MORAL DAMAGES.

Concept.

The Civil Code provides that moral damages include physical

suffering, mental anguish, fright, serious anxiety, besmirched reputa-
tion, wounded feelings, moral shock, social humiliation, and similar
injury. Though incapable of pecuniary computation, moral damages
may be recovered if they are the proximate result of the defendant’s
wrongful act for omission. (Article 2217, Civil Code).

The award of moral damages is designed to compensate the

claimants for actual injury and is not meant to enrich the complain-
ant at the expense of the defendant. They are awarded only to
enable the injured party to obtain means, diversions or amusement
that will serve to alleviate the moral suffering he has undergone by
reason of the defendant’s culpable action. (Kierulf vs. Court of
Appeals, 269 SCRA 433 [1997]; Zenith Insurance Corporation vs. Court
of Appeals, 185 SCRA 308 [1990]). Its aim is the restoration within the
limits of the possible the spiritual status quo ante. (Visayan Sawmil
Co., Inc. vs. Court of Appeals, 219 SCRA 378 [1993]).

It must be understood to be in the concept of grants not punitive or

corrective in nature, calculated to compensate the claimant for the
injury suffered. In other words, moral damages are not awarded to
punish the defendant but to compensate the victim. (People vs.
Aringue, 283 SCRA 291 [1997]; Morales vs. Court of Appeals, 274
SCRA 282 [1997]; Del Mundo vs. Court of Appeals, 240 SCRA 348
[1996]; De la Serna vs. Court of Appeals, 233 SCRA 325 [1994]; Bau-
tista vs. Mangaldan Rural Bank, Inc., 230 SCRA 16 [1994]; Zenith
Insurance Corp. vs. Court of Appeals, 185 SCRA 398 [1990]; Simex
International (Manila), Inc. vs. Court of Appeals, 183 SCRA 360
[1990]; Robleza vs. Court of Appeals, 174 SCRA 354 [1989]).
The Code Commission observed that moral damages were not
DAMAGES

expressly recognized in the Old Civil Code, although it was observed

in one case — involving injury to reputation — that “such damages
have been allowed by the Supreme Court of Spain, and some Span-
ish jurists believe that moral damages are allowable.” Likewise, the
Supreme Court of the Philippines has awarded moral damages in a
few cases decided prior to the adoption of the New Civil Code. The
Commission explained the provision allowing moral damages:

“Denial of the award of moral damages has been predicated on the

idea that physical suffering, mental anguish and similar injury are
incapable of pecuniary estimation. But it is unquestion-able that the
loss or injury is just as real as in other cases. The ends of justice are
better served by giving the judge discretion to adjudicate some
definite sum as moral damages. That is more equitable than that the
sufferer should be uncompensated. The wrongdoer cannot complain
because it was he who caused the injury. In granting moral damages,
the Project proceeds upon the ancient maxim that when there is a
wrong there is a remedy.’’

Justice Capistrano, one of the members of the Code Commis-sion,

gave the following background on the inclusion of a chapter on moral
damages in the New Civil Code in his concurring opinion in
Macondray & Co., Inc. vs. Villarosa, Inc., et al. (1 CAR 2s 413, July 14,
1961):

The law on moral damages found in Arts. 2217 to 2220 (Sec. 1,

Chapter 3, Title XVII, Book IV) of the Civil Code is new. The Spanish
Civil Code of 1889 contained no provisions on moral dam-ages. The
Code Commission, however, was aware that two recent and
progressive decisions of the Supreme Court (Lilius vs. Manila Railroad
Co., 59 Phil. 758; Castro vs. Acro Taxicab Co., Inc., 82 Phil. 359) had
held that damages could be recovered in case of a wrongful act
resulting in physical injuries for the physical pain suffered by the
offended party and that the American jurispru-dence contains a big
and rich field of law on moral damages. In

view of its duty to codify the laws “in accord- ance . . . with modern
trends in legislation and the progressive principles of law’’ (Exec.
Order No. 48), the Commission resolved to include a section (Sec. 2)
on ‘moral damages’ in Chapter 3, Title XVIII on “Damages” in the
Project of Civil Code.

After consulting the American jurisprudence on moral damages, the

Code Commission formulated Art. 2217 as the basic rule or principle
giving, in the first sentence, the concept of moral damages or what it
includes, and, in the second sentence, the requisite that the moral
damages be the proximate result of the guilty party’s wrongful act or
omission. x x x

It is clear from the article that moral moral damages can be

896 TORTS AND DAMAGES

recovered in every case of “wrongful act or omission” (a broad term

which includes delict, quasi-delict, and breach of contract which is sui
generis) causing, as the proximate result thereof, ‘physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar
injury.’”

Proof and Proximate Cause.

No proof of pecuniary loss is necessary in order that moral dam-ages

may be adjudicated. The assessment of such damages is left to the
discretion of the court, according to the circumstances of each case.
(Article 2216, Civil Code). However, there must be proof that the
defendant caused physical suffering, mental anguish, fright, seri-ous
anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar injury to the plaintiff. Without allega-
tion and proof of such sufferings, no moral damages can be awarded.
(Compania Maritima vs. Allied Free Worker’s Union, 77 SCRA 24).
Nevertheless, the language of the law need not be used to warrant
the award of moral damages. (Mirana-Ribaya vs. Carbonell, 95 SCRA
672). So long as there is satisfactory proof of the psychological and
mental trauma actually suffered by a party, the grant to him of moral
damages is warranted. (Del Rosario vs. Court of Appeals, 267 SCRA 58
[1997]).

Aside from the fact that there is a need for the claimant to sat-
isfactorily prove the existence of the factual basis of the damages, it
is also necessary to prove its causal relation to the defendant’s act.
(Raagas vs. Traya, 22 SCRA 839 [1968]). While moral damages is
incapable of pecuniary estimation, they are recoverable if they are
the proximate cause of the defendant’s wrongful act or omission.
(Enervida vs. De la Torre, 55 SCRA 339; Yutuk vs. Manila Electric Co., 2
SCRA 337 [1961]).

The exception to the rule that the factual basis for moral dam-ages
must be alleged are criminal cases. Moral damages may be awarded
to the victim in criminal proceedings in such amount as the court
deems just without the need for pleading or proof of the basis
thereof. (People vs. Prades, G.R. No. 127569, July 30, 1998; People vs.
Moreno, G.R. No. 126921, August 28, 1998; People vs. Bagayong,
G.R. No. 126518, December 2, 1998).

Cases when Moral Damages are allowed.

Articles 2219 and 2220 of the Civil Code enumerate the cases
DAMAGES

when moral damages may be awarded by the courts:

“Art. 2219. Moral damages may be recovered in the follow-ing and

analogous cases:

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;

Acts mentioned in Article 309;

 Acts and actions referred to in Articles 21, 26, 27, 28,

29, 30, 32, 34, and 35.

