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The Code Commission explains that:
The present code (Spanish civil code then
in force) has but a few general principles on the
measure of damages. Moreover, practically the only
damages in the present Code are compensatory
ones and those agreed upon in a penal clause.
Moral damages are not expressly recognized in the
present Civil Code, although in one instance injury
to reputation - such damages have been allowed by
the Supreme Court of Spain, and some Spanish
jurist believe that moral damages are allowable. The
Supreme Court of the Philippines had awarded
moral damages in few cases.
The measure of damages is of far reaching
importance in every legal system. Upon it depends
the just compensation for every wrong or breach of
The Commission therefore, deemed it
advisable to include a Title on Damages, which
embodies some principles of the American law on
the subject. The American courts have developed
abundant rules and principles upon the adjudication
of damages.
The provisions on Damages are NEW
except articles 2200, 2201, 2209, and 2212.
The fundamental principle of the law on
damages is that one injured by a breach of a
contract and by a wrongful or negligent act or
omission shall have a fair and just compensation,
commensurate with the loss sustained as a
consequences of the defendants act.
General rule:
Actual pecuniary compensation, whether the
action is based on a contract or in tort
- Generally, the damages awarded should
be equal to, and precisely commensurate with the
injury sustained.
- Recovery of damages are framed with
reference to just rights of BOTH PARTIES, not
merely what may be right for an injured person to
receive, but also what is just to compel the other
party to pay, to accord just compensation for the
As used in the Civil Code. Damages may
mean either:
1. The injury or loss caused to another by the
violation of his legal rights; or
2. The sum of money which the law awards or
imposes as pecuniary compensation,
recompense, or satisfaction for a injury done
or wrong sustained as a consequence either
of a breach of contractual obligation or a
tortious act.

Case: Ong vs. Court of Appeals January 21, 1999
The SC held that the fundamental principle
of the law on damages is: that one injured by a
breach of contract or by a wrongful or negligent act
or omission shall have a fair and just compensation,
commensurate with the loss sustained as a
consequence of the defendants act.
Damages are awarded to compensate the
plaintiff for the loss or injury that he suffered, not to
enrich him, or to impose a penalty on the wrongdoer.
Law on damages-where found.
The law governing damages is found in
articles 2195 to 2235.
Damage distinguish from Injury
Injury refers to the illegal invasion of a legal
right thus the legal wrong to be redressed.
Damage is the lost, hurt, or harm which
results from the injury or the amount of money to be
awarded by the court to compensate for the loss or
injury suffered.
Principle of damnum absque injuria
damage without injury
Case: Farolan vs. SOLMAC March 13, 1991
The Bureau of Customs withheld the release
of the importation of Solmacs plastic products
considering that the shipment was different from
what was authorized and importation of which is
restricted, under LOI no. 658-B.
Thereafter, Solmac filed the action for
mandamus and injunction with the trial court, which

ordered Farolan and Parayno to release the
The CA ordered Farolan and Parayno
solidarily liable in their personal capacity to pay
Solmac temperate damages, exemplary.
WON they are liable for damages
The SC set aside and annulled the decision
of the CA. It further ruled that when a public officer
takes his oath of office, he binds himself to perform
the duties of his office faithfully and to use
reasonable skill and diligence and to act primarily for
the benefit of the public. The petitioners acted in
good faith in not immediately releasing the imported
These cellophane products were competing
with locally manufactured products. Hence, the
importation of which is restricted. Petitioners could
not be said to have acted in bad faith in not
immediately releasing the imported goods without
obtaining the clarificatory guidelines. As public
officers, they had the duty to see to it that the law
there tasked to implement was faithfully complied
Whatever damages they may have caused
is in the nature of damnum absque injuria. The law
affords no remedy for damages resulting from an act
that does not amount to a legal wrong.
General principles of recovery
To warrant recovery; requisites
-there must be both a right of action
-a wrong inflicted by the defendant
-a damage resulting to the plaintiff

1. An action for recovery of damages for
the commission of an injury to a person
is a personal action.
Personal Action- one brought for the recovery of
personal property, for the enforcement of some
contract of recovery of damages for its breach or for
the recovery of damages for the commission of an
injury to the persons or property.
Case: Pascual vs. Beltran October 27, 2006
Raymundo was charged with Conduct
Grossly Prejudicial to the Best Interest of the
Services/Gross Insubordination/Violation of
Reasonable Office Rules and Regulations. The
DOTC exonerated Raymundo of the charges.
Raymundo filed an action for damages
arising from Malicious Administrative suit against
Pascual, primarily on the basis of the administrative
complaint against her. During the trial, Pascual was
represented by the OSG. Raymundo filed a motion
to disqualify the OSG since no right or interest of the
government is involved and that petitioner is sued in
his private capacity.
The trial court granted the motion of
Raymundo stating that Pascual is being sued for
acts which he committed in his official capacity but
the cause of action is for torts, for which he may be
held personally answerable. It is a suit for damages,
the interest of the government is in no way involved
so that the appearance of the SG is unjustified.
The SC affirmed the decision of the trial court. The
OSG has no authority to represent Pascual in a civil
suit for damages. The law allows a public official to
be represented by the OSG in all civil, criminal and
special proceedings, when such proceedings arise
from the formers acts in his official capacity. In this
case, petitioner was actually sued in his personal
capacity. The complaint filed by Raymundo merely
identified petitioner as Director of
Telecommunications Office, but did not categorically
state he was being sued in his official capacity. The
reliefs sought by Raymundo are directed against
Pascual personally and not his office. Raymundo is
claiming directly from Pascual. Thus, the OSG has
no authority to represent him in such civil suit for
2. Damages and its amount must be proved
Every judgment for damages, whether
arising from a breach of contract or whether the
result of some provision of law, must rest upon
satisfactory proof of the existence in reality of the
damages alleged to have been suffered. (Rubiso vs.
Rivera 41 Phil. 39)
Except in those cases where the law
authorizes the imposition of punitive or exemplary
damages, a party claiming damages must establish
by competent evidence the amount of such
damages and courts cannot give judgment for a
greater amount than that actually prove. (Ventanilla
vs. Centeno)
3. Only proximate, not remote, damages are

Proximate damages said to be such as are
the ordinary and natural result of the omission or
commission of acts of negligence, and such are
usual and might have been reasonably expected or
Remote Damages the unusual unexpected
result not reasonably to be anticipated from an
accidental or unusual combination of circumstances-
a result beyond and over which the negligent party
has no control.
In order to maintain an action for damages
for injuries claimed to have been caused by a
negligent or other tortuous or wrongful act or
omission, it should be made to appear that such act
or omission was the proximate cause of the injuries
complained of.
The damages the plaintiff is entitled to
recover in a civil action for damages are, in the
absence of any statutory modification of the rule,
such only as are the natural and probable
consequences of the wrongful act or breach of
contract. Those which naturally and proximately flow
from the original wrongful act.
TEST: whether the facts shown constitute a
continuous succession of events so linked together
as to make a natural whole or whether there was a
new and independent cause intervening between
the wrong and the injury.
4. Speculative damages NOT recoverable
Alleged injuries or losses that are uncertain or
cannot be used as a basis of recovery for TORT or
contract actions.

