraud of the debtor. The nonperformance gives rise to the presumption of fault; in order to avoid the payment of the penalty,
the debtor has the burden of proving an excuse the failure of the performance was due to
either force majeure or the acts of the creditor himself.
G. EXEMPLARY DAMAGES
Makabali v. Court of Appeals, G.R. No. L-46877, January 22, 1988
FACTS:
Georgina Makabali received a trip to Hongkong as a graduation gift. She then came across an
advertisement of Baron Travel offering a package tour in Hongkong. After personally consulting
with Barons representatives, they agreed to be part of the tour. On the day that they were
supposed to fly out, Baron Travel representatives and the tour group were nowhere to be
found in the airport. They were paged to board the plane. Inside the plane, petitioners did not
meet anyone from the Baron Tour Group. They looked for and found a certain Mr. Arsenio
Rosal who, to their embarrassment, protested that he was not a tour guide but a business
executive working with International Harvester Macleod, Inc. and who was going to Hong-kong
as a paying passenger.
In Hongkong, nobody met petitioners at the airport. Thereafter, petitioners called up the
President Hotel in Hongkong where private respondent promised to book them but it had no
accommodations for them.
Left with no alternative, petitioners tagged along with the Abaya Tour Group. Petitioners
claimed public humiliation due to the fact that they had to pay for their lunch while the rest of
the group had prepaid meals. They could not go shopping with the Abaya group for fear that
their limited funds would not be sufficient to pay for their hotel bills. There were times when
breakfast consisted of hot dogs bought along the sidewalk while lunch and supper consisted of
apples and oranges. On the third night, they tried to place a long-distance call to their home but
50
could not get through. The next morning, petitioners sent a cable to their parents.
According to petitioners, they had to scrimp on their limited budget for fear that their meager
pocket money would not be enough to pay for their hotel bills. All these caused them sleepless
nights because of great worry, mental anguish and public humiliation.
It was only on the fourth day of the supposed five-day tour that petitioners were notified that
private respondent had finally made arrangements for the payment of their bills. By that time,
the supposed tour was practically over. Upon their return, petitioners complained to private
respondent who according to petitioners did not even bother to apologize but simply ignored
their complaint and gave them the run around.
Petitioners sued.
CA: defendant is ordered to pay the plaintiffs the sum of P5,000.00 as moral and exemplary
damages and the sum of P1,000.00 as attorneyEs fees and the costs.
ISSUE:
W/N moral and exemplary damages were correct? YES
HELD:
As to exemplary damages, Article 2229 of the Civil Code provides that such damages may be
imposed by way of example or correction for the public good. While exemplary damages
cannot be recovered as a matter of right, they need not be proved, although plaintiff must show
that he is entitled to moral, temperate or compensatory damages before the court may consider
the question of whether or not exemplary damages should be awarded.
A review of related jurisprudence shows that We had awarded moral damages in more or less
similar cases ranging 7from P20,000.00 [Northwest Airlines, Inc. v. Cuenca], P25,000.00
[Yutuk v. Manila Electric Company, Air France v. Carrascoso],8 P50,000.00 [KLM Royal Dutch
Airlines v. Court of Appeals],9 P150,000.00 [Ortigas v. Lufthansa German Airlines],10 and
P200,000.00 [Lopez v. Pan American World Airways],11 to P500,000.00 [Zulueta v. Pan
American World Airways].12 As to exemplary damages, We awarded in Yutuk and Air France
P10,000.00, in Lopez P75,000.00, in Ortigas P100,000.00 and in Zulueta P200,000.00.
It will thus be noted that We have awarded moral and exemplary damages depending upon the
facts attendant to each case. It will also be noted that We gave separate awards for moral and
exemplary damages. This is as it should be because the nature and purposes of said damages
are different. While moral damages have to do with injury personal to the awardee, such as
physical suffering and the like, exemplary damages are imposed by way of example or
correction for the public good.
It is essential however, in the award of damages that the claimant must have satisfactorily
proven during the trial the existence of the factual basis of the damages and its causal
connection to defendantEs acts. This is so because moral damages, though incapable of
pecuniary estimation, are in the category of an award designed to compensate the claimant for
actual injury suffered and not to impose a penalty on the wrongdoer, and are allowable only
when specifically prayed for in the complaint.
EXEMPLARY DAMAGES
NOT A MATTER OF RIGHT
BUT NEED NOT BE
PROVED AS WELL (AS
LONG AS ENTITLED TO
As to exemplary damages, Article 2229 of the Civil Code provides that such damages may be
imposed by way of example or correction for the public good. While exemplary damages
cannot be recovered as a matter of right, they need not be proved, although plaintiff must show
that he is entitled to moral, temperate or compensatory damages before the court may consider
the question of whether or not exemplary damages should be awarded.
MORAL, TEMPERATE OR
COMPENSATORY
DAMAGES)
DIFFERENCE
IN
THE
It will thus be noted that We have awarded moral and exemplary damages depending upon the
51
NATURE AND PURPOSE

