DAMAGES

1. Concept / Kinds of Damages

Art. 2197. Damages may be:

(1) Actual or compensatory;

(2) Moral;
(3) Nominal;
(4) Temperate or moderate;
(5) Liquidated; or
(6) Exemplary or corrective.

Occena vs. Icamina*

 Vegfria shouted at Occena, a barangay captain, calling him an ignoraus and tyrant, among other things. Occena filed
a case of Grave Oral Defamatioon against Vegfria. The trial court found Vegfria guilty of Slight Oral Defamation
awarding a fine but no damages holding that the circumstances of the case do not warrant the awarding of moral
damages.
 Occena filed a petition for review claiming that a person criminally liable is also civilly liable. Vegfria, on the other
hand claims that the trial court decision was already final.
 The Supreme Court ruled that Vegfria was liable for moral damages. As a general rule, a person convicted of a crime
has violated the State (fine/imprisonment) and the opposing individual (damages). In the case at bar, the imputations
caused injury to the reputation and social standing of Occena who was a barangay captain at that time.
 Courts allows moral damages in cases of libel, slander and other form of defamation. Art. 2219 allows an offended
party in a case for oral defamation to recover from the guilty party damages for injury to his feelings and reputation.

Quisumbing vs. MERALCO**

An inspection was conducted by Meralco on Greenmeadows. Meralco discovered that the Quisumging spouses’ meter
had been tampered with so the former immediately disconnected the electric supply and brought the meter to the laboratory for
examination. Quisumbing spouses claim the disconnection was illegal because it was summary in nature and that they were
damaged since they were expecting a very important guest whom they just treated out.
 The Supreme Court ruled that the requisites for summary disconnection were not present. There was no ERB
representative with the Meralco team which disconnected the electricity of the spouse. However, actual damages
should not be granted because such should be proven. In this case, the spouse just made allegations of their loss
without presenting any evidence to support their allegations.
 Moral damages should be awarded. Case law establishes the following requisites for the award of moral damages:
(1) there is an injury -- whether physical, mental or psychological -- clearly sustained by the claimant; (2) there is 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 of damages is predicated on any of the cases stated in
Article 2219 of the Civil Code. In the case at bar, Meralco should have been prudent in the disconnection. It should
have given the spouses ample time to explain their side.

Lecture:

Damages
 Loss, prejudice, suffering or injury
 Compensation under the law for the loss, suffering or prejudice

Compensation

1) Actual/Compensatory

 Refers to compensation for pecuniary losses actually suffered by the person (money)
 Hospitalization fees, funeral fees, etc.
 Includes attorney’s fees

2) Moral

 A2217 – Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
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 or omission.

3) Nominal
a. Compensation for recognition and vindication of a right
b. You have a right which was violated but there’s really no pecuniary loss

4) Temparate/Moderate
a. You were able to prove loss but not amount
 b. Depends on the discretion of the court

5) Liquidated
a. Damages stipulated in the contract
b. Eg is “10% damages if you are not able to perform in 10 days.”

6) Exemplary/Corrective
a. For public example and common good
b. Sometimes called punitive damages but it’s wrong to say that here in the Philippines because exemplary
damages here are really very small unlike in the US wherein you can make a killing with punitive damages.

2. General Principles of Recovery

3 General Principles for Recovery of Damage

1) Amount must be JUST, FAIR AND COMMENSURATE to the loss or damage.

2) Proximate effect of the tortuous act. The damage must be proximate and not remote or speculative.
3) Must be proved by COMPETENT EVIDENCE (admissible and probative).

PAL vs. Miano **

 Miano’s bag was lost by PAL. He demanded reimbursement and damages but was given the runaround. It was later
discovered that the reason for the incident was that the tag on the bag got detached.
 No moral damages should be awarded in this case because in breach of contract, moral damages would only be awarded
in case of bad faith or ill will. In the case at bar, the delay was because of an accident. PAL made earnest efforts to locate
the baggage when Miano reported his loss.
 No exemplary either, for such may only be awarded if respondent acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner.

DBP vs. CA *
Actual or compensatory damages cannot be presumed but must be proved with reasonable degree of certainty.
Court cannot rely on speculations, conjectures, or guesswork as to the fact and amount of damages, but must depend
upon competent proof that they have been suffered by the injured party and on the best obtainable evidence of the actual
amount thereof. It must point out specific facts which would serve as a basis for measuring whatever compensatory or
actual damages borne.

People vs. Paraiso **

Paraiso was charged with robbery with homicide because he robbed a house (taking jewelry) and killed the victim
in front of her children. There should be moral damages because the mother was killed in front of the children which
brought great pain to the latter. Actual damages, however, was limited to P200. The value of the jewelry was not properly
supported by evidence. Only the relatives testified on the value of such jewelry. It has already been held that ordinary
witnesses are cannot testify on the value of stolen jewelry. Receipts should have been provided.
Sir thinks that this ruling has a problem. Who in the province would be an expert in jewelry? Moral of the story is
if you’re going to testify on something, you should prove you’re competent. Present receipts and other evidence.

People vs. Rios**

Rios killed the victim in front of his wife. To prove actual damages, the wife was not able to produce receipts for
the burial, funeral expenses, etc. It is necessary for a party seeking the award of actual damages to produce competent
proof or the best evidence obtainable to justify such award. Only substantiated and proven expenses, or those that appear
to have been genuinely incurred in connection with the death will be recognized by the courts.

Q: What if you bought ice cream and discovered there were glass splinters inside? What damages can you demand?
A: First of all, you should prove it came from that company ( give receipts. You can also show the container of the ice cream. Of
course, it would be better if you had the presence of mind to put the ice cream in the ref. You can demand actual damages
(hospitalization and other costs such as taxi ride). You get moral damages and exemplary damages.

Jarencio Reading (pp 285-306)

 Damages ordinarily and normally recoverable against a vendor for failure to deliver land he has contracted to deliver is
the value of the use and occupation of the land for the time which it was wrongfully withheld. Damages recoverable
are such as naturally and generally would result from such a breach, according to the usual course of things.
 Damages awarded have been determined by adequately considering the official, political, social and financial standing
of the offended parties, on the one hand, and the business and financial position of the offended party on the other.

3. Actual Damages
Art. 2199. Except 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. Such compensation is referred to as actual or compensatory damages.

Art. 2200. 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. (1106)

Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall be those that
are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have
reasonably foreseen at the time the obligation was constituted. In case of fraud, bad faith, malice or wanton attitude, the obligor
shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. (1107a)

Art. 2202. In crimes and quasi-delicts, the defendant shall be liable for all damages which are the natural and probable
consequences of the act or omission complained of. It is not necessary that such damages have been foreseen or could have
reasonably been foreseen by the defendant.

Art. 2203. 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.

Art. 2205. Damages may be recovered:

(1) For loss or impairment of earning capacity in cases of temporary or permanent personal injury;
(2) For injury to the plaintiff's business standing or commercial credit.

Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the insurance company for the injury or
loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the
insured against the wrongdoer or the person who has violated the contract. If the amount paid by the insurance company does not
fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury.

Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages,
there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the
legal interest, which is six per cent per annum. (1108)

People vs. Degoma **

Degoma and a friend were captured when they tried to steal from a bazaar. Degoma was a look-out while the other guy
wrestled and shot the security guard.
The Supreme Court lowered the actual damages awarded by the lower court because such were not substantiated by
evidence. Actual damages should always be proven by sufficient evidence. Furthermore, the receipts/expenses should be related
to the death. Expenses such as plane tickets of relatives which were not directly suffered by the immediate heirs should not be
included. The expenses should also not include those incurred before the death and a long time after. Finally, luxurious expenses
should not be included.