An individual cannot be compensated for
mere speculative probability of future loss unless he
can prove that such negative consequences can
reasonably be expected to occur. The amount of
damages sought in a lawsuit need not be
established with absolute certainty provided they are
anticipated with reasonable certainty.
Thus, in an action of ejectment, damages
claimed by plaintiff on the basis of interest that could
have been realized had the lands been converted
into a subdivision and sold were too speculative to
sustain an award, in the absence of evidence that
the lands could have been sold at the price claimed
and the purchase money collected.(M.M. Tuason &
co. vs. De Guzman)
5. Duty of the injured party to minimize
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. (Article 2203)
A party cannot recover for loss which s/he
could have avoided or mitigated through his/her
reasonable efforts. A person injured by the wrongful
acts of another has a duty to mitigate or minimize
the damages and must protect himself/herself if s/he
can do so with reasonable effort or at minimal
expense, and can recover from the delinquent party
only such damages as s/he could not, with
reasonable effort, have avoided.
General Provisions
ARTICLE 2195: The provsions of this Title shall be
respectively applicable to all obligations mentioned
in article 1157.
Article 1157: sources of obligations
1. Law 2. Contracts 3. Quasi-contracts 4.
Delicts and 5. Quasi-delicts.
Classification of Damages:
ARTICLE 2197: Damages may be:
1. Actual or compensatory
2. Moral
3. Nominal
4. Temperate or moderate
5. Liquated or
6. Exemplary or corrective.
Actual Damages adequate compensation only for
pecuniary loss actually suffered by the plaintiff as he
has duly proved (Article 2199). The components of
actual damages are: a. value of loss and unrealized
profit (Article 2200), b. loss of earning capacity for
personal injury suffered (Article 2205), c. injury to
plaintiffs business standing or commercial credit,
attorneys fees (Article 2208) and d. interest (Article
Moral Damages damages, though incapable of
pecuniary estimation, are designed to compensate
and alleviate in some way the physical suffering,
mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social
humiliation, and similar injury unjustly caused a
person. (Article 2217)
Nominal Damages 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. (Article

Temperate or moderate damages damages
which may be recovered when the Court finds that
some pecuniary loss has been suffered but its
amount cannot, from the nature of the case, be
proved with certainty. They are more than nominal
but less than compensatory damages. (Article 2224)
Liquidated Damages damages agreed upon by
the parties to a contract, to be paid in case of breach
thereof. (Article 2226) Liquidated damages, whether
intended as an indemnity or penalty, shall be
equitably reduced if they are iniquitous or
unconscionable. (Article 2227)
Exemplary Damages damages imposed by way
of example or correction for the public good, in
addition to the moral, temperate, liquidate or
compensatory damages (Article 2229).
1. Imposed by way of example in addition to
other damages.
2. Cannot be recovered as a matter of right
3. The act complained of must be accompanied
by bad faith.
Concept of SPECIAL AND ORDINARY damages

Ordinary Damages
Found in all breaches of contract where
there are no special circumstances to
distinguish the case specially from other
contracts. In all such cases the damages
recoverable are such as naturally and
generally would result from such a breach,
according to the usual course of things.
These damages constitute the direct loss
suffered by the aggrieved party.
They are estimated on the basis of
circumstances prevailing on the date of the
breach of the contract.
Generally inherent in a breach of Typical
In contracts for 'sale and purchase', the
general rule as regards measures of damages is
that the damages would be assessed on the
difference between the contract price and the market
price on the date of breach.
A agreed to deliver 100 bags of rice at P90
per bag on a future date and finding that the market
price on that date has risen to P95 a bag, he refused
to deliver them. In a suit for damages by the buyer
for breach of contract for delivery of goods, it was
held that the measure of damages is the difference
between the contract price and the market price i.e.
P5 per bag.
If, however, the thing contracted is not
available in the market, the price of the nearest and
best available substitute may be taken into account
in calculating damage. In the absence of market at
the place of delivery, market price of the nearest
place or price prevailing in the controlling market is
to be considered.
Special Damages
Those which exist because of SPECIAL
circumstances and for which a debtor in
GOOD FAITH can be held liable only if he
had been previously informed of such
A taxi driver gave his taxi for repair to a
mechanic informing him that unreasonable delays
will result in loss of income of P100 per day. The
mechanic unreasonably delays the repair of the taxi.
The taxi driver is entitled to recover loss of income at
the rate of P100 per day.
If a carrier fails to deliver a movie film
intended for showing at fiesta, it cannot be held
liable for the extraordinary profits realizable at a
fiesta showing, if it had not been told that the film
had to be delivered in time for fiesta.(Mendoza vs.
PAL, 90 Phil 836)
Note: If a debtor is in BAD FAITH, special
damages can be assessed against him even if he
had NO knowledge of the special circumstances. It
is enough that the damage can be reasonably
attributed to the non-performance of obligation.


Actual Damages
Article 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.
Actual or compensatory damages are those
recoverable because of pecuniary loss
actually suffered and duly proved by the
Under Article 2199 of the Civil Code, actual
or compensatory damages are those
awarded in satisfaction of, or in recompense
for, loss or injury sustained. They proceed
from a sense of natural justice and are
designed to repair the wrong that has been
done, to compensate for the injury inflicted
and not to impose a penalty. In actions
based on torts or quasi-delicts, actual
damages include all the natural and
probable consequences of the act or
omission complained of. (PNOC Shipping
and Transport Corporation vs. CA G.R. No.
107518 October 8, 1998)
Actual damages are compensation for an
injury that will put the injured party in the
position where it was before it was
injured. They pertain to such injuries or
losses that are actually sustained and
susceptible of measurement. Except as
provided by law or by stipulation, a party is
entitled to an adequate compensation only
for such pecuniary loss as it has duly
proven. (Quisumbing vs MERALCO G.R.
No. 142943 April 3, 2002)
Actual damages or compensatory damages: Is
there a difference?
In the first place, actual damages are not
different from compensatory damages. Under
Chapter 2, Title XVIII, Book IV of the Civil Code,
actual and compensatory damages are
synonymous; hence the title of the Chapter as well
as Article 2199 thereof refer to them as actual or
compensatory damages. (People vs Laceste, G.R.
No. 127127 July 30, 1998)
Civil Indemnity and Actual Damages
Civil indemnity ex delicto is the indemnity
authorized in our criminal law for the offended party,
in the amount authorized by the prevailing judicial
policy and apart from other proven actual damages,
which itself is equivalent to actual or compensatory
damages in civil law. This award stems from Art. 100
of the RPC which states, Every person criminally
liable for a felony is also civilly liable. (People vs
Jose Pepito Combate G.R. No. 189301 December
15, 2010)
1. Plead for/allege actual damages However,
when a prayer mentions only exemplary damages,
moral damages, and attorneys fees and such
further relief that is deemed just and equitable, such
phrase may include actual damages if and when
they are proved.
2. Proof of actual damages suffered Actual
damages, to be recoverable, must not only be
capable of proof, but must actually be proved with a
reasonable degree of certainty.
The rule is long and well settled that there
must be pleading and proof of actual
damages suffered for the same to be
recovered. In addition to the fact that the
amount of loss must be capable of proof, it
must also be actually proven with a
reasonable degree of certainty, premised
upon competent proof or the best evidence
obtainable. The burden of proof of the
damage suffered is, consequently, imposed
on the party claiming the same who should
adduce the best evidence available in
support thereof, like sales and delivery
receipts, cash and check vouchers and
other pieces of documentary evidence of the
same nature. In the absence of
corroborative evidence, it has been held that
self-serving statements of account are not
sufficient basis for an award of actual
damages. Corollary to the principle that a
claim for actual damages cannot be
predicated on flimsy, remote, speculative,
and insubstantial proof, courts are, likewise,
required to state the factual bases of the
award. (Oceaneering Contractors vs.
Nestor N. Barretto, doing business as
N.N.B. Lighterage)

The burden of proof is on the party who
would be defeated if no evidence would be
presented on either side. He must establish
his case by a preponderance of evidence
which means that the evidence, as a whole,
adduced by one side is superior to that of
the other. In other words, damages cannot
be presumed and courts, in making an
award must point out specific facts that
could afford a basis for measuring whatever

compensatory or actual damages are borne.
(PNOC Shipping vs CA)

