Title VIII.

- NUISANCE

(n)

Art. 694. A nuisance is any act, omission, establishment, business, condition of property, or
anything else which:
(1) Injures or endangers the health or safety of others; or
(2) Annoys or offends the senses; or
(3) Shocks, defies or disregards decency or morality; or
(4) Obstructs or interferes with the free passage of any public highway or street, or any
body of water; or
(5) Hinders or impairs the use of property.
Art. 695. Nuisance is either public or private. A public nuisance affects a community or
neighborhood or any considerable number of persons, although the extent of the annoyance,
danger or damage upon individuals may be unequal. A private nuisance is one that is not included
in the foregoing definition.
Art. 696. Every successive owner or possessor of property who fails or refuses to abate a nuisance
in that property started by a former owner or possessor is liable therefor in the same manner as
the one who created it.
Art. 697. The abatement of a nuisance does not preclude the right of any person injured to
recover damages for its past existence.
Art. 698. Lapse of time cannot legalize any nuisance, whether public or private.
Art. 699. The remedies against a public nuisance are:
(1) A prosecution under the Penal Code or any local ordinance: or
(2) A civil action; or
(3) Abatement, without judicial proceedings.
Art. 700. The district health officer shall take care that one or all of the remedies against a public
nuisance are availed of.
Art. 701. If a civil action is brought by reason of the maintenance of a public nuisance, such action
shall be commenced by the city or municipal mayor.
Art. 702. The district health officer shall determine whether or not abatement, without judicial
proceedings, is the best remedy against a public nuisance.
Art. 703. A private person may file an action on account of a public nuisance, if it is specially
injurious to himself.

Art. 704. Any private person may abate a public nuisance which is specially injurious to him by
removing, or if necessary, by destroying the thing which constitutes the same, without committing
a breach of the peace, or doing unnecessary injury. But it is necessary:
(1) That demand be first made upon the owner or possessor of the property to abate the
nuisance;
(2) That such demand has been rejected;
(3) That the abatement be approved by the district health officer and executed with the
assistance of the local police; and
(4) That the value of the destruction does not exceed three thousand pesos.
Art. 705. The remedies against a private nuisance are:
(1) A civil action; or
(2) Abatement, without judicial proceedings.
Art. 706. Any person injured by a private nuisance may abate it by removing, or if necessary, by
destroying the thing which constitutes the nuisance, without committing a breach of the peace or
doing unnecessary injury. However, it is indispensable that the procedure for extrajudicial
abatement of a public nuisance by a private person be followed.
Art. 707. A private person or a public official extrajudicially abating a nuisance shall be liable for
damages:
(1) If he causes unnecessary injury; or
(2) If an alleged nuisance is later declared by the courts to be not a real nuisance

EMILIO GANCAYCO,
- versus CITY
GOVERNMENT
OF QUEZON
METRO MANILADEVELOPMENT AUTHORITY

CITY AND

Article 694 of the Civil Code defines nuisance as any act, omission,
establishment, business, condition or property, or anything else that (1) injures or
endangers the health or safety of others; (2) annoys or offends the senses; (3)
shocks, defies or disregards decency or morality; (4) obstructs or interferes with
the free passage of any public highway or street, or any body of water; or, (5)
hinders or impairs the use of property. A nuisance may be per se or per

accidens. A nuisance per se is that which affects the immediate safety of persons
and property and may summarily be abated under the undefined law of necessity.[29]
Clearly, when Justice Gancayco was given a permit to construct the building,
the city council or the city engineer did not consider the building, or its demolished
portion, to be a threat to the safety of persons and property. This fact alone should
have warned the MMDA against summarily demolishing the structure.
We agree with petitioner's contention that, under Section 447(a)(3)(i) of
R.A. No. 7160, otherwise known as the Local Government Code,
the Sangguniang Panglungsod is empowered to enact ordinances declaring,
preventing or abating noise and other forms of nuisance. It bears stressing,
however, that the Sangguniang Bayan cannot declare a particular thing as a
nuisance per se and order its condemnation. It does not have the power to find,
as a fact, that a particular thing is a nuisance when such thing is not a
nuisance per se; nor can it authorize the extrajudicial condemnation and
destruction of that as a nuisance which in its nature, situation or use is not
such. Those things must be determined and resolved in the ordinary courts of
law. If a thing be in fact, a nuisance due to the manner of its operation, that
question cannot be determined by a mere resolution of the Sangguniang Bayan.
(Emphasis supplied.)
RUFINA SALAO and LUCIO LUCAS, plaintiffs-appellants,
vs.
TEOFILO C. SANTOS,

Moreover, nuisances are of two kinds: nuisance per se and nuisance per accidens. The first is
recognized as a nuisance under any and all circumstances, because it constitutes a direct menace
to public health or safety, and, for that reason, may be abated summarily under the undefined law of
necessity. The second is that which depends upon certain conditions and circumstances, and its
existence being a question of fact, it cannot be abated without due hearing thereon in a tribunal
authorized to decide whether such a thing does in law constitute a nuisance. (Iloilo Ice and Cold
Storage Co. vs. Municipal Council of Iloilo, 24 Phil., 471; Monteverde vs. Generoso, 52 Phil., 123,
127.) Appellants' smoked fish factory is not a nuisance per se. It is a legitimate industry. If it be, in
fact, a nuisance due to the manner of its operation, then it would be merely a nuisance per accidens.
(Iloilo Ice and Cold Storage Co. vs. Municipal Council of Iloilo, supra;
Monteverde vs. Generoso, supra.) Consequently, the order of the municipal president and those of
the health authorities issued with a view to the summary abatement of what they have concluded, by
their own findings, as a nuisance, are null and void there having been no hearing in court to the
effect.

HIDALGO ENTERPRISES, INC., petitioner,

vs.
GUILLERMO BALANDAN

The Court of Appeals, and the Court of First Instance of Laguna, took the view that the petitioner
maintained an attractive nuisance (the tanks), and neglected to adopt the necessary precautions to
avoid accidents to persons entering its premises. It applied the doctrine of attractive nuisance, of
American origin, recognized in this Jurisdiction in Taylor vs. Manila Electric 16 Phil., 8.
The doctrine may be stated, in short, as follows: One who maintains on his premises dangerous
instrumentalities or appliances of a character likely to attract children in play, and who fails to
exercise ordinary care to prevent children from playing therewith or resorting thereto, is liable to a
child of tender years who is injured thereby, even if the child is technically a trespasser in the
premises. (See 65 C.J.S., p. 455.)
The principle reason for the doctrine is that the condition or appliance in question although its danger
is apparent to those of age, is so enticing or alluring to children of tender years as to induce them to
approach, get on or use it, and this attractiveness is an implied invitation to such children (65 C.J.S.,
p. 458).
Now, is a swimming pool or water tank an instrumentality or appliance likely to attract the little
children in play? In other words is the body of water an attractive nuisance?
The great majority of American decisions say no.

VIII TORTS WITH INDEPENDENT CIVIL ACTIONS ASIDE FROM THOSE ART 2176

1. VIOLATION OF CIVIL AND POLITICAL RIGHTS ART 32

Art. 32. Any public officer or employee, or any private individual, who directly or
indirectly obstructs, defeats, violates or in any manner impedes or impairs any of the
following rights and liberties of another person shall be liable to the latter for damages:
(1) Freedom of religion;
(2) Freedom of speech;
(3) Freedom to write for the press or to maintain a periodical publication;
(4) Freedom from arbitrary or illegal detention;
(5) Freedom of suffrage;
(6) The right against deprivation of property without due process of law;
(7) The right to a just compensation when private property is taken for public use;
(8) The right to the equal protection of the laws;
(9) The right to be secure in one's person, house, papers, and effects against unreasonable
searches and seizures;
(10) The liberty of abode and of changing the same;
(11) The privacy of communication and correspondence;

(12) The right to become a member of associations or societies for purposes not contrary
to law;
(13) The right to take part in a peaceable assembly to petition the government for redress
of grievances;
(14) The right to be free from involuntary servitude in any form;
(15) The right of the accused against excessive bail;
(16) The right of the accused to be heard by himself and counsel, to be informed of the
nature and cause of the accusation against him, to have a speedy and public trial, to meet
the witnesses face to face, and to have compulsory process to secure the attendance of
witness in his behalf;
(17) Freedom from being compelled to be a witness against one's self, or from being forced
to confess guilt, or from being induced by a promise of immunity or reward to make such
confession, except when the person confessing becomes a State witness;
(18) Freedom from excessive fines, or cruel and unusual punishment, unless the same is
imposed or inflicted in accordance with a statute which has not been judicially declared
unconstitutional; and
(19) Freedom of access to the courts.
In any of the cases referred to in this article, whether or not the defendant's act or
omission constitutes a criminal offense, the aggrieved party has a right to commence an
entirely separate and distinct civil action for damages, and for other relief. Such civil
action shall proceed independently of any criminal prosecution (if the latter be instituted),
and mat be proved by a preponderance of evidence.
The indemnity shall include moral damages. Exemplary damages may also be adjudicated.
The responsibility herein set forth is not demandable from a judge unless his act or
omission constitutes a violation of the Penal Code or other penal statute.

ABERCA VS VER
Moreover, as pointed out by petitioners, their right and cause of action for damages are explicitly recognized
in PD 1755 which amended Art. 1146 of the Civil Code by adding the following text: However, when the
action (for injury to the rights of the plaintiff or for quasi-delict) arises from or out of any act, activity or
conduct of any public officer involving the exercise of powers or authority arising from martial law including
the arrest, detention and/or trial of the plaintiff, the same must be brought within one year.
Even assuming that the suspen

Article 32 of the Civil Code, which renders any public officer or employees, or any private individual, liable in
damages for violating the constitutional rights and liberties of another, does not exempt the respondents
from responsibility. Only judges are excluded from liability under the said article, provided their acts or
omissions do not constitute a violation of the Revised Penal Code or other penal statute.
However, the decisive factor in this case is the language of Art. 32, Civil Code; the law speaks of
an officer or employee or person directly or indirectly responsible for the violation of the
constitutional rights and liberties of another. Thus, it is not the actor alone who must answer for
damages under Art. 32; the person indirectly responsible has also to answer for the damages or
injury caused to the aggrieved party. Art. 32 makes the persons who are directly as well as
indirectly responsible for the transgression joint tortfeasors.

2.

DEFAMATION, FRAUD, PHYSICAL INJURIES

Art. 33. In cases of defamation, fraud, and physical injuries a civil action for damages, entirely
separate and distinct from the criminal action, may be brought by the injured party. Such civil
action shall proceed independently of the criminal prosecution, and shall require only a
preponderance of evidence.
3.

NEGLECT OF DUTY BY PUBLIC OFFICERS

Art. 34. When a member of a city or municipal police force refuses or fails to render aid or
protection to any person in case of danger to life or property, such peace officer shall be primarily
liable for damages, and the city or municipality shall be subsidiarily responsible therefor. The civil
action herein recognized shall be independent of any criminal proceedings, and a preponderance
of evidence shall suffice to support such action

4.