OF
EXEMPLARY AND
MORAL DAMAGES
facts attendant to each case. It will also be noted that We gave separate awards for moral and
exemplary damages. This is as it should be because the nature and purposes of said damages
are different. While moral damages have to do with injury personal to the awardee, such as
physical suffering and the like, exemplary damages are imposed by way of example or
correction for the public good.
People v. Catubig, 363 SCRA 62 (2001)

FACTS:
Danilo Catubig used to send his children to their aunts place while he instructs Dannilyn
Catubig (his daughter) to lay down in bed. There he would rape her. Dannilyn aunt grew
suspicious and upon asking Dannilyn, she admitted that she was being repeatedly raped by her
father. Danilo was charged of rape. TC found him guilty.
ISSUE:
Is the accused liable for exemplary damages? YES.
HELD:
Anent the award of damages, the trial court has correctly awarded P50,000.00 moral damages,
an award that rests on the jural foundation that the crime of rape necessarily brings with it
shame, mental anguish, besmirched reputation, moral shock and social humiliation to the
offended party. In addition, the offended party deserves to receive the amount of P50,000.00
civil indemnity, the equivalent of compensatory damages, and exemplary damages in the
amount of P25,000.00.
An apparent discord in the award of exemplary damages in simple and qualified rape cases
perhaps deserves more than just a passing remark.
Under Section 11 of Republic Act No. 7659, amending Article 335 of the Revised Penal Code,
the death penalty is to be imposed in rape cases when the victim is under eighteen (18) years
of age and the offender is a parent, ascendant, step-parent, guardian, relative by consanguinity
or affinity within the third civil degree, or the common-law spouse of the parent of the victim.
The Court has since held that the circumstances enumerated by the amendatory law are to be
regarded as special qualifying (aggravating) circumstances. Somehow doubts linger on
whether relationship may then be considered to warrant an award for exemplary damages
where it is used to qualify rape as a heinous crime, thereby becoming an element thereof, as
would subject the offender to the penalty of death. Heretofore, the Court has not categorically
laid down a specific rule, preferring instead to treat the issue on a case to case basis.
In certain cases, the Court has almost invariably appreciated relationship as an ordinary
aggravating circumstance in simple rape and thereby imposed exemplary damages upon the
offender whether or not the offense has been committed prior to or after the effectivity of
Republic Act No. 7659. Exceptionally, in other cases, the Court has denied the award of
exemplary damages following the effectivity of that law. The Court decreed the payment of
exemplary damages to the offended party but it did not so do in other cases.
EXEMPLARY DAMAGES:
PURPOSE
It may be time for the Court to abandon its pro hac vice stance and provide, for the guidance of
the bar and the bench, a kind of standard on the matter.
(see doctrines below for the rules)
Also known as punitive or vindictive damages, exemplary or corrective damages are
intended to serve as a deterrent to serious wrongdoings and as a vindication of undue
sufferings and wanton invasion of the rights of an injured or a punishment for those guilty of
outrageous conduct. These terms are generally, but not always, used interchangeably. In
common law, there is preference in the use of exemplary damages when the award is to
account for injury to feelings and for the sense of indignity and humiliation suffered by a person
52
as a result of an injury that has been maliciously and wantonly inflicted, the theory being that
there should be compensation for the hurt caused by the highly reprehensible conduct of the
defendantassociated with such circumstances as willfulness, wantonness, malice, gross
negligence or recklessness, oppression, insult or fraud or gross fraudthat intensifies the injury.
The terms punitive or vindictive damages are often used to refer to those species of damages
that may be awarded against a person to punish him for his outrageous conduct. In either case,
these damages are intended in good measure to deter the wrongdoer and others like him from
similar conduct in the future.
AGGRAVATING
CIRCUMSTANCE UNDER
CIVIL CODE
The term aggravating circumstances used by the Civil Code, the law not having specified
otherwise, is to be understood in its broad or generic sense. The commission of an offense has
a two-pronged effect, one on the public as it breaches the social order and the other upon the
private victim as it causes personal sufferings, each of which is addressed by, respectively, the
prescription of heavier punishment for the accused and by an award of additional damages to
the victim. The increase of the penalty or a shift to a graver felony underscores the
exacerbation of the offense by the attendance of aggravating circumstances, whether ordinary
or qualifying, in its commission. Unlike the criminal liability which is basically a State concern,
the award of damages, however, is likewise, if not primarily, intended for the offended party
who suffers thereby. It would make little sense for an award of exemplary damages to be due
the private offended party when the aggravating circumstance is ordinary but to be withheld
when it is qualifying. Withal, the ordinary or qualifying nature of an aggravating circumstance is
a distinction that should only be of consequence to the criminal, rather than to the civil, liability
of the offender. In fine, relative to the civil aspect of the case, an aggravating circumstance,
whether ordinary or qualifying, should entitle the offended party to an award of exemplary
damages within the unbridled meaning of Article 2230 of the Civil Code.
People v. Dalisay, G.R. No. 188106, November 25, 2009