No official receipts were, however,
presented to substantiate the claim. The
victims wifes testimony cannot thus be
considered as competent proof and cannot
replace the probative value of official
receipts to justify the award of actual
damages, for jurisprudence instructs that the
same must be duly substantiated by
receipts. (People vs Sara G.R. No. 140618
Dec. 10, 2003)

The photographs the petitioners presented
as evidence show the extent of the damage
done to the house, the tailoring shop and the
petitioners appliances and
equipment. Irrefutably, this damage was
directly attributable to the drivers gross
negligence in handling OMCs truck.
Unfortunately, these photographs are not
enough to establish the amount of the loss
with certainty. (Tan vs OMC Carriers G.R.
No. 190521 January 12, 2011)

The claim of P70,000 as actual damages is
supported merely by a list of expenses
instead of official receipts. A list of expenses
cannot replace receipts when the latter
should have been issued as a matter of
course in business transactions. Neither can
the mere testimony on the amount spent
suffice. It is necessary for a party seeking an
award for actual damages to produce
competent proof or the best evidence
obtainable to justify such award. (People vs
Guillera G.R. No. 175829 March 20, 2009)

An estimate of the damage cost will not
suffice. Private respondents failed to adduce
adequate and competent proof of the
pecuniary loss they actually incurred. Private
respondents merely sustained an estimated
amount needed for the repair of the roof of
their subject building. What is more, whether
the necessary repairs were caused only by
petitioners alleged negligence in the
maintenance of its school building, or
included the ordinary wear and tear of the
house itself, is an essential question that
remains indeterminable. (Southeastern
College, Inc. v. Court of Appeals)
Article 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
Value of the loss suffered
(dao emergente) loss of
what a person already
Destruction of things
Fines or penalties that had to be paid
Rents and agricultural products not received
Cost of medical procedures to restore the injured
person to his or her former condition (this award
necessitates expert testimony on the cost of
possible restorative medical procedure.)
A scar resulting from the infliction of injury on the
face of a woman gave rise to a legitimate claim for
restoration to her conditio ante, granted P15,000 as
actual damages for plastic surgery. It bears
emphasis that the said amount was based on expert
testimony. (Gatchalian v. Delim)
Where goods are destroyed by the wrongful act of
the defendant, the plaintiff is entitled to their value at
the time of destruction, that is, normally, the sum of
money which he would have to pay in the market for
identical or essentially similar goods, plus in a
proper case damages for the loss of use during the
period before replacement. (PNOC Shipping and
Transport Corporation vs. Court of Appeals and
Maria Efigenia Fishing Corporation)
Profits which are not
obtained or realized (lucro
cesante) failure to receive
as a benefit that which
would have pertained to him
Profits that could have been earned had there been
no interruption on the plaintiffs business
Interest on rentals not paid
Lost income because the self-employed plaintiff
cannot work

There are two kinds of actual or compensatory
damages one is the loss of what a person already
possesses, and the other is the failure to receive as
a benefit that which would have pertained to him. In

the latter instance, the familiar rule is that damages
consisting of unrealized profits, frequently referred
as "ganacias frustradas" or "lucrum cessans," are
not to be granted on the basis of mere speculation,
conjecture, or surmise, but rather by reference to
some reasonably definite standard such as market
value, established experience, or direct inference
from known circumstances. However, when the
existence of a loss is established, absolute
certainty as to its amount is not required. The
benefit to be derived from a contract which one of
the parties has absolutely failed to perform is of
necessity to some extent, a matter of speculation,
but the injured party is not to be denied for that
reason alone. He must produce the best evidence
of which his case is susceptible and if that
evidence warrants the inference that he has been
damaged by the loss of profits which he might with
reasonable certainty have anticipated but for the
defendant's wrongful act, he is entitled to recover.
(Producers Bank of the Philippines vs. CA and
Spouses Chua)
Loss of earning capacity for
personal injury suffered
(Art. 2205)
Article 2205 of the New Civil Code allows the
recovery of damages for "loss or impairment of
earning capacity in cases of temporary or permanent
personal injury." Such damages covers the loss
sustained by the dependents or heirs of the
deceased, consisting of the support they would have
received from him had he not died because of the
negligent act of another. The loss is not equivalent
to the entire earnings of the deceased, but only that
portion that he would have used to support his
dependents or heirs. Hence, we deduct from his
gross earnings the necessary expenses supposed to
be used by the deceased for his own needs. In fixing
the amount of that support, we must reckon with the
necessary expenses of his own living, which should
be deducted from his earnings. Thus, it has been
consistently held that earning capacity, as an
element of damages to ones estate for his death by
wrongful act is necessarily his net earning capacity
or his capacity to acquire money, less the necessary
expense for his own living. Stated otherwise, the
amount recoverable is not loss of the entire earning,
but rather the loss of that portion of the earnings
which the beneficiary would have received. In other
words, only net earnings, not gross earning are to be
considered that is, the total of the
earnings less expenses necessary in the creation of
such earnings or income and less living and other
incidental expenses. (Magbanua vs Tabusares citing
Villa Rey Transit, Inc. vs. CA)
By way of exception, damages for loss of earning
capacity may be awarded despite the absence of
documentary evidence when:
1. The deceased is self-employed and earning less
than the minimum wage under current labor laws, in
which case, judicial notice may be taken of the fact
that in the deceased's line of work no documentary
evidence is available; or
2. The deceased is employed as a daily wage worker
earning less than the minimum wage under current
labor laws.
Injury to plaintiffs business
standing or commercial
credit (Art. 2205)
"The financial credit of a businessman is a prized
and valuable asset, it being a significant part of the
foundation of his business. Any adverse reflection
thereon constitutes some financial loss to him."
(Leopoldo Araneta vs. Bank of America)
Attorneys fees (Art. 2208)
2 Concepts:
1. Ordinary concept reasonable compensation paid
to a lawyer by his client for the legal services
2. Extraordinary concept awarded by the court as
indemnity for damages to be paid by the losing party
to the prevailing party, such that, in any of the cases
provided by law where such award can be made
(Art. 2208), the amount is payable not to the lawyer
but to the client, unless they have agreed that the
award shall pertain to the lawyer as additional
compensation or as part thereof.
Article 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
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.
Generally, attorneys fees are not a proper element
of damages, for it is not a sound public policy to
place a premium on the right to litigate.
An award of attorneys fees lies within the discretion
of the court and depends upon the circumstances of
each cases. However, it requires factual, legal and
equitable justification; its basis cannot be left to
speculation or conjecture. (Dutch Boy Philippines vs
Seniel G.R. No. 170008 January 19, 2009)
Attorney's fees as part of damages are not meant to
enrich the winning party at the expense of the losing
litigant. They are not awarded every time a party
prevails in a suit because of the policy that no
premium should be placed on the right to litigate.
The award of attorney's fees is the exception rather
than the general rule. Consequently, the reason for
the award must be stated in the text of the courts
decision. If it is stated only in the dispositive portion
of the decision, the same must be disallowed.
(Madrid vs Mapoy, G.R. No. 150887 August 14,
It is true that, in No. 11 of Article 2208, recovery of
counsel fees is allowed "where the court deems it
just and equitable that attorneys' fees and expenses
of litigation should be recovered", but even in such
cases the conclusion must be borne out by findings
of facts and law. What is just and equitable in a
given case is not a mere matter of feeling but of
demonstration. This is especially true since the last
part of Article 2208 expressly adds that the
"attorneys' fees and expenses of litigation must be
reasonable". Hence, the exercise of judicial
discretion in the award of attorneys' fees under
Article 2208 (11) of the Civil Code demands a
factual, legal, or equitable justification upon the
basis of which the court exercises its discretion.
(Buan vs Camaganacan G.R. No. L-21569 February
28, 1966)
Even when a claimant is compelled to litigate with
third persons or to incur expenses to protect his
rights, still attorneys fees may not be awarded
where no sufficient showing of bad faith could be
reflected in a partys persistence in a case other
than an erroneous conviction of the righteousness of
his cause. (DBP vs Traverse Development Corp.
G.R. No. 169293 October 5, 2011)
The Court has established a set standards in fixing
the amount of attorney's fees:
1. Amount and character of the services rendered;
2. Labor, time and trouble involved;
3. The nature and importance of the litigation or
business in which the services were rendered;
4. The responsibility imposed;
5. The amount of money or the value of the property
affected by the controversy or involved in the
6. The skill and experience called for in the
performance of the services;
7. The professional character and social standing of
the attorney;
8. The results secured, it being a recognized rule that
an attorney may properly charge a much larger fee
when it is contingent than when it is not.
(These factors approximate those enumerated in
Rule 20.01 of the Code of Professional