EFFECT OF ACQUITTAL OF DEFENDANT FOR FELONIES OR ACTS PUNISHABLE BUT WITH

INDEPENDENT CIVIL ACTIONS

Art. 29. When the accused in a criminal prosecution is acquitted on the ground that his guilt has
not been proved beyond reasonable doubt, a civil action for damages for the same act or omission
may be instituted. Such action requires only a preponderance of evidence. Upon motion of the
defendant, the court may require the plaintiff to file a bond to answer for damages in case the
complaint should be found to be malicious.
If in a criminal case the judgment of acquittal is based upon reasonable doubt, the court shall so
declare. In the absence of any declaration to that effect, it may be inferred from the text of the
decision whether or not the acquittal is due to that ground.
Art. 30. When a separate civil action is brought to demand civil liability arising from a criminal
offense, and no criminal proceedings are instituted during the pendency of the civil case, a
preponderance of evidence shall likewise be sufficient to prove the act complained of.
Art. 31. When the civil action is based on an obligation not arising from the act or omission
complained of as a felony, such civil action may proceed independently of the criminal proceedings
and regardless of the result of the latter.
RULE 111 SEC 3&4

Section 3. When civil action may proceeded independently. In the cases provided for in Articles 32, 33, 34 and
2176 of the Civil Code of the Philippines, the independent civil action may be brought by the offended party. It shall
proceed independently of the criminal action and shall require only a preponderance of evidence. In no case,
however, may the offended party recover damages twice for the same act or omission charged in the criminal action.
(3a)
Section 4. Effect of death on civil actions. The death of the accused after arraignment and during the pendency of
the criminal action shall extinguish the civil liability arising from the delict. However, the independent civil action

instituted under section 3 of this Rule or which thereafter is instituted to enforce liability arising from other sources of
obligation may be continued against the estate or legal representative of the accused after proper substitution or
against said estate, as the case may be. The heirs of the accused may be substituted for the deceased without
requiring the appointment of an executor or administrator and the court may appoint a guardian ad litem for the minor
heirs.
The court shall forthwith order said legal representative or representatives to appear and be substituted within a
period of thirty (30) days from notice.
A final judgment entered in favor of the offended party shall be enforced in the manner especially provided in these
rules for prosecuting claims against the estate of the deceased.
If the accused dies before arraignment, the case shall be dismissed without prejudice to any civil action the offended
party may file against the estate of the deceased. (n)
VS RULE 111 5&6

Section 5. Judgment in civil action not a bar. A final judgment rendered in a civil action absolving the defendant
from civil liability is not a bar to a criminal action against the defendant for the same act or omission subject of the civil
action. (4a)
Section 6. Suspension by reason of prejudicial question. A petition for suspension of the criminal action based
upon the pendency of a prejudicial question in a civil action may be filed in the office of the prosecutor or the court
conducting the preliminary investigation. When the criminal action has been filed in court for trial, the petition to
suspend shall be filed in the same criminal action at any time before the prosecution rests. (6a)
MANLICLIC VS CALAUNAN

To be resolved by the Court is the effect of petitioner Manliclics acquittal in the civil case.
From the complaint, it can be gathered that the civil case for damages was one arising from, or
based on, quasi-delict.30 Petitioner Manliclic was sued for his negligence or reckless imprudence in
causing the collision, while petitioner PRBLI was sued for its failure to exercise the diligence of a
good father in the selection and supervision of its employees, particularly petitioner Manliclic. The
allegations read:
"4. That sometime on July 12, 1988 at around 6:20 A.M. plaintiff was on board the abovedescribed motor vehicle travelling at a moderate speed along the North Luzon Expressway
heading South towards Manila together with MARCELO MENDOZA, who was then driving
the same;
"5. That approximately at kilometer 40 of the North Luzon Express Way, the above-described
motor vehicle was suddenly bumped from behind by a Philippine Rabbit Bus with Body No.
353 and with plate No. CVD 478 then being driven by one Mauricio Manliclic of San Jose,
Concepcion, Tarlac, who was then travelling recklessly at a very fast speed and had
apparently lost control of his vehicle;

"6. That as a result of the impact of the collision the above-described motor vehicle was
forced off the North Luzon Express Way towards the rightside where it fell on its drivers side
on a ditch, and that as a consequence, the above-described motor vehicle which maybe
valued at EIGHTY THOUSAND PESOS (P80,000) was rendered a total wreck as shown by
pictures to be presented during the pre-trial and trial of this case;
"7. That also as a result of said incident, plaintiff sustained bodily injuries which compounded
plaintiffs frail physical condition and required his hospitalization from July 12, 1988 up to and
until July 22, 1988, copy of the medical certificate is hereto attached as Annex "A" and made
an integral part hereof;
"8. That the vehicular collision resulting in the total wreckage of the above-described motor
vehicle as well as bodily (sic) sustained by plaintiff, was solely due to the reckless
imprudence of the defendant driver Mauricio Manliclic who drove his Philippine Rabbit Bus
No. 353 at a fast speed without due regard or observance of existing traffic rules and
regulations;
"9. That defendant Philippine Rabbit Bus Line Corporation failed to exercise the diligence of
a good father of (sic) family in the selection and supervision of its drivers; x x x" 31
Can Manliclic still be held liable for the collision and be found negligent notwithstanding the
declaration of the Court of Appeals that there was an absence of negligence on his part?
In exonerating petitioner Manliclic in the criminal case, the Court of Appeals said:
To the following findings of the court a quo, to wit: that accused-appellant was negligent "when the
bus he was driving bumped the jeep from behind"; that "the proximate cause of the accident was his
having driven the bus at a great speed while closely following the jeep"; x x x
We do not agree.
The swerving of Calaunans jeep when it tried to overtake the vehicle in front of it was beyond the
control of accused-appellant.
xxxx
Absent evidence of negligence, therefore, accused-appellant cannot be held liable for Reckless
Imprudence Resulting in Damage to Property with Physical Injuries as defined in Article 365 of the
Revised Penal Code.32
From the foregoing declaration of the Court of Appeals, it appears that petitioner Manliclic was
acquitted not on reasonable doubt, but on the ground that he is not the author of the act complained
of which is based on Section 2(b) of Rule 111 of the Rules of Criminal Procedure which reads:

(b) Extinction of the penal action does not carry with it extinction of the civil, unless the extinction
proceeds from a declaration in a final judgment that the fact from which the civil might arise did not
exist.
In spite of said ruling, petitioner Manliclic can still be held liable for the mishap. The afore-quoted
section applies only to a civil action arising from crime or ex delicto and not to a civil action arising
from quasi-delict or culpa aquiliana. The extinction of civil liability referred to in Par. (e) of Section 3,
Rule 111 [now Section 2 (b) of Rule 111], refers exclusively to civil liability founded on Article 100 of
the Revised Penal Code, whereas the civil liability for the same act considered as a quasi-delict only
and not as a crime is not extinguished even by a declaration in the criminal case that the criminal act
charged has not happened or has not been committed by the accused. 33
A quasi-delict or culpa aquiliana is a separate legal institution under the Civil Code with a
substantivity all its own, and individuality that is entirely apart and independent from a delict or crime
a distinction exists between the civil liability arising from a crime and the responsibility for quasidelicts or culpa extra-contractual. The same negligence causing damages may produce civil liability
arising from a crime under the Penal Code, or create an action for quasi-delicts or culpa extracontractual under the Civil Code.34 It is now settled that acquittal of the accused, even if based on a
finding that he is not guilty, does not carry with it the extinction of the civil liability based on quasi
delict.35
In other words, if an accused is acquitted based on reasonable doubt on his guilt, his civil liability
arising from the crime may be proved by preponderance of evidence only. However, if an accused is
acquitted on the basis that he was not the author of the act or omission complained of (or that there
is declaration in a final judgment that the fact from which the civil might arise did not exist), said
acquittal closes the door to civil liability based on the crime or ex delicto. In this second instance,
there being no crime or delict to speak of, civil liability based thereon or ex delicto is not possible. In
this case, a civil action, if any, may be instituted on grounds other than the delict complained of.
As regards civil liability arising from quasi-delict or culpa aquiliana, same will not be extinguished by
an acquittal, whether it be on ground of reasonable doubt or that accused was not the author of the
act or omission complained of (or that there is declaration in a final judgment that the fact from which
the civil liability might arise did not exist). The responsibility arising from fault or negligence in
a quasi-delict is entirely separate and distinct from the civil liability arising from negligence under the
Penal Code.36 An acquittal or conviction in the criminal case is entirely irrelevant in the civil
case37 based on quasi-delict or culpa aquiliana
For failure to adduce proof that it exercised the diligence of a good father of a family in the selection
and supervision of its employees, petitioner PRBLI is held solidarily responsible for the damages
caused by petitioner Manliclics negligence.
We now go to the award of damages. The trial court correctly awarded the amount of P40,838.00 as
actual damages representing the amount paid by respondent for the towing and repair of his
jeep.47 As regards the awards for moral and exemplary damages, same, under the circumstances,
must be modified. The P100,000.00 awarded by the trial court as moral damages must be reduced
to P50,000.00.48 Exemplary damages are imposed by way of example or correction for the public

good.49 The amount awarded by the trial court must, likewise, be lowered to P50,000.00.50 The award
of P15,000.00 for attorneys fees and expenses of litigation is in order and authorized by law.51

IX DAMAGES

DAMAGES
CHAPTER 1
GENERAL PROVISIONS
Art. 2195. The provisions of this Title shall be respectively applicable to all obligations mentioned
in Article 1157.
Art. 2196. The rules under this Title are without prejudice to special provisions on damages
formulated elsewhere in this Code. Compensation for workmen and other employees in case of
death, injury or illness is regulated by special laws. Rules governing damages laid down in other
laws shall be observed insofar as they are not in conflict with this Code.
Art. 2197. Damages may be:
(1) Actual or compensatory;
(2) Moral;
(3) Nominal;
(4) Temperate or moderate;
(5) Liquidated; or
(6) Exemplary or corrective.
Art. 2198. The principles of the general law on damages are hereby adopted insofar as they are not
inconsistent with this Code.

b. Damages distinguished from injury

Civil Law Torts and Damages Damnum Absque Injuria Actionable Wrong
Pacifico Mabasa owns a property behind the properties of spouses Cristino and Brigida
Custodio and spouses Lito and Ma. Cristina Santos. The passageway leading to Mabasas
house passes through the properties of the Custodios and the Santoses.

