TORTS - Actual Damages

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Damages (in general)
1. Custodio v CA
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. These situations are often called damnum absque injuria.
In order that a plaintiff may maintain an action for the injuries of which he
complains, he must establish that such injuries resulted from a breach of
duty which the defendant owed to the plaintiff—a concurrence of injury to
the plaintiff and legal responsibility by the person causing it. The underlying
basis for the award of tort damages is the premise that an individual was
injured in contemplation of law.
2. Ong v CA (1999)
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. Except
as provided by law or by stipulation, a party is entitled to adequate
compensation only for such pecuniary loss as he has duly proven.

To be recoverable, actual damages must be pleaded and proven
in Court. In no instance may the trial judge award more than those so
pleaded and proven. Damages cannot be presumed. The award there
of must be based on the evidence presented, not on the personal
knowledge of the court; and certainly not on flimsy, remote,
speculative and nonsubstantial proof. Article 2199 of the Civil Code
expressly mandates that "[e]xcept 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."

ii. on moral damages: A person is entitled to the physical integrity of
his or her body, and if that integrity is violated, damages are due and
assessable. However, physical injury, like loss or diminution of use of an arm
or a limb, is not a pecuniary loss. Indeed, it is nor susceptible of exact
monetary estimation. The usual practice is to award moral damages for
physical injuries sustained. In the case at bar, it was sufficiently shown
during the trial that Francia's right arm could not function in a normal
manner and that, as a result, she suffered mental anguish and anxiety. Thus,
an increase in the amount of moral damages awarded, from P30,000 to

P50,000, appears to be reasonable and justified. Renato also suffered mental
anxiety and anguish from the accident. Thus, he should be separately
awarded P30,000 as moral damages. In some instances, the Court
awards the cost of medical procedures to restore the injured person
to his or her former condition. However, this award necessitates
expert testimony on the cost of possible restorative medical
procedure. (NB: expenses for medical restoration – must be
established by expert testimony. I believe the ruling here
distinguishes between actual damages and moral damages. Moral
damages would be granted by the mere fact that a person suffered
physical injury, i.e. “QD resulting in physical injury”; on the other
hand, if one can prove actual pecuniary loss or expenses, i.e.
restorative surgery, then he may be awarded actual damages.)

In the case at bar, petitioner failed to present evidence
regarding the feasibility or practicability and the cost of a restorative
medical operation on her arm. Thus, there is no basis to grant her P48,000
for such expense.
iii. Unrealized income:
The bare and unsubstantiated assertion of Francia that she usually
earned P200 a day from her market stall is not the best evidence to prove
her claim of unrealized income for the eight-month period that her arm was
in plaster cast. Her testimony that was their lessor who filed their income
tax returns and obtained business licenses for them does not justify her
failure to present more credible evidence of her income. Furthermore, after
her ten-day confinement at the San Pablo Hospital, she could have returned
so her work at the public market despite the plaster cast on her right arm,
since she claimed to have two nieces as helpers. Clearly, the appellate court
was correct in deleting the award for unrealized income, because of
petitioner's utter failure to substantiate her claim.
iv. Under the Civil Code, an award of attorney's fees is an indemnity for
damages ordered by a court to be paid by the losing party to the prevailing
party, based on any of the cases authorized by law. It s payable not to the
lawyer but to the client, unless the two have agreed that the award shall
pertain to the lawyer as additional compensation or as part thereof. The
Court has established a set standards in fixing the amount of attorney's fees:

(1) The amount and character of the services rendered; (2)
labor, time and trouble involved; (3) the nature and importance
of the litigation or business in which the services were
rendered; (4) the responsibility imposed; (5) the amount of
money or the value of the property affected by the controversy

or involved in the employment; (6) the skill and experience
called for in the performance of the services; (7) the
professional character and social standing of the attorney; (8)
the results secured, it being a recognized rule that an attorney
may properly charge a much larger fee when it is contingent
than when it is not. (ALIRAS-PR)

Counsel's performance, however, does not justify the award of 25%
attorney's fees. It is well-settled that such award is addressed to sound
judicial discretion and subject to judicial control.

