G.R. No. L-27033 | October 31, 1969

Whether the award of attorneys' fees which totals P51,961.63, i.e.

25% of the total principal
indebtedness of P207,846.51 (exclusive of interest) is exorbitant and unconscionable.

To be borne in mind is that the attorneys' fees here provided is not, strictly speaking, the attorneys' fees
recoverable as between attorney and client spoken of and regulated by the Rules of Court. Rather, the
attorneys' fees here are in the nature of liquidated damages and the stipulation therefor is aptly called a
penal clause. It has been said that so long as such stipulation does not contravene law, morals, or public
order, it is strictly binding upon defendant. The attorneys' fees so provided are awarded in favor of the
litigant, not his counsel. It is the litigant, not counsel, who is the judgment creditor entitled to enforce
the judgment by execution.

The governing law then is Article 2227 of the Civil Code, viz.: "Liquidated damages, whether intended as
an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable." For this
reason, we do not really have to strictly view the reasonableness of the attorneys' fees in the light of
such factors as the amount and character of the services rendered, the nature and importance of the
litigation, and the professional character and the social standing of the attorney. We do concede,
however, that these factors may be an aid in the determination of the iniquity or unconscionableness of
attorneys' fees as liquidated damages.

May the attorneys' fees (P51,961.63) here granted be tagged as iniquitous or unconscionable? Upon the
circumstances, our answer is in the negative. Plaintiff's lawyers concededly are of high standing. More
important is that this case should not have gone to court. It could have been easily avoided had
defendant been faithful in complying with his obligations. It is not denied that the rawhide was
converted into leather and sold by defendant. He raises no defense. In fact, he did not even answer the
complaint in the lower court, and was thus declared in default. Nor does he deny the principal liability.
Add to all these the fact that the writ of attachment issued below upon defendant's properties yielded
no more than P400 and the picture is complete. The continued maintenance by defendant of the suit is
plainly intended for delay. The attorneys' fees awarded cannot be called iniquitous or unconscionable.

In the very recent case of Universal Motors Corporation vs. Dy Hian Tat (1969), 28 SCRA 161, 170, we
allowed attorneys' fees in the form of liquidated damages at the rate of 25% of the total amount of the
indebtedness. Here, the trial court has already reduced the attorneys' fees from the stipulated 25% "of
the total amount involved, principal and interest, then unpaid" to only 25% of the principal amount due.
There is no reason why such judgment should be disturbed.

G.R. NO. 148753 | JULY 30, 2004

The attorney’s fees were equitably reduced from 10% to 1% of the total indebtedness. Since these are
not integral part of the cost of borrowing, but arise only when collecting upon the Notes becomes
necessary. The purpose of these fees is not to give respondent a larger compensation for the loan than
the law already allows, but to protect it against any future loss or damage by being compelled to retain
counsel- in-house or not, to institute judicial proceedings for the collection of its credit. As such Court
has the power to determine their reasonableness based on quantum meruit and to reduce the amount
thereof is excessive. Since there was overcollection, PNB was ordered to refund the spouses instead.

G.R. NO. 138677 | FEBRUARY 12, 2002

The trial court held, among others, the borrowers were liable for a 3% per month penalty (instead of
5%) and 10% of the total amount of the indebtedness for attorney’s fee, in addition to the principal
loan. Petitioners appealed stating that such amount is unconscionable

ATTORNEY’S FEES: Petitioners next assail the award of 10% of the total amount of indebtedness by way
of attorney’s fees for being grossly excessive, exorbitant and unconscionable vis-a-vis the time spent and
the extent of services rendered by counsel for the bank and the nature of the case. Bearing in mind that
the rate of attorney’s fees has been agreed to by the parties and intended to answer not only for
litigation expenses but also for collection efforts as well, the Court, like the appellate court, deems the
award of 10% attorney’s fees to be reasonable.

G.R. NO. 139290 | NOVEMBER 11, 2005

Whether it was improper for the appellate court to have deleted the award of attorney’s fees to
petitioner despite the express stipulation therefor contained in the Deed.