Interest (Art. 2209)
1. Agreed interest provided for by the terms of a
contract to be paid before its breach. Also called
contractual interest or monetary interest (interest for
the use of money)
2. Interest by way of damages interest allowed in
actions for breach of contract or tort for the unlawful
detention of money already due. It is allowed as a
result of the justice of the individual case and as

compensation to the injured party. Often called
moratory interest (interest for the delay)
General Rule:
Interest is allowed as a matter of right for failure to
pay liquidated claims when due
Unliquidated claims will bar the granting of interest
The person liable did not know what amount he
owed and therefore should not be charged interest
for not paying an unknown sum
Exception: HOWEVER, if a claim otherwise
unliquidated is ascertainable by mathematical
computation, interest is allowed as though the claim
were liquidated (Sunga-Chan vs CA GR 164401
June 25, 2008)
Rate of Interest
97412 July 12, 1994)
With regard particularly to an award of interest in the
concept of actual and compensatory damages, the
rate of interest, as well as the accrual thereof, is
imposed, as follows:
1. When the obligation is breached, and it consists in
the payment of a sum of money, i.e., a loan or
forbearance of money, the interest due should be
that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal
interest from the time it is judicially demanded. In the
absence of stipulation, the rate of interest shall be
12% per annum to be computed from default, i.e.,
from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil
2. When an obligation, not constituting a loan or
forbearance of money, is breached, an interest on
the amount of damages awarded may be imposed at
the discretion of the court at the rate of 6% per
annum. No interest, however, shall be adjudged on
unliquidated claims or damages except when or until
the demand can be established with reasonable
certainty. Accordingly, where the demand is
established with reasonable certainty, the interest
shall begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil Code) but
when such certainty cannot be so reasonably
established at the time the demand is made, the
interest shall begin to run only from the date the
judgment of the court is made (at which time the
quantification of damages may be deemed to have
been reasonably ascertained). The actual base for
the computation of legal interest shall, in any case,
be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of
money becomes final and executory, the rate of
legal interest, whether the case falls under
paragraph 1 or paragraph 2, above, shall be
12% per annum from such finality until its
satisfaction, this interim period being deemed to be
by then an equivalent to a forbearance of credit.

Moral Damages
A. Concept
Article 2217 of the New Civil Code:
Moral damages includes physical suffering,
mental anguish, freight, 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
defendants wrongful act or omission.
B. Purpose of Awarding Moral Damages:
To compensate the claimant for the injury suffered
and not to impose penalty on the wrongdoer.
It is not meant to enrich a person at the
expense of the other, but are awarded to enable the
injure party to obtain means, diversions, or
amusement that will serve to alleviate the moral
suffering the person has undergone.
It is aimed at restoration, as much as
possible, of the spiritual status quo ante.
C. Requisites:
1. Evidence that plaintiff suffered:
physical suffering,
mental anguish,
serious anxiety
besmirched reputation,
wounded feelings,
moral shock,
social humiliation,
similar injury
2. Culpable act or omission factually established
3. Proof that the wrongful act or omission of the
defendant is the proximate cause of the
damages sustained by the claimant.

If there is no proof upon which the claim for
moral damages could be based, it could not be out
rightly awarded.
4. The case is predicated on any of the instances
expressed or envisioned by Article 2219 and
Article 2220 of the Civil Code.
Illustrative Cases
Pagsuyuin vs IACGR No. 72121, February 6, 1991
A certain Mrs. Schlander was able to secure
a loan from Manila Banking Corporation secured by
real estate mortgage of two properties of Salud
Pagsuyuin upon a forged power of attorney allegedly
signed by the latter.
Thereafter, Saluds cousins Rafael and
Peregrina offered to settle the loan if Salud will allow
Peregrina to stay free of charge in the leased
premises and Salud will repay the amount with
interest. Consequently two documents were
allegedly executed involving the transfer of
properties of Salud to Peregrina and Rafael. Salud
denied having executed the deeds alleging that she
was in Batangas at that time. Furthermore, the
witnesses to the instrument also denied their
Salud then filed for a complaint against her
two cousins alleging that her signature and those of
the witnesses were obtained thru fraud and trickery.
The RTC ruled in favor of Salud. Among others, it
awarded the award of P20,000.00 as moral
damages. The IAC affirmed the decision but
reduced the award of moral damages to P5,000.00.
Whether or not the award of moral damages
is warranted
Yes. For moral damages to be awarded, it
is essential that the claimant must have satisfactorily
proved during trial the existence of the factual basis
of the damages and its causal connection with
adverse partys acts. The wrongful act attributable to
the petitioners which is the employment of fraud is
the proximate cause of the mental anguish suffered
by Salud.

MERALCO vs TEAM Electronics Corp, GR No.
131723, December 13, 2007
MERALCO is the supplier of electricity to
two of TEAMs buildings. A surprise inspection by
petitioner was conducted wherein they found out
that two meter were tampered and did not register
the actual power consumption. Petitioner then
demanded payment and when the respondent failed
to pay. They disconnected the electric supply.
Defendant filed for a complaint for damages. The
RTC ruled in favor of TEAM and ordered MERALCO
to pay among others, moral damages of P500,
000.00. The CA affirmed the RTC.
Issue: Whether or not damages moral damages
should be awarded.
No. The claim of moral damages was
premised on the damage to its goodwill and
reputation. A corporation can recover moral damage
when its reputation is debased, resulting in its
humiliation in the business realms. However it is
imperative for the claimant to present proof to justify
the award. It is essential to prove the existence of
the factual basis of the damage and its causal
relation to petitioners acts. In the present case, the
records are bereft of any evidence that the name or
reputation has been debased as a result of
petitioners acts. Besides, the trial court simply
awarded moral damages in the dispositive portion of
its decision without stating the basis thereof.
D. When Can Moral Damages be Recovered:
Article 2219
1. A criminal offense resulting in physical injuries
Illustrative Case:
Ferrer vs People, February 22, 2006
Tommy Ferrer was found guilty attempted
homicide for attacking Ricardo Ferrer and frustrated
homicide for his attack on Roque Ferrer. Among
others, he was ordered to pay moral damages of
P10,000.00 to Roque and P8,000.00 to Ricardo.
Whether the awards are proper.