ACTUAL DAMAGES
1. Algarra v Sandejas
Facts: Lucio Algarra sold products of a distillery on a 10% commission and
made an average of P50 per month. He had about twenty regular customers
who, it seems, purchased in small quantities, necessitating regular and
frequent deliveries. He was injured. He had to spend for medical expenses,
stopped work for 2 months, and also lost 16/20 of his customers.
Held:
i. Purpose: The PURPOSE OF THE LAW IN AWARDING ACTUAL DAMAGES is to
repair the wrong that has been done, to compensate for the injury inflicted,
and not to impose a penalty. Actual damages are not dependent on nor
graded by the intent with which the wrongful act is done. In other words,
actual damages are compensatory only. They proceed from a sense of
natural justice, and are designed to repair that of which one has been
deprived by the wrong of another.
The party claiming damages must establish by competent evidence the
amount of such damages, and courts can not give judgment for a
greater amount than those actually proven.
ii. Scope: Actual damages include not only loss already suffered, but loss
of profits which may not have been realized. Plagiarizing from Sanchez
Roman, he says that the indemnity comprises, not only the value of the
loss suffered, but also that of the prospective profit that was not
realized, and the obligation of the debtor in GOOD FAITH is limited to
such losses and damages as were foreseen or might have been
foreseen at the time the obligation was incurred and which are a
necessary consequence of his failure of fulfillment. Losses and damages
under such limitations and frustrated profits must, therefore, be proved
directly by means of the evidence the law authorizes.

The case at bar involves actual incapacity of the plaintiff for 2 months,
and loss of the greater portion of his business. As to the damages resulting
from the actual incapacity of the plaintiff to attend to his business there is
no question. They are, of course, to be allowed on the basis of his earning
capacity, which in this case, is P50 per month. The difficult question in the
present case is to determine the damage which has resulted to his business
through his enforced absence.
(NB: Atty. Lopez here differentiated injury to person and injury to
business).
iii. Amount of damages for injury to his business
ELEMENTS TO BE CONSIDERED
While certainty is an essential element of an award of damages, it
need not be a mathematical certainty. (NB: Sir said that fact of loss must
be certain, but amount need not be.) As to the ELEMENTS TO BE CONSIDERED in
"estimating the damage done to plaintiff's business by reason of his
accident, this same author, citing numerous authorities, has the following to
say: It is proper to consider the business the plaintiff is engaged in, the
nature and extent of such business, the importance of his personal
oversight and superintendence in conducting it, and the consequent
loss arising from his inability to prosecute it.
The business of the present plaintiff required his immediate supervision
of all the profits derived therefrom were wholly due to his own
exertions. Nor are his damages confined to the actual time during which he
was physically incapacitated for work, as is the case of a person working for
a stipulated daily or monthly or yearly salary.
GENERAL RULE: As to persons whose labor is thus compensated and who
completely recover from their injuries, the rule may be said to be that their
damages are confined to the duration of their enforced absence from their
occupation.
EXCEPT (as in this case): But the present plaintiff could not resume his
work at the same profit he was making when the accident occurred.
He had built up an established business which included some 20 regular
customers. These customers represented to him a regular income. In
addition to this he made sales to other people who were not so regular in
their purchases. But he could figure on making at least some sales each
month to others besides his regular customers.
Taken as a whole his average monthly income from his business was about
P50. As a result of the accident, he lost all but 4 of his regular
customers and his receipts dwindled down to practically nothing.
Other agents had invaded his territory, and upon becoming physically
able to attend to his business, he found that it would be necessary to start
with practically no regular trade, and either win back his old customers from
his competitors or else secure others. During this process of re-establishing
his patronage his income would necessarily be less than he was making at