Yes. The award of attorney’s fees is the exception rather than the rule, and it must have some factual,
legal and equitable bases. The stipulation on attorney’s fees contained in the Deed constitutes what is
known as a penal clause. The award of attorney’s fees by the lower court, therefore, is not in the nature
of an indemnity but rather a penalty in the form of liquidated damages in accordance with the contract
between petitioner and Roblett. Such a stipulation has been upheld by this Court as binding between
the parties so long as it does not contravene the law, morals, public order or public policy. Hence, it was
improper for the appellate court to have deleted the award of attorney’s fees to petitioner despite the
express stipulation therefor contained in the Deed. Nevertheless, the courts still have the power to
educe the amount of attorney’s fees whether intended as an indemnity or a penalty, if the same is
iniquitous or unconscionable.

The penalty in this case was in a form of attorney’s fees. While the Court has upheld the reasonableness
of penalties in the form of attorney’s fees consisting of ten percent (10%) of the principal debt plus
interest, it has to make an exception in the instant case since interest alone is already thrice as much as
the principal debt, and which attorney’s fees would now exceed the principal amount, thus making the
attorney’s fees manifestly exorbitant. The principal amount in the case at bar is P11,775,611.35. At the
time the complaint was filed in 1990, the amount had already ballooned to P29,804,831.03 inclusive of
interest and penalty charges. Today, the interest alone runs roughly to P37 million, which is thrice as
much as the principal debt. Consequently, ten percent (10%) of the principal debt plus interest and
penalty charges would definitely exceed the principal amount, thus making the attorney’s fees
manifestly exorbitant. Accordingly, we reduce the same to ten percent (10%) of the principal debt only.

G.R. NO. 160026 | DECEMBER 10, 2007

Whether the CA erred in failing to reduce the attorney’s fees to below 10%.

With regard to the award of attorney’s fees, the same is recoverable because petitioners signified their
adherence to such an arrangement when they availed of the Unicard credit card. The 25% attorney’s
fees was, however, excessive, thus, the reduction of the amount was appropriate. Thus, the attorney’s
fees should be fixed below 10%.

G.R. No. 165608 | December 13, 2007

Whether there was basis for the imposition of the award of attorney’s fees.

Philphos claims attorney’s fees under Article 2208 of the Civil Code which provides that attorney’s fees
may be granted where “the defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff’s plainly valid, just and demandable claim.” Suffice it to say the evidence does not bear out any
gross and evident bad faith on the part of Kamalig.

As to the Court of Appeals’ award of attorney’s fees to Kamalig, it appears that the award was granted
under the auspices of Art. 2208, par. (4) which provides that attorney’s fees may be recovered “in case
of a clearly unfounded civil action or proceeding against the plaintiff”—or in this case, against then
defendant Kamalig—since the appellate court reasoned that Kamalig was compelled to hire the services
of a lawyer to defend itself. In this case, overwithdrawals of fertilizer products in Iloilo had been proven,
showing that indeed there was cause for filing of a complaint against Kamalig.

Kamalig is thus not entitled to attorney’s fees. The general rule is that attorney’s fees cannot be
recovered as part of damages because no premium should be placed on the right to litigate. In short, the
grant of attorney’s fees as part of damages is the exception rather than the rule, and counsel’s fees are
not awarded every time a party prevails in a suit.

G.R. No. 170633 | October 17, 2007

Whether the award of attorney’s fees is proper

Yes. Attorney's fees in the sum of P50,000.00 plus P2,000.00 per counsel's appearance in court, the
same being deemed just and equitable considering that by reason of defendants' breach of their
obligation under the subject contract, plaintiff was constrained to litigate to enforce its rights and
recover for the damages it sustained, and therefore had to engage the services of a lawyer.

It is well-settled that no premium should be placed on the right to litigate and not every winning party is
entitled to an automatic grant of attorney’s fees. The party must show that he falls under one of the
instances enumerated in Article 2208 of the Civil Code. In the instant case, however, the Court finds the
award of attorney’s fees proper, considering that petitioner MCC’s unjustified refusal to pay has
compelled respondent Ssangyong to litigate and to incur expenses to protect its rights.