Sometime in 1981, the spouses Lito and Ma. Cristina Santos built a fence around their
property. This effectively deprived Mabasa passage to his house. Mabasa then sued the
Custodios and the Santoses to compel them to grant his right of way with damages.
Mabasa claims that he lost tenants because of the blockade done by the families in front.
The trial court ruled in favor of Mabasa. It ordered the Custodios and the Santoses to give
Mabasa a permanent easement and right of way and for Mabasa to pay just compensation.
The Santoses and the Custodios appealed. The Court of Appeals affirmed the decision of
the trial court. However, the CA modified the ruling by awarding damages in favor of
Mabasa (Actual damages: P65k, Moral damages: P30k, Exemplary damages: P10k).
ISSUE: Whether or not the grant of damages by the CA is proper.
HELD: No. The award is not proper. This is an instance of damnum absque injuria.
There is a material distinction between damages and injury. Injury is the illegal invasion of a
legal right; damage is the loss, hurt, or harm which results from the injury; and damages are
the recompense or compensation awarded for the damage suffered. Thus, there can be
damage without injury in those instances in which the loss or harm was not the result of a
violation of a legal duty.
In this case, it is true that Mabasa may have incurred losses (damage) when his tenants left
because of the fence made by the Santoses. However, when Santos built the fence, he was
well within his right. He built the fence inside his property. There was no existing easement
agreement, either by contract or by operation of law, on his property. Hence, Santos has all
the right to build the fence. It was only after the judgment in the trial court that the easement
was created which was even conditioned on the payment of Mabasa of the just
compensation. Santos did not commit a legal injury against Mabasa when he built the
fence, therefore, there is no actionable wrong as basis for the award of damages. In this
case, the damage has to be borne by Mabasa.

c. Distinguished from restitution and injunction

d. Requisites for recovery
e. Kinds of Damages
1. Actual or Compensatory Damages

ACTUAL OR COMPENSATORY DAMAGES

Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate

compensation only for such pecuniary loss suffered by him as he has duly proved. Such
compensation is referred to as actual or compensatory damages.
Art. 2200. Indemnification for damages shall comprehend not only the value of the loss suffered,
but also that of the profits which the obligee failed to obtain. (1106)
Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good
faith is liable shall be those that are the natural and probable consequences of the breach of the
obligation, and which the parties have foreseen or could have reasonably foreseen at the time the
obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all
damages which may be reasonably attributed to the non-performance of the obligation. (1107a)
Art. 2202. In crimes and quasi-delicts, the defendant shall be liable for all damages which are the
natural and probable consequences of the act or omission complained of. It is not necessary that
such damages have been foreseen or could have reasonably been foreseen by the defendant.
Art. 2203. The party suffering loss or injury must exercise the diligence of a good father of a
family to minimize the damages resulting from the act or omission in question.
Art. 2204. In crimes, the damages to be adjudicated may be respectively increased or lessened
according to the aggravating or mitigating circumstances.
Art. 2205. Damages may be recovered:
(1) For loss or impairment of earning capacity in cases of temporary or permanent personal
injury;
(2) For injury to the plaintiff's business standing or commercial credit.
Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least
three thousand pesos, even though there may have been mitigating circumstances. In addition:
(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and
the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be
assessed and awarded by the court, unless the deceased on account of permanent physical
disability not caused by the defendant, had no earning capacity at the time of his death;
(2) If the deceased was obliged to give support according to the provisions of Article 291,
the recipient who is not an heir called to the decedent's inheritance by the law of testate
or intestate succession, may demand support from the person causing the death, for a
period not exceeding five years, the exact duration to be fixed by the court;
(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased
may demand moral damages for mental anguish by reason of the death of the deceased.
Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the
insurance company for the injury or loss arising out of the wrong or breach of contract complained
of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer
or the person who has violated the contract. If the amount paid by the insurance company does

not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency
from the person causing the loss or injury.
Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than
judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff to litigate with third
persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff's plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;
(8) In actions for indemnity under workmen's compensation and employer's liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorney's fees and
expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be reasonable.
Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in
delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment
of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six per
cent per annum. (1108)
Art. 2210. Interest may, in the discretion of the court, be allowed upon damages awarded for
breach of contract.
Art. 2211. In crimes and quasi-delicts, interest as a part of the damages may, in a proper case, be
adjudicated in the discretion of the court.
Art. 2212. Interest due shall earn legal interest from the time it is judicially demanded, although
the obligation may be silent upon this point. (1109a)
Art. 2213. Interest cannot be recovered upon unliquidated claims or damages, except when the
demand can be established with reasonably certainty.

Art. 2214. In quasi-delicts, the contributory negligence of the plaintiff shall reduce the damages
that he may recover.
Art. 2215. In contracts, quasi-contracts, and quasi-delicts, the court may equitably mitigate the
damages under circumstances other than the case referred to in the preceding article, as in the
following instances:
(1) That the plaintiff himself has contravened the terms of the contract;
(2) That the plaintiff has derived some benefit as a result of the contract;
(3) In cases where exemplary damages are to be awarded, that the defendant acted upon
the advice of counsel;
(4) That the loss would have resulted in any event;
(5) That since the filing of the action, the defendant has done his best to lessen the
plaintiff's loss or injury

FILSYN VS DELOS SANTOS

in view of the absence of sufficient proof of its exercise of due diligence, Filsyn cannot escape its
solidary liability as the owner of the wayward bus and the employer of the negligent driver of the
wayward bus. x x x
As to the amount of the damages awarded by the CA, petitioner claims that it is not in accord with
the evidence on record. It explained that the amounts used in computing for compensatory damages
were based mainly on the assertions of the respondents as to the amount of salary being received
by the two deceased at the time of their deaths.
1awphil

This Court, in its ruling,16 expounded on the nature of compensatory damages, thus:
Under Article 2199 of the New Civil Code, actual damages include all the natural and probable
consequences of the act or omission complained of, classified as one for the loss of what a person
already possesses (dao emergente) and the other, for the failure to receive, as a benefit, that which
would have pertained to him (lucro cesante). As expostulated by the Court in PNOC Shipping and
Transport Corporation v. Court of Appeals:17
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. There are
two kinds of actual or compensatory damages: one is the loss of what a person already
possesses (dao emergente), and the other is the failure to receive as a benefit that which would
have pertained to him (lucro cesante).18
The burden of proof is on the party who would be defeated if no evidence would be presented on
either side. The burden is to establish ones 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. Actual damages are
not presumed. The claimant must prove the actual amount of loss with a reasonable degree of

certainty premised upon competent proof and on the best evidence obtainable. Specific facts that
could afford a basis for measuring whatever compensatory or actual damages are borne must be
pointed out. Actual damages cannot be anchored on mere surmises, speculations or conjectures. As
the Court declared:
As stated at the outset, to enable an injured party to recover actual or compensatory damages, he is
required to prove the actual amount of loss with reasonable degree of certainty premised upon
competent proof and on the best evidence available. 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.19

2. BF METAL VS LOMOTAN
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.10 Actual damages are such compensation or damages for an
injury that will put the injured party in the position in which he had been before he was injured. They
pertain to such injuries or losses that are actually sustained and susceptible of measurement. To
justify an award of actual damages, there must be competent proof of the actual amount of loss.
Credence can be given only to claims which are duly supported by receipts. 11
In People v. Gopio,12 the Court allowed the reimbursement of only the laboratory fee that was duly
receipted as "the rest of the documents, which the prosecution presented to prove the actual
expenses incurred by the victim, were merely a doctors prescription and a handwritten list of food
expenses."13 In Viron Transportation Co., Inc. v. Delos Santos,14 the Court particularly disallowed the
award of actual damages, considering that the actual damages suffered by private respondents
therein were based only on a job estimate and a photo showing the damage to the truck and no
competent proof on the specific amounts of actual damages suffered was presented.
In the instant case, no evidence was submitted to show the amount actually spent for the repair or
replacement of the wrecked jeep. Spouses Lomotan presented two different cost estimates to prove
the alleged actual damage of the wrecked jeep. Exhibit "B," is a job estimate by Pagawaan Motors,
Inc., which pegged the repair cost of the jeep at P96,000.00, while Exhibit "M," estimated the cost of
repair at P130,655.00. Following Viron, neither estimate is competent to prove actual damages.
Courts cannot simply rely on speculation, conjecture or guesswork in determining the fact and
amount of damages.15

EMETRITA DE GUZMAN VS TUMOLVA

CIACs award of actual damages, however, is indeed not proper under the
circumstances as there is no concrete evidence to support the plea. In determining
actual damages, one cannot rely on mere assertions, speculations, conjectures or
guesswork, but must depend on competent proof and on the best evidence

obtainable regarding specific facts that could afford some basis for measuring
compensatory or actual damages.[12] Article 2199 of the New Civil Code defines
actual or compensatory damages as follows:
Art. 2199. Except as provided by law or by stipulation, one is
entitled to an adequate compensation only for such pecuniary loss suffered
by him as he has duly proved. Such compensation is referred to as actual or
compensatory damages.

Unfortunately, De Guzman failed to adduce evidence to satisfactorily prove

the amount of actual damage incurred. Contrary to her assertion, the handwritten
calculation of reconstruction costs made by Engineer Santos and attached to his
affidavit cannot be given any probative value because he never took the witness
stand to affirm the veracity of his allegations in his affidavit and be cross-examined
on them.

A. DAMAGES IN CONTRACTS AND QUASI CONTRACTS

CARIAGA VS LAGUNA
Appellant LTB admits that under Art. 2201 of the Civil Code the damages for which the
obligor, guilty of a breach of contract but who acted in good faith, is liable shall be those that
are the natural and probable consequences of the breach and which the parties had forseen
or could have reasonably forseen at the time the obligation was constituted, provided such
damages, according to Art. 2199 of the same Code, have been duly proved. Upon this
premise it claims that only the actual damages suffered by Edgardo Cariaga consisting of
medical, hospital and other expenses in the total sum of P17,719.75 are within this category.
We are of the opinion, however, that the income which Edgardo Cariaga could earn if he
should finish the medical course and pass the corresponding board examinations must be
deemed to be within the same category because they could have reasonably been foreseen
by the parties at the time he boarded the bus No. 133 owned and operated by the LTB. At
that time he was already a fourth-year student in medicine in a reputable university. While his
scholastic may not be first rate (Exhibits 4, 4-A to 4-C), it is, nevertheless, sufficient to justify
the assumption that he could have passed the board test in due time. As regards the income
that he could possibly earn as a medical practitioner, it appears that, according to Dr. Amado
Doria, a witness for the LTB, the amount of P300.00 could easily be expected as the
minimum monthly income of Edgardo had he finished his studies.
B. Damages in Crimes and Quasi Delict with Death (Civil indemnity separate and distinct from
moral)
PEOPLE VS VILLARICO

Penalty and Damages

There is no question that the CA justly pronounced all the four accused
guilty beyond reasonable doubt of murder, and punished them with reclusion
perpetua pursuant to Article 248[52] of the Revised Penal Code, in relation to Article
63, paragraph 2, of the Revised Penal Code, considering the absence of any generic
aggravating circumstance.
However, the CA did not explain why it did not review and revise the grant
by the RTC of civil liability in the amount ofonly P50,000.00. Thereby, the CA
committed a plainly reversible error for ignoring existing laws, like Article 2206 of
the Civil Code,[53] which prescribes a death indemnity separately from moral
damages, and Article 2230 of the Civil Code,[54] which requires exemplary damages
in case of death due to crime when there is at least one aggravating circumstance;
and applicable jurisprudence, specifically, People v. Gutierrez,[55] where we held
that moral damages should be awarded to the heirs without need of proof or
pleading in view of the violent death of the victim, and People v.Catubig,
[56]
where we ruled that exemplary damages were warranted whenever the crime
was attended by an aggravating circumstance, whether qualifying or ordinary.
Here, the aggravating circumstance of treachery, albeit attendant or qualifying in
its effect, justified the grant of exemplary damages.
Consistent with prevailing jurisprudence, we grant to the heirs of
Haide P75,000.00 as death indemnity;[59] P75,000.00 as moral damages;
[60]
and P30,000.00 as exemplary damages.[61] As clarified in People v. Arbalate,
[62]
damages in such amounts are to be granted whenever the accused are adjudged
guilty of a crime covered by Republic Act No. 7659, like the murder charged and
proved herein. Indeed, the Court, observing in People v. Sarcia,[63] citing People v.
Salome[64] and People v. Quiachon,[65] that the principal consideration for the award
of damages xxx is the penalty provided by law or imposable for the offense
because of its heinousness, not the public penalty actually imposed on the
offender, announced that:
The litmus test[,] therefore, in the determination of the civil indemnity is the
heinous character of the crime committed, which would have warranted the
imposition of the death penalty, regardless of whether the penalty actually
imposed is reduced to reclusion perpetua.