PNOC Shipping vs. CA **

Two boats collided. Damages were sought to be proven by the general manager of one of the ships who gave quotations
and the alleged value of the fish and equipment inside the damaged vessel.
The Supreme Court ruled that the testimony of the manager and the alleged quotations by dealers were all hearsay. No
sufficient documentary evidence was presented. The owner of the shop which issued the receipt should have testified. Nominal
damages were awarded in this case but sir thinks this should be liquidated damages.

Bank of America vs. Realty *

The general rule is the courts will not award more than what is asked for. The exception is when appraisal is submitted. In
this case, the court awarded more than what was asked because such amount was sufficiently proven during trial with the opposing
party having opportunity to dispute said amounts. As such, there was due process.

Lecture:

 Types of Actual Damages

1) A 2200
a. Loss suffered
b. Unrealized profit
2) A2205
a. Disability
b. Damage to business standing
3) A2206 (Dead)
 a. Indemnity
i. You only have to prove death
ii. Fixed amount of P3,000 however there has been judicial repeal or amendment of the law (P50,000)
b. Loss of earning capacity
4) A2205 (Interest)
a. Never forget to apply for this so delay would make you richer.
b. If not demand for interest, you should delay the case.

 Life expectancy = 2/3 x (80 – age of injured party)

There are 3 steps in computing the life expectancy:

1. Determine life expectancy of the injured party
2. Determine Gross Earnings (per year)
3. Less Personal expenses (normally computed to be 50% of Gross Earnings)
4. Life expectancy x net earnings

In other words, the formula for computing loss of earning capacity is:

Net Earning = Life x [Gross annual income – Necessary Living]

Capacity Expectancy Expenses

 Principle of Recovery of Moral Damages

 Prove first factual basis (Art. 2217) you have to prove that this happened
 These things are the proximate cause of the torts (Art. 2219)
i. P50,000 death indemnity is different from moral damages
 Testimony of the person who suffered the moral damage

 Amount of Moral Damages (Factors to be used to determine amount of damages)

 Political, social, financial status of the offended party

 (With the statement above) Business and financial standing of offender
 Degree of the anguish – describe clearly
 Sentimental Value

 Fraud/Bad Faith/Malice
 Breach of Contract – Should be done with fraud, bad faith, malice
 Breach of Contract of Carriage – prove existence of fraud, bad faith, malice

Jarencio, pp 308 - 340

 Injured party is bound to protect himself if he can do so with reasonable exertion or at trifling expense, and can
recover form the delinquent party only such damages as he could not, with reasonable effort have avoided
 Party claiming damages must not be in fault in contributing to them by his own want of proper care

a. Damnum Emergens/Lucrum cessans

Art. 2200. 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. (1106)

Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall be those that
are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have
reasonably foreseen at the time the obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably
attributed to the non-performance of the obligation. (1107a)

Terminal Facilities vs. PPA **

PPA accepted Terminal’s proposal to construct a specialized terminal complex in Davao. Terminal sued PPA for collection
of the proceeds it is entitled to, since PPA rescinded the contract. SC held that actual damages consisting of unrealized profits
(lucrum cessans) are not granted on the basis of mere speculation but by reference to SOME REASONABLY DEFINITE
STANDARD such as market value, established experience or direct inference from known circumstances. However, it is not
necessary to prove with absolute certainty the amount of unrealized profit.

Padillo vs. CA **
With the allegation that the respondent made millions for the improper used and exploitation of the property, the petitioner’s
testimony regarding the matter of unrealized income is lacking of the requisite details on how such huge amount of income could be
made possible. Testimonial evidence on the alleged unrealized income is not enough to warrant damages because it is too vague
and unspecificed to induce faith and reliance.

b. Disability/commercial Credit

Art. 2205. Damages may be recovered:

(1) For loss or impairment of earning capacity in cases of temporary or
permanent personal injury;
(2) For injury to the plaintiff's business standing or commercial credit.

GSIS vs. CA **
Rosa Balais was an employee of the National Housing Authority. She suffered sickness and was unable to do the same
things she could before said sickness. She filed for temporary partial disability and permanent partial disability with the GSIS which
was granted. She then requested the GSIS to convert her disability from permanent partial disability to permanent total disability.
GSIS denied such claim.
The Supreme Court ruled that permanent total disability should not be understood more on its medical sense but on the
loss of earning capacity. In this case, Rosa was forced to retire from work and take medication for life. Although, technically her
sickness was only partial disability, her inability to work was total. Permanent total disability means disablement of an employee to
earn wages the same kind of work, or work of a similar nature that she was trained for and accustomed to. It does not mean state
of absolute helplessness, but inability do to substantially all material acts necessary to prosecution of an occupation.

PNB vs. CA **
Pujol availed of PNB’s “Combo Account” which entitles the bank’s clients to have their current accounts debited from their
savings. Pujol issued two checks which were subsequently dishonored for lack of funds from her current account. She sued PNB
for damages. PNB denied liability because it said that Pujol’s account was not approved under the Combo account for failure to
comply with certain documentary evidence.
While PNB’s negligence in this case may not have been ended with malice and bad faith, nevertheless, it caused serious
anxiety, embarrassment and humiliation to Pujol, for which she is entitled to moral damages. The amount of P100,000 as moral
damages is just proper, considering her social standing (member of the judiciary siya).

Producers Bank vs. CA **

Chua issued several checks which were dishonored for lack of funds; sued Producers’ Bank. It was correct for the RTC
and CA to award Chua with moral and exemplary damages, considering that the credit standing of Chua was adversely affected
with the dishonor of his checks (he lost a gas station, kung di pa naman adversely affected pa sya). The financial credit of a
businessman is prized and valuable asset, it being a significant part of the foundation of his business. Any adverse reflection
thereon constitutes some financial loss to him. Chua was able to prove that he is entitled to moral damages. Remember the ruling
in Terminal Facilities.
Sir says never to be hesitant to make you complaint long. You have to prove moral damages, etc. so you should prove
social standing. The reason is to make your opponent scared that your client is somebody and because the other party cannot
object. It’s not irrelevant because my client is so and so.

c. Fixed Indemnity

Art. 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning
Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier.

Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though
there may have been mitigating circumstances. In addition:
(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of
the latter; such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of permanent
physical disability not caused by the defendant, had no earning capacity at the time of his death;
(2) If the deceased was obliged to give support according to the provisions of Article 291, the recipient who is not an heir called to
the decedent's inheritance by the law of testate or intestate succession, may demand support from the person causing the death,
for a period not exceeding five years, the exact duration to be fixed by the court;
(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental
anguish by reason of the death of the deceased.

Fortune Express vs. CA **

Atty. Caorong was shot by certain Maranaos. For his death, Fortune, the bus company, is liable to the heirs of Caorong for
P50,000 as fixed indemnity for death (which used to be P3,000). Other than that, the heirs are entitled to moral damages, actual
damages in the form of the expenses for the wake and burial, as well as for the victim’s loss of earning capacity.