While no proof of pecuniary loss is
necessary, it is essential that the claimant should
satisfactorily provide factual basis for the alleged
moral injury.
In the case of Roque, the award is in order
since he testified that suffered pain even at the time
that he was being discharged from the hospital.
However, in the case of Ricardo, the award
is unsubstantiated, because he did not satisfy on
any emotional distress, mental anguish or even
physical suffering which he suffered as a result of
the crime.
2. Quasi-delicts causing physical injuries
Illustrative Case:
RT Transport Corporation vs Pante, September 15,
Due to a vehicular incident, the respondent
sustained a laceration in the frontal area with
fracture of the right humerus. He underwent an
operation for the fracture, and after a few years of
rest, he had to undergo a second operation. He
suffered physical pain, mental anguish and anxiety
as a result of the vehicular accident. The Court
awarded P50,000.00
3. Seduction, abduction, rape, or other lascivious
Note: Victim may recover
Parents may also recover
4. Adultery or concubinage
5. Illegal or arbitrary detention or arrest
6. Illegal search
7. Libel, slander, or any other forms of defamation
8. Malicious prosecution
9. Article 309:
Any person who shows disrespect to the
dead, or wrongfully interferes with a funeral shall be
liable to the family of the deceased for damages,
material and moral.
Note: Action may be brought by the following
persons in this particular order: spouse;
descendants; ascendants; brothers and sisters.
10. Acts referred in the following articles:
a. Article 21: Willful cause of loss or
injury in a manner contrary to public policy,
good customs, or public
b. Article 26: Interference
Illustrative Case
Radio Communications of the Philippines vs
Verchez, January 31, 2006
Grace sent a telegram to her sister Zenaida
through petitioner company. She was asking for
financial assistance for their mother. RCPI failed to
deliver the telegram.
Whether there is basis for moral damages.
Yes. The source is not Article 26: Meddling
with or disturbing the private life or family relations
of another.
The negligence of RCPI disturbed the peace
of mind not only of Grace but of the whole family. It
disrupted the filial tranquility among them as they
blamed each other for failing to respond swiftly to
an emergency. The tortuous omissions complained
were therefore e analogous to the acts mentioned in
Article 26.
c. Article 27 malfeasance, misfeasance,
nonfeasance of official duty
d. Article 28: unfair competition
e. Article 29: filing of a dependent civil
action because of an acquittal in the
criminal case based on reasonable
f. Article 30: filing of a dependent civil
action arising from criminal offense, and
no criminal proceedings are
instituted during the pendency of the civil case
g. Article 32: violations of constitutional
h. Article 34: refusal or failure of a police
officer to render aid and protection in
case of danger to life or property
i. Article 35: in case of non-prosecution
of a criminal offense

11. Article 2220:
Willful injury to property may be a legal
ground for awarding 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 of in
bad faith.
Illustrative Case
Enrico Villanueva and Ever Pawnshop vs
Spouses Salvador
Spouses Salvador secured two loans from
Ever pawnshop secured by two pledges. The
Salvadors failed to redeem the pawned jewelry.
Thereafter, Ever Pawnshop issued a notice in
Manila Bulletin announcing an auction sale on the
very day of auction itself.
The Salvador filed a complaint for damages
arising from the sale without notice of the two sets of
jewelry pledged. Petitioner alleged that they
reminded the Salvadors of the maturity date and
redemption period of their loans. Also, they issued a
notice in the Manila Bulletin.
The RTC, among others, moral damages of
P20, 000.00 . The CA affirmed in toto.
Whether moral damages should be
No. Moral damages are not generally
recoverable in culpa contractual except when bad
faith supervenes and is proven. It may be that gross
negligence may sometimes amount to bad faith.
In the present case, the cause of action of
the respondents arose merely from simple
negligence. The trial court categorically found that
due to an oversight, the defendants mistakenly
renewed the first loan.
Defendants action must be vitiated by bad
faith or that there is willful intent to injure. Moral
damages cannot arise from simple negligence.

Northwest Oreint Philippines vs CA, June 8, 1990
As a graduation gift from their parents,
Annette, Joy, and Marilou were given a trip abroad.
They flew to Hongkong where they will wait for their
plane tickets to Tokyo and US. In Manila, the
parents went to the agent of petitioner to purchase
said tickets and were assure that the tickets will be
delivered to the children. When Annette and Marilou
claimed the ticket, they found our that there was a
miscomputation and they have to pay additional
$261.60 per ticket. They requested that the Manila
Office be contacted but they were arrogantly
rejected in the presence of may persons. Having no
other choice, they paid.
Whether moral damages should be
Yes. While the miscomputation was not
unfamiliar, the negligence imposed upon them a
needless burden who had gone on their trio
precisely to enjoy themselves. Worse, the manner of
treatment was far from acceptable. The employees
should have been polite if not sympathetic to the two
young girls in the foreign land. Instead, they were
hostile, overbearing. The girls testified that they
were treated coldly and arrogantly. They were not
accorded courtesy but were humiliated.
These acts taken in totality constitutes more
than mere negligence and assumed the dimension
of bad faith. There is clear malice, manifested in the
contemptuous disregard of the passengers protest
and the abrupt rejection of their request.
E. Considerations in Awarding Damages
General Rule: Each case must be governed by its
peculiar circumstances. there is no hard and fast
rules in determining the proper amount.

Guidelines Used by Supreme Court in some
cases (Jurisprudence):
1. Moral damages must be proportionate to the
suffering inflicted.


RCPI and Globe Mackay and Radio Corporation
vs Rufus Rodriguez, GR No. 83768, February 28,
Rufus Rodriguez sent two telegrams via
RCPI. The first was sent to Sudan advising Taha of
his arrival in Sudan for an international conference.
The second was sent to US addressed to Merger,
the Secretary of the organization. These two
telegrams were not delivered and RCPI did not
inform Rodriguez of non-delivery. When Rodriguez
arrived in Sudan, nobody was waiting for him and
was forced to sleep at the airport by lining five (5)
chairs together and lay down his luggage near him.
The conference also had to be cancelled because
the Merger was absent.
RCPI blames Rodriguez for the non-delivery
of the two telegrams. Regarding the first telegram,
the complete address was not given. As to the
second telegram, Merger already moved from her
old address and it was Rodriguezs fault for not
verifying the address.
Rodriguez filed for complaint for damages.
The RTC, among others awarded P100,
000.00. The CA affirmed.
Whether moral damages should be awarded.
Yes. Records show that an earlier telegram
to Taha bearing the incomplete address was
received by the latter. As to the second telegram,
the company as a public utility should ascertain that
messages are delivered and in cases of undelivered
messages, the sender must be given notice of non-
However, the amount awarded is
unconscionable and excessive. Moral damages are
emphatically not intended to enrich a complainant at
the expense of defendant. They are awarded only to
enable the injured party to obtain means, diversion
or amusements that will serve to alleviate the moral
suffering he has undergone, by reason of the
defendants culpable action. The award of moral
damages must be proportionate to the suffering
The respondent is not entirely blameless.
Anybody who is involved in international conference
and meetings knows that a telegram is not adequate
preparation. He cannot simply send a telegram and
assume that every preparation will proceed as he
anticipates it.
The amount of P10,000.00 as moral
damages in favor of the respondent would be
reasonable considering the facts and circumstances.
2. Social and financial standing
Bankard vs Dr. Antonio Novak Feliciano
Dr. Feliciano is the holder of PCIBank
Mastercard with an extension line issued to his wife,
Marietta. While in Canada, he tried to use the card
to pay for breakfast bill but it was dishonored. Thus,
it was the guests doctors who had to pay for the bill.
He immediately inquired on the cause of dishonor
and denied not having paid his bills. The next day,
he met with one of the doctors to reimburse the bill
and thereafter went to a prestigious mall.
Respondent again tried to use his card but was
dishonored to his embarrassment. The card was
Respondent filed for complaint for damages
for breach of contractual rights and damages. He
alleged that as a result of the incident, he suffered
social humiliation, embarrassment and besmirched
Petitioner claimed that they were diligent
before suspending the use of card. They alleged that
there was a report of counterfeit transaction of the
extension line, thus they cancelled it as well as the
principal line. They also tried to call the respondent
but he was not home.
The RTC awarded, among others, moral
damages of P1,000,000.00. The CA reduced the
same to P800, 000.00.
Whether moral damages should be
Yes. Moral damages by be recovered in
culpa contractual when the defendant acted in bad
faith or with malice in the breach of contract.
Malice or bad faith implies moral obliquity or
a conscious design to do a wrongful act for a
dishonest purpose. However, intentional design
need not to be always present. Bad faith under Art
2220 includes gross negligence amounting to bad
faith or in wanton disregard of his contractual