People vs Apattad

Consequently, courts can no longer impose the penalty of death. Instead,

they have to impose reclusion perpetua. Nonetheless, the principal consideration
for the award of damages is the penalty provided by law or imposable for the
offense because of its heinousness, not the public penalty actually imposed on the
offender.
Pertinently, as early as July 9, 1998, this Court has held that when the
circumstances surrounding the crime would justify the imposition of the penalty of
death were it not for RA 9346, the award of civil indemnity for the crime of rape
should be PhP 75,000,[79] racionating that [t]his is not only a reaction to the
apathetic societal perception of the penal law and the financial fluctuations over
time, but also an expression of the displeasure of the Court over the incidence of
heinous crimes against chastity.[80]
Likewise, the award of moral damages in the amount of PhP 75,000 is
warranted,[81] without need of pleading or proving them. [82] In rape cases, it is
recognized that the victims injury is concomitant with and necessarily results from
the odious crime of rape to warrant per se the award of moral damages.[83]
Further, the Court also awards exemplary damages in the amount of PhP
30,000, despite the lack of any aggravating circumstances, [84] to deter others from
committing similar acts or for correction for the public good.[85]

HEIRS OF CASTRO VS BUSTOS (ipad pix Phil law on Torts & Damages)

When the commission of a crime results in death, the civil obligations arising therefrom are
governed by the penal laws, "... subject to the provisions of Art. 2177, and of the pertinent provisions
of Chapter 2, Preliminary Title on Human Relations, and of Title XVIII of this Book (Book IV)
regulating damages." (Art. 1161, Civil Code)
Thus, "every person criminally liable for a felony is also civily liable." (Art. 100, Revised Penal Code).
This civil liability, in case the felony involves death, includes indemnification for consequential
damages (Art. 104, id.) and said consequential damages in turn include "... those suffered by his
family or by a third person by reason of the crime." (Art. 107, id.) Since these provisions are subject,

however, as above indicated, to certain provisions of the Civil Code, We will now turn to said
provisions.
The general rule in the Civil Code is that:
In crimes and quasi-delicts, the defendant shall be liable for all damages which are the
natural and probable consequences of the act or omission complained of. It is not necessary
that such damages have been foreseen or could have reasonably been foreseen by the
defendant. (Art. 2202)
When, however, the crime committed involves death, there is Art. 2206 which provides thus:
The amount of damages for death caused by a crime or quasi-delict shall be at least three
thousand pesos, even though there may have been mitigating circumstances. In addition:
(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the
indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be
assessed and awarded by the court, unless the deceased on account of permanent physical
disability not caused by the defendant, had no earning capacity at the time of his death;
(2) If the deceased was obliged to give support according to the provisions of article 291, the
recipient who is not an heir called to the decedent's inheritance by law of testate or intestate
succession may demand support from the person causing the death, for a period not
exceeding five years, the exact duration to be fixed by the court;
(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased
may demand moral damages for mental anguish by reason of the death of the deceased.
The amount of P3,000 referred to in the above article has already been increased by this Court first,
to P6,000.00 in People v. Amansec, 80 Phil. 426, and lately to P12,000.00 in the case of People v.
Pantoja, G. R. No. L-18793, promulgated October 11, 1968, and it must be stressed that this
amount, as well as the amount of moral damages, may be adjudicated even without proof of
pecuniary loss, the assessment of the moral damages being "left to the discretion of the court,
according to the circumstances of each case." (Art. 2216)
Exemplary damages may also be imposed as a part of this civil liability when the crime has been
committed with one or more aggravating circumstances, such damages being "separate and distinct
from fines and shall be paid to the offended party," (Art. 2230). Exemplary damages cannot however
be recovered as a matter of right; the court will decide whether or not they should be given. (Art.
2233)
In any event, save as expressly provided in connection with the indemnity for the sole fact of death
(1st par., Art. 2206) and in cases wherein exemplary damages are awarded precisely because of the
attendance of aggravating circumstances, (Art. 2230) "... damages to be adjudicated may be
respectively increased or lessened according to the aggravating or mitigating circumstances," (Art.
2204) but "the party suffering the loss or injury must exercise the diligence of a good father of a
family to minimize the damages resulting from the act or omisson in question." (Art. 2203) "Interest
as a part of the damages, may, in a proper case, be adjudicated in the discretion of the Court." (Art.
2211) As to attorneys' fees and expenses of litigation, the same may be recovered only when
exemplary damages have been granted (Art. 2208, par. 1) or, as We have already stated, when
there is a separate civil action.

Stated differently, when death occurs as a result of a crime, the heirs of the deceased are entitled to
the following items of damages:
1. As indemnity for the death of the victim of the offense P12,000.00, without the need of
any evidence or proof of damages, and even though there may have been mitigating
circumstances attending the commission of the offense.
2. As indemnity for loss of earning capacity of the deceased an amount to be fixed by the
Court according to the circumstances of the deceased related to his actual income at the
time of death and his probable life expectancy, the said indemnity to be assessed and
awarded by the court as a matter of duty, unless the deceased had no earning capacity at
said time on account of permanent disability not caused by the accused. If the deceased was
obliged to give support, under Art. 291, Civil Code, the recipient who is not an heir, may
demand support from the accused for not more than five years, the exact duration to be fixed
by the court.
3. As moral damages for mental anguish, an amount to be fixed by the court. This may be
recovered even by the illegitimate descendants and ascendants of the deceased.
4. As exemplary damages, when the crime is attended by one or more aggravating
circumstances, an amount to be fixed in the discretion of the court, the same to be
considered separate from fines.
5. As attorney's fees and expresses of litigation, the actual amount thereof, (but only when
a separate civil action to recover civil liability has been filed or when exemplary damages are
awarded).
6. Interests in the proper cases.
7. It must be emphasized that the indemnities for loss of earning capacity of the deceased
and for moral damages are recoverable separately from and in addition to the fixed sum of
P12,000.00 corresponding to the indemnity for the sole fact of death, and that these
damages may, however, be respectively increased or lessened according to the mitigating or
aggravating circumstances, except items 1 and 4 above, for obvious reasons.
The award of moral damages to the surviving spouse, legitimate and illegitimate
descendants, and ascendants of the deceased, should be made to each of them individually
and in varying amounts depending upon proof of mental anguish and the depth or intensity
of the same. Where it is shown that one or some did not suffer mental anguish or could not
have suffered the same, no award of moral damages should be made to him or to them. For
example: The evidence shows that the surviving widow, who had a paramour, when informed
of the death of her husband, said: "Mabuti nga. Ngayon maaari na akong pakasal kay Pepe."
Another example: The evidence shows that the legitimate children (or grandchildren) were
aged one, two and four at the time their father was killed. In the very nature of things these
children (or descendants) could not have suffered mental anguish. In these examples there
should be no award of moral damages to the widow and the infant children.

PEOPLE VS JOSE COMBATE

This Court will now endeavor to end, once and for all, the confusion as to
the proper award of damages in criminal cases where the imposable penalty for the
crime is reclusion perpetua or death. As a rule, the Court awards three kinds of
damages in these types of criminal cases: civil indemnity and moral and exemplary
damages. We shall discuss all three.
First, 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.[21] This award stems from Art. 100 of
the RPC which states, Every person criminally liable for a felony is also civilly
liable.
Civil liability ex delicto may come in the form of restitution, reparation, and
indemnification.[22] Restitution is defined as the compensation for loss; it is full or
partial compensation paid by a criminal to a victim ordered as part of a criminal
sentence or as a condition for probation.[23] Likewise, reparation and
indemnification are similarly defined as the compensation for an injury, wrong,
loss, or damage sustained.[24] Clearly, all of these correspond to actual or
compensatory damages defined under the Civil Code.[25]
The other kinds of damages, i.e., moral and exemplary or corrective
damages,[26] have altogether different jural foundations.
The second type of damages the Court awards are moral damages, which are
also compensatory in nature. Del Mundo v. Court of Appeals explained the nature
and purpose of moral damages, viz:
Moral damages, upon the other hand, may be awarded to compensate one
for manifold injuries such as physical suffering, mental anguish, serious anxiety,
besmirched reputation, wounded feelings and social humiliation. These damages
must be understood to be in the concept of grants, not punitive or corrective
in nature, calculated to compensate the claimant for the injury
suffered. Although incapable of exactness and no proof of pecuniary loss is
necessary in order that moral damages may be awarded, the amount of indemnity
being left to the discretion of the court, it is imperative, nevertheless, that (1)

injury must have been suffered by the claimant, and (2) such injury must have
sprung from any of the cases expressed in Article 2219[27] and Article 2220[28] of
the Civil Code. (Emphasis supplied.)

Similarly, in American jurisprudence, moral damages are treated as

compensatory damages awarded for mental pain and suffering or mental anguish
resulting from a wrong.[29] They may also be considered and allowed for
resulting pain and suffering, and for humiliation, indignity, and vexation suffered
by the plaintiff as result of his or her assailants conduct, as well as the factors of
provocation, the reasonableness of the force used, the attendant humiliating
circumstances, the sex of the victim, [and] mental distress.[30]
ATTORNEYS FEES AS ACTUAL DAMAGES
QUIRANTE VS IAC
HELD: NO. present recourse is hereby AFFIRMED

attorney's fees may be asserted either in:

the very action in which the services in question have been

rendered -as in this case
the Court may pass upon said claim, even if its amount
were less than the minimum prescribed by law for the jurisdiction of said
court, upon the theory that the right to recover attorney's fees is but an
incident of the case in which the services of counsel have been rendered
rests on the assumption that the court trying the case is to
a certain degree already familiar with the nature and extent of the
lawyer's services
The rule against multiplicity of suits will in effect be served
a separate action
2 Kinds of Attorney's fees

1. item of damages provided for under Article 2208 of the Civil

Code wherein the award is made in favor of the litigant, not of his
counsel, and the litigant, not his counsel, is the judgment creditor who
may enforce the judgment for attorney's fees by execution
2. claims are based on the contract for professional services,
with the attorney as the creditors and the clients as the debtors

It is further observed that the supposed contract alleged by petitioners

as the basis for their fees provides that the recoveryof the amounts
claimed is subject to certain contingencies
We are of the considered view that the orderly administration of justice
dictates that such issue be likewise determined by the court a quo inasmuch
as it also necessarily involves the same contingencies in determining the
propriety and assessing the extent of recovery of attorney's fees by both
petitioners herein. The court below will be in a better position, after the
entire case shall have been adjudicated
We, therefore, take exception to and reject that portion of the decision of
the respondent court which holds that the alleged confirmation to attorney's
fees should not adversely affect the non-signatories thereto, since it is also
premised on the eventual grant of damages to the Casasola family, hence
the same objection of prematurity obtains and such a holding may be preemptive of factual and evidentiary matters that may be presented for
consideration by the trial court.