The parents of the female seduced, abducted, raped, or abused,

referred to in No. 3 of this article, may also recover moral damages.

The spouse, descendants, ascendants, and brothers and sisters may

bring the action mentioned in No. 9 of this article, in the order
named.

Art. 2220. Willful injury to property may be a legal ground for

awarding moral damages if the court should find that, under the
circumstances, such damages are justly due. The same rule applies to
breaches of contract where the defendant acted fraudu-lently or in
bad faith.’’

The different cases identified by law when moral damages may

be awarded are discussed elsewhere in this work. It is well to point

out however certain basic rules on the award of moral damages. For
instance, it is well settled that no moral damages may be awarded in
the absence of a wrongful act or omission or of fraud or bad faith.
(Ong Yui vs. Court of Appeals, 91 SCRA 223; Castillo vs. Castillo, 95
SCRA 40; St. Peter Memorial Park, Inc. vs. Cleofas, 92 SCRA 389). The
same rule applies to cases involving breach of contract, that is, no
moral damages may be awarded where the breach of contract is not
malicious. (Francisco vs. GSIS, 7 SCRA 577 [1963]; Mercado vs. Lira, 3
SCRA 124 [1961]; Martinez vs. Gonzales, 6 SCRA 331 [1962]).

The presence of contractual negligence is insufficient for such

award. (Phil. National Railways vs. Court of Appeals, 139 SCRA
898 TORTS AND DAMAGES

87). Although the enumeration in Article 2119 is not exclusive, the

“analogous cases” mentioned in the said Article does not include a
case where a passenger suffered physical injuries because of the car-
rier’s negligence. (Mercado vs. Lira, 3 SCRA 124 [1961]).

Justice Vitug summarized the rules regarding the award of moral

damages in Expert Travel & Tours, Inc. vs. The Hon. Court of Appeals
and Ricardo Lo (G.R. No. 130030, June 25, 1999):

“Moral damages are not punitive in nature but are de-signed to

compensate and alleviate in some way the physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injury unjustly
caused to a person. Although inca-pable of pecuniary computation,
moral damages, nevertheless, must somehow be proportional to and
in approximation of the suffering inflicted. Such damages, to be
recoverable, must be the proximate result of a wrongful act or
omission the factual basis for which is satisfactorily established by the
aggrieved party. An award of moral damages would require certain
conditions to be met, to wit: (1) First, there must be an injury,
whether physical, mental or psychological, clearly sustained by the
claimant; (2) second, there must be a culpable act or omission
factually estab-lished; (3) third, the wrongful act or omission of the
defendant is the proximate cause of the injury sustained by the
claimant; and (4) fourth, the award of damages is predicated on any
of the cases stated in Article 2219. Under the provisions of this law, 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
his contractual obligation and, exceptionally, when the act of breach
of contract itself is constitutive of tort resulting in physi-cal 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. In culpa aquiliana, or
quasi-delict, (a) when an act or omission causes physical injuries, or
(b) where the defendant is guilty of intentional tort, moral damages
may aptly be recovered. This rule also applies, as aforestated, to
contracts when breached by tort. In culpa criminal, moral damages
could be lawfully due when the accused is found guilty of physical
injuries, lascivious acts, adultery or concubinage, illegal or arbitrary
detention, illegal arrest, illegal search, or defamation. Malicious
prosecution can also give rise to a claim for moral damages. The term
“analogous cases,” referred to in Article 2219, following the ejusdem
generis rule, must be held similar to those expressly enumerated by
the law.’’
DAMAGES

In Macondray & Co., Inc. vs. Villarosa, et al. (1 CAR 2s 402, 415
[1961]), Justice Capistrano explained that moral damages can be
recovered in every case of wrongful act or omission causing, as the
proximate result thereof physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral
shock, social humiliation and similar injury. “In view of the fact that
the question of moral damages is a novel one in the civil law, the
Code Commission considered it advisable, for the convenience of the
bar and the bench, to mention some cases as examples of wrongful
acts where moral damages may be recovered. It was not prepared at
that time to make a complete and exclusive enumeration of all such
wrongful acts and omissions.” The Commission purposely added the
words “and analogous cases” in the opening sentence of the article in
order to avoid a possible erroneous interpretation that the enumera-
tion made therein was intended by the Commission to mean other
cases of ‘wrongful act or omission,’ causing, as the proximate result
thereof the sufferings mentioned earlier.

Justice Capistrano also noted in the said case that “the enumera-tion
does not mention any wrongful omission. This is so because, as
pointed out, the enumeration was not intended to be complete and
exclusive. The cases of wrongful acts mentioned, enumerated merely
for purposes of style, were those which the Commission could readily
give at the time of its deliberation (about two hours) on the formula-
tion of the article.” Justice Capistrano went on further to explain that
“it is obvious from a reading of the enumeration that those
mentioned are clearly cases which immediately suggest physical or
moral suffering. Thus, the delicts or crimes mentioned in Nos. (1) and

immediately suggest physical suffering. But it was not meant that

other crimes and quasi-delicts not resulting in, or causing physical
injuries were to be excluded. This is apparent from the fact that Nos.
 to (7) involve crimes not resulting in physical injuries, and No. (8)
a quasi-delict (malicious prosecution is no longer punished as a crime
in the Revised Penal Code) not causing physical injuries, all of which,
however, immediately suggest moral suffering; and the fact that No.

involves quasi-delicts clearly causing moral suffering, while No.

covers quasi-delicts immediately suggesting moral suffering. The

Commission did not resolve to make an exclusive enumeration, for
that would have required an examination of all the provisions of the
Project of the Civil Code and of the Revised Penal Code in order to
determine all the cases where moral damages could be recovered. It
did not have the time nor the inclination to do so. The Commission
also felt that the ‘analogous cases’ for recovery of moral damages
should be left to the courts to determine. There was no good reason
to
900 TORTS AND DAMAGES

narrow the coverage of the law to the few cases mentioned in Article
2219 considering that the field of moral injury is a vast one in the civil
and criminal laws, and that the field of moral damages in American
jurisprudence is equally extensive.” (ibid., pp. 415-416).

Unfounded Suits.

It is also well settled that moral damages (and attorney’s fees under
paragraph [4] of Article 2208 of the Civil Code) cannot be assessed
against the plaintiff by the mere fact that he filed a case against the
defendant so long as the same was done in good faith. (Grapilon vs.
Mun. Council of Carigara, 2 SCRA 103 [1961]; National Rice and Corn
Corporation vs. Antonio, 2 SCRA 643 [1961]; Solis & Yarisantos vs.
Salvador, 14 SCRA 887 [1965]; Francel Realty Corp. vs. Court of
Appeals, 252 SCRA 156 [1996]; Mijares vs. Court of Ap-peals, 271
SCRA 558 [1997]). The rule applies even if the plaintiff’s case is
declared to be unfounded. (De la Pena vs. Court of Appeals, 231 SCRA
456 [1994]). No damages can be charged on those who may exercise
the right to litigate in good faith even if done erroneously (“J”
Marketing Corporation v. Sia, Jr., 285 SCRA 580 [1998]).