Petitioner was not diligent in its efforts at
personally contacting the respondent. It only tried to
call once, and contended to leave a message.
Before the incident, the petitioner still has three days
to inform the respondent.
Evidence show that respondent is a
cardholder in good standing for 10 years. The
attendant circumstances show that there is gross
negligence amounting to bad faith
As to the amount, it is reduce to
P500,000.00. Moral damages are not meant to
enrich the complainant at the expense of the
defendants and should be commensurate with the
actual loss or injury suffered
4. Moral feelings and personal pride of claimant

5. Discretion of the court but said discretion should
be just and reasonable, not founded upon the whims
and caprices of the judge.
Illustrative Case
Siga-an vs Villanueva, January 20, 2009
Respondent testified that she experienced
sleepless nights and wounded feelings when
petitioner refused to return the around paid as
interest despite repeated demands. Moral damages
is justified. However the P300,000.00 is exorbitant
and must be equitably reduced.
The assessment of damages is left to the
discretion of the court but this discretion is limited by
the principle that the amount awarded should not be
palpably excessive as to indicate that it was the
result of prejudice or corruption on the part of the
trial court. The amount of P150,000.00 as moral
damages was declared to be fair, reasonable, and
proportionate to the injury suffered.
Article 2218:
In the adjudication of moral damages, the
sentimental value of property, real or personal may
be considered.

Article 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.

They are those recoverable where a legal
right is technically violated and must be
vindicated against an invasion that has
produced no actual present loss of any kind,
or where, from the nature of the case, there
has been some injury arising from a breach
of contract or legal duty but the amount
thereof has not been or cannot be shown.

The law infers some damage from the
breach of an agreement or invasion of a
right, and if no evidence is given of any
particular amount of loss, it declares the
right by awarding what it terms nominal
damages. Its allowance is generally based
on the ground that every injury from its very
nature legally imports damage.

Any award which is not of any significant
amount but is given primarily as a courts
recognition of the justness or rightness of a
claim is a nominal award.

The assessment of nominal damages is left
to the discretion of the court according to the
circumstances of the case.

Generally, nominal damages by their nature
are small sums fixed by the court without
regard to the extent of the harm done to the
injured party.

Nominal damages is a substantial claim, if
based upon the violation of a legal right; in
such case, the law presumes damage
although actual or compensatory damages
are not proven.

Nominal damages are damages in name
only and not in fact, and are allowed, not as
an equivalent of wrong inflicted, but simply
in recognition of the existence of a technical

Nominal damages are really a symbolic
award given to the plaintiff when liability of
the defendant is established but the amount
of the harm done is not measurable or even
demonstrable. The award indicates that the
defendant committed a wrong and it serves
to clarify or vindicate the rights of the


When Awarded:
Article 2222. The court may award nominal
damages in every obligation arising from
any source enumerated in Art. 1157 (law,
contracts, quasi-contracts, acts or omissions
punished by law, and quasi-delicts), or in
every case where any property right has
been invaded.

Obligations for violation of which NOMINAL
DAMAGES may be awarded:
1) Invasion of a legal right.
2) Torts.
3) Breach of contract.
4) Personal injury action.
5) Invasion of property.
6) Breach of duty by a public officer.

A. Adjudication of NOMINAL DAMAGES:
Article 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.

Effect of adjudication of NOMINAL
1) Nominal damages cannot co-exist with actual or
compensatory damages. They are awarded only
if there is no proof of actual damages.
2) Where the court has already award
compensatory damages, the award of nominal
damages is unnecessary and improper.
3) Where the interests of the stockholders were
already represented by the corporation itself,
which was the proper party plaintiff, and no
cause of action accruing to them separately from
the corporation is alleged in the complaint, other
than for moral damages to the corporation and
no appeal from such ruling has been taken, also
rules out the claim for nominal damages and
exemplary damages to the stockholders.
Petitioners, vs. IRENE MONTEMAYOR and THE
On 18 February 1994, petitioners filed a
Complaint for Reconveyance. They alleged in their
Complaint that they were the owners of a parcel of
land and that they consistently paying real estate
taxes of said property since their acquisition.
Petitioners asserted that private respondent was
able to cause the issuance of TCT No. T-369793 in
her name by presenting a simulated and fictitious
Deed of Absolute Sale. The signatures of the sellers,
spouses Cuevas were forged in the said Deed.
Hence, petitioners prayed for the cancellation of
TCT No. T-369793 in private respondents name;
the issuance of a new certificate of title in petitioners
names; the award of nominal damages of
P50,000.00 and exemplary damages of
P100,000.00, by reason of the fraud employed by
private respondent in having the subject property
registered in her name; the award of attorneys fees
of not less than P50,000; and the costs of suit.
Private respondent said she purchased the subject
property for value and in good faith and had been in
possession thereof. Private respondent insisted that
she had a better title to the subject property, since
she was the first registrant of its sale.
Whether or not petitioners are entitled to
nominal damages
Yes. Evidence on record reveals that the
spouses Cuevas, the previous owners of the subject
property, did not sell the said property to private
respondent. Private respondents unabashed
confession that she knew of the dubiousness of her
title from the very beginning is contrary to the
concept of good faith. Since private respondents
fraudulent registration of the subject property in her
name violated petitioners right to remain in peaceful
possession of the subject property, petitioners are
entitled to nominal damages under Article 2221 of
the Civil Code, which provides: 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.

Article 2224. Temperate or moderate
damages, which are more than nominal
but less than compensatory damages,
may be recovered when the court finds
that some pecuniary loss has been
suffered but its amount can not, from the
nature of the case, be prove with

Reason for allowing Temperate or
Moderate Damages.
In some States of the American Union,
temperate damages are allowed. There are cases

where from the nature of the case, definite proof of
pecuniary loss cannot be offered, although the court
is convinced that there has been such loss. For
instance, injury to ones commercial credit or to the
goodwill of a business firm is often hard to show with
certainty in terms of money. Should damages be
denied for that reason? The judge should be
empowered to calculate moderate damages in such
cases, rather than that the plaintiff should suffer,
without redress, from the defendants wrongful act.
Article 2225. Temperate damages must be
reasonable under the circumstances.
Amount of temperate or moderate
1) Reasonable under the circumstances.
2) Evidence of some pecuniary loss.
3) In case of death without evidence to prove
GARCIA, Respondents.
Rhonda Brunty together with her Filipino
host Garcia, traveled to Baguio City on board a
Mercedes Benz sedan, driven by Mercelita. On the
way, their car collided with PNR Train No. T-71.
Mercelita and Brunty were killed. Garcia suffered
severe head injuries. Thereafter, Ethel Brunty, sent
a letter to PNR demanding payment of actual,
compensatory, and moral damages, as a result of
her daughters death. When PNR did not respond,
Ethel Brunty and Garcia, filed a complaint for
damages against the PNR before the RTC of
Whether or not the respondents are entitled
to temperate or moderate damages.
Yes. This Court has previously determined
the liability of the PNR for damages for its failure to
put warning devices. Such failure is evidence of
negligence and disregard of the safety of the public.
In view of the foregoing, this court affirms the
decision of the CA as well as its conclusion to
petitioners negligence. As the heirs of Rhonda
Brunty undeniably incurred expenses for the wake
and burial of the latter, this Court deem it proper to
award temperate damages in the amount of
P25,000.00 pursuant to prevailing jurisprudence.
This is in lieu of actual damages as it would be
unfair for the victims heirs to get nothing, despite
the death of their kin, for the reason alone that they
cannot produce receipts.