People vs. Balgos **

If the commission of rape was qualified by any of the circumstances under which the penalty of death may be imposed, the
civil indemnity for damages the defendant may be held liable shall be P75,000. Balgos was made to pay P75,000 since he raped a
6 year old. He was also made to pay moral damages in the amount of P50,000, to which the victim is entitled to without the
necessity for pleading or proof of the basis. This is in accordance with Article 2219.

d. Loss of Earning Capacity

Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though
there may have been mitigating circumstances. In addition:

(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of
the latter; such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of permanent
physical disability not caused by the defendant, had no earning capacity at the time of his death;
(2) If the deceased was obliged to give support according to the provisions of Article 291, the recipient who is not an heir called to
the decedent's inheritance by the law of testate or intestate succession, may demand support from the person causing the death,
for a period not exceeding five years, the exact duration to be fixed by the court;
(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental
anguish by reason of the death of the deceased.

Davila vs. PAL **

PAL crashed, killing the son of Davila. Earning Capacity is not the loss of the entire earnings, but the loss of EARNING
WHICH BENEFICIARY WOULD HAVE RECEIVED. Therefore, only the net earnings (total earnings less expenses necessary to
create such earnings & living expenses, usually computed to be half of the total earnings) NOT GROSS EARNINGS.
SC said that Davila was single, 30 years old, manager of a radio station (earning P8,400); partner in a law firm (earning
P3,600) and has a farming business (earning P3,000). Compute for it, and the answer should be P195,000, which the court
awarded. Article 2206 makes PAL liable for the loss of earning capacity of the deceased and imposes a duty on PAL to indemnify
the heirs of said deceased. Although Article 2206 refers to damages arising from crime or quasi-delict, Article 1764 specifically
makes Article 2206 applicable to breach of contract by common carriers.

People vs. Quilaton *

The important variables taken into account in determining the compensable amount of lost earnings are the ff:

1. NUMBER OF YEARS for which the victim would otherwise have lived; and
2. RATE OF LOSS sustained by the heirs of the deceased

Rosales vs. CA **
Rosales, a 3rd year high school student of UPIS was hit and killed by a MMTC bus along Katipunan. MMTC claimed it was
not liable because it exercised due diligence in the hiring and supervision of its drivers. It argued that there should be no award for
loss of earning capacity as Rosales was only a high school student.
The Supreme Court ruled that MMTC was liable because it did not present any evidence to substantiate that it exercised
due diligence in the hiring and supervision of its employees.
Although Rosales was merely a 3rd year high school student, it was proven that she was smart and doing well
academically. Evidence was also presented showing she had diverse interests. One UP professor claimed she had potential to be
an artist. In fact, her watercolor paintings were presented in court. As such, an award of loss of earning capacity was proper using
the minimum wage in non-agricultural work. (The court applied the formula for life expectancy)
Sir says that if a law student was hit, a higher award should be given.

People vs. Daroy *

An indemnity for loss of earning capacity is justified, appearing from the testimony of the surviving spouse that the
deceased was 40 years of age at the time he died and earned P4,200 a month. Although there was no evidence to support the
widow’s claim for loss of earning capacity, such failure does not necessarily prevent recovery of the damages if the testimony of the
surviving spouse is sufficient to establish a basis from which the court can make a fair and reasonable estimate of the damage for
loss of earning capacity. Remember the formula : Net earning capacity is life expectancy multiplied by the difference between the
Gross Annual and living expenses (50% of gross annual).

People vs. Taliman*

Pecuniary loss must be established by credible evidence before such may be awarded. But the award of P50,000 as fixed
indemnity for wrongful death can be awarded without need of proof other than the death of the victim.

Smith Belll vs. Borja **

In determining the reasonableness of the damages awarder under Art. 1764 in conjunction with Art. 2206, the factors to be
considered are:

a. Life expectancy (considering the health of the victim and the mortality table which is deemed conclusive)
and loss of earning capacity
b. Pecuniary loss or loss of support and service
 c. Moral and mental sufferings

The loss of Earning capacity is based mainly on the number of years remaining in the person’s expected life span. It is the
basis of the damages that shall be computed and the rate at which the loss sustained by the heirs shall be fixed. The amount
recoverable is not the loss of the entire earning but the loss of that portion of the earnings which the beneficiary would have
received (net income which is the gross income-living expenses).

People vs. Dubria

In this case, the court ruled that personal expenses were 80% of the gross earnings because the victim was single and a
bachelor. This is an exception to the 50% personal expenses rule.

People vs. Pejota

Testimonial evidence is not necessary to prove gross earnings.

e. Interest

Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages,
there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the
legal interest, which is six per cent per annum. (1108)

Art. 2210. Interest may, in the discretion of the court, be allowed upon damages awarded for breach of contract.

Art. 2211. In crimes and quasi-delicts, interest as a part of the damages may, in a proper case, be adjudicated in the discretion of
the court.

Art. 2212. Interest due shall earn legal interest from the time it is judicially demanded, although the obligation may be silent upon
this point. (1109a)

Art. 2213. Interest cannot be recovered upon unliquidated claims or damages, except when the demand can be established with
reasonably certainty.

Lecture:

Rules on Interest

1. If there is a stipulation as to the rate of interest, apply the rate.

2. If only interest but no rate is stipulated, or there is delay, apply the legal rate of interest, which
is either 6% or 12%.
a. When the obligation involves payment of indemnities in the concept of damage, the
legal rate is 6%, computed as follows:
i. From the date of demand if the amount of indemnities can be established by
reasonable certainty
ii. If not, from the date of judgment of the trial court.
b. When the obligation consists of a loan or forbearance of money, goods or credits as
well as to judgment involving such loan or forbearance, the legal rate of interest shall
be 12% per annum computed from default, that is, from judicial or extrajudicial
demand
c. In both cases, the legal rate of interest shall be 12% from the finality of judgment until
judgment is paid.

When is the interest rate applicable?

Start of Case RTC Decision CA decision SC decision Payment

6% 6% 6% 6% 12%

When does delay start?

If demand is made extrajudicially – from the receipt of the demand letter

If demand is made judicially - from the filing of the complaint

Reformina vs. Tomol *

 Circular No. 416 of the CB took effect on 29 July 1974 pursuant to PD 116, which amended the Usury Law. The Circular
raised the legal rate of interest from 6% - 12% per annum, and such increase applies only to forbearances of money, goods or
credits and the court judgments thereon, but NOT TO COURT JUDGMENTS FOR DAMAGES ARISING FROM INJURY TO
PERSONS or loss of property which does not involve a loan. In the latter cases interests remain at 6%.
The decision sought to be executed is one rendered in an Action for Damages for injury to persons and loss of property
and does not involve any loan, much less forbearance of any money, goods or credits. The law applicable to the case is Article
2209.

Eastern Shipping vs. CA **

Two drums of riboflavin were shipped from Japan by Eastern Shipping Lines, and when it arrived here, it was already
spoiled. 6% or 12%?
Supreme Court provided guidelines to use in determining which rate to apply.
a. When an obligation, regardless of its source, i.e., law, contracts, quasicontracts, delicts or quasi-delicts is
breached, the contravenor can be held liable for damages. The provisions under Title XVIII on "Damages" of the
Civil Code govern in determining the measure of recoverable damages.
b. 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:
i. 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 116923 of the Civil
Code.
ii. When an obligation, no constituting loans or forbearance of money is breached an interest on the
amount of damages awarded may he imposed at the discretion of the court at the rate of 6% per a
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 shah 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 maybe deemed to have
been reasonably ascertain. The actual base for the computation of legal interest shall, in any case, be
on the amount finally adjudged.
c. 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 on, this interim period being deemed to be by then an equivalent to a forbearance of credit.

In this case, the decision of the lower court was modified. From the time of filing until the finality of the judgment, 6%
should be used. However, from final judgment until actual payment, 12% should be used.