Nevertheless, there are instances when award of moral damages (as

well as attorney’s fees) is justified if there is clear abuse of court
processes. There can be no blanket clearance against the filing of all
types of cases (Cometa v. Court of Appeals, 301 SCRA 459 [1999]).
Although no person should be penalized for the exercise of the right
to litigate, this right must be exercised in good faith. Absence of good
faith is established if the plaintiff clearly has no cause of action
against the defendant but he recklessly filed the suit anyway and
wantonly pursued pointless appeals, thereby causing the defendant
to spend valuable time, money and effort in unnecessarily defending
himself, incurring damages in the process (Industrial Insurance Co. v.
Pablo Bondad, G.R. No. 136722, April 12, 2000, 330 SCRA 706, 707).

Labor Cases.

Moral damages may be recovered where the dismissal of the

employee was attended by bad faith or fraud or constitute an act op-
pressive to labor, or was done in a manner contrary to morals, good
customs, or public policy. (Triple Eight Integrated Services, Inc. vs.
NLRC, 299 SCRA 608, 620-621 [1998]; Hilario vs. NLRC, 252 SCRA 555
[1996]; Estiva vs. NLRC, 225 SCRA 169 [1993]). For example, the
award of moral damages was warranted under the following factual
circumstances:
DAMAGES

“According to the facts of the case as stated by public re-spondent,

Osdana was made to perform such menial chores, as dishwashing
and janitorial work, among others, contrary to her job designation as
waitress. She was also made to work long hours without overtime
pay. Because of such arduous working condi-tions, she developed
Carpal Tunnel Syndrome. Her illness was such that she had to
undergo surgery twice. Since her employer determined itself that she
was no longer fit to continue working, they sent her home posthaste
without as much as separation pay or compensation for the months
when she was unable to work because of her illness.” (Panay Electric
Co., Inc. vs. NLRC, 248 SCRA 688).

Criminal Taking of Life.

In a number of cases, the Supreme Court upheld the rule that in the
present stage of our case law involving criminal taking of human life,
evidence must be adduced by the offended party to war-rant an
award of moral damages (See: People v. Acaya, 327 SCRA 269
[2000];People v. Pirame, 327 SCRA 552 [2000]). However, the rule
was clarified by stating that no such proof is necessary in case of
violent death. The Supreme Court explained in Carlos Arcona y
Moban v. The Court of Appeals and the People of the Philippines (G.R.
No. 134784, December 9, 2002; see also People v. Cabote, G.R.
136143, November 15, 2001 and People v. Panado, 348 SCRA 679,
690-691 [2000]; People v. Cortez, 348 SCRA 663 [2000]) that “as
borne out by human nature and experience, a violent death
invariably and neces-sarily brings about emotional pain and anguish
on the part of the victim’s family. It is inherently human to suffer
sorrow, torment, pain and anger when a loved one becomes the
victim of a violent or brutal killing. Such violent death or brutal killing
not only steals from the family of the deceased his precious life,
deprives them forever of his love, affection and support, but often
leaves them with the gnawing feeling that an injustice has been done
to them. For this reason, moral damages must be awarded even in
the absence of any allegation and proof of the heirs’ emotional
suffering.”

Factors to Consider in Determining Amount.

There is no hard and fast rule in the determination of what would be

a fair amount of moral damages, since each case must be governed
by its own peculiar circumstances. (Philippine National Bank vs. Court
of Appeals, 266 SCRA 136). The Court should take into consideration
the circumstances obtaining in the case and assess damages
according to its discretion (Fule v. Court of Appeals, 286 SCRA 698
[1998]).
902 TORTS AND DAMAGES

There are, however, factors specified by law and established

by jurisprudence that could affect the amount to be recovered. An

example of these is Article 2218 of the Civil Code which provides that
in the adjudication of moral damages, the sentimental value of
property, real or personal, may be considered.

Extent of Humiliation

The extent of humiliation may also determine the amount of moral

damages that can be awarded. Thus, in one case, moral dam-ages
was awarded and fixed because of the humiliation caused by the
dicriminatory acts of an airline company. (Philippine Airlines vs. Court
of Appeals, 275 SCRA 621 [1997]). In another, moral damages was
awarded because the plaintiff was slapped in the face. (Ford vs. Court
of Appeals, 186 SCRA 21 [1990]).

Pain and Suffering

The extent of pain and suffering likewise determines the award

(Valenzuela vs. Court of Appeals, supra at p. 37). For instance, an in-
crease in the amount of moral damages was justified in an attempted
homicide case where the accused bit the ear of the complainant
caus-ing mutilation. The nature of the injuries and the degree of
physical suffering endured by the complainant warrants an increase.
The tragic incident left indelible marks on the complainant’s body and
will serve as a constant reminder of his traumatic experience. (Su-
maplong vs. Court of Appeals, 268 SCRA 764, 776 [1997]). The award
was also justified in another case because of the pain and disfigure-
ment suffered by the respondent, a pretty girl of 16 whose left arm
was scraped of flesh from shoulder to elbow (De Leon Brokerage Co.
v. Court of Appeals, No. L-15247, February 28, 1962; see also Ong v.
Court of Appeals, 301 SCRA 387 [1999]; Salao v. Court of Appeals, 284
SCRA 493 [1998]).

In Valenzuela vs. Court of Appeals (supra), the Supreme Court was

confronted with a situation where the injury suffered by the plaintiff
would have led to expenses which were difficult to estimate because
while they would have been a direct result of the injury (amputation),
and though certain to be incurred by the plaintiff, they were likely to
arise only in the future. The amount P1,000,000.00 in moral damages
was awarded in the said case. Describing the nature of the injury, the
Court therein stated:

“As a result of the accident, Ma. Lourdes Valenzuela under-went a

traumatic amputation of her left lower extremity at the distal left
thigh just above the knee. Because of this, Valenzuela
DAMAGES

will forever be deprived of the full ambulatory functions of her left

extremity, even with the use of state of the art prosthetic technology.
Well beyond the period of hospitalization (which was paid for by Li),
she will be required to undergo adjustments in her prosthetic devise
due to the shrinkage of the stump from the process of healing.