G.R. No. 101706 | September 23, 1992

Whether plaintiff is entitled to attorneys fees

The award for attorneys fees in the amount of P20,000.00 is likewise proper. Petitioner was forced to
litigate in court for the recovery of actual damages incurred by him because the private respondent
ignored petitioners’ letters demanding that they return to the area and perform their obligations.

361. LAZATIN v. TWANO (SET 21)
G.R. NO. L-12736 | JULY 31, 1961

Whether the award for attorney’s fees was proper

Yes. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs,
cannot be covered, except: . . .

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff.
x x x x x x x x x
(11) In any other case where the court deems it just and equitable that attorney's fees and
expenses of litigation should be recovered." (Art. 2208, Civil Code).

Defendants' counterclaim for the recovery of attorney's fees is based on paragraph 4 of the cited
provision, for legal services rendered in defending the main suit. There is no showing in the decision
appealed from that plaintiffs' action is "clearly unfounded". Plaintiffs-appellants' complaint was not
dismissed because the facts alleged therein were found untrue, but on purely technical grounds; the
special defenses of prescription of the action and res adjudicata. While it may be hard to believe that
the plaintiff had labored under the impression that the matters involved in his complaint had not been
adjudicated in the previous litigation between the same parties (Civil Case No. 213 CFI Manila), because
plaintiff himself was a lawyer such error of judgment on his part would not justify the inference that the
action was "clearly unfounded". As aptly observed by appellants' counsel, defenses as the one
interposed by appellee in their counterclaim "raise questions of law not always of obvious and easy
solution." While it may appear also that the move was a scheme to prevent the defendants-appellees
from reaping the benefits of the final judgment rendered in their favor in said case CA- G.R. No. 5433-R,
still one cannot nullify, without cause, the good and honest motive, which should be presumed, when a
litigant goes to court for the determination of his alleged right.

Withal, and considering the fact that defendants-appellant lees were drawn into this litigation by
plaintiff-appellant and were compelled to hire an attorney to protect and defend them, and taking into
account the work done by said attorney, as reflected in the record, throughout the proceedings, we
deem it just and equitable to award at attorney's fees for defendants-appellees. The sum of P3,000.00
adjudicated by the trial court, is reasonable under the circumstances (par. 11 Art. 2208, Civil Code).

G.R. NO. 165935 | FEBRUARY 8, 2012

1. Whether the award for exemplary damages was proper
2. Whether the respondent is entitled to attorney’s fees in the concept of damages and expenses of

1. Yes. The Court agrees with the Court of Appeals that petitioner BMC is liable to respondent for
exemplary damages, which are imposed by way of example or correction for the public good in view of
petitioner’s act of preventing respondent from being deployed on the ground that he was not yet
declared fit to work on the date of his departure, despite evidence to the contrary. Such act, if
tolerated, would prejudice the employment opportunities of our seafarers who are qualified to be
deployed, but prevented to do so by a manning agency for unjustified reasons. Exemplary damages are
imposed not to enrich one party or impoverish another, but to serve as a deterrent against or as a
negative incentive to curb socially deleterious actions. In this case, petitioner should be held liable to
respondent for exemplary damages in the amount of P50,000.00, following the recent case of Claudio S.
Yap v. Thenamaris Ship’s Management, et al., instead of P10,000.00

2. Yes. The Court also holds that respondent is entitled to attorney’s fees in the concept of damages and
expenses of litigation. Attorney's fees are recoverable when the defendant's act or omission has
compelled the plaintiff to incur expenses to protect his interest. Petitioners’ failure to deploy
respondent based on an unjustified ground forced respondent to file this case, warranting the award of
attorney’s fees equivalent to ten percent (10%) of the recoverable amount.