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs. HONORATO C. BELTRAN, JR., accused-
Appellant was found guilty beyond
reasonable doubt of the crime of murder. Appellant
is further directed to indemnify the heirs of the victim
in the sum of P61,000.00 as actual damages,
among others.
On appeal, the CA affirmed with modification
the decision of the RTC. Appellant is ordered to pay
the heirs P18,525.00 as actual damages.
Whether or not the CA gravely erred in
modifying the actual damages
Normita claimed that she spent a total
amount of P61,080 for the burial and funeral
expenses of Norman. However, the receipts on
record shows that only an amount of P18,420.82
was spent. Her claim of expenses for the food,
drinks, flowers, chairs and tables during the funeral
and burial of Norman, as well as the traditional 40
days prayer thereafter, were not supported by any
receipts. These expenses are merely written, listed,
and signed by her in one sheet of yellow paper, and
submitted as evidence in the trial court. Thus, as
general rule, she is entitled only to an amount of
P18,420.82 since actual damages may be awarded
only if there are receipts to support the same.
However, in the case of People v. Dela
Cruz, this Court declared that when actual damages
proven by receipts during the trial amount to less
than P25,000.00, such as in the present case, the
award of temperate damages for P25,000.00, is
justified in lieu of actual damages for a lesser
amount. This Court ratiocinated therein that it was
anomalous and unfair that the heirs of the victim
who tried but succeeded in proving actual damages
to less P25,000.00 only would be in a worse
situation than those who might have presented no
receipts at all but would be entitled to P25,000.00
temperate damages. Thus, instead of P18,420.82,
an amount of P25,000.00 as temperate damages
should be awarded to the heirs of Norman.

Article 2227. Liquidated damages, whether
intended as an indemnity or a penalty, shall
be equitably reduced if they are iniquitous or

Article 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.

Liquidated Damages distinguished from Penalty
As distinguished from liquidated
damages, a penalty is a sum
inserted in a contract, not as the
measure of compensation for its
breach, but rather as a punishment
for default, or by way of security for
actual damages which may be
sustained by reason of non-
performance. It involves the idea of
A penalty is an agreement to pay a
stipulated sum on breach of
contract, irrespective of the damage
sustained. Its essence is a payment
of money stipulated as a deterrent
to the offending party, while the
essence of liquidated damages is
genuine covenanted pre-estimate of

A. Determining Character of stipulated sum:
The question of whether a stipulated sum is
a penalty or for liquidated damages is
answered by the application of one or more
aspects of the following rule:

A stipulated sum is for
liquidated damages only:

a. Where the damages which the parties
might reasonably anticipate are difficult to
ascertain because of their indefiniteness or
uncertainty; and

b. Where the mount stipulated is either
reasonable estimate of the damages which
would probably be caused by a breach or is
reasonably proportionate to the damages
which have actually been caused by the

Ordinarily, a stipulated sum
will be regarded as a penalty:
a. Where it is an evident that the sum was
fixed to evade the usury laws, or any other
statute, or to cloak oppression;

b. Where the defaulting party is rendered
liable for the same amount whether the
breach is total or partial, or where the sum is
set without regard to the extent of
performance where, in the nature of
promises, the extent of the performance
would be important in determining the
amount of actual damages which would
result; and

c. Where the contract provides for the
payment of a fine in addition to the amount
of any damage caused by a breach, such
fine cannot be considered as liquidated
damages but must be regarded as penalty
which cannot be recovered.

A stipulation in a contract to
forfeit a certain sum for a breach of its terms
cannot be separated, and a part discarded
as a penalty, and the remainder treated as
liquidated damages. But the parties to a
contract may agree that certain elements for
damages for its breach which are difficult to
estimate shall be covered by a provision for
liquidated damages and that other elements
shall be ascertained in the usual manner.


petitioner, vs. MARINA PROPERTIES
and TAN YU, respondents.

Marina Properties Corporation
(MPC) entered into a contract with H.L.
Carlos Construction, Inc. (HLC) to construct
Phase III of a condominium complex for a
total consideration of P38,580,609.00,
within a period of 365 days from receipt of
Notice to Proceed. The original completion
date of the project was May 16, 1989, but it
was extended to October 31, 1989 with a
grace period until November 30, 1989.

On December 15, 1989, HLC
instituted a case for sum of money against
MPC seeking the payment of various sums
with an aggregate amount of P14 million
pesos for unpaid labor escalation costs,
change orders and material price
escalations. This was granted by the RTC.
On appeal, the CA held that respondents
were not liable for escalations in the cost of
labor and construction materials, because
the contract between the parties was for a
lump sum consideration, which did not allow
for cost escalation, and petitioner failed to
show any basis for the award
sought. Furthermore, the CA ruled that
petitioner was liable for actual and liquidated
damages. The latter had abandoned the
project prior to its completion; hence, MPC
contracted out the work to another entity and
incurred actual damages in excess of the
remaining balance of the contract price. In
addition, the Construction Contract had
stipulated payment of liquidated damages in
an amount equivalent to 1/1000 of the
contract price for each calendar day of
delay. Hence, this Petition.

Whether or not the petitioner is
liable for liquidated damages
Yes. Liquidated damages are those
that the parties agree to be paid in case of a
breach. As worded, the amount agreed upon
answers for damages suffered by the owner
due to delays in the completion of the
project. Under Philippine laws, these
damages take the nature of penalties. A
penal clause is an accessory undertaking to
assume greater liability in case of a
breach. It is attached to an obligation in
order to ensure performance. Thus, as held
by the CA, petitioner is bound to pay
liquidated damages for 92 days, or from the
expiration of the grace period in the
Amended Contract until February 1, 1990,
when it effectively abandoned the project.

Exemplary/Corrective 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 damage
Exemplary or corrective damages are
generally defined or described as damages 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 damages go beyond the actual
damages suffered in the case; they are allowed as a
punishment of the defendant and as a deterrent to
Nature of Exemplary Damages
1. Accessory Damage
- A mere accessory to other forms of
damages except to nominal.
2. May or May not be granted
- Depends upon the necessity of setting an
example for public good
3. Form of deterrent
- To avoid repetition of the same act by
To deter the commission of similar acts in
future and to allow the courts to correct behavior that
can have grave and deleterious consequences to
society and not to enrich one party or impoverish
When Recoverable
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.
Generally Exemplary Damages cannot be
awarded in criminal offences if there is no
aggravating circumstance.
Also known as punitive or vindictive
damages, exemplary or corrective damages are
intended to serve as a deterrent to serious wrong
doings, and as a vindication of undue sufferings and
wanton invasion of the rights of an injured or a
punishment for those guilty of outrageous conduct.
Being corrective in nature, exemplary
damages, therefore, can be awarded, not only in the
presence of an aggravating circumstance, but also
where the circumstances of the case show the
highly reprehensible or outrageous conduct of the
offender. In much the same way as Article 2230
prescribes an instance when exemplary damages