FACTS:
Accused Dalisay repeatedly raped his stepdaughter since she was 12 years old. Bent on
satisfying his lust, he forced the girl down on the floor, took off her shorts and underwear, and
placed himself on top of her. The defenseless lass resisted by kicking his legs and by pleading
for him to stop. He, however, remained deaf to the girlEs earnest entreaty, warned her that he
would kill her entire family, and proceeded to bombard the gate to her chastity with his bestial
toughness
AGGRAVATING
CIRCUMSTANCES STILL
CONSIDERED THOUGH
NOT ALLEGED
Prior to the effectivity of the Revised Rules of Criminal Procedure, courts generally awarded
exemplary damages in criminal cases when an aggravating circumstance, whether ordinary or
qualifying, had been proven to have attended the commission of the crime, even if the same
was not alleged in the information. This is in accordance with the aforesaid Article 2230.
However, with the promulgation of the Revised Rules, courts no longer consider the
aggravating circumstances not alleged and proven in the determination of the penalty and in
the award of damages. Thus, even if an aggravating circumstance has been proven, but was
not alleged, courts will not award exemplary damages.
Nevertheless, People v. Catubig laid down the principle that courts may still award exemplary
damages based on the aforementioned Article 2230, even if the aggravating circumstance has
not been alleged, so long as it has been proven, in criminal cases instituted before the
effectivity of the Revised Rules which remained pending thereafter. Catubig reasoned that the
retroactive application of the Revised Rules should not adversely affect the vested rights of the
private offended party.
Importantly, the difference rests on when the criminal case was instituted, either before or after
the effectivity of the Revised Rules.
In the instant case, the information for rape was filed in 2003 or after the effectivity of the
53
Revised Rules. Following the doctrine in the second set of cases, the Court can very well deny
the award of exemplary damages based on Article 2230 because the special qualifying
circumstances of minority and relationship, as mentioned above, were not sufficiently alleged.
Nevertheless, by focusing only on Article 2230 as the legal basis for the grant of exemplary
damagestaking into account simply the attendance of an aggravating circumstance in the
commission of a crime, courts have lost sight of the very reason why exemplary damages are
awarded.
Being corrective in nature, exemplary damages, therefore, can be awarded, not only in the
presence of an aggravating circumstance, but also where the circumstances of the case show
the highly reprehensible or outrageous conduct of the offender. In much the same way as
Article 2230 prescribes an instance when exemplary damages may be awarded, Article 2229,
the main provision, lays down the very basis of the award.
It must be noted that in certain cases the Court used as basis Article 2229, rather than Article
2230, to justify the award of exemplary damages. Indeed, to borrow Justice Carpio Morales
words in her separate opinion in People of the Philippines v. Dante Gragasin y Par, [t]he
application of Article 2230 of the Civil Code strictissimi juris in such cases, as in the present
one, defeats the underlying public policy behind the award of exemplary damagesto set a
public example or correction for the public good.
In this case, finding that appellant, the father figure of the victim, has shown such an
outrageous conduct in sexually abusing his ward, a minor at that, the Court sustains the award
of exemplary damages to discourage and deter such aberrant behavior. However, the same is
increased to P30,000.00 in line with prevailing jurisprudence.
Kapalaran Bus Line v. Coronado, G.R. No. 85331, August 25, 1989
EXEMPLARY DAMAGES
MAY BE DEMANDED ON
THE BASIS OF GROSS
NEGLIGENCE
The Court is entitled to take judicial notice of the gross negligence and the appalling disregard
of the physical safety and property of others so commonly exhibited today by the drivers of
passenger buses and similar vehicles on our highways. The law requires petitioner as common
carrier to exercise extraordinary diligence in carrying and transporting their passengers safely
as far as human care and foresight can provide, using the utmost diligence of very cautious
persons, with due regard for all the circumstance.
The law requires petitioner as common carrier to exercise extraordinary diligence in carrying
and transporting their passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with due regard for all the
circumstances. In requiring the highest possible degree of diligence from common carriers
and creating a presumption of negligence against them, the law compels them to curb the
recklessness of their drivers. x x x The law seeks to stop and prevent the slaughter and
maiming of people (whether passengers or not) and the destruction of property (whether freight
or not) on our highways by buses, the very size and power of which seem often to inflame the
minds of their drivers. Article 2231 of the Civil Code explicitly authorizes the imposition of
exemplary damages in cases of quasi-delicts if the defendant acted with gross negligence.
Thus we believe that the award of exemplary damages by the trial court was quite proper,
although granted for the wrong reason, and should not only be restored but augmented in the
present case.
Quezon City Government v. Dacara, G.R. No. 150304, June 15, 2005
FACTS:
Dacara Jrs car rammed into a pile of earth or diggings in Quezon City. Dacara sustained
injuries. He sued the Quezon City Government alleging that they were negligent in leaving the
pile of earth without sufficient warning or precaution (quasi-delict, Art. 2189).
54
TC:
QC Government was negligent. P20,000 as actual/compensatory damages, P10,000.00 as
moral damages, P5,000.00 as exemplary damages, P10,000.00 as attorneys fees and other
costs of suit.
CA: Affirmed
ISSUE:
W/N the award of exemplary damages was proper?
SC:
Petitioners argue that exemplary damages and attorneys fees are not recoverable. Allegedly,
the RTC and the CA did not find that petitioners were guilty of gross negligence in the
performance of their duty and responsibilities.
Exemplary damages cannot be recovered as a matter of right.38 While granting them is subject
to the discretion of the court, they can be awarded only after claimants have shown their
entitlement to moral, temperate or compensatory damages.39 In the case before us,
respondent sufficiently proved before the courts a quo that petitionersE negligence was the
proximate cause of the incident, thereby establishing his right to actual or compensatory
damages. He has adduced adequate proof to justify his claim for the damages caused his car.
The question that remains, therefore, is whether exemplary damages may be awarded in
addition to compensatory damages.
Article 2231 of the Civil Code mandates that in cases of quasi-delicts, exemplary damages may
be recovered if the defendant acted with gross negligence.40 Gross negligence means such
utter want of care as to raise a presumption that the persons at fault must have been conscious
of the probable consequences of their carelessness, and that they must have nevertheless
been indifferent (or worse) to the danger of injury to the person or property of others.41 The
negligence must amount to a reckless disregard for the safety of persons or property. Such a
circumstance obtains in the instant case.
A finding of gross negligence can be discerned from the Decisions of both the CA and the trial
court. We quote from the RTC Decision:
Sad to state that the City Government through its instrumentalities have (sic) failed to show the
modicum of responsibility, much less, care expected of them (sic) by the constituents of this
City. It is even more deplorable that it was a case of a street digging in a side street which
caused the accident in the so-called premier city.
The CA reiterated the finding of the trial court that petitionersE negligence was clear,
considering that there was no warning device whatsoever43 at the excavation site.
The facts of the case show a complete disregard by petitioners of any adverse consequence of
their failure to install even a single warning device at the area under renovation. Considering
further that the street was dimly lit, the need for adequate precautionary measures was even
greater. By carrying on the road diggings without any warning or barricade, petitioners
demonstrated a wanton disregard for public safety. Indeed, the February 28, 1988 incident was
bound to happen due to their gross negligence. It is clear that under the circumstances, there is
sufficient factual basis for a finding of gross negligence on their part.
Article 2229 of the Civil Code provides that exemplary damages may be imposed by way of
example or correction for the public good. The award of these damages is meant to be a
deterrent to socially deleterious actions. Public policy requires such imposition to suppress
wanton acts of an offender. It must be emphasized that local governments and their employees
should be responsible not only for the maintenance of roads and streets, but also for the safety
55
of the public. Thus, they must secure construction areas with adequate precautionary
measures. Not only is the work of petitioners impressed with public interest; their very existence
is justified only by public service. Hence, local governments have the paramount responsibility
of keeping the interests of the public foremost in their agenda. For these reasons, it is most
disturbing to note that the present petitioners are the very parties responsible for endangering
the public through such a rash and reckless act.
Moral damages deleted
IF DEFENDANT ACTED
WITH BAD FAITH OR
GROSS NEGLIGENCE
Article 2231 of the Civil Code mandates that in cases of quasi-delicts, exemplary damages may
be recovered if the defendant acted with gross negligence. Gross negligence means such utter
want of care as to raise a presumption that the persons at fault must have been conscious of
the probable consequences of their carelessness, and that they must have nevertheless been
indifferent (or worse) to the danger of injury to the person or property of others. The negligence
must amount to a reckless disregard for the safety of persons or property
Article 2229 of the Civil Code provides that exemplary damages may be imposed by way of
example or correction for the public good. The award of these damages is meant to be a
deterrent to socially deleterious actions. Public policy requires such imposition to suppress
wanton acts of an offender. It must be emphasized that local governments and their employees
should be responsible not only for the maintenance of roads and streets, but also for the safety
of the public. Thus, they must secure construction areas with adequate precautionary
measures. Not only is the work of petitioners impressed with public interest; their very existence
is justified only by public service. Hence, local governments have the paramount responsibility
of keeping the interests of the public foremost in their agenda. For these reasons, it is most
disturbing to note that the present petitioners are the very parties responsible for endangering
the public through such a rash and reckless act.
H. MITIGATION OF DAMAGES
Velasco v. Manila Electric Co., G.R. No. L-18390, August 6, 1971
FACTS:
Velasco bought parcels of land from PHHC. Velasco then sold 2 lots to Meralco while he
maintained the third lot (at the farthest end of the street) where his residence lie. Meralco,
without a building permit, began constructing a substation which was designed to reduce high
voltage electricity into consumable quantities. A certain sound unceasingly emanates from the
substation. Velasco sued under Art. 694 (actionable nuisance).
SC:
There are several factors that mitigate defendantEs liability in damages. The first is that the
noise from the substation does not appear to be an exclusive causative factor of plaintiffappellantEs illnesses. Financial worries can affect unfavorably the debtorEs disposition and
mentality. The other factor militating against full recovery by the petitioner Velasco is his
passivity in the fact of the damage caused to him by the noise of the substation. Realizing as a
physician that the latter was disturbing or depriving him of sleep and affecting both his physical
and mental well being, he did not take any steps to bring action to abate the nuisance or to
remove himself from the affected area as soon as the deleterious effects became noticeable.
To evade them appellant did not even have to sell his house; he could have leased it and
rented other premises for sleeping and maintaining his office and thus preserve his health as
ordinary prudence demanded. Instead he obstinately stayed until his health became gravely
affected, apparently hoping that he would thereby saddle appellee with large damages.
The law in this jurisdiction is clear. Article 2203 prescribes that 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. This codal rule, which embodies the previous
jurisprudence on the point,3 clearly obligates the injured party to undertake measures that will
56
alleviate and not aggravate his condition after the infliction of the injury, and places upon him
the burden of explaining why he could not do so. This was not done.
Appellant Velasco introduced evidence to the effect that he tried to sell his house to Jose
Valencia, Jr., in September, 1953, and on a 60 day option, for P95,000.00, but that the
prospective buyer backed out on account of his wife objecting to the noise of the substation.
There is no reliable evidence, however, how much were appellantEs lot and house worth, either
before the option was given to Valencia or after he refused to proceed with the sale or even
during the intervening period. The existence of a previous offer for P125,000.00, as claimed by
the plaintiff, was not corroborated by Valencia. What Valencia testified to in his deposition is
that when they were negotiating on the price Velasco mentioned to him about an offer by
someone for P125,000.00. The testimony of Valencia proves that in the dialog between him
and Velasco, part of the subject of their conversation was about
the prior offer, but it does not corroborate or prove the reality of the offer for P125,000.00. The
testimony of Velasco on this point, standing alone, is not credible enough, what with his
penchant for metaphor and exaggeration, as previously adverted to. It is urged in appellantEs
brief, along the lines of his own testimony, that since one (1) transformer was measured by
witness Jimenez with a noise intensity of 47.2 decibels at a distance of 30.48 meters, the two
(2) transformers of the substation should create an intensity of 94.4 decibels at the same
distance. If this were true, then the residence of the plaintiff is more noisy than the noisiest spot
at the Niagara Falls, which registers only 92 decibels (Exhibit 15-A).
Since there is no evidence upon which to compute any loss or damage allegedly incurred by
the plaintiff by the frustration of the sale on account of the noise, his claim therefore was
correctly disallowed by the trial court. It may be added that there is no showing of any further
attempts on the part of appellant to dispose of the house, and this fact suffices to raise doubts
as to whether he truly intended to dispose of it. He had no actual need to do so in order to
escape deterioration of his health, as heretofore noted.
Despite the wide gap between what was claimed and what was proved, the plaintiff is entitled
to damages for the annoyance and adverse effects suffered by him since the substation started
functioning in January, 1954. Considering all the circumstances disclosed by the record, as well
as appellantEs failure to minimize the deleterious influences from the substation, this Court is of
the opinion that an award in the amount of P20,000.00, by way of moderate and moral
damages up to the present, is reasonable. Recovery of attorneyEs fees and litigation expenses
in the sum of P5,000.00 is also justifiedthe factual and legal issues were intricate (the
transcript of the stenographic notes is about 5,000 pages, side from an impressive number of
exhibits), and raised for the first time in this jurisdiction.
FACTORS MITIGATING
LIABILITY FOR DAMAGES
There are several factors that mitigate defendantEs liability in damages. The first is that the
noise from the substation does not appear to be an exclusive causative factor of plaintiffappellantEs illnesses. Financial worries can affect unfavorably the debtorEs disposition and
mentality. The other factor militating against full recovery by the petitioner Velasco is his
passivity in the fact of the damage caused to him by the noise of the substation. Realizing as a
physician that the latter was disturbing or depriving him of sleep and affecting both his physical
and mental well being, he did not take any steps to bring action to abate the nuisance or to
remove himself from the affected area as soon as the deleterious effects became noticeable.
INJURED PARTY MUST
Article 2203 of the Civil Code clearly obligates the injured party to undertake measures that will
alleviate and not aggravate his condition after the infliction of the injury, and places upon him
the burden of explaining why he could not do so.
MINIMIZE DAMAGE
Lim v. Court of Appeals, G.R. No. 125817, January 16, 2002