SPS ANDRADA VS PILIPINO SALES CORP.

The petitioners further seek attorneys fees based on Article 2208 (4) of
the Civil Code, which provides that in the absence of stipulation, attorneys fees
and expenses of litigation, other than judicial costs, cannot be recovered, except
xxx (4) in cases of clearly unfounded civil action or proceeding against the
plaintiff xxx.
The petitioners are not entitled to attorneys fees.
It is well accepted in this jurisdiction that no premium should be placed on
the right to litigate and that not every winning party is entitled to an automatic
grant of attorneys fees.[10] Indeed, before the effectivity of the new Civil Code,
such fees could not be recovered in the absence of a stipulation. [11] It was only with
the advent of the new Civil Code that the right to collect attorneys fees in the
instances mentioned in Article 2208 was recognized,[12] and such fees are now
included in the concept of actual damages.[13] One such instance is where the
defendant is guilty of gross and evident bad faith in refusing to satisfy the
plaintiffs plainly valid, just and demandable claim. [14] This is a corollary of the

general principle expressed in Article 19 of theCivil Code that everyone must, in

the performance of his duties, observe honesty and good faith and the rule
embodied in Article 1170 that anyone guilty of fraud (bad faith) in the performance
of his obligation shall be liable for damages.
But, as noted by the Court in Morales v. Court of Appeals,[15] the award of
attorneys fees is the exception rather than the rule. The power of a court to award
attorneys fees under Article 2208 of the Civil Code demands factual, legal, and
equitable justification; its basis cannot be left to speculation and conjecture. [16] The
general rule is that attorneys fees cannot be recovered as part of damages because
of the policy that no premium should be placed on the right to litigate.[17]
Herein, the element of bad faith on the part of Pilhino in commencing and
prosecuting Civil Case No. 21,898-93, which was necessary to predicate the lawful
grant of attorneys fees based on Article 2208 (4) of the Civil Code, was not
established. Accordingly, the petitioners demand for attorneys fees must fail.
INTEREST AS ACTUAL DAMAGES
EASTERN SHIPPING VS CA

(1)
The Court held that the legal interest is 6% computed from the decision of the court a
quo. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the
amount of damaes awarded may be imposed at the discretion of the court at the rate of 6% per annum.
No interest shall be adjudged on unliquidated claims or damages except when or until the demand can be
established with reasonable certainty.

When the judgment of the court awarding a sum of money becomes final and executor, the
rate of legal interest shall be 12% per annum from such finality until satisfaction, this interim period being
deemed to be by then an equivalent to a forbearance of money.
The interest due shall be 12% PA to be computed fro default, J or EJD.
(2)
From the date the judgment is made. Where the demand is established with reasonable
certainty, the interest shall begin to run from the time the claim is made judicially or EJ but when such
certainty cannot be so reasonably established at the time the demand is made, the interest shll begin to
run only from the date of judgment of the court is made.

(3) The Court held that it should be computed from the decision rendered by the court a quo.

TERESITA DIO VS SPS JAPOR

n the instant case, the Court of Appeals found that the 5% interest rate per month
and 5% penalty rate per month for every month of default or delay is in reality interest
rate at 120% per annum. This Court has held that a stipulated interest rate of 5.5% per
month or 66%per annum is void for being iniquitous or unconscionable. We have
likewise ruled that an interest rate of 6% per month or 72% per annum is outrageous
and inordinate. Conformably to these precedent cases, a combined interest and
penalty rate at 10% per month or 120% per annum, should be deemed iniquitous,
unconscionable, and inordinate. Hence, we sustain the appellate court when it found the
interest and penalty rates in the Deed of Real Estate Mortgage in the present case
excessive, hence legally impermissible. Reduction is legally called for now in rates of
interest and penalty stated in the mortgage contract.
[16]

[17]

What then should the interest and penalty rates be?

The evidence shows that it was indeed the respondents who proposed the 5%
interest rate per month for two (2) months. Having agreed to said rate, the parties are
now estopped from claiming otherwise. For the succeeding period after the two months,
however, the Court of Appeals correctly reduced the interest rate to 12% per annum and
the penalty rate to 1% per month, in accordance with Article 2227 of the Civil Code.
[18]

LOSS OF EARNING CAPACITY

PEOPLE VS LOPEZ
However, we modify the award for loss of earning capacity. The rule is that documentary evidence
should be presented to substantiate a claim for loss of earning capacity.10 In this case, Liberty
presented a certification from Tanod Publishing which showed that Melendres was a photo
correspondent for Tanod Newspaper and that "his monthly salary ranges from P1,780 to P3,570 on
per story basis."11 Liberty presented another certification from Tanod Publishing which showed that
Melendres received the total amount of P24,990 representing payment of honoraria and
transportation allowance from 1 January to 31 July 2006.12 The Court notes that the defense did not
object when the prosecution presented these documents before the trial court. The rule is that
evidence not objected to is deemed admitted and may be validly considered by the court in arriving
at its judgment.13 It was also established that at the time of his death, Melendres was 41 years old. 14
Thus, Melendres net earning capacity can be derived from two sources: (1) his monthly salary 15 and
(2) his honorarium and transportation allowance. 16 Loss of earning capacity is computed as follows:

Net Earning
Capacity = Life expectancy x Gross Annual Income Living Expenses
= [2/3 (80 age at death)] x GAI [50% of GAI]
= [2/3 (80 41)] x P74,94017 P37,470
= [2/3 (39)] x P37,470
= 26 x P37,470
Net Earning
Capacity = P974,220

HEIRS OF OCHOA VS GS TRANSPORT

While the trial court applied the formula generally used by the courts to determine net earning
capacity which is, to wit:
Net Earning Capacity = life expectancy* x (gross annual income - reasonable living expenses),53
*

Life expectancy = 2/3 (80 age of the deceased)

we, however, find incorrect the amount of P6,537, 244.96 arrived at. The award should
be P6,611,634.59 as borne out by the following computation:
2 (80-3654)
Net earning capacity =

x 450,844.4955-50%56
3
88

x 225,422.25
3

= 29.33 x 225,422.25
= P6, 611,634.59

MORAL DAMAGES ART. 2217- 2220

SECTION 1. - Moral Damages

Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.

Though incapable of pecuniary computation, moral damages may be recovered if they are the
proximate result of the defendant's wrongful act for omission.
Art. 2218. In the adjudication of moral damages, the sentimental value of property, real or
personal, may be considered.
Art. 2219. Moral damages may be recovered in the following and analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in Article 309;
(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this
article, may also recover moral damages.
The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in
No. 9 of this article, in the order named.
Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court
should find that, under the circumstances, such damages are justly due. The same rule applies to
breaches of contract where the defendant acted fraudulently or in bad faith.

KIELRUF VS CA
ELD: YES. AFFIRMED with MODIFICATION. The award of moral damages to

Lucila and Legaspi is hereby INCREASED to P400,000.00 and P50,000.00

respectively; exemplary damages to Lucila is INCREASED to
P200,000.00. Legaspi is awarded exemplary damages of P50,000.00

Rodriguez case ruled that when a person is injured to the extent that
he/she is no longer capable of giving love, affection, comfort and sexual

relations to his or her spouse, that spouse has suffered a direct and real
personal loss. The loss is immediate and consequential rather than
remote and unforeseeable; it is personal to the spouse and separate and
distinct from that of the injured person. Victor's claim for deprivation of
his right to consortium, although argued before Respondent Court, is not
supported by the evidence on record.
The social and financial standing of Lucila cannot be considered in
awarding moral damages.
no "rude and rough" reception, no "menacing attitude," no
"supercilious manner," no "abusive language and highly scornful
reference" was given her
awarded only if he or she was subjected to contemptuous
conduct despite the offender's knowledge of his or her social and financial
standing
proper to award moral damages to Lucila for her physical sufferings,
mental anguish, fright, serious anxiety and wounded feelings
She sustained multiple injuries on the scalp, limbs and ribs. She
lost all her teeth. She had to undergo several corrective operations and
treatments. Despite treatment and surgery, her chin was still numb and
thick. She felt that she has not fully recovered from her injuries. She
even had to undergo a second operation on her gums for her dentures to
fit. She suffered sleepless nights and shock as a consequence of the
vehicular accident.
Moral damages, though incapable of pecuniary estimation, are in
the category of an award designed to compensate the claimant for actual
injury and are not meant to enrich complainant at the expense of defendant

in order that moral damages may be awarded, there must be pleading

and proof of moral suffering, mental anguish, fright and the like. While
no proof of pecuniary loss is necessary in order that moral damages may
be awarded, the amount of indemnity being left to the discretion of the
court it is nevertheless essential that the claimant should satisfactorily
show the existence of the factual basis of damages and its causal
connection to defendant's acts. This is so because moral damages,
though incapable of pecuniary estimation, are in thecategory of
an award designed to compensate the claimant for actual injury suffered
and not to impose a penalty on the wrongdoer.
Moral damages are awarded to enable the injured party to obtain
means, diversions or amusements that will serve to alleviate the moral

suffering he/she has undergone, by reason of the defendant's culpable

action.
Its award is aimed at restoration, as much as possible, of the
spiritual status quo ante; thus, it must be proportionate to the suffering
inflicted. Since each case must be governed by its own peculiar
circumstances, there is no hard and fast rule in determining the proper
amount. The yardstick should be that the amount awarded should not be
so palpably and scandalously excessive as to indicate that it was the
result of passion, prejudice or corruption on the part of the trial judge.
Neither should it be so little or so paltry that it rubs salt to the injury already
inflicted on plaintiffs.

SECTION 2. - Nominal Damages

Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him.
Art. 2222. The court may award nominal damages in every obligation arising from any source
enumerated in Article 1157, or in every case where any property right has been invaded.
Art. 2223. The adjudication of nominal damages shall preclude further contest upon the right
involved and all accessory questions, as between the parties to the suit, or their respective heirs
and assigns.

ROBLES-FRANCISCO VS CFI

Nonetheless, while the CA recognized the existence of just causes for

petitioners dismissal, it found the petitioner entitled to nominal damages in the
amount of P5,000.00 due to Graphics, Inc.s failure to observe the procedural
requirements of due process.
Private respondent was not accorded due process when petitioner issued
and served to the former the written notice of dismissal dated Jun. 15, 2004. A
careful perusal of the records will show that the notice issued by the employer
gives the employee only twenty-four (24) hours to answer and put up his defenses
against the accusations laid upon him by the company, in contravention with the
rule of a reasonable period as construed in King of Kings Transport v.