These adjustments entail costs, prosthetic replacements and months

of physical and occupational rehabilitation and therapy. During her
lifetime, the prosthetic devise will have to be replaced and
readjusted to changes in the size of her lower limb effected by the
biological changes of middle-age, menopause and aging. Assuming
she reaches menopause, for example, the prosthetic will have to be
adjusted to respond to the changes in bone result-ing from a
precipitate decrease in calcium levels observed in the bones of all
post-menopausal women. In other words, the damage done to her
would not only be permanent and lasting, it would also be
permanently changing and adjusting to the physiologic changes
which her body would normally undergo through the years. The
replacements, changes, and adjustments will require corresponding
adjustive physical and occupational therapy. All of these adjustments,
it has been documented, are painful.

xxx xxx xxx

A prosthetic devise, however technologically advanced, will only

allow a reasonable amount of functional restoration of the motor
functions of the lower limb. The sensory functions are forever lost.
The resultant anxiety, sleeplessness, psychological injury, mental and
physical pain are inestimable.
In Ramos vs. Court of Appeals (G.R. No. 124354, Dec. 29, 1999), the
victim, petitioner Erlinda Ramos, was in her mid-forties when the
incident occurred. She has been in a comatose state for over
fourteen years at the time the Supreme Court promulgated its
decision in De-cember 1999. In the meantime, the burden of care has
been heroically shouldered by her husband and children, who, in the
intervening years have been deprived of the love of a wife and a
mother. Thus, the Court justified the award of moral damages in the
amount of

P2,000,000.00 stating that:

“Meanwhile, the actual physical, emotional and financial cost of the

care of petitioner would be virtually impossible to quantify. Even the
temperate damages herein awarded would be inadequate if
petitioner’s condition remains unchanged for the next ten years.

We recognized, in Valenzuela that a discussion of the victim’s actual

injury would not even scratch the surface of the resulting moral
damage because it would be highly speculative
904 TORTS AND DAMAGES

to estimate the amount of emotional and moral pain, psychologi-cal

damage and injury suffered by the victim or those actually affected
by the victim’s condition.

The husband and the children, all petitioners in this case, will have to
live with the day to day uncertainty of the patient’s illness, knowing
any hope of recovery is close to nil. They have fashioned their daily
lives around the nursing care of petitioner, altering their long term
goals to take into account their life with a comatose patient. They,
not the respondents, are charged with the moral responsibility of the
care of the victim. The family’s moral injury and suffering in this case
is clearly a real one. For the foregoing reasons, an award of
P2,000,000.00 in moral dam-ages would be appropriate.’’

Official, political, social and financial standing.

Official, political, social and financial standing of the offended party

and the business and financial position of the offender affect the
amount of damages. (Lopez vs. Pan American World Airways, 16
SCRA 431; Zulueta vs. Pan American World Airways, Inc., 43 SCRA
397; Kierulf vs. Court of Appeals, 269 SCRA 133 [1997]). In another
case, the Supreme Court ruled that the age of the claimant is mate-
rial in the determination of the amount of moral damages due to the
plaintiff. (Zamboanga Trans Co., Inc. vs. Court of Appeals, 30 SCRA
717 [1969]; Domingding vs. Ng, 103 Phil. 111; Yutuk v. Manila Elec-
tric Co., May 31, 1961).

The Court considered the credit standing of the plaintiff in awarding

moral damages in Producer’s Bank of the Philippines v. Court of
Appeals (G.R. No. 111584, September 17, 2001, 365 SCRA 326). The
wrongful dishonor of a check that was issued by the plaintiff affected
his credit standing. The plaintiff was a businessman engaged in
several businesses and his suppliers discontinued the credit line that
they extended causing his businesses to collapse. The Court quoted
Leopoldo Araneta v. Bank of America (40 SCRA 144 [1971]) where it
was explained that: “The financial credit of a businessman is a prized
and valuable asset, it being a significant part of the founda-tion of his
business. Any adverse reflection thereon constitutes some financial
loss to him.”

There are those who believe that financial standing of the of-fended
party does not affect the amount of recoverable moral damages
(Layda vs. Court of Appeals, 90 SCRA 724). The theory is that moral
sufferings of a rich person is the same as the intensity of suffering of
a poor litigant. Hence, the pain and suffering of a person who lost
DAMAGES

his limb is the same whether the victim is rich or poor. However,
Supreme Court continues to consider financial standing in a number
of cases that it decided.

Persons who may Recover.

Generally, the person who endured physical suffering, mental

anguish, fright, serious anxiety, besmirched reputation, wounded
feel-ings, moral shock, social humiliation, and similar injury is the
person who can recover moral damages. If the basis of the claim is
physical suffering, only the one who suffered and not his or her
spouse may recover. (Sobereno vs. Manila Railroad Co., Nov. 23,
1966). In the same manner, a person who symphatized with an
injured relative is not entitled to recover for the physical suffering of
another. (Strebel vs. Figueros, 96 Phil. 321).

The exception to said rule (where only the victim can recover)

is found in the last two paragraphs of Article 2219:

“The parents of the female seduced, abducted, raped, or abused,

referred to in No. 3 of this article, may also recover moral damages.

The spouse, descendants, ascendants, and brothers and sisters may

bring the action mentioned in No. 9 of this article, in the order
named.’’
It should be noted however that in those cases, the relatives have
also suffered although they are not the victims of the assault. They
must also have suffered mental anguish, serious anxiety, wounded
feelings, moral shock and other similar injuries.

Corporations.

Corporations and other artificial being are not entitled to recover

moral damages. There was confusion before regarding the right of
corporation because of the obiter of the Supreme Court in a number
of cases. However, the rule was finally clarified in ABS-CBN Broad-
casting Corporation vs. Honorable Court of Appeals (G.R. No. 128690,
January 21, 1999):

“Moral damages 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. The award is not meant to enrich the
complainant at the expense of the defendant, but to en-able the
injured party to obtain means, diversion, or amusements that will
serve to obviate the moral suffering he has undergone. It is aimed at
the restoration, within the limits of the possible,
906 TORTS AND DAMAGES

of the spiritual status quo ante, and should be proportionate to the

suffering inflicted. Trial courts must then guard against the award of
exorbitant damages; they should exercise balanced, restrained and
measured objectivity to avoid suspicion that it was due to passion,
prejudice, or corruption on the part of the trial court.

The award of moral damages cannot be granted in favor of a

corporation because, being an artificial person and having exist-ence
only in legal contemplation, it has no feelings, no emotions, no
senses. It cannot, therefore, experience physical suffering and mental
anguish which can be experienced only by one having a nervous
system. The statement in People vs. Manero and Mam-bulao Lumber
Co. vs. PNB that a corporation may recover moral damages if it “has a
good reputation that is debased, resulting in social humiliation” is an
obiter dictum. On this score alone the award for damages must be set
aside, since RBS is a corporation.”