G.R. NO. L-38037 | JANUARY 28, 1974

Enervida filed a complaint against de la Torre over ownership of a parcel of land without a cause of
action or capacity to sue. Whether Enervida is liable for attorney’s fees

As the case at bar is clearly an unfounded civil action, the respondents may recover attorney's fees. In
Deogracias Malonzo vs. Gregoria Galang,

this Court, applying the above doctrine, said:

As to attorney's fees, the award is correct and proper, in view of the finding of the trial court and
of the Court of Appeals that petitioner's action against respondents is clearly unfounded, since
Article 2208, par. (4), of the New Civil Code authorizes the recovery of attorney's fees "in case of a
clearly unfounded civil action or proceeding against the plaintiff." This provision applies equally in
favor of a defendant under a counter-claim for attorney's fees (as in this case), considering that a
counter-claim is a complaint by the defendant against the original plaintiff (Pongos vs. Hidalgo
Enterprises, Inc., et al., 84 Phil. 499) wherein the defendant is the plaintiff and the original plaintiff
the defendant.

G.R. NO. L-19407 | NOVEMBER 23, 1966

Soberano was a passenger of a bus owned by Manila Railroad and which met an accident, causing her
injuries. Whether Manila Railroad is liable for attorney’s fees

No. Attorney's fees are not recoverable if claimants refuse settlement of case. It will be observed that
the defendant companies offered to settle the case by offering to the appellants the sum of P5,000.
Appellants however, rejected the offer and proceeded to court to recover damages in the total sum of
P76,757.76. It was not, therefore, the defendant companies that compelled appellants to litigate or to
incur expenses in connection with the litigation instituted by them. Appellants went to court after
rejecting the defendant companies' offer of settlement. The latter cannot likewise be considered to
have acted in gross and evident bad faith in not satisfying the claim of the appellants, because, as the
lower court puts it, the appellants "have asked for too much", and the "defendant was justified in
resisting this action."

G.R. NO. L-21879 | SEPTEMBER 29, 1967

In a case where there is failure to pay tax, a warrant for distraint and levy was issued against the
taxpayer. In turn, TP sued the collector in his personal capacity. Whether the taxpayer is liable to the
collector for damages

The amount of attorney's fees, on the other hand, is addressed to the sound discretion of the court. It
may be awarded along with expenses of litigation, other than judicial costs, in cases where the court
deems it just and equitable under the circumstances of the case. And when as in this case, the
defendant public officer was sued in his private capacity for acts done in the performance of official duty
required by law, and was forced to employ the services of private counsel to defend his rights, it is but
proper that attorney's fees be charged against the plaintiff.

Nominal damages may also be adjudicated. We believe the award of P2,000.00 attorney's fees and
P100.00 nominal damages, is just and equitable in the premises.

G.R. NO. L-22973 | JANUARY 30, 1968

In a foreclosure and subsequent sale in utter disregard of the agreement, whether or not PNB may be
held liable to plaintiff Corporation for damages and attorney’s fees

Herein appellant's claim for moral damages, however, seems to have no legal or factual basis. Obviously,
an artificial person like herein appellant corporation cannot experience physical sufferings, mental
anguish, fright, serious anxiety, wounded feelings, moral shock or social humiliation which are basis of
moral damages. A corporation may have a good reputation which, if besmirched, may also be a ground
for the award of moral damages. The same cannot be considered under the facts of this case, however,
not only because it is admitted that herein appellant had already ceased in its business operation at the
time of the foreclosure sale of the chattels, but also for the reason that whatever adverse effects of the
foreclosure sale of the chattels could have upon its reputation or business standing would undoubtedly
be the same whether the sale was conducted at Jose Panganiban, Camarines Norte, or in Manila which
is the place agreed upon by the parties in the mortgage contract.

But for the wrongful acts of herein appellee bank and the deputy sheriff of Camarines Norte in
proceeding with the sale in utter disregard of the agreement to have the chattels sold in Manila as
provided for in the mortgage contract, to which their attentions were timely called by herein appellant,
and in disposing of the chattels in gross for the miserable amount of P4,200.00, herein appellant should
be awarded exemplary damages in the sum of P10,000.00.

