4.01.

Kinds or Components of Actual Damages

Indemnification is meant to compensate only for the injury inflicted. It comprehends not only
the value of the loss suffered, but also that profits the oblige failed to obtain.

Actual or compensatory damages are classified into two:

1. Daño Emergente or the loss of what a person already possesses; and
2. Lucro Cesante or the failure to receive as a benefit that would pertained to him. Under
Article 2205 of the New Civil Code, it is the state of loss or impairment of earning
capacity in cases of temporary or permanent personal injury.

a. Concurrently Awarded
Both damages may be concurrently awarded in the same case in favor of the same injured
party. However, under chapter 2 of Title XVIII on damages, it uses the two terms as equivalent
to one another, while Article 2200 of the Civil Code provides that indemnification for damages
shall comprehend not only danum emergens but also lucrum cessans.

b. Business Standing and Commercial Credit

Article 2205 also provides that damages can be awarded for injury to the plaintiff’s business
standing or commercial credit. Thus, compensatory damages can be awarded to business
reputation or standing or for loss of goodwill and loss of customers or shippers who shifted
their patronage to other competitors.

4.02. Extent and Measure of Damages

This talks about the limit of liability in cases involving quasi-delicts. Article 2202 of the Civil
Code provides that in crimes and quasi-delicts, the defendant shall be liable for all damages
which are the natural and probable consequences of the act or omission complained of. I
should be emphasized. that the said rule is the same as the rule in breach of contracts and
quasi-contracts where the breach was accompanied by fraud, bad faith, malice or wanton
attitude on the part of the obligor.
 a. Restitutio in Intergrum
The amount to be awarded should be that sum of money which will put the party who has been
injured or who has suffered in the same position as he would have been in if he had not
sustained the wrong for which he is not getting his compensation or reparation. The primary
objective of an award for civil action is just compensation, indemnity or reparation for the loss
or injury sustained by the injured party so that he may be made whole or restored as nearly as
possible prior to the injury.

b. Exception: Defendant’s Gain is the Measure

Damages are measured by the benefit that has accrued to the defendant in certain cases.
Benefits derived by the defendant pertain to or could have been received by the plaintiff
because only the plaintiff is supposed to profit from the activity involved.

c. Damages in Breach of Contract

Article 1170 of the New Civil Code provides that those who in the performance of their
obligation are guilty of fraud, negligence, or delay, and those who in any manner contravene
the tenor thereof, are liable for damages. While Article 2201 provides the rules on the scope of
recoverable damages with respect to breach of contract.

1. Nature of Breach of Contract

In the case of FGU Insurance Corporation v. G.P. Sarmiento Trucking Corporation, the Supreme
Court explained the rules on the remedies that can be availed in case of breach of contract. The
mere proof of the existence of the contract and the failure of its compliance justify, prima facie,
a corresponding right of relief. The remedy serves to preserve the interests of the promisee
that may in include his “expectation interest”, or his “reliance interest”; or “restitution
interest”. The effect of every infraction is to create a new duty to make recompense to the one
who has been injured by the failure of another to observe his contractual obligation unless he
can show extenuating circumstances, like proof of his exercise of due diligence or of the
attendance of fortuitous event, to excuse him from his ensuing liability.

2. Non-applicability of Proximate Cause

The doctrine of proximate cause does not apply to determine if there is a breach of contract
because it is applicable only in actions for quasi-delicts, not in actions involving breach of
contract. However, it is not correct to say that proximate cause is not material in breach of
contract. Factual causation and scope of liability is indispensable in determining if the
defendant is liable for the damages being claimed arising from ex contractu .