In another case, the Supreme Court explained that while it is true

that besmirched reputation is included in moral damages, it cannot
cause mental anguish to a corporation, unlike in the case of a natural
person, for a corporation has no reputation in the sense that an
individual has, and besides, it is inherently impossible for a
corporation to suffer mental anguish. Moral damages are granted in
recompense for physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar injury. A corporation, being an artificial
per-son and having existence only in legal contemplation, has no
feelings, no emotions and no senses; therefore, it cannot experience
physical suffering and mental anguish. Mental suffering can be
experienced only by one having a nervous system and it flows from
real ills, sor-rows, and griefs of life — all of which cannot be suffered
by respondent bank as an artificial person (National Power
Corporation v. Philipp Brothers Oceanic, Inc., G.R. No. 126204,
November 20, 2001).

NOMINAL DAMAGES.

The allowance of nominal damages is generally based on the ground

that every injury from its very nature legally imports damage, or that
the injury complained of would in the future be evidence in favor of
the wrongdoer, especially where, if continued for a sufficient length
of time, the invasion of the plaintiff’s rights would ripen into a
prescriptive right in favor of the defendant. (22 Am. Jur. 2d 20).

In this jurisdiction, the award of nominal damages was justified by

the Code Commission by stating that there are instances when
DAMAGES

the vindication or recognition of the plaintiff’s right is of the utmost

importance to him, as in the case of trespass upon real property. The
Commission observed that in those instances, the awarding of
nominal damages does not run counter to the maxim, “De minimis
non curate lex.” (Report). The pertinent provisions of the Civil Code
on nominal damages are as follows:

“Art. 2221. 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.

Art. 2222. The court may award nominal damages in every obligation
arising from any source enumerated in Article 1157, or in every case
where any property right has been invaded.

Art. 2223. The adjudication of nominal damages shall pre-clude

further contest upon the right involved and all accessory questions,
as between the parties to the suit, or their respective heirs and
assigns.’’

The assessment of nominal damages is left to the discretion of the

court according to the circumstances of the case. (Ventanilla vs.
Centeno, 1 SCRA 215 [1961]). Generally, nominal damages by their
nature are small sums fixed by the court without regard to the extent
of the harm done to the injured party. However, it is generally held
that a nominal damage is a substantial claim, if based upon the viola-
tion of a legal right; in such case, the law presumes damage although
actual or compensatory damages are not proven. In truth, nominal
damages are damages in name only and not in fact, and are allowed,
not as an equivalent of wrong inflicted, but simply in recognition of
the existence of a technical injury. (Robes-Francisco Realty and
Development Corporation vs. Court of First Instance, 86 SCRA 59).

The view is that for every actionable injury, there is a corre-sponding

right to damages and such injury arises whenever a legal right of the
plaintiff is violated; if there is no injury as to actual dam-ages or none
appears on inquiry, the legal implication of damages remains and
nominal damages are given. (Wente vs. Shaver, 145 ALR 1176, 350
Mo 1143, 169 SW 2d 947).

For instance, only nominal damages can be recovered by a

manufacturer that was injured by a conspiracy to prevent use of his
product, where the actual damages cannot be determined and
whatever he suffered was also suffered by others in the same line of
business so that he suffered no special damages whatsoever. (A.T.
908 TORTS AND DAMAGES

Stearns Lumber Co. vs. Howlett, 25 ALR 1125, 260 Mass 45, 157 NE
82).

The award of nominal damages is also justified in the absence of

competent proof of the specific amounts of actual damages suffered.
(People vs. Dianos, 297 SCRA 191; Sumaplong vs. Court of Appeals,
268 SCRA 764 [1997]; People v. Gopio, 346 SCRA 408 [2000]). Thus,
nominal damages were awarded in Sumaplong vs. Court of Appeals
(268 SCRA 764, 775-776 [1997]), an attempted homicide case where
the victim’s left ear was mutilated and a permanent scar remained in
the latter’s forearm. In the said case, the Supreme Court observed
that nominal damages is proper “whenever there has been a
violation of an ascertained legal right, although no actual damages
resulted or none are shown.” The Court observed further that “there
is no room to doubt that some species of injury was caused to the
complainant because of the medical expenses he incurred in having
his wounds treated, and the loss of income due to his failure to work
during his hospitalization.” However, only nominal damages were
awarded because there was absence of competent proof of the same
actual damages.

Nominal damages were also awarded in Japan Airlines vs. Court of

Appeals (294 SCRA 19, 25-26 [1998]) where the plaintiffs sued the
airline because the latter failed to transport them to Manila. The
Supreme Court acknowledged that the Mount Pinatubo eruption
prevented JAL from proceeding to Manila on schedule. However, the
award was justified because JAL failed to make necessary ar-
rangement to transport the plaintiffs on the first available connect-
ing flight to Manila. It even declassified the plaintiffs from “transit
passengers” to “new passengers” as a result of which plaintiffs were
obliged to make the necessary arrangements themselves. However,
only nominal damages were awarded in the absence of proof of
actual damages.

Similarly, nominal damages were awarded in Northwest Air-lines, Inc.

vs. Nicolas L. Cuenca (14 SCRA 1063, 1066 [1965]). The plaintiff was
the holder of a first class ticket from Manila to Tokyo who was rudely
compelled by an agent of the airlines to move to the tourist class
notwithstanding the agent’s knowledge that the plaintiff was a
Commissioner of Public Highways of the Republic of the Philip-pines
who was travelling in his official capacity as a delegate of the country
to a conference in Tokyo. There was also no proof of actual damages
in the said case.

It follows however that nominal damages cannot co-exist with actual

or compensatory damages. (Armovit vs. Court of Appeals, 184
DAMAGES

SCRA 476 [1990]). The purpose of nominal damages is to vindicate or

recognize a right that has been violated, in order to preclude further
contest thereof; and not for the purpose of indemnifying the plaintiff
for any loss suffered by him. An award of compensatory damages is a
vindication of a right. It is in itself a recognition that plaintiff’s right
was violated, hence, the award of nominal damages is unnecessary
and improper. (Vda. De Medina vs. Cresencia, 99 SCRA 506, 510
[1956]).

In Erlinda Francisco v. Ricardo Ferrer, Jr. (G.R. No. 142029, February

28, 2001), nominal damages was imposed for the insensitiv-ity,
inadvertence and inattention of the defendant to the plaintiffs’
anxiety and need of the hour. The defendant was sued because she
failed to deliver the wedding cake of the plaintiffs on time for the re-
ception. The delivery was not only late but the cake that was
delivered was different from what was agreed upon. The defendant
initially gave the lame excuse that delivery was probably delayed
because of traffic when in truth defendant knew that no cake would
be delivered because the order slip got lost.

TEMPERATE OR MODERATE DAMAGES.

The Civil Code includes provisions allowing temperate and moderate

damages. Articles 2224 and 2225 state:

“Art. 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 can not, from the nature of the case, be
provided with certainty.

Art. 2225. Temperate damages must be reasonable under the

circumstances.’’