SC:
In this case, the matter was not a liquidated obligation as the assessment of the damage on the
57
vehicle was heavily debated upon by the parties with private respondentEs demand for
P236,000.00 being refuted by petitioners who argue that they could have the vehicle repaired
easily for P20,000.00. In fine, the amount due private respondent was not a liquidated account
that was already demandable and payable.
One last word. We have observed that private respondent left his passenger jeepney by the
roadside at the mercy of the elements. Article 2203 of the Civil Code exhorts parties suffering
from loss or injury to exercise the diligence of a good father of a family to minimize the
damages resulting from the act or omission in question. One who is injured then by the
wrongful or negligent act of another should exercise reasonable care and diligence to minimize
the resulting damage. Anyway, he can recover from the wrongdoer money lost in reasonable
efforts to preserve the property injured and for injuries incurred in attempting to prevent
damage to it.15
However, we sadly note that in the present case petitioners failed to offer in evidence the
estimated amount of the damage caused by private respondentEs unconcern towards the
damaged vehicle. It is the burden of petitioners to show satisfactorily not only that the injured
party could have mitigated his damages but also the amount thereof; failing in this regard, the
amount of damages awarded cannot be proportionately reduced.
DUTY TO MINIMIZE
DAMAGE
We have observed that private respondent left his passenger jeepney by the roadside at the
mercy of the elements. Article 2203 of the Civil Code exhorts parties suffering from loss or
injury to exercise the diligence of a good father of a family to minimize the damages resulting
from the act or omission in question. One who is injured then by the wrongful or negligent act of
another should exercise reasonable care and diligence to minimize the resulting damage.
Anyway, he can recover from the wrongdoer money lost in reasonable efforts to preserve the
property injured and for injuries incurred in attempting to prevent damage to it.
JUST AND ADEQUATE