the time of the accident and would continue to be so for some time. Of
course, if it could be mathematically determined how much less he
will earn during this rebuilding process than he would have earned if
the accident had not occurred, that would be the amount he would be
entitled to in this action. But manifestly this ideal compensation cannot
be ascertained. The question therefore resolves itself into whether this
damage to his business can be so nearly ascertained as to justify a court in
awarding any amount whatever.
When it is shown that a plaintiff's business is a going concern with a
fairly steady average profit on the investment, it may be assumed that
had the interruption to the business through defendant's wrongful
act not occurred, it would have continued producing this average
income "so long as is usual with things of that nature.
When in addition to the previous average income of the business it is
further shown what the reduced receipts of the business are
immediately after the cause of the interruption has been removed,
there can be no manner of doubt that a loss of profits has resulted
from the wrongful act of the defendant. (causation)
In the present case, we not only have the value of plaintiff's business to him
just prior to the accident, but we also have its value to him after the
accident. At the trial, he testified that his wife had earned about 15 pesos
during the 2 months that he was disabled. That this almost total
destruction of his business was directly chargeable to defendant's wrongful
act, there can be no manner of doubt; and the mere fact that the loss can
not be ascertained with absolute accuracy, is no reason for denying
plaintiff's claim altogether.
Thus, in this case, he was awarded actual damages for (1) the medical
expenses, (2) damages to person (p100, or the lost income of p50 for two
months) and (3) an amount for the damages to his business.
NB: Facts to consider in ascertaining loss to business: 1) nature of business,
2) supervision by plaintiff over it, 3) losses due to absence.
Extensive discussion from Amjur:
a. The Civil Code requires that the defendant repair the damage caused by
his fault or negligence. No distinction is made therein between damage
caused maliciously and intentionally and damages caused through mere
negligence in so far as the civil liability of the wrongdoer in concerned. Nor
is the defendant required to do more than repair the damage done, or, in
other words, to put the plaintiff in the same position, so far as pecuniary
compensation can do so, that he would have been in had the damage not
been inflicted. In this respect there is a notable difference between the two
systems.

b. The damages recoverable of a manufacturer or dealer for the breach of
warranty of machinery, which he contracts to furnish, or place in
operation for a known purpose are not confined to the difference in value of
the machinery as warranted and as it proves to be, but includes such
consequential damages as are the direct, immediate, and probable
result of the breach.
c. Evidence needed: evidence of damages "must rest upon satisfactory proof
of the existence in reality of the damages alleged to have been suffered."
But, while certainty is an essential element of an award of damages,
it need not be a mathematical certainty.
d. As to the elements to be considered in estimating the damage done
to plaintiff's business: it is proper to consider the business the plaintiff is
engaged in, the nature and extent of such business, the importance of his
personal oversight and superintendence in conducting it, and the
consequent loss arising from his inability to prosecure it. (BELO)
e. Distinguished a mere salary employee vs one with a business: As to
persons whose labor is thus compensated and who completely
recover from their injuries, the rule may be said to be that their
damages are confined to the duration of their enforced absence from
their occupation. But the present plaintiff could not resume his work
at the same profit he was making when the accident occurred.
Case at bar: The business of the present plaintiff required his immediate
supervision. All the profits derived therefrom were wholly due to his own
exertions. Nor are his damages confined to the actual time during which he
was physically incapacitated for work, as is the case of a person working for
a stipulated daily or monthly or yearly salary.
f. Factors to consider:
-When it is shown that a plaintiff's business is a going concern with a
fairly steady average profit on the investment, it may be assumed that had
the interruption to the business through defendant's wrongful act not
occurred, it would have continued producing this average income "so long as
is usual with things of that nature."
- When in addition to the previous average income of the business it is
further shown what the reduced receipts of the business are immediately
after the cause of the interruption has been removed, there can be no
manner of doubt that a loss of profits has resulted from the wrongful act of
the defendant. In the present case, we not only have the value of
plaintiff's business to him just prior to the accident, but we also have
its value to him after the accident.