The Code Commission justified the adoption of the above-quoted

provisions by citing the law in the United States:

“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 one’s
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 defendant’s
wrongful act.’’
910 TORTS AND DAMAGES

The Supreme Court explained in Pleno vs. Court of Appeals (G.R. No.
56505, May 9, 1988; see also People v. Singh, G.R. No. 129782, 360
SCRA 404, 408 [2001]; People v. Plazo, 350 SCRA 433 [2001]) that:

“Temperate damages are included within the context of

compensatory damages. In arriving at a reasonable level of
temperate damages to be awarded, courts are guided by the rul-ing
that x x x there are cases where from the nature of the case, definite
proof of pecuniary loss can not be offered, although the court is
convinced that there has been such loss. For instance, injury to one’s
commercial credit or to the goodwill of a business firm is often hard
to show certainly in terms of money. Should damages be denied for
that reason? The judge should be empow-ered to calculate moderate
damages in such case, rather than the plaintiff should suffer, without
redress from the defendant’s wrongful act.”

Thus, temperate damages to the heirs of the victim under Article

2224 of the Civil Code where it has been shown that they suffered
pecuniary loss but the amount thereof cannot be proved with
certainty (People v. Singh, et al., 360 SCRA 404, 408 [2001]; People v.
Plazo, 350 SCRA 433 [2001]; People v. Briones, 344 SCRA 149 [2000];
People v. De la Tongga, 336 SCRA 687 [2000]).
In Rogelio E. Ramos, et al. vs. Court of Appeals, et al. (G.R. No.
124354, December 29, 1999), the Supreme Court sustained the
award of temperate damages to answer for the anticipated increase
in future medical expenses. The Supreme Court observed that our
present laws on actual damages cannot cover such adjustments
because 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 situa-tions, where the resulting injury might be
continuing and possible future complications directly arising from the
injury, while certain to occur, are difficult to predict. The Court
concluded that temper-ate damages should be awarded to 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.
DAMAGES

CASES:

ROGELIO RAMOS vs. COURT OF APPEALS

G.R. No. 124354, December 29, 1999

[The victim in this case was rendered comatose by medical

malpractice. The trial court awarded a total of P632,000.00 pesos
(should be P616,000.00) in compensatory damages to the plaintiff,
“subject to its being updated” covering the period from 15 November
1985 up to 15 April 1992, based on monthly expenses for the care of
the patient estimated at P8,000.00. The High Court observed that at
current levels, the P8,000/monthly amount established by the trial
court at the time of its decision would be grossly inadequate to cover
the actual costs of home-based care for a comatose individual. The
calculated amount was not even arrived at by looking at the actual
cost of proper hospice care for the patient. What it reflected were the
actual expenses incurred and proved by the petitioners after they
were forced to bring home the patient to avoid mounting hospital
bills. The Court further explained.]

And yet ideally, a comatose patient should remain in a hospital or be

transferred to a hospice specializing in the care of the chronically ill
for the purpose of providing a proper milieu adequate to meet
minimum standards of care. In the instant case for instance, Erlinda
has to be constantly turned from side to side to prevent bedsores
and hypostatic pneumonia. Feeding is done by nasogastric tube. Food
preparation should be normally made by a dietitian to provide her
with the correct daily caloric requirements and vitamin supplements.
Furthermore, she has to be seen on a regular basis by a physical
therapist to avoid muscle atrophy, and by a pulmonary therapist to
prevent the accumulation of secretions which can lead to respiratory
complications.

Given these considerations, the amount of actual damages re-

coverable in suits arising from negligence should at least reflect the

correct minimum cost of proper care, not the cost of the care the
fam-ily is usually compelled to undertake at home to avoid
bankruptcy. However, the provisions of the Civil Code on actual or
compensatory damages present us with some difficulties.

Well-settled is the rule that actual damages which may be claimed by

the plaintiff are those suffered by him as he has duly proved. The Civil
Code provides:

“ARTICLE 2199. Except as provided by law or by stipula-tion, one is

entitled to an adequate compensation only for such pecuniary loss
suffered by him as he has duly proved. Such com-pensation is
referred to as actual or compensatory damages.’’
912 TORTS AND 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.

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 in-terests

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 compen-
satory 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 peti-
tioners 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.

ARANETA vs. BANK OF AMERICA

40 SCRA 144 [1971]

Leopoldo Araneta, the petitioner herein, was a local merchant

engaged in the import and export business. On June 30, 1961 he
issued a check for $500 payable to cash and drawn against the San
Francisco main office of
DAMAGES

the Bank of America, where he had been maintaining a dollar current

ac-count since 1948. At that time he had a credit balance of $523.81
in his ac-count, confirmed by the bank’s assistant cashier in a letter to
Araneta dated September 7, 1961. However, when the check was
received by the bank on September 8, 1961, a day after the date of
the letter, it was dishonored and stamped with the notation “Account
Closed.”

“Upon inquiry by Araneta as to why his check had been dishonored,

the Bank of America acknowledged that it was an error, explaining
that for some reason the check had been encoded with wrong
account number, and promising that “we shall make every effort to
see that this does not reoc-cur.” The bank sent a letter of apology to
the payee of the check, a Mr. Harry Gregory of Hongkong, stating
that “the check was returned through an error on our part and
should not reflect adversely upon Mr. Araneta.” In all prob-ability the
matter would have been considered closed, but another incident of a
similar nature occurred later.

On May 25, and 31, 1962 Araneta issued Check No. 110 for $500 and
Check No. 111 for $150, respectively, both payable to cash and drawn
against the Bank of America. These two checks were received by the
bank on June 3, 1962. The first check appeared to have come into the
hands of Rufina Saldaña, who deposited it to her account with the
First National City Bank of New York, which in turn cleared it through
the Federal Reserve Bank. The second check appeared to have been
cleared through the Wells Fargo Bank. Despite the sufficiency of
Araneta’s deposit balance to cover both checks, they were again
stamped with the notation “Account Closed” and returned to the
respective clearing banks.
In the particular case of Check No. 110, it was actually paid by the
Bank of America to the First National City Bank. Subsequently,
however, the Bank of America, claiming that the payment had been
inadvertently made, returned the check to the First National City
Bank with the request that the amount thereof be credited back to
the Bank of America. In turn, the First National City Bank wrote to the
depositor of the check, Rufina Saldaña, informing her about its return
with the notation “Account Closed” and ask-ing her consent to the
deduction of its amount from her deposit. However, before Mrs.
Saldaña’s reply could be received, the Bank of America recalled the
check from the First National City Bank and honored it.

In view of the foregoing incidents, Araneta, through counsel, sent a

letter to the Bank of America demanding damages in the sum of
$20,000. While admitting responsibility for the inconvenience caused
to Araneta, the bank claimed that the amount demanded was
excessive, and offered to pay the sum of P2,000.00. The offer was
rejected.