The circumstances of the case also warrant the award of P3,000.00 as attorney's fees for herein
appellant (Mambulao).

The principle that courts should reduce stipulated attorney's fees whenever it is found under the
circumstances of the case that the same is unreasonable, is now deeply rooted in this jurisdiction to
entertain any serious objection to it.

Since then this Court has invariably fixed counsel fees on a quantum meruit basis whenever the fees
stipulated appear excessive, unconscionable, or unreasonable, because a lawyer is primarily a court
officer charged with the duty of assisting the court in administering impartial justice between the
parties, and hence, the fees should be subject to judicial control. Nor should it be ignored that sound
public policy demands that courts disregard stipulations for counsel fees, whenever they appear to be a
source of speculative profit at the expense of the debtor or mortgagor.

And it is not material that the
present action is between the debtor and the creditor, and not between attorney and client. As court
have power to fix the fee as between attorney and client, it must necessarily have the right to say
whether a stipulation like this, inserted in a mortgage contract, is valid.

In determining the compensation of an attorney, the following circumstances should be considered: the
amount and character of the services rendered; the responsibility imposed; the amount of money or the
value of the property affected by the controversy, or involved in the employment; the skill and
experience called for in the performance of the service; the professional standing of the attorney; the
results secured; and whether or not the fee is contingent or absolute, it being a recognized rule that an
attorney may properly charge a much larger fee when it is to be contingent than when it is not.

the stipulation in the mortgage contract earlier quoted, it appears that the agreed fee is 10% of the total
indebtedness, irrespective of the manner the foreclosure of the mortgage is to be effected. The
agreement is perhaps fair enough in case the foreclosure proceedings is prosecuted judicially but,
surely, it is unreasonable when, as in this case, the mortgage was foreclosed extra-judicially, and all that
the attorney did was to file a petition for foreclosure with the sheriff concerned. It is to be assumed
though, that the said branch attorney of the PNB made a study of the case before deciding to file the
petition for foreclosure; but even with this in mind, we believe the amount of P5,821.35 is far too
excessive a fee for such services. Considering the above circumstances mentioned, it is our considered
opinion that the amount of P1,000.00 in favor of PNB would be more than sufficient to compensate the
work aforementioned.

GR No. 128066 | June 19, 2000

Breach of contract due to a 3
party, whether Purefoods is liable for damages

YES. Purefoods was found to have acted in bad faith. This Court has awarded in the past moral
damages to a corporation whose reputation has been besmirched. In the instant case, respondent
FEMSCO has sufficiently shown that its reputation was tarnished after it immediately ordered
equipment from its suppliers on account of the urgency of the project, only to be canceled later. SC
however reduced the award from 2M to 1M as moral damages are never intended to enrich the
recipient. Likewise, the award of exemplary damages by way of example for the public good is
excessive and should be reduced to 100k.

The attorney’s fees equivalent to 20% of the total amount due is likewise awarded to FEMSCO. (Court
did not explain why, though.)

GR No. 127358 | GR No. 127449 | March 31, 2005

Whether in this case of declaration of nullity on grounds of psychological incapacity, moral and
exemplary damages and attorney’s fees are entitled to petitioner

NO. The award by the trial court of moral damages is based on Articles 2217 of the Civil Code, which
states that 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. Article 2219 enumerates the cases in which moral damages may
be recovered, one of them Article 21, which states that any person who wilfully causes loss or injury to
another in a manner that is contrary to morals, good customs or public policy shall compensate the
latter for the damage.