g. Rule on Profits: Profits are not excluded from recovery because
they are profits; but when excluded, it is on the ground that there are
no criteria by which to estimate the amount with the certainty on
which the adjudications of courts, and the findings of juries, should
be based. (i.e. for established businesses, one can do “trending” to
determine the future profits; whereas if not established, then it would be
hard to look for basis. But nonetheless, still possible).
f. Other proof to adduce: plaintiff may establish his reputation, good
standing as a professional/ businessman: Joslin case - "The plaintiff, in
making proof of his damages, offered testimony to the effect that he was an
attorney at law of ability and in good standing, and the extent and value of
his practice, and that, in substance, the injury had rendered him incapable
of pursuing his profession. This was objected to as irrelevant, immaterial
and incompetent. We think this was competent.”
Gobel case - When a regular and established business, the value of
which may be ascertained, has been wrongfully interrupted, the true
general rule for compensating the party injured is to ascertain how
much less valuable the business was by reason of the interruption,
and allow that as damages.
g. Established business v un-established - Wellington vs. Spencer - plaintiff
had rented a building from the defendant and used it as a hotel. Defendant
sued out a wrongful writ of attachment upon the equipment of the plaintiff,
which caused him to abandon his hotel business. Held: General rule is that
no recovery could be had for prospective profits. Exception: damages may
be allowed when the amount is capable of proof, the court had the following
to say. (NB: so, they are disallowed not because they are prospective, but
because of lack of proof. So if with proof, the court may award em.)
Where the plaintiff has just made his arrangements to begin
business, and he is prevented from beginning either by tort or a
breach of contract, or where the injury is to a particular subject
matter, profits of which are uncertain, evidence as to expected profits
must be excluded from the jury because of the uncertainty. There is as
much reason to believe that there will be no profits as to believe that there
will be no profits, but no such argument can be made against proving a
usual profit of an established business.
A business not established for which loss of profits may be allowed. In
one case, it was held:
In the present case the plaintiffs had only been in business a short
time — not so long that it can be said that they had an established
business. they had contracted three jobs of plumbing, had finished
two, and lost money on both; not, however, because of any misconduct
or wrongful acts on the part of the defendants or either of them. They
carried no stock in trade, and their manner of doing business was to
secure a contract and then purchase the material necessary for its

completion. It is not shown that they had any means or capital
invested in the business other than their tools. Neither of them had
prior thereto managed or carried on a similar business. Nor was it
shown that they were capable of so managing this business as to
make it earn a profit. There was little of that class of business being
done at the time, and little, if any, profit derived therefrom. The
plaintiffs'
business
lacked
duration,
permanency,
and
recognition. It was an adventure, as distinguished from an
established business. Its profits were speculative and remote,
existing only in anticipation. The law, with all its vigor and energy
in its effort to right or wrongs and damages for injuries sustained,
may not enter into a domain of speculation or conjecture. In view of
the character and condition of the plaintiffs' business, the jury had not
sufficient evidence from which to ascertain profits.
2. PNOC v CA
There are two kinds of actual or compensatory damages: One is the loss of
what a person already possess and the other is the failure to receive as a
benefit that which would have pertained to him.
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- 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.
In the absence of proof on the actual damage suffered, a party is entitled to
nominal damages. Nominal damages are damages in name only and not in
fact.
NB: Atty. Lopez said that to be entitled to damages, one must prove 1) fact of
loss and 2) amount
3. People v Mamarungcas
Anent the award of actual damages, the victim’s widow testified that the
family spent a total of P66,904.00 relative to the wake and burial of the
victim. However, the claim for said amount is supported merely by a list of
expenses personally prepared by the widow instead of official receipts. To be
entitled to an award of actual damages, “it is necessary to prove the actual
amount of loss with a reasonable degree of certainty, premised upon
competent proof and on the best evidence obtainable x x x.” “A list of
expenses cannot replace receipts when the latter should have been issued as
a matter of course in business transactions.” (NB: OR not always required.
Only when they are issued in the ordinary course of business, since, in that
case, any other proof is not the “best proof”).