On December 11, 1962 Araneta filed the complaint in this case

against the Bank of America for the recovery of the following:

1. Actual or compensatory damages P30,000.00

2. Moral damages 20,000.00

914 TORTS AND DAMAGES

3. Temperate damages 50.000.00

4. Exemplary damages 10,000.00
5. Attorney’s fees 10,000.00
TOTAL P120,000.00

The judgment of the trial court awarded all the items prayed for, but

on appeal by the defendant the Court of Appeals eliminated the

award of

compensatory and temperate damages and reduced the moral

damages to

P8,000.00, the exemplary damages to P1,000.00 and the attorney’s

fees to

P1,000.00.

Not satisfied with the decision of the appellate court, the plaintiff
filed the instant petition for review, alleging two reasons why it
should be allowed, as follows:

“(1) The Court of Appeals erred in holding that temperate damages

cannot be awarded without proof of actual pecuniary loss. There is
absolutely no legal basis for this ruling; worse yet, it runs counter to
the very provisions of ART. 2216 of the New Civil Code and to the
established jurisprudence on the matter;
“(2) The Court of Appeals erred in not holding that moral damages
may be recovered as an item separate and distinct from the damages
recoverable for injury to business standing and commercial credit.
This involves the application of paragraph

of Art. 2205 of the New Civil Code which up to now has not yet
received an authoritative interpretation from the Supreme Court . . .”

In his brief, however, the petitioner assigned five (5) errors commit-
ted by the appellate court, namely: (1) in concluding that the
petitioner, on the basis of the evidence, had not sufficiently proven
his claim for actual damages, where such evidence, both testimonial
and documentary, stands uncontradicted on the record; (2) in
holding that temperate damages cannot be awarded to the petitioner
without proof of actual pecuniary loss; (3) in not granting moral
damages for mental anguish, besmirched reputation, wounded
feelings, social humiliation, etc., separate and distinct from the
damages recoverable for injury to business reputation; (4) in
reducing, without any ostensible reason, the award of exemplary
damages granted by the lower court; and (5) in reducing, without
special reason, the award of attorney’s fees by the lower court.

We consider the second and third errors, as they present the issues
raised in the petition for review and on the basis of which it was
given due course.

In disallowing the award of temperate damages, the Court of Appeals

ruled:
DAMAGES

“In view of all the foregoing considerations we hold that the plaintiff
has not proven his claim that the two checks for $500 each were in
partial payment of two orders for jewels worth P50,000 each. He has
likewise not proven the actual damage which he claims he has
suffered. And in view of the fact that he has not proven the existence
of the supposed contract for him to buy jewels at a profit there is not
even an occasion for an award of temperate damages on this score.”

This ruling is now assailed as erroneous and without legal basis. The
petitioner maintains that in an action by a depositor against a bank
for damages resulting from the wrongful dishonor of the depositor’s
checks, temperate damages for injury to business standing or
commercial credit may be recovered even in the absence of definite
proof of direct pecuniary loss to the plaintiff, a finding — as it was
found by the Court of Appeals — that the wrongful acts of the
respondent had adversely affected his credit being suf-ficient for the
purpose. The following provisions of the Civil Code are invoked:

“ART. 2205. Damages may be recovered:

For loss or impairment of earning capacity in cases of temporary

or permanent personal injury;

For injury to the plaintiff’s business standing or com-mercial

credit.

xxx xxx xxx

ART. 2216. No proof of pecuniary loss is necessary in order that
moral, nominal, temperate, liquidated or exemplary damages may be
adjudicated. The assessment of such damages, except liquidated
ones, is left to the discretion of the court, according to the
circumstances of each case.”

Also invoked by the petitioner is the case of Atlanta National Bank vs.
Davis, 96 Ga 334, 23 SE 190; 1 and the following citations in American
Jurisprudence:

“In some states what are called ‘temperate damages’ are allowed in
certain classes of cases, without proof of actual or special damages,
where the wrong done must in fact have caused actual damage to
the plaintiff, though from the nature of the case, he cannot furnish
inde-pendent, distinct proof thereof. Temperate damages are more
than nominal damages, and, rather, are such as would be a
reasonable compensation for the injury sustained . . .” (15 Am. Jur.
400)

“. . . It has been generally, although not universally, held, in an action

based upon the wrongful act of a bank in dishonoring checks of a
merchant or trader having sufficient funds on deposit with the bank,
that substantial damages will be presumed to follow such act as a
neces-sary and natural consequence, and accordingly, that special
damages need not be shown. One of the reasons given for this rule is
that the
916 TORTS AND DAMAGES

dishonor of a merchant’s or trader’s check is tantamount or

analogous, to a slander of his trade or business, imputing to him
insolvency or bad faith . . .” (10 Am. Jur. 2d. 545).

On the other hand the respondent argues that since the petitioner
invokes Article 2205 of the Civil Code, which speaks of actual or
compensa-tory damages for injury to business standing or
commercial credit, he may not claim them as temperate damages
and thereby dispense with proof of pecuniary loss under Article 2216.
The respondent cites Article 2224, which provides that “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,” and contends that
the petitioner failed to show any such loss in this case.

The question, therefore, is whether or not on the basis of the findings

of the Court of Appeals, there is reason to conclude that the
petitioner did sustain some pecuniary loss although no sufficient
proof of the amount thereof has been adduced. In rejecting the claim
for temperate damages the said Court referred specifically to the
petitioner’s failure to prove “the existence of a supposed contract for
him to buy jewels at a profit,” in connection with which he issued the
two checks which were dishonored by the respondent. This may be
true as far as it goes, that is, with particular reference to the alleged
loss in that particular transaction. But it does not detract from the
finding of the same Court that actual damages had been suffered,
thus:

“. . . Obviously, the check passed the hands of other banks since it

was cleared in the United States. The adverse reflection against the
credit of Araneta with said banks was not cured nor explained by the
letter of apology to Mr. Gregory.”

xxx xxx xxx

“. . . This incident obviously affected the credit of Araneta with Miss

Saldaña.

xxx xxx xxx

“However, in so far as the credit of Araneta with the First Na-tional

City Bank, with Miss Rufina Saldaña and with any other persons who
may have come to know about the refusal of the defendant to honor
said checks, the harm was done . . .”

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
re-flection thereon constitutes some material loss to him. As stated in
the case Atlanta National Bank vs. Davis, supra, citing 2 Morse Banks,
Sec. 458, “it can hardly be possible that a customer’s 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 inde-pendent, distinct proof thereof.”
DAMAGES

The Code Commission, in explaining the concept of temperate

damages under Article 2224, makes the following comment:

“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 one’s
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 defendant’s wrongful act.”