Atlantic Gulf vs. CA **

When an obligation not constituting a loan or forbearance of money is breached, interest on the amount of the damages
awarded may be imposed at the rate of 6% per annum. No interest shall be adjudged on unliquidated claims unless the same can
be established with reasonable certainty. Since in the case, the pleadings of respondents did not spell out said amounts with
certainty, the legal interest shall run only from the promulgation of judgment of said court, it being that stage that the quantification
of damages may be deemed to have been reasonably ascertained. The actual base for the computation of such legal interest,
however, shall be the amount as finally adjudged by the SC. When the judgment becomes final and executory, the rate of legal
interest shall be 12% from such finality until the satisfaction of the total judgment account, the interim period being equivalent to a
forbearance of credit.

Crismina Garments vs. CA **

An argument arose about the contract for a piece of work. The clothes delivered were allegedly defective. The lower court
held that interest should be 12% from time of demand until payment.
The Supreme Court ruled that from demand until finality of decision, the interest rate should be 6%. This is a form of indemnity
for delay in the performance of an obligation. However, after finality of judgment until actual payment, the interest should be 12%
because it is already a forbearance of money.
Forbearance in the context of the usury law is a contractual obligation of creditor to refrain during a given period of time,
from requiring the borrower or debtor to repay a loan or debt then due and payable. The obligation is NOT A FORBEARANCE,
because the amount due in this case arose from a contract for a piece of work. Forbearance is any case where there is a period
within which the oblige cannot collect money from the obligor.
 4. Moral Damages

Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, 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.

Art. 2218. In the adjudication of moral damages, the sentimental value of property, real or personal, may be considered.

Art. 2219. Moral damages may be recovered in the following and analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in Article 309;
(10) 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 fraudulently
or in bad faith.

Lecture:

Principles of Recovery of Moral Damages

1) Prove factual basis (A2217)
2) Proximate Result of the torts (A2219)
3) Proof – Testimony of person who suffered (you can add testimony of doctors)
- In rape, there’s a fixed indemnity of P50,000 for every count of rape. However, if the rape was carried out under
circumstances that would make him liable for death, the amount would be P75,000.
- You can get moral damages in practically all cases provided the requisites are present.
Amounts of Moral Damages
1) Political, social and financial standing of the offended party as well as the financial standing of the offender (Lopez vs.
PANAM)
2) Degree of Mental Anguish (People vs. Wisenhunt)
3) Sentimental Value

a. Amount of Award

Lopez vs. PANAM **

Senator Lopez and his family were going to the US on first class in Pan Am. Suddenly they were transferred to tourist
since the first class was already fully booked. As a proximate result of PanAm’s breach in bad faith of its contracts with Sen. Lopez,
the latter suffered social humiliation, wounded feelings, serious anxiety and mental anguish.

People vs. Wiesenhunt*

The Chop chop lady case. The award of moral damages in murder cases is justified because of the physical suffering and
mental anguish brought about by the felonious acts, and is recoverable in criminal offenses resulting in death. Moral damages are
not intended to enrich the victim’s heirs or to penalize the convict, but to obviate the spiritual sufferings of the heirs. Damages
awarded in this case, given the unusual grief brought about by the murder, it was P1,000,000.

Herbosa vs. CA **

The wedding video case. The issue in this case was whether damages arising from breach of contract may be claimed.
The SC held that ordinarily, moral damages cannot be recovered in an action for breach of contract because such an action is not
among those expressly mentioned in Art. 2219. However, moral damages are recoverable for breach of contract where the breach
was wanton, reckless, malicious or in bad faith, oppressive or abusive. The wanton an reckless failure and neglect to timely check
and remedy the video tape indicates a malicious breach of contract and gross negligence on the part of said respondent in
discharge of its contractual obligations. Anyhow, the spouses are still entitled to moral damages for the mental anguish, tortured
feelings, sleepless nights and humiliation that they suffered, which also allowed under Art. 2217 and 2218.

b. Bad Faith/Fraud/Malice

Citytrust vs. Villanueva *

Although incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the
defendant’s wrongful act or omission. The requisites for the award of moral damages are the ff:

1) There must be an injury, 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 is 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.

In this case, the award for moral damages was not given because the inconvenience and discomfort that Villanueva might have
suffered as a result of the dishonor of his check could not have been so grave and intolerable as he attempts it to be.

Zalamea vs. CA **

Transworld Airlines overbooked, so petitioners were not able to be accommodated, despite confirmation of the airlines of
their reservation. Overbooking amounts to bad faith, entitling the injured party to moral damages. A contract of carriage arises
when the airline has confirmed the reservation of the passengers and booked them to a certain flight. The passengers have every
right to expect that he would fly on that flight, and if does not, the carrier opens itself to a suit for breach of contract of carriage. And
even assuming that overbooking is allowed, Transworld is still guilty of bad faith in not informing its passengers before.

Spouses Yu vs. PANAM **

Yu bought a plane ticket from one Tagunicar who purported to be an agent of Tourist World Services, going to US. Yu was
bumped off in Tokyo because their reservations in the flight to US was not confirmed nor reserved. They kept on demanding that
they be accommodated by the other flights of the airline. Mere refusal to accede to the passengers’ wishes does not necessarily
translate into damages, in the absence of bad faith. The law presumes good faith such that any person who seeks to be awarded
damages due to acts of another has the burden of proving that the latter acted in bad faith or ill motive.

Prudential Bank vs. CA **

The bank committed a mistake by misposting the check of Villanueva to another account, causing the checks she issued to
bounce. Bank was only able to correct its mistake after 23 days. Here, there was a clear proof of the lack of supervision on the part
of the bank.
As a business affected with public interest and because of the nature of its functions, the bank is under the obligation to
treat the account of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship. While the
bank’s negligence may not have been attended with malice and bad faith, nevertheless, it caused serious anxiety, embarrassment
and humiliation which entitles the Villanueva to recover moral damages.

Tan vs. Northwest Airline *

There was nothing in the conduct of Northwest which showed that they were motivated by malice or bad faith in loading
Tan’s baggages on another plane. Due to weight and balance restrictions, as a safety measure, Northwest had to transport the
baggage on a different flight, but with the same expected date and time of arrival in the Philippines.
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 fraud.
Where in breaching the contract of carriage Northwest is not shown to have acted fraudulently or in bad faith, liability for damages is
limited to the natural and probable consequences of the breach of obligation which the parties had foreseen or could have
reasonably foreseen. In that case, such liability does not include moral and exemplary damages.

Northwest Airline vs. Laya **

Dr. Laya was rudely treated in the airport so he filed complaint for damages against Northwest. Northwest said that such
treatment was part of a security measure. SC said that any security measure must coincide with the passenger’s right to be treated
by the carrier with kindness, respect and utmost consideration in all matters relative to their trip. Dr. Laya certainly suffered mental
anguish and serious anxiety because of such ordeal that he should be awarded moral damages. Damages are not awarded to
enrich the plaintiff nor to penalize the defendant, so the award was reduced.
 c. Malicious Prosecution

Lao vs. CA **

Lao was an employee of St. Joseph Lumber owned by Chan Tong. St. Joseph filed a complaint against Espiritu for
collection of money, which was subsequently dismissed. Espiritu filed a complaint against Lao and St. Joseph. SC held that Lao
was not liable for malicious prosecution.

Elements of Malicious prosecution:

1. Fact of the prosecution, and further fact that the defendant was himself the prosecutor; and that action was finally
terminated with an acquittal;
2. In bringing the action, the prosecutor acted without probable cause; and
3. the prosecutor was actuated or impelled by legal malice.