COMPENSATION
In awarding damages for tortuous injury, it becomes the sole design of the courts to provide for
adequate compensation by putting the plaintiff in the same financial position he was in prior to
the tort. It is a fundamental principle in the law on damages that a defendant cannot be held
liable in damages for more than the actual loss which he has inflicted and that a plaintiff is
entitled to no more than the just and adequate compensation for the injury suffered. His
recovery is, in the absence of circumstances giving rise to an allowance of punitive damages,
limited to a fair compensation for the harm done. The law will not put him in a position better
than where he should be in had not the wrong happened.
Sotelo v. Behn, Meyer & Co., G.R. No. 35489, December 29, 1932
FACTS:
Behn Meyer & Co (BMC) employed Sotelo as a salesman under a contract which had an
extended period of 5 years. Sotelo was known as an intelligent, charismatic and skillful
salesman. One day, recognizing that the Visayan region was nearly at the end of the flush
times,BMC needed to get out of the region. Realizing that Sotelos contract was the only thing
standing on its way, its manager (in an attempt to test Sotelo) sent him a letter accepting his
resignation. Sotelo manifested that he never submitted any resignation letter. Its initial strategy
having failed, BMC discharged Sotelo. Sotelo sued (breach of contract).
SC:
In this connection it will be noted that the trial judge awarded to the plaintiff full salary for the
entire period elapsing between the date of the discharge and the date fixed for the termination
of the contract. Yet the proof shows that, after the plaintiff was discharged, he again set himself
up in business as a business agent upon his own account and that he was soon reemployed by
at least two of the five Manila firms that had used him as their agent prior to the time when the
plaintiff went with Behn, Meyer & Co.
In Garcia Palomar vs. Hotel de France Co. (42 Phil, 660), this court held that an employee who
58
is mproperly discharged is under an obligation to use reasonable diligence to obtain other