By declaring the petitioner as psychologically incapacitated, the possibility of awarding moral damages
on the same set of facts was negated. The award of moral damages should be predicated, not on the
mere act of entering into the marriage, but on specific evidence that it was done deliberately and with
malice by a party who had knowledge of his or her disability and yet willfully concealed the same. No
such evidence appears to have been adduced in this case. Since the grant of moral damages was not
proper, it follows that the grant of exemplary damages cannot stand since the Civil Code provides that
exemplary damages are imposed in addition to moral, temperate, liquidated or compensatory

Regarding Attorney’s fees, Art. 2208 of the Civil Code authorizes an award of attorney’s fees and
expenses of litigation, other than judicial costs, when as in this case the plaintiff’s act or omission has
compelled the defendant to litigate and to incur expenses of litigation to protect her interest and where
the Court deems it just and equitable that attorney’s fees and expenses of litigation should be

The acts or omissions of petitioner which led the lower court to deduce his psychological incapacity, and
his act in filing the complaint for the annulment of his marriage cannot be considered as unduly
compelling the private respondent to litigate, since both are grounded on petitioner’s psychological
incapacity, is a mental incapacity causing an utter inability to comply with the obligations of marriage.
Hence, neither can be a ground for attorney’s fees and litigation expenses. Furthermore, since the
award of moral and exemplary damages is no longer justified, the award of attorney’s fees and expenses
of litigation is left without basis.

G.R. No. L-49390 | January 28, 1980

Mrs. Ribaya, sold jewelry to Bautista, who paid in check that were subsequently dishonored. Whether
Mrs. Ribaya is entitled to moral and exemplary damages

Yes. The respondent court is incorrect in its narrow view that Mrs. Ribaya’s failure to use in her
testimony the precise legal terms or "sacramental phrases" of "mental anguish, fright, serious anxiety,
wounded feelings or moral shock" and the like justifies the denial of the claim for damages. It is
sufficient that these exact terms have been pleaded in the complaint and evidence has been adduced,
as cited above, amply supporting the averments of the complaint. Indeed, Mrs. Ribaya vividly portrayed
in simple terms the moral shock and suffering she underwent as a result of respondents' wanton abuse
of her good faith and confidence. Her testimonial evidence to the effect that she suffered "extremely"
and that for three months she could not sleep was a clear demonstration of her physical suffering,
mental anguish and serious anxiety and similar injury, resulting from respondents' malevolent acts that
show her to be clearly entitled to moral damages.

Petitioners having established the moral damages, are entitled in addition thereto, to exemplary
damages. The wantonness and malevolence through which respondents defrauded petitioners,
deceitfully incurring and then evading settlement of their just liability certainly justifies the award of
exemplary damages by way of example and correction for the public good and also to serve as a
deterrent to the commission of similar misdeeds by others, even if the transaction were viewed as a
breach of civil contract.

In Pan Pacific Company (Phil.) vs. Phil. Advertising Corporation, the Court awarded moral and exemplary
damages, in addition to other kinds of damages, to the plaintiff upon ample demonstration that the
defendant therein, in utter disregard of the contractual rights of therein plaintiff, had refused
deliberately and wantonly to pay the latter what was justly due under their contract for installation of
bowling alleys and for taking advantage of the plaintiff's good faith, "notwithstanding that the
defendant had promised to pay the balance of the price of the bowling alleys. Defendant, taking
advantage of the plaintiff's good faith, requested a deferment of the payment until the installation shall
have been completed; but the installation having been completed, defendants under one pretext or
another, refused without just cause to pay what is due the plaintiff." Here, of course, there was more
than wanton refusal to pay a plainly valid and just contractual debt, but a malicious defraudation and
gross abuse of petitioners' good faith, whereby petitioners were wantonly "paid" with bouncing
postdated checks and besides not being paid what was due them, had to undergo trauma and travail to
redeem with their own and borrowed funds from the pawnshops some of the jewelries in order to
return them to their owners.

Mrs. Ribaya is awarded moral and exemplary damages equivalent to 25% of the principal sum of
P125,460.79 adjudged in her favor by the lower court. With costs.

G.R. No. L-37633 | January 31, 1975

In a case of negligence where a vehicular collision caused the death of a person, whether the damages
were correctly awarded

Yes. Moral damages compensate for mental anguish, serious anxiety and moral shock suffered by the
victim or his family as the proximate result of the wrongful act, and they are expressly recoverable
where a criminal offense result in physical injuries as in the instant case before, which in fact culminated
in the death of the victim.