Mamac. Moreover, the scheduled hearing in front of Leticia D. Lago was on the
same date at 1:00 p.m., which left private respondent with no recourse to secure
the services of a counsel, much less prepare a good rebuttal against the alleged
evidences for the valid dismissal of the former.
xxxx
x x x Considering that petitioner has made efforts in the past to afford private
respondent the opportunity to be able to defend himself, but the latter, instead of
availing such remedy, rejected the same; We have taken this into consideration,
and impose [P]5,000.00 as the penalty for the employers failure to comply with
the due process requirement.[7]

onetheless, while the CA finding that the petitioner is entitled to nominal damages
as his right to procedural due process was not respected despite the presence of just
causes for his dismissal is affirmed, this Court finds the CA to have erred in fixing
the amount that the Company is liable to pay. The CA should have taken
cognizance of the numerous cases decided by this Court where the amount of
nominal damages was fixed at P30,000.00 if the dismissal was for a just
cause. One of such cases isAgabon v. National Labor Relations Commission,[15] on
which the CA relied in the Assailed Decision and was reiterated inGenuino v.
National Relations Commission[16] as follows:
In view of Citibank's failure to observe due process, however, nominal
damages are in order but the amount is hereby raised to PhP 30,000 pursuant
to Agabon v. NLRC. The NLRC's order for payroll reinstatement is set aside.
In Agabon, we explained:
The violation of the petitioners' right to statutory due
process by the private respondent warrants the payment of
indemnity in the form of nominal damages. The amount of such
damages is addressed to the sound discretion of the court, taking
into account the relevant circumstances. Considering the
prevailing circumstances in the case at bar, we deem it proper to
fix it at [P]30,000.00. We believe this form of damages would
serve to deter employers from future violations of the statutory due
process rights of employees. At the very least, it provides a
vindication or recognition of this fundamental right granted to the
latter under the Labor Code and its Implementing Rules.

Thus, the award of PhP 5,000 to Genuino as indemnity for non-observance

of due process under the CA's March 31, 2000 Resolution in CA-G.R. SP No.
51532 is increased to PhP 30,000.[17]
SECTION 3. - Temperate or Moderate Damages
Art. 2224. Temperate or moderate damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds that some pecuniary loss has been
suffered but its amount can not, from the nature of the case, be provided with certainty.
Art. 2225. Temperate damages must be reasonable under the circumstances.

PNR VS BRUNTY
Respondents, however, failed to present evidence for such damages; hence, the award of actual
damages cannot be sustained. However, as the heirs of Rhonda Brunty undeniably incurred
expenses for the wake and burial of the latter, we deem it proper to award temperate damages in the
amount of P25,000.00 pursuant to prevailing jurisprudence. 65 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.66

APOLINARIO DUENAS VS ALICE AFRICA

espondent entitled to temperate damages in

lieu of actual damages

Nonetheless, in the absence of competent proof on the amount of actual

damages suffered, a party is entitled to temperate damages. Articles 2216, 2224
and 2225 of the Civil Code provide:

Art. 2216. No proof of pecuniary loss is necessary in order that moral,

nominal, temperate, liquidated or exemplary damages may be adjudicated. The
assessment of such damages, except liquidated ones, is left to the discretion of the
court, according to the circumstances of each case.

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

Art. 2225. Temperate damages must be reasonable under the

circumstances.

APOLINARIO DUENAS VS ALICE AFRICA

House repair in time for wedding of respondent sis Sally Africa

House construction was not finished

Respondent denied fault, was due to heavy rains & order to stop

Respondent prayed for the return of the P50,000.00

overpayment. She also prayed for an award of P100,000.00
for the purpose of repairing what had been poorly constructed
and at least P200,000.00 to complete the project.

Temperate or moderate damages may be recovered when some pecuniary

loss has been suffered but its amount cannot, from the nature of the case, be proved
with certainty.[23] The amount thereof is usually left to the discretion of the courts
but the same should be reasonable, bearing in mind that temperate damages should
be more than nominal but less than compensatory. [24]

There is no doubt that respondent sustained damages due to the breach

committed by the petitioner. The transfer of the venue of the wedding, the repair
of the substandard work, and the completion of the house necessarily entailed
expenses. However, as earlier discussed, respondent failed to present competent
proof of the exact amount of such pecuniary loss. To our mind, and in view of the
circumstances obtaining in this case, an award of temperate damages equivalent to

20% of the original contract price of P500,000.00, or P100,000.00 (which,

incidentally, is equivalent to 1/3 of the total amount claimed as actual damages), is
just and reasonable.

SECTION 4. - Liquidated Damages

Art. 2226. Liquidated damages are those agreed upon by the parties to a contract, to be paid in
case of breach thereof.
Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably
reduced if they are iniquitous or unconscionable.
Art. 2228. When the breach of the contract committed by the defendant is not the one
contemplated by the parties in agreeing upon the liquidated damages, the law shall determine the
measure of damages, and not the stipulation.

NAPOCOR VS NATIONAL MRCHANDISING CORP

NPCs appeal, L-33897. The trial court reduced the liquidated damages to twenty percent of the stipulated
amount. the NPC contends the it is entitled to the full amount of liquidated damages in the sum of
P360,572.80.
In reducing the liquidated damages, the trial court relied on article 2227 of the Civil Code which provides
that "liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they
are iniquitous or unconscionable."
Apparently, the trial court regarded as an equitable consideration the persistent efforts of Namerco and its
principal to charter a steamer and that the failure of the New York firm to secure shipping space was not
attributable to its fault or negligence.
The trial court also took into account the fact that the selling price of the sulfur was P450,716 and that to
award as liquidated damages more than eighty percent of the price would not be altogether reasonable.

SOLEDAd LEONOR SUATENGCO VS CARMENCITA REYES

Strictly speaking, the attorneys fees herein litigated are in the

nature of liquidated damages and not the attorneys fees
recoverable as between attorney and client enunciated and
regulated by the Rules of Court.[9] Liquidated damages are

those agreed upon by the parties to a contract to be paid in

case of breach thereof.[10] The stipulation on attorneys fees
contained in the said Promissory Note constitutes what is
known as a penal clause. A penalty clause, expressly
recognized by law, is an accessory undertaking to assume
greater liability on the part of the obligor in case of breach of an
obligation. It functions to strengthen the coercive force of
obligation and to provide, in effect, for what could be the
liquidated damages resulting from such a breach. The obligor
would then be bound to pay the stipulated indemnity without
the necessity of proof on the existence and on the measure of
damages caused by the breach.[11] It is well-settled that so long
as such stipulation does not contravene law, morals, or public
order, it is strictly binding upon the obligor. The attorneys fees
so provided are awarded in favor of the litigant, not his counsel.
[12]

G.R. No. 153874

March 1, 2007

TITAN CONSTRUCTION CORPORATION, Petitioner,

vs.
UNI-FIELD ENTERPRISES, INC., Respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the 7 January 2002 Decision2 and 20 May 2002 Resolution of the
Court of Appeals in CA-G.R. CV No. 56816. The Court of Appeals affirmed the 9 September 1997
Decision3 of the Regional Trial Court of Quezon City, Branch 224 (trial court) in Civil Case No. Q-9524170.
The Facts
Petitioner Titan Construction Corporation (petitioner) is engaged in the construction business, while
respondent Uni-Field Enterprises, Inc.4 (respondent) is engaged in the business of selling various
construction materials.
From 1990 to 1993, petitioner purchased on credit various construction supplies and materials from
respondent. Petitioners purchases amounted to P7,620,433.12 but petitioner was only able to
pay P6,215,795.70, leaving a balance of P1,404,637.42. On 19 October 1994, respondent sent a
demand letter to petitioner.5 But the balance remained unpaid.

On 26 June 1995, respondent filed with the trial court a complaint for collection of sum of money with
damages against petitioner.
In its Answer dated 18 August 1995, petitioner admitted the purchases but disputed the amount
claimed by respondent. Petitioner also interposed a counterclaim and sought to
recover P204,527.99 from respondent based on damaged vinyl tiles, non-delivery of materials, and
advances for utility expenses, dues, and insurance premiums on the condominium unit turned over
by petitioner to respondent.
On 9 September 1997, the trial court rendered judgment in favor of respondent. The 9 September
1997 Decision provides:
Accordingly, therefore, judgment is hereby rendered for the plaintiff [respondent] as against the
defendant [petitioner] and ordering the latter to pay the plaintiff [respondent] the following:
1. The principal amount of P1,404,114.00;
2. Interest Charges in the amount of P504,114.00 plus accrued interest charges at 24% per
annum compounded yearly reckoned from July, 1995 up to the time of full payment;
3. Liquidated Damages in the amount of P324,147.94;
4. Attorneys Fees equivalent to 25% of whatever amount is due and payable and
accumulated appearance fees at P1,000.00 per hearing; and
5. Costs of suits.
IT IS SO ORDERED.6
Petitioner appealed to the Court of Appeals. In its 7 January 2002 Decision, the Court of Appeals
denied the appeal for lack of merit and affirmed the trial courts 9 September 1997 Decision.
In its 20 May 2002 Resolution, the Court of Appeals denied petitioners motion for reconsideration.
Hence, this petition.
The Ruling of the Court of Appeals
The 7 January 2002 Decision of the Court of Appeals reads:
A careful reading of the records of the case shows that in the answer to the complaint, the existence
of the delivery receipts and invoices were not denied by appellant, rather, it admitted the transactions
subject of the instant case. Clearly, if the damages alleged are liquidated or stipulated, they are
deemed admitted when not specifically denied.
xxxx
Further, appellant cannot question the interest rate on overdue accounts as the same was provided
for in the delivery receipts and sales invoices, which have not been denied by it. Therefore, the
terms and conditions therein have become the law between the parties, and both are bound by said
conditions. Failure of a party to contest the terms and conditions results in his admission thereof.