Lao was only a witness of the one who filed the case. He acted out without malice in making the affidavit because he
merely was the employee of St. Joseph, the party who really prosecuted the case. Although the prosecution of Espiritu for estafa
did not prosper, the unsuccessful prosecution many not be labeled as malicious.
Sir said that a witness may not be held liable for malicious prosecution.

Lao vs. CA **

Eduardo Antonio was hit by one jeep driven by George Felipe Jr. Felipe was nowhere to be found so the police took the
jeep to the police station for safekeeping. Lao, the owner of the jeep, filed carnapping charges against Frank (the barangay captain
who was one of those who took the jeep). Criminal case was dismissed, so Frank filed a complaint for malicious prosecution
against Lao.
SC said that Lao was liable for malicious prosecution. Mere act of filing a case does no make one liable for malicious
prosecution. There must a proof that the prosecution was prompted by a serious design to vex or humiliate a person and that the
basis for prosecution was false and baseless. The elements for malicious were present.

Villanueva vs. UCPB**

Villanueva, in consideration of a loan applied for by his son, mortgaged certain properties in Quezon in favor of UCPB.
UCPB made some investigations and found the existence of fraud, anomalies and irregularities with the said loan so they filed a
criminal complaint against Villanueva for violation of the General Banking Act; subsequently dismissed. Villanueva filed a complaint
for malicious prosecution against UCPB. RTC held UCPB liable, reversed by the CA, saying that it was the fiscal who had absolute
control over the filing of criminal charges, therefore it was prosecutor, not the bank.
SC said that the mere fact that the fiscal took full control of a litigation does not grant immunity to persons who misuse their
rights to instigate criminal actions. Remember the elements of malicious prosecution, the 2 nd element in this case was present.
However, UCPB could not be held liable since there was no evidence to show that it was impelled by a desire to unjustly
vex, annoy and inflict injury on Villanueva. Malicious prosecution requires proof that the prosecution was prompted by a sinister
design to vex and humiliate the plaintiff. Mere act of filing a criminal complaint does not make the complainant liable, there must be
proof that the suit was prompted by legal malice. There is no penalty for the filing of an action in good faith.

d. Labor Cases

Rutaquio vs. NLRC **

The CPA of Rural Bank recommended the reprimand of Rutaquio, who was the bank’s bookkeeper, for negligence and
delay in recording the books of account. The bank sent him a letter requiring that his letter of resignation be submitted;
subsequently dismissed.
There was illegal dismissal, so Rutaquio was entitled to full backwages and separation pay. But there was no award for
moral damages. Mereallegation of entitlement to moral damages would not suffice to justify the award, absent any concrete proof.
In the absence of fraud or bad faith on the part of the employer in dismissing him, an award of moral damages is not proper.

National Bookstore vs. CA **

 Respondents were cash custodian and Head cashier of National Bookstore. They were dismissed because the cash they
handled were lacking. There was illegal dismissal. But the finding that they were wrongfully dismissed does not automatically
signify that the employer is liable for moral and other damages. Award for damages cannot be justified solely upon the premise that
the employer fires his employee without just cause or due process. Additional facts must be proved to warrant the grant.
In short, moral damages may be recovered only where the dismissal:

1. was attended by bad faith or fraud

2. constituted an act oppressive to labor
3. done in a manner contrary to morals, good customs or public policy
4. social humiliation, wounded feelings, grave anxiety resulted therefrom

Nueva Ecija Electric vs. NLRC

There was an award of moral damages since bad faith was present which was due to the employer’s wanting to bust the
union. As to reinstatement, DOLE requires that the employer write the dismissed employee informing him that he can return to
work. Mere manifestation to the court will not suffice.

e. Corporation

ABS-CBN Broadcasting Corp. vs. CA

Corporations are not entitled to any form of moral damages because of the following reasons:

1. Being an artificial person and having existence only in legal contemplation, it has no feelings, no emotions, no sense
2. it cannot experience physical suffering and mental anguish, which can be experience only by one having a central
nervous system

Hemedes vs. CA **

Corporation is not entitled to moral damages for it has not alleged nor proven factual basis for the same.

Query:
A Co. and its major stockholders B and C filed an ejectment case against D. During the trial, D uttered defamatory words
against the corporation and its stockholders. Corporation and the major stockholders filed a case for damages against D. If you
were the judge, will you award moral damages? If so, to whom will you give it?

Jarencio, pp 342 – 346

5. Nominal Damages

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

Lecture:

Requisites for award of Nominal Damages

1. A legal right is violated

2. No loss or damage suffered or the damage suffered cannot be proven, or was not proved,
3. The award is to vindicate the right.

General Rule: One does not ask for nominal damages and it is in lieu of the actual, moral, temperate or liquidated damages

PAL vs. CA *
 As a general rule, an appellee who has not appealed is not entitled to affirmative relief other than the ones granted. In the
decision of the court below, the long delay in the case suffered by the plaintiff due to the defendant’s multiple appeals and
considering how inflation has depleted the value of the judgment in her favor, in the interest of justice, the defendant should pay
legal rate of interest on the indemnity due to her.
The SC awarded the respondents interest as nominal damages since the case took so long. The right violated here is the
citizen’s right to a swift disposition of his case in court.

Better Living, Inc vs. NLRC *

An employer who deprives an employee the right to defend himself is liable for damages, according to Article 32 of the
Civil Code. This is because a man’s job is a property right duly protected by our laws. That the damages shall be in the form of
nominal damages for the award is not for the purpose of penalizing the petitioner but to vindicate or recognize the private
respondent’s right to procedural due process which was violated by the petitioner.

Japan Airlines vs. CA **

Respondents come from the US and booked flights in JAL form Manila, and given privileged overnight stay in Japan. They
were not able to go home to Manila as scheduled because of the ash fall, NAIA was closed indefinitely so they had to spend for
hotel accommodation the days following. They filed damages.
JAL is liable. Cancellation of flights may have been caused by fortuitous even but this does not excuse JAL from its
obligation to make necessary arrangements to transport respondents on its first available flight to Manila. The award of nominal
damages was proper.
Nominal damages are adjudicated in order that the right of the plaintiff violated by defendant may be vindicated. This is
not for indemnity. The court may award nominal damages in every obligation arising form any source enumerated in Art. 1157, or in
any case where property right has been invaded.

Cojuangco vs. CA **

PCSO refused to release the prize won by Cojuangco, upon orders of the PCGG. Cojuangco filed damages against
Carrascoso, the head of PCSO. SC held that Carrascoso acted in good faith, upon the orders of PCGG. The Decision to withhold
the winnings was not arbitrary or whimsical or tainted with malice.
The general rule is that a public officer shall not be liable for moral and exemplary damages for acts done in the
performance of the functions, absent bad faith, malice, negligence. However, Carrascoso was still liable under Art. 32, because
under Art. 32, there was no need to prove the existence of bad faith to render him liable. In short, under Carrascoso is liable for
nominal damages under Article 32, for Cojuangco’s right to use his property (in the form of winnings) was duly impeded.

Jarencio, pp 346 – 349

 Nominal damages is the term used to distinguish a certain type of damage wards from those wards given as actual,
substantial, or compensatory damages.
 Any award which is not of a significant amount of money and given primarily as a court’s declaration of the rightness of
a claim is a nominal award.
 Those recoverable where a legal right is to be indicated against an invasion that has produced no actual present loss
of any kind or where some injury has been done the amount of which the proofs fail to show.
 Assessment is left to the discretion of the court, and not intended for indemnification of loss suffered but fo the
vindication or recognition of a right violated or invaded.