4.03 Certainty of Damages

A party is entitled to adequate compensation only for such pecuniary loss actually suffered and
duly proven. To recover damages, the amount of loss must not only be capable of proof but
must actually be proven with a reasonable degree of certainty, premised upon the competent
proof or best evidence obtainable of the actual amount thereof.

a. Burden of Proof
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
evidence, as a whole, adduced by one side is superior over the other.

b. Absence of Proof of Precise Amount

Uncertainty as to the precise amount is not necessarily fatal or that absolute certainty of the
amount is not required. Mere difficulty in the assessment of the damages is not sufficient
reason for refusing to award damages where the right to them has been established.

c. Effect of Stipulation
There are cases when the parties in contract may stipulate that the obligor is responsible for
any damages to the oblige and to the latter’s customers. The court explained that “as regards
the express terms of the agreement holding the seller liable for damages it may cause the
buyer, the same are merely declaratory of the obligation assumed, not an obligation which the
obligee may demand in compliance with upon breach of the terms of the contract and even
before actual payment of damages by the one who breached the agreement, because the
obligee has not yet actually suffered the damage or paid the same to the person to whom
damage was caused.

d. Civil Indemnity
Proof of actual damages is not necessary for the award of civil indemnity in tort cases or
criminal cases wherein the victim died. However, this indemnity is in addition to any actual or
compensatory damages that may be awarded in favor of the victim’s heirs.

4.04. Damage to Property

a. Damages to or Loss of Personal Property
Where goods were destroyed by the wrongful act of the defendant, the plaintiff is entitled to
their value at the time of destruction. In case of profit-earning chattels, it has to be assessed by
the value of the chattel of its owner at the time and place of loss.

b. Damages to or Loss of Real Property

The measure of damage for a permanent injury is ordinarily the difference between the
reasonable market value of the property immediately before and after the injury. In case of
total loss, the value of the real property at the time and place of the loss must also be assessed
and such assessed value is the measure of the damage due to the plaintiff.

c. Loss of Possession
Where plaintiff was merely deprived of his possession, he is entitled to the value of use of the
premises. Thus, the rental value should be assessed against the plaintiff for trespass or illegal
occupation of a house. This rule is equally applicable in the cases involving deprivation of
possession of personal property.

d. Damage to Property Under Special Laws

Special laws may fix the amount to be paid as damages for the loss of personal property. For
example, under RA 10642 known as the “Philippine Lemon Law”, it provides for the
compensation for the non-usage of vehicle under repair.

4.05. Personal Injury

a. Actual Medical and Other Expenses
If plaintiff is asking for damages for his own injuries, he is entitled to the amount of medical
expenses as well as other reasonable expenses that he incurred to treat his or his relative’s
injuries. However, it has been held that actual proof of expenses incurred for medicines and
other medical supplies necessary for treatment and rehabilitation must be presented by the
claimant to show the exact cost of his medication and to prove that he indeed went through
medication and rehabilitation.

b. Plastic Surgery
The award of damages may likewise include the amount spend for the plastic surgery or any
procedure to restore the part of the body that was affected.

c. Future Medical Expenses and Life Care Cost

Courts may also be award monthly payments to the person who was injured to answer for his
future medical expenses. The Supreme Court ruled that if the victims did not die but he will
require medical attendance for the rest of his life, it is proper to award life care cost because
the tortfeasor is liable for all damages which are natural and probable consequences of the act
or omission complained of.
1. Alternative Approaches: Preiodic v. Lump Sum
In Ramos v. Court of Appeals and Mercury Drug Corp. v. Spouses Huang present two alternative
ways of providing compensation for disabled victims for future medical expenses where the
former provides for periodic payments while the latter provides for a lump-sum payment.

It is believed that the rule on Mercury Drug Corp. v. Spouses Huang is the better rule as
enforcement of the periodic payment is administratively problematic. There would be no
problem if the judgment debtor will religiously pay the mandated amount every month.
However, it might be difficult to enforce the award if the judgment debtor is not regular on his
payments.

d. Loss of Earning Capacity

Plaintiffs are also entitled to damages for loss of earning capacity when the defendant’s act or
omission resulted in his permanent incapacity. In the case of Borromeo v. Manila Electric
Railroad & Light Co., the Supreme Court awarded the plaintiff the amount of his loss of earning
capacity because he lost his left foot. As such loss resulted to the plaintiff to no longer be
employed as a marine engineer on a vessel.