The determination of the amount which would adequately compensate the victim or his family in a
criminal case of this nature is left to the discretion of the trial judge whose assessment will not be
disturbed on appeal unless there is a manifest showing that the same is arbitrary or excessive, for it
has been said that "(T)here can be no exact or uniform rule for measuring the value of a human life
and the measure of damages cannot be arrived at by precise mathematical calculation, but the
amount recoverable depends on the particular facts and circumstances of each case."

With respect to the exemplary damages awarded by the trial court, the same are justified by the fact
that the herein appellant without having been issued by competent authority a license to drive a motor
vehicle, willfully operated a BHP dump truck and drove it in a negligent and careless manner as a result
of which he hit a pedestrian who died from the injuries sustained by him. Exemplary damages are
corrective in nature and are imposed by way of example or correction for the public good (Art. 2229,
Civil Code), and the situation before us calls for the imposition of this kind of damages to deter others
from taking into their hands a motor vehicle without being qualified to operate it on the highways
thereby converting the vehicle into an instrument of death.

409. TAN KAPOC V. MESA 134 SCRA 231

G.R. No. L-21151 | June 26, 1968

In a case where injuries were inflicted upon a passenger of a jeepney, whether the owner and operator
of the jeepney is liable for exemplary damages and attorney’s fees

No only as to the exemplary damages. The Civil Code provides that "exemplary or corrective damages
are imposed, by way of example or correction for the public good" (Art. 2229); and that in contracts "the
Court may award exemplary damages if the defendant acted in wanton, fraudulent, reckless, oppressive
or malevolent manner" (Art. 2232).

Appellant is correct in pointing out that the act referred to in Art. 2232 must be one which is
coetaneous with and characterizes the breach of the contract on which the suit is based, and not one
which is subsequent to such breach and therefore has no causal relation thereto, such as the herein
defendant's failure to placate the sufferings of the plaintiff.

Appellant relies on the case of Rotea vs. Halili, where this Court held: According to the rule adopted by
many courts, a principal or master can be held liable for exemplary or punitive damages based upon
the wrongful act of his agent or servant only where he participated in the doing of such wrongful act
or has previously authorized or subsequently ratified it with full knowledge of the facts. Reasons given
for this rule are that since damages are penal in character, the motive authorizing their infliction will
not be imputed by presumption to the principal when the act is committed by an agent or servant, and
that since they are awarded not by way of compensation, but as a warning to others, they can only be
awarded against one who has participated in the offense, and the principal therefore cannot be held
liable for them merely by reason of wanton, oppressive or malicious intent on the part of the agent.

It is difficult to conceive how the defendant in a breach of contract case could be held to have acted in a
wanton, fraudulent, reckless, oppressive or violent manner within the meaning of Article 2232 for
something he did or did not do after the breach, which had no causal connection therewith. The law
does not contemplate a vicarious liability on his part: the breach is his as party to the contract, and so if
he is to be held liable at all for exemplary damages by reason of the wrongful act of his agent, it must be
shown that he had previously authorized or knowingly ratified it thereafter, in effect making him a co-
participant. In this case, however, there is nothing to show previous authority or subsequent ratification
by appellant insofar as the recklessness of the driver was concerned. The mere statement that the
defendant failed, even refused, to placate the suffering of the plaintiff, necessitating the filing of the
action, is too tenuous a basis to warrant the conclusion that the defendant approved of the wrongful act
of his servant with full knowledge of the facts.

It is not enough to say that an example should be made, or corrective measures employed, for the
public good, especially in accident cases where public carriers are involved. For the causative
negligence in such cases is personal to the employees actually in charge of the vehicles, and it is they
who should be made to pay this kind of damages by way of example or correction, unless by the
demonstrated tolerance or approval of the owners they themselves can be held at fault and their fault
is of the character described in Art.2232. Otherwise there would be practically no difference between
their liability for exemplary damages and their liability for compensatory damages, which needs no
proof of their negligence since the suit is predicated on breach of contract and due diligence on their
part does not constitute a defense.

The award for exemplary damages is deleted and the attorney's fees affirmed.