6. Temperate Damages

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.

Lecture:

Requisites for the award of temperate damages

1. There is actual damage

2. The pecuniary amount of the damage cannot be produced

Pleno vs. CA *
 Temperate damages are included within the context of compensatory damages. In arriving at a reasonable level of
temperate damages to be awarded, trial courts are guided by our ruling that “. . . [t]here 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 a loss.

Consolidated Plywood vs. CA **

Consolidated and defendants entered into a logging and hauling agreement. Defendants obtained a loan from Equitable
guaranteed by Consolidated’s president Lee. Suddenly the trucks of defendants were withdrawn and the hauling business was
abandoned. Consolidated demanded the return of the trucks and its continued operation.
SC did not award temperate damages since there was no showing of proof that consolidated was entitled to an award of
the kind of damage in addition to actual damages suffered. The nature of the contract between the parties is such that damages
incurred may be substantiated by evidence.

Metrobank vs. CA *

Moral and temperate damages which are not susceptible of pecuniary estimation are not awarded to penalize the petitioner
but to compensate the respondents for injuries suffered as a result of the former’s fault and negligence, taking into account the
latter’s credit and social standing in the banking community, particularly since this is the very first time such humiliation has befallen
the respondent. The amount of such loss need not be established with exactitude, precisely due to their nature.

People vs. Lopez **

Lopez was convicted of murder, the SC modified the award of damages for expenses incurred by the heirs of the
deceased. The heirs, did not have the receipts for the funeral and for the expenses during the wake.
It is true that under Art. 2119 a party is only entitled to compensation if duly proved. However, under Art. 2224, temperate
damages maybe recovered if shown that the party incurred loses surely, but amount cannot be proven with certainty. It was clear
that they did incur funeral expenses (obviously), so the court awarded temperate damages.

GSIS vs. Labung-Daeng **

For the loan obtained by Defendant-spouses from GSIS, the former executed a real estate mortgage on a parcel of land.
The title was given to GSIS. Spouses were able to pay, but GSIS could not find the title of the land. Spouses filed a complaint
against GSIS.
GSIS liable. Because of its failure to return the title on time, the spouses were not able to use such to have another
mortgage for the construction of their house. The damages suffered by them are because of such failure. Temperate damages
were awarded because it is apparent that the spouses suffered financial damage.
The rationale behind temperate damages is precisely that from the nature of the case, definite proof of pecuniary loss
cannot be offered. When the court is convinced that there has been such a loss, the judge is empowered to calculate moderate
damages, rather than let the complainant suffer without redress from the defendant’s wrongful act.

Jarencio, p 350 351

 Temperate damages are awarded in cases where definite proof of pecuniary loss cannot be offered, although the
court is convinced that there has been such a loss.
 Good example of award of temperate damages is injury to one’s commercial credit or to the goodwill of the business.
These instances are normally hard to prove with money.
 Another good example is damages suffered from unfair competition and a check wrongfully dishonored by the bank.

7. Liquidated Damages

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.

Art. 2228. 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.

Lecture:

 Damages agreed upon in a contract in case of breach thereof

 There is no need to prove the amount, only the fact of breach
 The amount can be reduced if unconscionable as determined by the court
 Jison vs. CA *

In any case where 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 and 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 s fixed without regard to the probable damages which might be anticipated as a result of a breach of the terms of the
contract.
Where the indemnity provided for is essentially a mere penalty having for its principal object the enforcement of
compliance with the contract.

Country Bankers vs. CA **

As a general rule, in obligations with a penal clause, the penalty shall substitute the indemnity for damages and the
payment of interest in case of non-compliance. In such case, proof of actual damages suffered by the creditor is not necessary in
order that the penalty may be demanded.
Exceptions to the substitution:

 When there is a stipulation to the contrary

 When the obligor is sued for refusal to pay the agreed penalty; and
 When the obligor is guilty of fraud

RCBC vs. CA **

More than a year after the dater of the unsigned check, RCBC, claiming delay demanded from responded payment of the
value of said check and that of the last two checks, including liquidated damages.
Art. 1170 provides that those who in the performance of their obligations are guilty of delay are liable for damages. The
delay in the performance of the obligation, however, must be either malicious or negligent. In view of the lack of malice or
negligence on the part of the respondents, RCBC’s blind and mechanical invocation of the stipulations of their contract is
unwarranted.

Jarencio, pp 352 – 353

 Liquidated damages, whether intended as indemnity or penalty, shall be equitable reduced if they are iniquitous or
unconscionable.
 It is mere technicality to refuse to lessen the damages to their just amount simply because the stipulation is not
meant to be a penalty.
 Where there is partial or irregular performance in a contract providing for liquidated damages, it can be said that the
court may mitigate the sum stipulated therein since it is to be presumed that the parties only contemplated a total
breach of the contract.

8. Exemplary Damages

Art. 2229. 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.

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 addition 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.
Lecture:

 Requirement for the award of exemplary damages:

1. There is actual, moral, temperate or liquidated damages

2. Crime when there is one or more aggravating circumstances
3. Quasi-delict when the defendant acted with gross negligence
4. Contract/quasi-contract when the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner

 What is the liability of the employer when his employee is convicted of a crime?

When the employee is convicted but cannot pay, the employer is subsidiarily liable to pay only the moral, actual,
temperate or liquidated damages, but not as to the exemplary damages because aggravating circumstance are person to the
accused.

 What happens when aggravating and mitigating circumstances are both present?

There would still be damages because the law does not distinguish.

 In the case of People vs. Francisco, where the father raped his child, there is an illustration of the meaning of wantonness.

 In the case of Chai vs. CA, exemplary damages was awarded when the bank foreclosed on properties that was not
included in the mortgage

Octot vs. Ybanez **

Octot was dismissed pursuant to an administrative order. He was subsequently reinstated, but without backwages. He
was repeated requested to go back to work but he just reiterated his demands on the backwages.
There was no award for exemplary damages. Exemplary damages are available only when the defendant acted with bad
faith.
Requirements for the award of exemplary damages:

1. They may be imposed by way of example or correction only in addition, among others, to compensatory
damages, and cannot e 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
3. The wrongful act must be accompanied with bad faith, and the award would be allowed only if the guilty party
acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.

Particio vs. Leviste *

The amount of moral damages, exemplary or corrective damages may be imposed upon herein private
respondent by way of example or correction for the public good. Exemplary damages are required by public policy to suppress the
wanton acts of the offender. The amount of exemplary damages need not be proved where it is shown that plaintiff is entitled to
either moral, temperate or compensatory damages, as the case may be, although such award cannot be recovered as a matter of
right.

PAL vs. CA **

Pantejo’s flight to Manila from Surigao was cancelled because of the typhoon. He did not have money so he had to stay
with a co-passenger. He found out after that some passengers were paid reimbursement for their expenses for the unexpected
stay, while he was not given any.
The awards for exemplary damages are just and equitable. It is high time that the traveling public is afforded protection
and that the duties of common carriers, be enforced through appropriate sanctions.
The contract of air carriage generates a relation attended with a public duty, and neglect or malfeasance of the carrier’s
employees naturally could give ground for an action for damages.