suitable employment and that in assessing the damages for the period which is still to run after
the breach, the court may properly take into account the probability that the discharged
employee will be able to earn money in other employment. As was said in that case, "The law
of service is a law of life.
The general rule is that sooner or later men who are capable of service find employment, and
enforced idleness is the exception. It should not be presumed in advance that the exceptional
will occur. To assume that the plaintiff must remain idle through the entire term of contract
merely because he had not found employment up to the time of trial would put a premium on
idleness and incompetency." (42 Phil., 677.) Considerations of this kind have greater weight in
a case like that now before us, from the proven fact that after his discharge he returned to
business upon his own account and prior to the date of the trial in this case had been reinstated
in his relations with some of his old customers. Upon consideration of the different factors
bearing upon this feature of the case, we are of the opinion that the ends of justice will be
sufficiently met by allowing to the plaintiff about 60 per centum of the amount which he would
have earned under his contract with the defendant if he had been permitted to serve as its
salesman for the entire term.
The judgment will accordingly be modified by reducing the amount of recovery to the sum of
P10,000, and as thus modified, the judgment is affirmed, with costs against the defendant. So
ordered.
MITIGATION OF DAMAGES
IN LIGHT OF AN
EMPLOYEES
SUBSEQUENT
EMPLOYMENT IN
ANOTHER LUCRATIVE
BUSINESS
A person employed under contract for a definite term who is discharged by the employer
without cause before the termination of the service has a right to recover damages for the
breach of contract, but the amount to be awarded does not necessarily include full unearned
salary for the entire period for which the contract is yet to run. The amount to be awarded
should be determined upon a fair appreciation of all the circumstances, and where the
discharged employee goes into other lucrative business, his earning capacity in such business
should be appreciated in mitigation of the claim for unearned salary.
Lemoine v. Alkan, G.R. No. 10422, January 11, 1916