Appellant asserts that "nowhere is there any stipulation that plaintiff is entitled to a 24% interest".
This is absurd. The Sales Invoices and Delivery Receipts, contained the provision that:
"This invoice is the written contract between Unifield Enterprises, [I]nc. and the above-named
customer. This is payable on demand unless otherwise indicated hereinabove. Interest of 24% per
annum will be charged on overdue accounts, compounded with the outstanding principal obligation
as they accrue. Claims or corrections hereto or in the goods must be communicated in writing to Unifield Enterprises within two (2) days from receipt of the goods. x x x Should Unifield Enterprises, Inc.
be constrained to effect collection through Court action and proceedings before the Fiscals [sic],
said customer agrees to pay the following additional sums: (1) 25% liquidated damages based on
the outstanding total obligation; (2) 25% attorneys fees based on the total claim including said
liquidated damages; (3) appearance fees of counsel at P500.00 per hearing in addition to all other
court costs and expenses. x x x"
It is emphasized that contracts are perfected by mere consent; the stipulations of the contract being
the law between the parties, courts have no alternative but to enforce them as they are agreed upon
and written, there being no law or public policy against the stipulated provisions.
Verily, this Court finds no reason to go against the findings of the lower court considering that the
assailed decision was arrived at "after a careful review and perusal of the evidence presented by
both parties in their pleadings filed before the" lower court. 7 (Citations omitted)
The Issues
Petitioner raises the following issues:
1. THE COURT OF APPEALS ERRED IN FINDING LEGAL BASIS FOR [AWARDING]
LIQUIDATED DAMAGES, ATTORNEYS FEES AND INTEREST IN FAVOR OF
RESPONDENT; and
2. THE COURT OF APPEALS ERRED BY OVERLOOKING CERTAIN FACTS OR
CIRCUMSTANCES OF WEIGHT AND INFLUENCE WHICH IF CONSIDERED WOULD
ALTER THE RESULTS OF THE CASE.8
The Ruling of the Court
Factual Findings of the Trial Court and the Court of Appeals
Bind the Court
Petitioner asks the Court to review the records of the case and re-examine the evidence presented
before the trial court and the Court of Appeals.
As a rule, only questions of law may be appealed to the Court by petition for review. The Court is not
a trier of facts, its jurisdiction being limited to errors of law.9 Moreover, factual findings of the trial
court, particularly when affirmed by the Court of Appeals, are generally binding on this Court. 10 In this
case, the factual findings of the trial court and the Court of Appeals were based on substantial
evidence which were not refuted with contrary proof by petitioner. We thus find no reason to disturb
the factual findings of the trial court and the Court of Appeals.
On the Award of Interests, Liquidated Damages, and Attorneys Fees

Petitioner insists that the trial court and the Court of Appeals had no legal basis to award interest,
liquidated damages, and attorneys fees because the delivery receipts and sales invoices, which
served as the basis for the award, were not formally offered as evidence by respondent. Petitioner
also alleges that the delivery receipts and sales invoices were in the nature of contracts of adhesion
and petitioner had no option but to accept the conditions imposed by respondent.
While the delivery receipts and sales invoices did not form part of respondents formal offer of
evidence,11 records show that the delivery receipts and sales invoices formed part of petitioners
formal offer of evidence.12 The delivery receipts and sales invoices expressly stipulated the payment
of interest, liquidated damages, and attorneys fees in case of overdue accounts and collection suits.
Petitioner did not only bind itself to pay the principal amount, it also promised to pay (1) interest of
24% per annum on overdue accounts, compounded with the principal obligations as they accrue; (2)
25% liquidated damages based on the outstanding total obligation; and (3) 25% attorneys fees
based on the total claim including liquidated damages. Since petitioner freely entered into the
contract, the stipulations in the contract are binding on petitioner. Thus, the trial court and the Court
of Appeals did not err in using the delivery receipts and sales invoices as basis for the award of
interest, liquidated damages, and attorneys fees.
On the allegation that the delivery receipts and sales invoices are in the nature of contracts of
adhesion, the Court has repeatedly held that contracts of adhesion are as binding as ordinary
contracts.13 Those who adhere to the contract are in reality free to reject it entirely and if they adhere,
they give their consent.14 It is true that on some occasions the Court struck down such contract as
void when the weaker party is imposed upon in dealing with the dominant party and is reduced to the
alternative of accepting the contract or leaving it, completely deprived of the opportunity to bargain
on equal footing.15
Considering that petitioner and respondent have been doing business from 1990 to 1993 and that
petitioner is not a small time construction company, petitioner is "presumed to have full knowledge
and to have acted with due care or, at the very least, to have been aware of the terms and conditions
of the contract."16 Petitioner was free to contract the services of another supplier if respondents
terms were not acceptable. Moreover, petitioner failed to show that in its transactions with
respondent it was the weaker party or that it was compelled to accept the terms imposed by the
respondent. In fact, petitioner only questioned the terms of the contract after the trial court issued its
9 September 1997 Decision. The Court, therefore, upholds the validity of the contract between
petitioner and respondent.
However, the Court will reduce the amount of attorneys fees awarded by the trial court and the
Court of Appeals. In this case, aside from the award of P324,147.94 as liquidated damages, the trial
court and the Court of Appeals also ordered petitioner to pay respondent attorneys fees "equivalent
to 25% of whatever amount is due and payable."17
The law allows a party to recover attorneys fees under a written agreement. 18 In Barons Marketing
Corporation v. Court of Appeals, the Court ruled that:
[T]he 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. 19
On the other hand, the law also allows parties to a contract to stipulate on liquidated damages to be
paid in case of breach.20 A stipulation on liquidated damages is a penalty clause where the obligor
assumes a greater liability in case of breach of an obligation.21 The obligor is bound to pay the

stipulated amount without need for proof on the existence and on the measure of damages caused
by the breach.22
Articles 122923 and 222724 of the Civil Code empower the courts to reduce the penalty if it is
iniquitous or unconscionable. The determination of whether the penalty is iniquitous or
unconscionable is addressed to the sound discretion of the court and depends on several factors
such as the type, extent, and purpose of the penalty, the nature of the obligation, the mode of breach
and its consequences.25
The Court notes that respondent had more than adequately protected itself from a possible breach
of contract because of the stipulations on the payment of interest, liquidated damages, and
attorneys fees. The Court finds the award of attorneys fees "equivalent to 25% of whatever amount
is due and payable" to be exorbitant because it includes (1) the principal of P1,404,114.00; (2) the
interest charges of P504,114.00 plus accrued interest charges at 24% per annum compounded
yearly reckoned from July 1995 up to the time of full payment; and (3) liquidated damages
of P324,147.94. Moreover, the liquidated damages and the attorneys fees serve the same purpose,
that is, as penalty for breach of the contract. Therefore, we reduce the award of attorneys fees to
25% of the principal obligation, or P351,028.50.
WHEREFORE, we AFFIRM the appealed Decision dated 7 January 2002 of the Court of Appeals in
CA-G.R. CV No. 56816 with MODIFICATION as regards the award of attorneys fees. Petitioner
Titan Construction Corporation is ordered to pay respondent Uni-Field Enterprises, Inc. attorneys
fees of P351,028.50.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice

ECTION 5. - Exemplary or 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 damages.
Art. 2230. In criminal offenses, exemplary damages as a part of the civil liability may be imposed
when the crime was committed with one or more aggravating circumstances. Such damages are
separate and distinct from fines and shall be paid to the offended party.
Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant acted with gross
negligence.
Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.
Art. 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide
whether or not they should be adjudicated.
Art. 2234. While the amount of the exemplary damages need not be proved, the plaintiff must
show that he is entitled to moral, temperate or compensatory damages before the court may

consider the question of whether or not exemplary damages should be awarded. In case liquidated
damages have been agreed upon, although no proof of loss is necessary in order that such
liquidated damages may be recovered, nevertheless, before the court may consider the question
of granting exemplary in addition to the liquidated damages, the plaintiff must show that he would
be entitled to moral, temperate or compensatory damages were it not for the stipulation for
liquidated damages.
Art. 2235. A stipulation whereby exemplary damages are renounced in advance shall be null and
void.

RUDY
LAO, petitioner, vs.
INC., respondent.

STANDARD

INSURANCE

CO.,

DECISION
QUISUMBING, J.:

.
The following are the antecedent facts:
Petitioner Rudy Lao is the owner of a Fuso truck with Plate No. FCG-538. The truck
was insured with respondent Standard Insurance Co., Inc. under Policy No. CV21074 for the maximum amount of P200,000 and an additional sum of P50,000 to
cover any damages that might be caused to his goods.
[3]

While the policy was in effect, an accident occurred. At around 8:00 p.m. of April 24,
1985, in Barangay Buhang, Jaro, Iloilo City, the insured truck bumped another truck,
with Plate No. FBS-917, also owned by petitioner Lao. The latter truck was running
ahead of the insured truck and was bumped from the rear. The insured truck sustained
damages estimated to be around P110,692, while the damage to the other truck and to
properties in the vicinity of the accident, were placed at P35,000 more or less.
Petitioner filed a claim with the insurance company for the proceeds from his
policy. However, the claim was denied by the insurance company on the ground that
when its adjuster went to investigate the matter, it was found that the driver of the
insured truck, Leonardo Anit, did not possess a proper drivers license at the time of the
accident. The restriction in Leonardo Anits drivers license provided that he can only
drive four-wheeled vehicles weighing not more than 4,500 kgs. Since the insured truck
he was driving weighed more than 4,500 kgs., he therefore violated the authorized
driver clause of the insurance policy. In addition, respondent cited the following
excerpts from the police blotter of the Iloilo INP, to wit:
[4]

[5]

C-UN-85

DAMAGE TO PROPERTY W/ PHY INJURIES R/ IMPRUDENCE

Petitioner claims that at the time of the accident, it was in fact another driver named
Giddie Boy Y Coyel who was driving the insured truck. Giddie Boy possessed a drivers

license authorizing him to drive vehicles such as the truck which weighed more than
4,500 kgs. As evidence, petitioner presented the Motor Vehicle Accident
Report wherein the Investigating Officer, Pat. Felipe D. Villahermosa, stated that it was
Giddie Boy driving the insured truck and not Leonardo Anit. The said report was made
three days after the accident or on April 27, 1985. However, respondent insurance
company was firm in its denial of the claim.
[7]

Hence, petitioner filed the civil case before the RTC. After trial, the court disposed of
the case as follows:

WHEREFORE, premises considered, the Court finds that plaintiff lacks sufficient
cause of action against the defendant and hence ordered his case dismissed and further
orderes (sic) him to pay the defendant the following:
1)

P20,000.00 as attorneys fees plus P500.00 for appearance fee; and

2)

P50,000.00 as exemplary damages.

SO ORDERED.

[8]

On appeal with the Court of Appeals, the RTC decision was affirmed.

SO ORDERED.

[9]

D. THE HONORABLE COURT OF APPEALS MISAPPLIED ARTICLES 2232 AND

2208 OF THE NEW CIVIL CODE IN GRANTING EXEMPLARY DAMAGES AND
ATTORNEYS FEES TO RESPONDENT. UNDER ARTICLES 2229 AND 2234 OF
THE NEW CIVIL CODE, EXEMPLARY DAMAGES CANNOT BE AWARDED IN
THE ABSENCE OF AN AWARD FOR MORAL, TEMPERATE, LIQUIDATED OR
COMPENSATORY DAMAGES;[13]

On the issue of damages, we agree with petitioner that the award of

exemplary damages was improper. In Tiongco v. Atty. Deguma we held that the
entitlement to the recovery of exemplary damages must be shown. In the case at
bar, respondent have not shown sufficient evidence that petitioner indeed
schemed to procure the dubious documents and lied through his teeth to
establish his version of the facts. What was found was that the document he
presented was inadmissible, and its contents were dubious. However, no proof
was adduced to sufficiently establish that it came to his hands through his
employment of underhanded means. In Tiongco, we further stated:
[24]

Although exemplary damages cannot be recovered as a matter of right, they also

need not be proved. But a complainant must still 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.
[25]

Thus, it was error for the courts below to award exemplary damages in the
absence of any award for moral, temperate or compensatory damages.
The award of attorneys fees must also be deleted. Such award was given in its
extraordinary concept as indemnity for damages to be paid by the losing party to the
prevailing party. But it was not sufficiently shown that petitioner acted maliciously in
instituting the claim for damages. Perforce, the award of attorneys fees was improper.
[26]

SO ORDERED

PEOPLE VS ALVIN
as to the damages awarded, when death occurs due to a crime, the following
damages may be awarded: (1) civil indemnity ex delicto for the death of the victim;
(2) actual or compensatory damages; (3) moral damages; (4) exemplary damages;
and (5) temperate damages.[25]
In murder, the grant of civil indemnity, which has been fixed by
jurisprudence at P50,000.00, requires no proof other than the fact of death as a
result of the crime, and proof of an accuseds responsibility therefor. Similarly,
moral damages are awarded in view of the violent death of the victim, and these do
not require any allegation or proof of the emotional sufferings of the heirs. [26] We,
therefore, sustain the awards of P50,000.00 as civil indemnity and P50,000.00 as
moral damages to the heirs of Edwin.