Industrial Ins. Vs. Bondad **

The bus rammed into a parked jeep driven by Bondad. The jeep in turn rammed into the car insured by Industrial
Insurance. Industrial filed a claim against both the bus and Bondad.
 The SC awarded Bondad with exemplary damages because Industrial’s conduct needlessly dragged innocent bystanders
into an unfounded litigation. The jeep was parked in the service lane, with a flat tire when the bus bumped it. Exemplard damages
are imposed by way of example or correction for the public good, in addition to moral, temperate or compensatory damages.

Jarencio, pp 353 – 356

 Exemplary or corrective damages are such which are given in enhancement merely of the ordinary damages on
account of the wanton, reckless, malicious or oppressive character of the acts complained of.
 Such go beyond the actual damages suffered in the case; they are allowed as a punishment of the defendant and as a
deterrent to others.
 Jurisprudence sets certain conditions when exemplary damages may be awarded:
o They may be imposed by way of example or correction
 But only in addition to compensatory damages
 This cannot be recovered as a matter of right. Determination depends upon the amount of
compensatory damages
o Claimant must first establish his right to moral, temperate, liquidated or compensatory damages.
o Wrongful act must be accompanied by bad faith. Award may only be allowed if the guilty party acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner.
 It need not be alleged, since it is merely incidental or dependent upon the what the court may award as compensatory
damages. It is only considered as additional damages.

9. Attorney’s Fee

Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered,
except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his
interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable
claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;
(8) In actions for indemnity under workmen's compensation and employer's liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be
recovered.

In all cases, the attorney's fees and expenses of litigation must be reasonable.

Lecture:

 2 Concepts of Attorney’s fees

o Retainer agreement between the lawyer and the client (in writing)
o Awarded as an indemnity to the client (which belongs to him and not to the lawyer)

 Requirements for an award of attorney’s fees

1. There must be a stipulation

2. It must fall into one of the cases stated in Article 2208

 Attorney’s fees is the exception, not the general rule

 In the case of Hanil vs. CA, the delay in the resolution of the case due to the appeal by the adverse party which generated
several unforeseen incidents justified the award of P150,000 instead of P50,000 asked for by the plaintiff.

 In the case of Ibaan Rural Bank vs. CA, the SC deleted the award of moral and exemplary damage thereby also deleting
the award of attorney’s fees.

Query:
  B represented A in a case for ownership over a land. A won and the land was adjudicated to him. Can B, as his lawyer file
for an attorney’s lien? NO. He should instead ask the court for an award of attorney’s fees.

 B represented A in a case for recovery of a sum of money. A won and was paid the judgment money. Can B, as his
lawyer, file for an attorney’s lien? YES.

PNB vs. Utility Insurance **

Article 2208 permits recovery of attorney’s fees, among them “where the court deem it just and equitable that attorney’s
fees and expenses of litigation should be recovered” or “when the defendant acted in gross and evident bad faith in refusing to
satisfy the plaintiff’s plainly valid, just and demandable claim.” This giver the court’s discretion in apportioning attorney’s fees.

Badiongan vs. CA *

In redemption of property sold at an extra judicial foreclosure sale, the amount payable is no longer the judgment debt but
the purchase price at the auction sale. In other words, the attorney’s fees are awarded by the trial court should not have been
added to the redemption price because the amount payable is no longer the judgment debt.

Metrobank vs. CA **

Attorney’s charging lien is provided in Section 37, Rule 138 of the Rules of Court. The charging lien here is limited only to
money judgment and not to annulment of a contract or for delivery of real property. A petition for recovery of attorney’s fees, as a
separate civil suit or as an incident in the main action, has to be prosecuted and the allegation therein established as any other
money claim.

Pimentel vs. CA **

The fact that no evidence was presented concerning a lawyer’s professional standing does not necessarily rule out a claim
for attorney’s fees – the absence of evidence on this point will only result in such factor not being considered to enhance or diminish
his claims. Where granted, the court must explicitly state in the body of the decision, and not only in the dispositive portion thereof,
the legal reason for the award of attorney’s fees.

Compania Maritima vs. CA **

There are two concepts of attorney’s fees:

1. Ordinary sense which represent the reasonable compensation paid to a lawyer by his client for the legal services
rendered; and
2. Extraordinary sense which may be awarded by the court as indemnity for damges to be paid by the losing party to the
prevailing party.

In determining the amount of attorney’s fees, the following factors are considered:

1. Time spent and extent of service rendered;

2. The novelty and difficulty of the questions involved;
3. The importance of subject matter;
4. The skill demanded;
5. The probability of losing other employment as a result of the acceptance of the offered case;
6. The amount involved in the controversy and the benefits resulting to the client;
7. The certainty of compensation;
8. The character of employment ; and
9. The professional standing of the lawyer

10. Mitigation of Damages

Art. 1192. In case both parties have committed a breach of the obligation, the liability of the first infractor shall be equitably
tempered by the courts. If it cannot be determined which of the parties first violated the contract, the same shall be deemed
extinguished, and each shall bear his own damages. (n)
Art. 2203. 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.

Art. 2204. In crimes, the damages to be adjudicated may be respectively increased or lessened according to the aggravating or
mitigating circumstances.

Art. 2214. In quasi-delicts, the contributory negligence of the plaintiff shall reduce the damages that he may recover.

Art. 2215. In contracts, quasi-contracts, and quasi-delicts, the court may equitably mitigate the damages under circumstances other
than the case referred to in the preceding article, as in the following instances:

(1) That the plaintiff himself has contravened the terms of the contract;
(2) That the plaintiff has derived some benefit as a result of the contract;
(3) In cases where exemplary damages are to be awarded, that the defendant
acted upon the advice of counsel;
(4) That the loss would have resulted in any event;
(5) That since the filing of the action, the defendant has done his best to lessen
the plaintiff's loss or injury.

Malaysian Airlines vs. CA **

The inordinate amount granted to the respondent calls for the moderating hand of the court, that justice may be tempered
with reason instead of being tainted with appears here to be a ruthless vindictiveness.

Monzon vs. IAC *

Respondent’s refusal to enter into an amicable settlement justifies a higher amount of damages. Life expectancy of a
person fluctuate with several factors justifying the formulation of a generally accepted formula to determine loss of earning capacity.
Reduction of award for loss of earning capacity was not proper, as the payment of one respondent cannot be credited to the other
respondent because the 2 respondents are not joint tortfeasors.

Bricktown vs. Amor Tiera **

While Bricktown acted within its legal right to declare the contracts to sell rescinded or cancelled, the peculiar
circumstances of the case would make it unconscionable to likewise sanction the forfeiture by petitioner of payments made to it by
respondent. It was inequitable, however, to adjudge any interest payment by petitioners on the amount refunded, for respondent
should not be allowed to be free from its own breach.

International School vs. CA **

Awards for moral and exemplary damages cannot be the subject of execution pending appeal.

PROCEDURAL RULES ON DAMAGES

1. Specification of Amount of Damages

Manchester Development Corp vs. CA **

All complaints, petitions, answers and other similar pleadings should specify the amount of damages being prayed for, not
only in the body of the pleading but also in the prayer. And said damages shall be considered in the assessment of the filing fees
in any case. Any pleading that fails to comply with this requirement shall not be accepted nor admitted or shall otherwise be
expunged from the record.

Davao Light vs. Dinopol *

Ng Soon vs. Alday *

The failure to state the rate of interest demanded was not fatal not only because it is the Court which ultimately fix the
same, but also because the Rules of Court speaks of “ the sum claimed, exclusive of interest.” This clearly implies that the
specification of the interest rate is not that indispensable. The amount was definite enough for the Clerk of Court to compute docket
fees available.