FACTS:
Alkan hired Lemoine as an expert automobile mechanic in Manila for 3 years. Later that same
year, Lemoine was discharged. Lemoine sued under breach of contract.
RATIO:
Defendant then invokes the principle of law that, where a servant has been illegally discharged
and has failed to obtain other employment, he must accept the offer of the employer who
discharged him to receive him back into his employ under terms and conditions substantially
those of his previous employment and at the same rate of wages on pain of having his
damages on a suit f or breach of contract reduced to the extent of the wages which he would
have received if he had accepted the offer. We understand that the facts on which this defense
rests are admitted by both parties. There remains only the discussion as to whether such facts
constitute a def ense or whether they may be used in mitigation of damages to which plaintiff
may prove himself entitled. This discussion will also be reserved until later.
The action in this case is founded on that provision of the Civil Code which provides that "fieldhands, mechanics, artisans, and other hired laborers, for a certain time and for a certain work,
shall not leave nor be dismissed, without just cause, before the fulfillment of the contract" (art.
1586); and also that disposition of the same code which provides that "those who, in fulfilling
their obligations, are guilty of fraud, neglect or delay, or who violate the provisions thereof, are
liable for the damages caused thereby." (Art. 1101.)
An examination of the Spanish authorities relative to the right of a mechanic to bring an action f
or damages resulting f rom a wrongful discharge discloses nothing which indicates that that law
59
differs in any material respect from that of English-speaking countries. Manresa in his
discussion of this subject follows the usual lines with which American lawyers and jurists are
familiar. His first serious remarks, after outlining the scope of the subject, refer to that portion of
the article which seems to restrict its application to those who have agreed to work for a certain
time with respect to a certain work, the limitation, "for a certain work," seeming to indicate, says
Manresa, if taken literally, that the persons mentioned in the article may be discharged at will
when they are employed generally and without reference to any particular piece of work, even
though the hiring is for a specified time. His conclusion is that the wording of the article must
not be taken so literally as to permit the perpetration of an injustice which.would necessarily
follow if, after the execution of a contract of hiring for a specified time, the proprietor might, bef
ore the designated period had prescribed, capriciously discharge the employee. He seems to
think that the disjunctive "or" should take the place of the conjunctive "and" between the words
"time" and "for," making the article read "for a certain time or for a certain work," he giving it as
his opinion that that is the real meaning of the article.
Continuing the discussion,' Manresa is of the opinion that the Civil Code not having specified
the causes which would justify a dismissal of the employee or the abandonment by the latter of
his contract, all matters pertaining to that question are left to the sound judgment of the courts.
He adds that, along with the prohibition against wrongful discharge f ound in article 1586, goes
also the supplemental obligation to indemnify in case of such discharge. He is of the opinion
that there is no necessity for such a statement in article 1586 or elsewhere in the law relative to
lease of services, inasmuch as the principles which it would embody are enunciated in the law
of obligations as laid down in previous articles of the same Code. He makes some comment
with respect to the amount of damages to be awarded and adds that when, in actions based on
a wrongful discharge, the evidence establishes the fact of wrongful discharge, the employer
shall be considered, in relation to the injured employee, a "debtor in bad faith."
Under both the Spanish and American law, then, the action based on a wrongful discharge is
one to recover damages f or breach of contract.
That which defendant alleges to be his second and third defenses, even if all the facts
necessary to establish the defenses as alleged were proved, could not really be called
defenses. They would more properly go to a mitigation of damages. But even considering them
as matters in mitigation of damages, the defendant has not proved f acts sufficient to avail
himself of the benefit thereof under his so-called second defense. He has offered no evidence
showing what wages plaintiff would have received if he had obtained one of the positions to
which defendant refers. The evidence ref ers simply to the f act that plaintiff might have
obtained like employment in the same locality; but it does not show at what rate of wages.
There is nothing in the record showing the wages of a particular position or the usual wages
paid in such employment. We understand it to be the rule that before defendant can take
advantage of the failure of plaintiff to obtain like employment, it must apear: (1) That it is like
employment, (2) that it is in the same locality; (3) that it is under substantially the same
conditions; and (4) the wages which he could have earned.
MITIGATION OF
DAMAGES: DAMAGES ARE
PRIMA FACIE THE
AMOUNT OF WAGES FOR
THE FULL TERM
The fact that the plaintiff in such an action could have obtained by the use of reasonable
diligence like employment under similar conditions in the same locality, or that the employer
who wrongfully discharged him offered to permit him to return to his employment under
substantially the same conditions as formerly and at the same rate of wages, does not
constitute a defense to the action but are matters in mitigation.
An action by an employee against his employer to recover damages for wrongful discharge is
an action for breach of contract and the damages are prima facie the amount of wages for the
full term. He is entitled however to such other damages as he has actually suffered which
spring directly from the breach and which he can prove.
60
In order that the defendant in such an action may take advantage of the fact that the plaintiff
could have obtained like employment under similar conditions in the same locality, he must
show the rate of -wages which plaintiff would have received if he had obtained such
employment. Defendant cannot be allowed a sum to reduce plaintiff's damages unless he has
proved what that sum is.
It is contended that the burden of proving that plaintiff could have procured like employment in
the same locality under similar conditions is on plaintiff. We cannot agree with this under the
principles either of Spanish or American law. Under the Spanish law, as we have seen, the
employer, when he wrongfully discharges an employee, becomes, with respect to the
employee, a debtor in bad faith. On a debtor in bad faith is laid the necessity of affirmatively
establishing every fact necessary to extricate him from that position. In this necessity we find
the germ of that principle of the American law which throws on the employer in an action for
wrongful discharge the burden of proving affirmatively that if the employee had used due
diligence he could, immediately on his discharge, have obtained like employment in the same
locality. (Hicks vs. Manila Hotel Co., 28 Phil. Rep., 325, and cases cited.)
REINSTATEMENT: AFTER
A REFUSAL TO RETURN,
EMPLOYER MAY SET-OFF
WAGES WHICH THE
EMPLOYEE WOULD HAVE
RECEIVED FROM TIME THE
OFFER WAS MADE
Where an employee has been wrongfully discharged by his employer and the latter, before the
employee has obtained other employment, offers to take him back into his employ in the same
position, under substantially the same conditions and at the same rate of wages, the employee
is bound to return, even after an action has been begun by him to recover damages for the
breach of the contract; provided such return does not prevent him from recovering the damages
already sustained, and provided the employer has not so mistreated him as to prevent a selfrespecting man from returning.
Where, under such circumstances, the plaintiff refused to return to the employ of the defendant,
the latter is entitled to offset plaintiff's damages with the wages which he would have received if
he had returned, from the time when the offer was made.
The mere acceptance of the offer of defendant would not constitute a waiver of his right to
recover damages for the time intervening from the date of the wrongful discharge to the time
when he returned to work under the new offer, which would consist in the loss of wages for that
period, and any other damages which might have been sustained and which plaintiff could
prove. We do not mean to hold that an employer may wrongfully discharge an employee an
indefinite number of times and require him each time to return to work under the same contract.
There would be a legal remedy for that sort of treatment,. even if an em-ployer should be so
disregardful of his own interests as to give his employee an opportunity to begin an indefinite
number of actions against him in each one of which he could recover damages equal to or
exceeding the wages which he would have received if he had not been wrongfully discharged,
together with interest and costs in each case, and possibly much more. We believe that it is the
purpose of the law to require an employee to labor if he is given the opportunity; and that it
does not permit him to remain idle and collect his wages nevertheless when he has an
opportunity to return to his former employment. The employer is the same employer when the
employee is offered the opportunity to return as he was when the original contract was made;
and the conditions under which the employment is to proceed are substantially the same. Of
course, where the employer has so mistreated the employee that a selfrespecting man could
not again work for him, the situation would be different. Nothing of that sort appears in this case
and we are convinced that, as matter of law, the plaintiff should have returned to service under
the offer of defendant.
61