The petitioner, as found by the Court of Appeals, is a merchant of

long standing and good reputation in the Philippines. Some of his
record is cited in the decision appealed from. We are of the opinion
that his claim for temperate damages is legally justified. Considering
all the circumstances, including the rather small size of the
petitioner’s account with the respond-ent, the amounts of the checks
which were wrongfully dishonored, and the fact that the respondent
tried to rectify the error soon after it was discovered, although the
rectification came after the damage had been caused, we believe that
an award of P5,000 by way of temperate damages is sufficient.

Under the third error assigned by the petitioner in his brief, which is
the second of the two reasons relied upon in his petition for review,
he contends that moral damages should have been granted for the
injury to his business standing or commercial credit, separately from
his wounded feelings and mental anguish. It is true that under Article
2217 of the Civil Code. “Besmirched reputation” is a ground upon
which moral damages may be claimed, but the Court of Appeals did
take this element into consideration

in adjudging the sum of P8,000 in his favor. We quote from the

decision:

“. . . the damages to his reputation as an established and well known

international trader entitled him to recover moral damages.”

xxx xxx xxx

“. . . It was likewise established that when plaintiff learned that his

checks were not honored by the drawee Bank, his wounded feelings
and the mental anguish suffered by him caused his blood pressure to
rise beyond normal limits, thereby necessitating medical attendance
for an extended period.”

LIQUIDATED DAMAGES.

Liquidated damages are those agreed upon by the parties to a

contract, to be paid in case of breach thereof. (Article 2226, Civil
Code). Ordinarily, the court cannot change the amount of liquidated
damages agreed upon by the parties. However, Article 2227 of the
Civil Code provides that liquidated damages, whether intended as
918 TORTS AND DAMAGES

an indemnity or a penalty, shall be equitably reduced if they are

iniquitous or unconscionable. In addition, Article 2228 provides that
when the breach of the contract committed by the defendant is not
the one contemplated by the parties in agreeing upon the liquidated
damages, the law shall determine the measure of damages, and not
the stipulation.

EXEMPLARY OR CORRECTIVE DAMAGES.

Corrective damages are called exemplary or “punitive” damages in

American law. The Code Commission used the term “corrective,” in
lieu of “punitive,” in harmony with the modern theory of penology.
(Report of the Code Commission). The Commission further explained
that exemplary damages are required by public policy to suppress
wanton acts. They are antidotes so that the poison of wickedness
may not run through the body politic. (ibid.).

Exemplary or corrective damages are imposed, by way of ex-ample or

correction for the public good, in addition to the moral, temperate,
liquidated or compensatory damages. (Article 2229, Civil Code; Zenith
Insurance Corporation vs. Court of Appeals, 185 SCRA 398 [1990]; Del
Rosario vs. Court of Appeals, 267 SCRA 158 [1997]). They are
designed to reshape behavior that is socially deleterious in its
consequence. (Mevenas vs. Court of Appeals).

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 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 defendant –
as-sociated with such circumstances as willfulness, wantonness,
malice, gross negligence or recklessness, oppression, insult or fraud
or gross fraud — that 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 con-duct. In either case, these damages are intended in
good measure to deter the wrongdoer and others like him from
similar conduct in the future (People v. Catubig, No. 137842, August
23, 2001, 363 SCRA 621, 634).
DAMAGES

In Philippine National Bank vs. Court of Appeals (256 SCRA 44 [1996],

citing Octot vs. Ybanez, 111 SCRA 79 [1982]; De Leon vs. Court of
Appeals, 165 SCRA 166 [1988]), the Supreme Court enumerated the
following requisites for the award of exemplary damages:

“1. They may be imposed by way of example in addition to

compensatory damages, and only after the claimant’s right to them
has been established;

They cannot be recovered as a matter of right, their de-

termination depending upon the amount of compensatory damages
that may be awarded to the claimant;

The act must be accompanied by bad faith or done in wan-ton,

fraudulent, oppressive or malevolent manner.’’

The award of exemplary damages is governed by the following

statutory provisions:

“Art. 2230. In criminal offenses, exemplary damages as a part of the

civil liability may be imposed when the crime was committed with
one or more aggravating circumstances. Such damages are separate
and distinct from fines and shall be paid to the offended party.

Art. 2231. In quasi-delicts, exemplary damages may be granted if the

defendant acted with gross negligence.
Art. 2232. In contracts and quasi-contracts, the court may award
exemplary damages if the defendant acted in a wanton, fraudulent,
reckless, oppressive, or malevolent manner.

Art. 2233. Exemplary damages cannot be recovered as a matter of

right; the court will decide whether or not they should be
adjudicated.

Art. 2234. While the amount of the exemplary damages need not be
proved, the 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. In case liquidated damages have been agreed upon,
although no proof of loss is necessary in order that such liquidated
damages may be recovered, nevertheless, before the court may
consider the question of granting exemplary in addi-tion to the
liquidated damages, the plaintiff must show that he would be entitled
to moral, temperate or compensatory damages were it not for the
stipulation for liquidated damages.

Art. 2235. A stipulation whereby exemplary damages are renounced

in advance shall be null and void.’’

Consistent with the above-stated statutory and juris-

920 TORTS AND DAMAGES

prudential rules, the Supreme Court sustained the award of

exemplary damages where there was gross carelessness or
negligence amounting to wanton misconduct. (Radio
Communications of the Philippines vs. Court of Appeals, 195 SCRA
147 [1991]). It was also awarded due to the presence of a
fraudulent conduct. (Geraldez vs. Court of Appeals, 230 SCRA 320
[1994]). In a case involving contract of carriage of passengers, the
Court justified the award of exemplary damages to deter the
airlines from the com-mission of acts of discourtesy to passengers.
(Northwest Airlines vs. Court of Appeals, 186 SCRA 440 [1990]).

Criminal Cases.

The Civil Code authorizes the imposition of exemplary damages in

criminal cases where there is an aggravating circumstance. 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 ef-fect, 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
aggravat-ing circumstances, whether ordinary or qualifying, in its
commission. Unlike the criminal liability which is basi-cally 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 aggravat-ing circumstance, whether
ordinary or qualifying, should entitle the offended party to an
award of exemplary dam-ages within the unbridled meaning of
Article 2230 of the
DAMAGES

Civil Code (People v. Catubig, supra.).

Nevertheless, the award of exemplary damages is also justified, not only due to the presence of
aggravat-ing circumstance, but also if the circumstances show the depravity of the mind of the accused.
Hence, exemplary

damages was awarded against an accused who assaulted a pregnant woman. By sexually assaulting a
pregnant woman, the accused has shown moral corruption, perver-sity and wickedness. (People vs.
Cristobal, 252 SCRA 507 [1996]). It was also imposed to deter fathers with perverse tendencies or
aberrant sexual behavior from abusing their own daughters. (People vs. Matrimonio, 215 SCRA 613
[1992]).