Tacay vs. RTC Davao **

 Pineda filed for ejectment against 3 people who occupy certain portions of his land. Petitioners moved to dismiss the
complaint alleging the failure of Pineda to give exact amount of damages prayed for. SC denied the motion to dismiss (inaffirm niya
lower court). The action is not basically for sum of money but for recovery of possession of real property. Such may be prosecuted
without an accompanying claim for damages.

2. Filing Fees for Claims for Damages

Original Development Corp vs. CA **

Original Devt. filed a complaint against HIGC for breach of contract. It did not specify the amount of damages it prayed for,
only indicated that it would only depend on what the court would impose. SC held that the court did not acquire jurisdiction over the
case, for Original did not specify the damages it prayed for. The statement “the amount of which will be proved at the trial” is not
definite enough to support the computation of the proper docket fees. While it is not required that the exact amounts be stated, the
plaintiff must ascertain, in his estimation, the sum he wants and the sums required to determine the amount of such docket and
other fees. The complaint here did not state enough fact and sums to enable the Clerk of Court to compute the docket fees payable
and left the judge to guess. The requirement in Circular No.7 has not been altered (Circular No. 7 is the ruling in Manchester).
What has been revised there is the rule that subsequent amendment of the complaint or similar pleading will not vest
jurisdiction on the Court, much less the payment of the docket fee based on the amount sought in the amended pleading.
Some basic rules set in this case:

1. Where a complaint for money did not specify the amounts being claimed. Here the Court may allow amendment
of the pleading and payment of proper fees.
2. Where the pleading specified the amount of every claim but the fees paid are insufficient. Here, the defect may
be cured and the Court may take cognizance of the action by payment of the docket fees.

In both cases, prescription has not yet set, kaya the court still allows payment.

3. Where the action involves real property and a related claim for damages and the prescribed fees for such have
been paid but the amounts of the unrelated damges were not specified. The Court acquires jurisdiction over the
case, but not in the damages unspecified. Here, the court has two options:
a. It may expunge the claims for damages; or
b. Allow the amendment of the complaint so as to allege the precise amount of each item of damages
within the prescriptive period.

In this case, none of the requisites have been complied with. The amount of any claim for damages, arising on or before
the filing of the complaint or any pleading should be specified. The exception contemplated as to claims not specified or to claims
although specified are left for the court to determine is limited only to any damages that may arise after the filing of the complaint or
similar pleading. It is only then that it is not possible for the claimant to specify nor speculate the amount thereof.

Phil. Pryce Assurance vs. CA **

Gregoco filed a claim against Phil Pryce, who acted as a guarantor for Sagum Inc. It filed a third party complaint to
Sagum, I think, but did not pay the docket fees for such third party complaint.
The SC said that when the third party complaint is filed but without the payment of the prescribed docket fees, such third
party complaint will be treated as a mere scrap of paper. A third-party complaint is one of the pleadings for which Clerks of Court of
Regional Trial Courts are mandated to collect docket fees pursuant to Section 5, Rule 141 of the Rules of Court. The record is
bereft of any showing tha(t) the appellant paid the corresponding docket fees on its third-party complaint. Unless and until the
corresponding docket fees are paid, the trial court would not acquire jurisdiction over the third-party complaint (Manchester
Development Corporation vs. Court of Appeals, 149 SCRA 562). The third-party complaint was thus reduced to a mere scrap of
paper not worthy of the trial court's attention. Hence, the trial court can and correctly set the case for pre-trial on the basis of the
complaint, the answer and the answer to the counterclaim.
It is really irrelevant in the instant case whether the ruling in Sun Insurance Office, Ltd. (SIOL) v. Asuncion or that in
Manchester Development Corp. v. C.A.15 was applied. Sun Insurance and Manchester are mere reiteration of old jurisprudential
pronouncements on the effect of non-payment of docket fees.16 In previous cases, we have consistently ruled that the court cannot
acquire jurisdiction over the subject matter of a case, unless the docket fees are paid.
Some of the basic rules laid down by the case:

1. It is not simply the filing of the complaint or, appropriate initiatory pleading, but the payment of the prescribed docket fee,
that vests a trial court with jurisdiction over the subject-matter or nature of the action. Where the filing of the initiatory pleading is not
accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time, but in no case beyond
the applicable prescriptive or reglementary period.
2. The same rule applies to permissive counterclaims, third party claims and similar pleadings, which shall not be
considered filed until and unless the filing fee prescribed therefor is paid. The court may also allow payment of said fee within a
prescriptive or reglementary period.
 3. Where the trial court acquire jurisdiction over a claim by the filing of the appropriate pleading and payment of the
prescribed filing fee, but subsequently, the judgment awards a claim not specified in the pleading, or if specified the same has not
been left for determination by the court, the additional film[,, fee therefor shall constitute a lien on the judgment. It shall be the
responsibility of the clerk of court or his duly authorized deputy to enforce said lien and assess and collect the additional fee.

It should be remembered that both in Manchester and Sun Insurance, plaintiffs therein paid docket fees upon filing of their
respective pleadings, although the amounts tendered were found to be insufficient considering the amounts of the reliefs sought in
their complaints. In the present case, petitioner did not and never attempted to pay the requisite docket fee. Neither is there any
showing that petitioner even manifested to be given time to pay the requisite docket fee, as in fact it was not present during the
scheduled pre-trial on December 1, 1988 and then again on February 1, 1989. Perforce, it is as if the third-party complaint was
never filed.

Alday vs. FGU Insurance **

FGU filed a complaint against Alday for collection of premiums and cash advances. Alday filed a compulsory counterclaim
alleging her rights to the payments made to her. FGU moved to dismiss the compulsory counterclaim on ground of non-payment of
docket fees. The SC held that although the pleading was labeled as compulsory counterclaim, looking at the nature of the
allegations, it is merely permissive since her cause of action is not based on the Contract of Agency disputed in the main cause of
action. When the counterclaim is permissive, there is still the need for payment of docket fees, for the courts to acquire jurisdiction
over the case.
Jurisprudence sets the rule for this:

1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee,
that vests a trial court with jurisdiction over the subject-matter or nature of the action. Where the filing of the initiatory pleading is not
accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but in no case beyond
the applicable prescriptive or reglementary period.
2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which shall not be
considered filed until and unless the filing fee prescribed therefor is paid. The court may allow payment of said fee within a
reasonable time but also in no case beyond its applicable prescriptive or reglementary period.
3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the
prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if specified the same has been
left for determination by the court, the additional filing fee therefor shall constitute a lien on the judgment. It shall be the
responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the additional fee.

Soriano vs. CA **

There is a suit between Soriano and respondents. During the case, respondents filed a supplemental complaint. Soriano
moved to dismiss it alleging failure to pay the correct filing fee on their amended complaint.
SC held that when insufficient filing fees were initially paid, there was no intention to defraud the government. Manchester
ruling here does not apply. Respondents were in good faith because what they initially paid was the amount assessed by the Clerk
of Court. Since they did not intend to defraud the government by paying insufficient docket fees, a more liberal interpretation of the
rule should apply in this case.
In Ng Soon vs. Alday, initial payment of the filing fees corresponding to the estimated amount of the claim is allowed
subject to the adjustment of what may be proved later. If what is proved is less than what is claimed, then a refund may be made; if
more additional fees will be exacted.

RA 7691 amending BP 129

SC Circular No. 21-99

SC Circular No. 57-27

CASES FOR REVIEW

Sanitary Laundry vs. CA

Benguet Electric vs. CA

People vs. Lopez

People vs. Temanel