Thus the Court deletes the lower courts’ award of actual damages.
Nonetheless, since entitlement of the same is shown under the facts of the
case, temperate damages in the amount of P25,000.00 should be awarded in
lieu of actual damages to the heirs of the victim pursuant to Article 2224 of
the Civil Code which provides that temperate damages “may be recovered
when the court finds that pecuniary loss has been suffered but its amount
cannot, from the nature of the case, be proved with certainty.”
4. People v Arrelano
i. While the heirs of the victim did not expressly claim an amount
representing the deceased’s loss of earning capacity nor present evidence
thereon, such failure does not necessarily prevent recovery of damages
considering that there is sufficient basis on record upon which the court may
determine a reasonable and fair estimate of such damages.
Ii. The amount of loss of earning capacity is based mainly on two factors.
These are (1) the number of years of which the damages shall be computed;
and (2) the rate at which the losses sustained by the respondent should be
fixed.
Factor number one in this ruling shall be computed by using the formula
based on the American Expectancy Table of Mortality or 2/3 x [80 - age of
the victim at the time of death] = life expectancy in terms of years.
Factor number two is arrived at by multiplying the life expectancy by the
earnings of the deceased. As has been settled, the computation of the rate of
loss of earnings should be based on the net earnings.
In this case, Andres Ventura was eighteen years of age at the time of his
death with a life expectance of 41 years. The undisputed claim of the
victim’s mother was that Andres was “employed” as a laborer at the Victory
Rice Mill at the rate of P100.00 a day, which was, likewise, admitted by the
defense. The crime was committed on a Sunday after the victim and
his co-workers had finished their work for the day. The victim should,
therefore, be presumed to have worked everyday including Sundays or
rest days, special days and regular holidays. As such, under the “1999
Handbook on Workers’ Statutory Monetary Benefits” outlining the minimum
legal requirements concerning workers’ monetary and nonmonetary, the
victim is deemed to have worked a total of 391.50 days a year with total
wages in the amount of P39,150.00 per annum (P100/day for 391.50 days).
One half of this amount would be considered as his necessary living
expenses.
III. Likewise, civil indemnity in the amount of P50,000.00 is automatically
granted to the heirs of the victim without need of any evidence other than
the fact of the commission of the crime.

The heirs of the victim should also be awarded actual damages in the total
amount of P13,000.00 as the defense admitted that the victim’s family
incurred funeral expenses of P6,000.00 and medical expenses of P7,000.00.
Ordinarily, receipts should support claims of actual damages.
However, since the defense did not contest that claim, it should be
granted.
5. Adrian Wilson v TMX
Actual damages puts the claimant in the position in which he had been
before he was injured. The award thereof must be based on the evidence
presented, not on the personal knowledge of the court; and certainly not on
flimsy, remote, speculative and nonsubstantial proof. Under the Civil Code,
one is entitled to an adequate compensation only for such pecuniary loss
suffered by him as he has duly proved.
6. GQ Garments v Miranda
i. actual damages include all the natural and probable consequences of the
act or omission complained of, classified as one (1) for the loss of what a
person already possesses (daño emergente) and the other, (2) for the failure
to receive, as a benefit, that which would have pertained to him (lucro
cesante)
ii. The claimants are not, however, mandated to prove damages in any
specific or certain amount in order to recover damages for a substantial
amount. When the existence of a loss is established, absolute
certainty as to its amount is not required. The amount of the
damages should be determined with reasonable certainty
7. Justiva v Gustilo
Doctrine: No need to allege claim for damages in pleadings if it is put in
issue in the course of the trial.
Is the award of actual damages proper? While the prayer by the
respondents in their “Answer” mentions only exemplary damages, moral
damages and attorney’s fees, therein also is a plea for “such further relief x
x x as this Honorable Court may deem just and equitable.” This prayer may
include “actual damages”, if and when they are proved. It is to be observed
that in the course of the trial, defendants introduced evidence of actual
damages; yet petitioners failed to object to such presentation. Consequently,
the unalleged but proved matter of actual damages may be considered by
the court. The trial judge mentioned such damages. And the Court of
Appeals, without going into specifics, approved the award, and declared
explicitly that the evidence sustained it. We affirm the appellate court’s
assessment of actual damages.
8. De Guia v The Manila Electric