may be awarded, Article 2229, the main provision,
lays down the very basis of the award.
People of the Philippines v.
The lower court found the accused guilty for
the crime of murder and order the award of actual,
moral, exemplary, and temperate. The CA
appreciated the aggravating circumstances of
evident premeditation and abuse of superior
strength but disregarded dwelling and insult to rank,
sex and age of the victim for this are amendments to
the information after the presentation of the
prosecution of its evidence.
Is the award of exemplary damages proper?
Yes. Article 2230 of the Civil Code
specifically states that exemplary damages may be
imposed when the crime was committed with one or
more aggravating circumstances, as in this case.
Moreover, as an example and deterrent to future
similar transgressions, the court finds that an award
of P25,000.00 for exemplary damages is proper.
Palaganas vs. People of the Philippines
As was previously established, a special
aggravating circumstance cannot be offset by an
ordinary mitigating circumstance. Voluntary
surrender of petitioner in this case is merely an
ordinary mitigating circumstance. Thus, it cannot
offset the special aggravating circumstance of use of
unlicensed firearm.
Exemplary damages should be awarded in
this case since the presence of special aggravating
circumstance of use of unlicensed firearm was
already established. Based on prevailing
jurisprudence, the award of exemplary damages for
homicide is P25,000.00.
People of the Philippines v. Gannaban
The trial court found the accused to be guilty
for the rape and death of the victim and ordered him
to pay, among others, exemplary damages.
Is the award of the trial court of exemplary
damages proper?
No. The exemplary damages of P 50,000.00
awarded by the trial court should be deleted there
being no proof of aggravating circumstance.
Fines - imposed by the court w/c is payable
to the State
Exemplary - one payable to the injured
B. Art. 2231- In quasi-delicts exemplary damages
may be granted if the defendant acted with gross
Gross Negligence Tantamount to bad faith
Exemplary damages are granted if the
defendant is shown to have been guilty of gross
negligence as to approximate malice. Even if there
is gross negligence the grant is not automatic. It is
still subject to the discretion of the court.
Can an employer be held liable for the acts of his
As a general rule an employer is not liable
for exemplary damages based upon the wrongful act
of his employee because exemplary damages
punish the intent and this cannot be presumed on
the part of the employer.
Exception: when he participated in the
doing of such wrongful act, has previously
authorized or subsequently ratified it with full
knowledge of the fact and if it was found out that he
was negligent in the selection and supervision of its
In Construction Development vs. Estrella,
the petitioners driver was found driving recklessly at
the time its truck rammed the BLTB bus. Petitioner,
who has direct and primary liability for the negligent
conduct of its subordinates, was also found
negligent in the selection and supervision of its
employees. Thus the award of exemplary damages
was held proper.


German Marine Agencies Inc. Vs NLRC, 350
SCRA 641
The ship radio officer was taken ill while the
ship was in New Zealand. Despite notice thereof by
the ships captain, the ship proceeded with the
voyage and reached the Philippines in 10 days and
yet the sick radio officer was not immediately taken
to hospital for medical treatment.
Ship owner is liable for moral damages for
the physical suffering and mental anguish caused to
Radio Officer. P50,000 in moral damages is proper.
As the fact of negligence of the ships
captain was not only shown to have existed but it
was deliberately perpetrated by the arbitrary refusal
to commit the ailing radio officer to a hospital in New
Zealand or at the nearest port resulting to his
permanent partial disability, the award of exemplary
damages for P50,000 is adequate and reasonable.
In this case the awarding of the exemplary
damages is to serve a correction as well as an
example for ship owners to look after the welfare of
their employees first to that of their customers-cargo-
C. 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.
Fraudulent if act is tainted with deception
or injurious misrepresentation of which the plaintiff is
Oppressive when it is arbitrary
Malevolent done in bad faith
Adelaida Amado and Heirs of Amado v. Salvador
Salvador alleges that in or around
September 1979, Judge Amado agreed to sell to
him the subject property for P60.00 per square
meter, or in the total sum of P66,360.00, payable in
cash or construction materials which would be
delivered to Judge Amado, or to whomsoever the
latter wished during his lifetime. Salvador though
failed to state the terms of payment, such as the
period within which the payment was supposed to
be completed, or how much of the payment should
be made in cash.
The petitioners maintain that the cash
advances and the various construction materials
were received by Judge Amado from Salvador in
connection with a loan agreement, and not as
payment for the sale of the subject property.
The RTC dismissed Salvadors
complaint. The trial court observed that it was not
indicated in the documentary evidence presented by
Salvador that the money and construction materials
were intended as payment for the subject
property. The CA reversed the decision of the RTC
and ordered the petitioners to execute a Deed of
Sale in favor of Salvador. The court likewise order
the payment of damages (P100,000.00 as moral
damages P100,000.00 as exemplary damages and
costs of suits).
Was the award of exemplary damages
Absent the valid sale agreement between
Salvador and Judge Amado, the formers
possession of the subject property hinges on the
permission and goodwill of Judge Amado and the
petitioners, as his successors-in-interest. Thus, there
is no more basis for Salvador and his brother,
Lamberto Salvador, to retain possession over it, and
such possession must now be fully surrendered to
the petitioners.
The award of exemplary damages is
improper. Exemplary damages are awarded only
when a wrongful act is accompanied by bad faith or
when the guilty party acted in a wanton, fraudulent,
reckless or malevolent manner. Moreover, where a
party is not entitled to actual or moral damages, an
award of exemplary damages is likewise baseless.
As this Court has found, petitioners refusal to turn
over the subject property to Salvador is justified and
cannot be the basis for the award of exemplary
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 been titled to moral, temperate
or compensatory damages were it not for the
stipulation for liquidated damages.
They may be imposed by way of example or
correction only in addition, to compensatory
damages, and cannot be recovered as a matter
of right, their determination depending upon the
amount of compensatory damages that may be
awarded to the claimant.
Exemplary damages cannot be claimed as a
matter of right. It is a mere additional to other forms
of damages which the court may or may not grant.
The amount of exemplary damages need
not be proven because its determination depends
upon the amount of compensatory damages that
may be awarded to the claimant. If the amount of
exemplary damages need not be proved, it need not
also be alleged, and the reason is obvious because
it is merely incidental or dependent upon what the
court may award as compensatory damages. It
follows as a necessary consequence that the
amount of exemplary damages need not be pleaded
in the complaint because the same cannot be
The claimant must first establish his right to
moral, temperate, liquidated or compensatory
While the court has discretion to grant it is
however, required of the aggrieved party to establish
evidence that he is entitled to compensatory, moral
or temperate damages.
The wrongful act must be accompanied by
bad faith, and the award should be allowed only if
the guilty party acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner.

On October 22, 1996, petitioners filed a
Complaint against respondent for unfair labor
practice and illegal dismissal with claims for
regularization, recovery of benefits under the
Collective Bargaining Agreement (CBA), moral and
exemplary damages, and attorney's fees.
Issues: Is the award of damages proper?
On the claim for moral and exemplary
damages, there is no basis to award the same.
Moral and exemplary damages are recoverable only
where the dismissal of an employee was attended
by bad faith or fraud, or constituted an act
oppressive to labor, or were done in a manner
contrary to morals, good customs or public
policy. The person claiming moral damages must
prove the existence of bad faith by clear and
convincing evidence, for the law always presumes
good faith. Petitioners failed to prove bad faith, fraud
or ill motive on the part of respondent. Moral
damages cannot be awarded. Without the award of
moral damages, there can be no award of
exemplary damages, or attorney's fees.
Art. 2235. A stipulation whereby exemplary
damages are renounced in advance shall be null
and void.
Impliedly, exemplary damages already
determined and granted by the court in a final
judgment may be renounced by the winning party in
the case.