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TORTS AND DAMAGES DOCTRINES

FAIR AND JUST

DAMAGES FOR PHYSICAL

AWARD FOR DAMAGES

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

PRICE QUOTATIONS ARE

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

Algarra v. Sandejas, 27 Phil. 284 (1914)

PAIN AND SUFFERING ARE

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

LOSS OF PROFITS: NOT

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

Cerrano v. Tan Chuco, G.R. No. 12907, August 1, 1918

Hicks v. Manila Hotel Company, G.R. No. 9973, November 6, 1914

Justiva v. Gustilo, 7 SCRA 72 (1963)

MORAL DAMAGES: WHEN

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

DEBTOR IN GOOD FAITH

LOSSES AND DAMAGES

Lim v. Court of Appeals, G.R. No. 125817, January 16, 2002

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

DEFENDANT LIABLE ONLY

DAMAGES NOT ONLY

People v. Mamaruncas, G.R. No. 179497, January 25, 2012

VICTIM OWING TO THE

ACTUAL DAMAGES MUST

INDEMNITY FOR LOSS OF

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

NOT BE AWARDED IN THE

People v. Arellano, G.R. No. 122477, June 30, 2000

People v. Anticamara, G.R. No. 178771, June 8, 2011

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

BAD FAITH NEEDED IN

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

NET EARNINGS AND NOT

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

De Caliston v. Court of Appeals, G.R. No. L-63135, June 24, 1983

Tamayo v. Senora, G.R. No. 176946, November 15, 2010

ONLY NET EARNINGS

OMC Carriers, Inc., v. Nabua, G.R. No. 148974, July 2, 2010

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

Daywalt v. Corporacion de PP Agustinos Recoletos, 39 Phil. 587 (1919)

BOK FOR SALE OF LAND

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

Mendoza v. Philippine Air Lines, 90 Phil. 836 (1952)

Araneta v. Bank of America, G.R. No. L-25414, July 30, 1971

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

DAMAGES FOR LOSS OF

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

RAMAWIL) failure to live up to their contractual undertakings with them.

Lacson v. Reyes, 182 SCRA 729 (1990)

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

Buan v. Camaganacan, 16 SCRA 321 (1966

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

Villanueva v. Salvador, 480 SCRA 39 (2006)

Eastern Shipping v. Court of Appeals, 234 SCRA 78 (1994)

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013

AUTHORITY OF THE BSP

LEO ARMAN GALANG | BLOCK B 2016 | ATTY. JESS LOPEZ

INTEREST FOR THOSE