Likewise, we include an award of exemplary damages in

favor of the heirs of Edwin. An aggravating circumstance,
whether ordinary or qualifying, should entitle the offended
party to an award of exemplary damages within the unbridled
meaning of Article 2230[28] of the Civil Code. The award
of P30,000.00 as exemplary damages is, therefore, proper
under current jurisprudence.[29]
DAMAGE FOR WRONGFUL ATTACHMENT
G.R. No. 155868

February 6, 2007

SPOUSES GREGORIO and JOSEFA YU, Petitioners,

vs.
NGO YET TE, doing business under the name and style, ESSENTIAL
MANUFACTURING, Respondent.
The antecedent facts are not disputed.
Spouses Gregorio and Josefa Yu (Spouses Yu) purchased from Ngo Yet Te (Te) bars of detergent
soap worthP594,240.00, and issued to the latter three postdated checks 4 as payment of the
purchase price. When Te presented the checks at maturity for encashment, said checks were
returned dishonored and stamped "ACCOUNT CLOSED". 5 Te demanded6 payment from Spouses Yu
but the latter did not heed her demands. Acting through her son and attorney-in-fact, Charry Sy (Sy),
Te filed with the Regional Trial Court (RTC), Branch 75, Valenzuela, Metro Manila, a
Complaint,7 docketed as Civil Case No. 4061-V-93, for Collection of Sum of Money and Damages
with Prayer for Preliminary Attachment.
In support of her prayer for preliminary attachment, Te attached to her Complaint an Affidavit
executed by Sy that Spouses Yu were guilty of fraud in entering into the purchase agreement for
they never intended to pay the contract price, and that, based on reliable information, they were
about to move or dispose of their properties to defraud their creditors. 8
Upon Tes posting of an attachment bond,9 the RTC issued an Order of Attachment/Levy10 dated
March 29, 1993 on the basis of which Sheriff Constancio Alimurung (Sheriff Alimurung) of RTC,
Branch 19, Cebu City levied and attached Spouses Yus properties in Cebu City consisting of one
parcel of land (known as Lot No. 11)11 and four units of motor vehicle, specifically, a Toyota Ford
Fierra, a jeep, a Canter delivery van, and a passenger bus. 12
On April 21, 1993, Spouses Yu filed an Answer13 with counterclaim for damages arising from the
wrongful attachment of their properties, specifically, actual damages amounting to P1,500.00 per
day; moral damages,P1,000,000.00; and exemplary damages, P50,000.00. They also sought
payment of P120,000.00 as attorneys fees and P80,000.00 as litigation expenses.14 On the same
date, Spouses Yu filed an Urgent Motion to Dissolve Writ of Preliminary Attachment. 15 They also filed
a Claim Against Surety Bond16 in which they demanded payment from Visayan Surety and Insurance
Corporation (Visayan Surety), the surety which issued the attachment bond, of the sum
of P594,240.00, representing the damages they allegedly sustained as a consequence of the
wrongful attachment of their properties.
In the case before Us, the complaint and the accompanying affidavit in support of the application for
the writ only contains general averments. Neither pleading states in particular how the fraud was
committed or the badges of fraud purportedly committed by the petitioners to establish that the latter
never had an intention to pay the obligation; neither is there a statement of the particular acts
committed to show that the petitioners are in fact disposing of their properties to defraud creditors. x
x x.
xxxx
Moreover, at the hearing on the motion to discharge the order of attachment x x x petitioners
presented evidence showing that private respondent has been extending multi-million peso credit
facilities to the petitioners for the past seven years and that the latter have consistently settled their
obligations. This was not denied by private respondent. Neither does the private respondent contest
the petitioners allegations that they have been recently robbed of properties of substantial value,
hence their inability to pay on time. By the respondent courts own pronouncements, it appears that

the order of attachment was upheld because of the admitted financial reverses the petitioner is
undergoing.
This is reversible error. Insolvency is not a ground for attachment especially when defendant has not
been shown to have committed any act intended to defraud its creditors x x x.
For lack of factual basis to justify its issuance, the writ of preliminary attachment issued by the
respondent court was improvidently issued and should be discharged. 22
From said CA Decision, Te filed a Motion for Reconsideration but to no avail. 23
No. 114700.
The RTC issued an Order dated August 9, 1994, which read:
xxxx
(2) With regard the counter claim filed by the defendants against the plaintiff for the alleged
improvident issuance of this Court thru its former Presiding Judge (Honorable Emilio
Leachon, Jr.), the same has been ruled with definiteness by the Supreme Court that, indeed,
the issuance by the Court of the writ of preliminary attachment appears to have been
improvidently done, but nowhere in the decision of the Supreme Court and for that
matter, the Court of Appeals decision which was in effect sustained by the High
Court, contains any ruling or directive or imposition, of any damages to be paid by the
plaintiff to the defendants, in other words, both the High Court and the CA, merely
declared the previous issuance of the writ of attachment by this Court thru its former
presiding judge to be improvidently issued, but it did not award any damages of any kind to
the defendants, hence, unless the High Court or the CA rules on this, this Court coud not
grant any damages by virtue of the improvident attachment made by this Court thru its
former presiding judge, which was claimed by the defendants in their counter claim.
(3) This Court hereby reiterates in toto its Decision in this case dated July 20,
1994. 30 (Emphasis ours)
Spouses Yu filed the present Petition raising the following issues:
I. Whether or not the appellate court erred in not holding that the writ of attachment was
procured in bad faith, after it was established by final judgment that there was no true ground
therefor.
II. Whether or not the appellate court erred in refusing to award actual, moral and exemplary
damages after it was established by final judgment that the writ of attachment was procured
with no true ground for its issuance.44
There is one preliminary matter to set straight before we resolve the foregoing issues.
According to respondent Te,45 regardless of the evidence presented by Spouses Yu, their
counterclaim was correctly dismissed for failure to comply with the procedure laid down in Section
20 of Rule 57. Te contends that as Visayan Surety was not notified of the counterclaim, no judgment
thereon could be validly rendered.

Such argument is not only flawed, it is also specious.

We now proceed to resolve the issues jointly.
Spouses Yu contend that they are entitled to their counterclaim for damages as a matter of right in
view of the finality of our June 8, 1994 Resolution in G.R. No. 114700 which affirmed the finding of
the CA in its September 14, 1993 Decision in CA-G.R. SP No. 31230 that respondent Te had
wrongfully caused the attachment of their properties. Citing Javellana v. D.O. Plaza Enterprises,
Inc.,53 they argue that they should be awarded damages based solely on the CA finding that the
attachment was illegal for it already suggests that Te acted with malice when she applied for
attachment. And even if we were to assume that Te did not act with malice, still she should be held
liable for the aggravation she inflicted when she applied for attachment even when she was clearly
not entitled to it.54
. As early as in Lazatin v. Twao,55 we laid down the rule that where there is wrongful
attachment, the attachment defendant may recover actual damages even without proof that
the attachment plaintiff acted in bad faith in obtaining the attachment. However, if it is alleged
and established that the attachment was not merely wrongful but also malicious, the
attachment defendant may recover moral damages and exemplary damages as well. 56 Either
way, the wrongfulness of the attachment does not warrant the automatic award of damages
to the attachment defendant; the latter must first discharge the burden of proving the nature
and extent of the loss or injury incurred by reason of the wrongful attachment. 57
In fine, the CA finding that the attachment of the properties of Spouses Yu was wrongful did
not relieve Spouses Yu of the burden of proving the factual basis of their counterclaim for
damages.
To merit an award of actual damages arising from a wrongful attachment, the attachment
defendant must prove, with the best evidence obtainable, the fact of loss or injury suffered
and the amount thereof.58 Such loss or injury must be of the kind which is not only capable of
proof but must actually be proved with a reasonable degree of certainty. As to its amount, the
same must be measurable based on specific facts, and not on guesswork or speculation. 59 In
particular, if the claim for actual damages covers unrealized profits, the amount of unrealized
profits must be estalished and supported by independent evidence of the mean income of the
business undertaking interrupted by the illegal seizure. 60
.64
Moreover, petitioners did not present evidence as to the damages they suffered by reason of the
wrongful attachment of Lot No. 11.
Nonetheless, we recognize that Spouses Yu suffered some form of pecuniary loss when their
properties were wrongfully seized, although the amount thereof cannot be definitively ascertained.
Hence, an award of temperate or moderate damages in the amount of P50,000.00 is in order.70
As to moral and exemplary damages, to merit an award thereof, it must be shown that the
wrongful attachment was obtained by the attachment plaintiff with malice or bad faith, such
as by appending a false affidavit to his application.71
Spouses Yu argue that malice attended the issuance of the attachment bond as shown by the
fact that Te deliberately appended to her application for preliminary attachment an Affidavit

where Sy perjured himself by stating that they had no intention to pay their obligations even
when he knew this to be untrue given that they had always paid their obligations; and by
accusing them of disposing of their properties to defraud their creditors even when he knew
this to be false, considering that the location of said properties was known to him. 72
The testimony of petitioner Josefa Yu herself negates their claim for moral and exemplary damages.
On cross-examination she testified, thus:
Based on the foregoing testimony, it is not difficult to understand why Te concluded that Spouses Yu
never intended to pay their obligation for they had available funds in their bank but chose to transfer
said funds instead of cover the checks they issued. Thus, we cannot attribute malice nor bad faith to
Te in applying for the attachment writ. We cannot hold her liable for moral and exemplary damages.
As a rule, attorneys fees cannot be awarded when moral and exemplary damages are not
granted, the exception however is when a party incurred expenses to lift a wrongfully issued
writ of attachment. 74 Without a doubt, Spouses Yu waged a protracted legal battle to fight off
the illegal attachment of their properties and pursue their claims for damages. It is only just
and equitable that they be awarded reasonable attorneys fees in the amount of P30,000.00.
1awphi1.net

In sum, we affirm the dismissal of the counterclaim of petitioners Spouses Yu for actual, moral, and
exemplary damages. However, we grant them temperate damages and attorneys fees.
WHEREFORE, the petition is partly GRANTED. The March 21, 2001 Decision of the Court of
Appeals isAFFIRMED with the MODIFICATION that petitioners counterclaim
is PARTLY GRANTED. Gregorio Yu and Josefa Yu are awarded P50,000.00 temperate damages
and P30,000.00 attorneys fee

AUTHORITY TO TEMPER
OTHER KINDS OF DAMAGES
Art. 2216. No proof of pecuniary loss is necessary in order that moral, nominal, temperate,
liquidated or exemplary damages, may be adjudicated. The assessment of such damages, except
liquidated ones, is left to the discretion of the court, according to the circumstances of each case.

SUBROGATION OF INSURER