Although in case like this the defendant must answer for the consequences
of the negligence of its employee, the court has the power to moderate
liability according to the circumstances of the case. An employer who has in
fact displayed due diligence in choosing and instructing his servants is
entitled to be considered a debtor in good faith, within the meaning of
article 1107 of the same Code. Construing these two provisions together,
applying them to the facts of this case, it results that the defendant's liability
is limited to such damages as might, at the time of the accident, have been
reasonably foreseen as a probable consequence of the physical injuries
inflicted upon the plaintiff and which were in fact a necessary result of those
injuries. There is nothing novel in this proposition, since both the civil and
the common law are agreed upon the point that the damages ordinarily
recoverable for the breach of a contractual obligation, against a person who
has acted in good faith, are such as can reasonably be foreseen at the time
the obligation is contracted.
9. Lim v. CA
Facts: Owner and operator of a jeepney without a certificate of public
convenience (kabit system) figured in an accident with a truck owned by lim.
Held: 1) The thrust of the law in enjoining the kabit system is not so much as
to penalize the parties but to identify the person upon whom responsibility
may be fixed in case of an accident with the end view of protecting the
riding public. The policy, therefore, loses its force if the public at large is not
deceived, much less involved.
2) Damages – its limits: It is a fundamental principle in the law on damages
that a defendant cannot be held liable in damages for more than the
actual loss which he has inflicted and that a plaintiff is entitled to no
more than the just and adequate compensation for the injury
suffered. The law will not put him in a position better than where he should
be in had not the wrong happened.
3) Damages – its extent: Petitioners are at best reminded that
indemnification for damages comprehends not only the value of the
loss suffered but also that of the profits which the obligee failed to
obtain. In other words, indemnification for damages is not limited to
damnum emergens or actual loss but extends to lucrum cessans or the
amount of profit lost.
Case at bar: Had Gonzales’ jeepney not met an accident, it could
reasonably be expected that it would have continued earning from
the business in which it was engaged. The award therefore of
P236,000.00 as compensatory damages is not beyond reason nor
speculative as it is based on a reasonable estimate of the total
damage suffered by Gonzales, i.e. damage wrought upon his jeepney and
the income lost from his transportation business.
4) Legal interest on unliquidated damages – when imposed: However, we are
constrained to depart from the conclusion of the lower courts that

upon the award of compensatory damages legal interest should be
imposed beginning 22 July 1990, i.e., the date of the accident.
Upon the provisions of Art. 2213, interest “cannot be recovered upon
unliquidated claims or damages, except when the demand can be
established with reasonable certainty.” It is axiomatic that if the suit were
for damages, unliquidated and not known until definitely ascertained,
assessed and determined by the courts after proof, interest at the rate of six
percent (6%) per annum should be from the date the judgment of the court
is made (at which time the quantification of damages may be deemed to be
reasonably ascertained).
In this case, the matter was not a liquidated obligation as the
assessment of the damage on the vehicle was heavily debated upon
by the parties with Gonzales demand for P236,000.00 being refuted by Lim
who argue that they could have the vehicle repaired easily for P20,000.00.
In fine, the amount due Gonzales was not a liquidated account that was
already demandable and payable.
5) Doctrine of avoidable consequences: One last word. We have observed
that Gonzales left his passenger jeepney by the roadside at the mercy
of the elements. Article 2203 exhorts parties suffering from loss or injury
to exercise the diligence of a good father of a family to minimize the
damages resulting from the act or omission in question. One who is
injured then by the wrongful or negligent act of another should exercise
reasonable care and diligence to minimize the resulting damage.
However, we sadly note that in the present case Lim failed to offer in
evidence the estimated amount of the damage caused by Gonzales’
unconcern towards the damaged vehicle. It is the burden of petitioners…
10. Talisay Silay v Gonzales
A court may rule and render judgment on the basis of the evidence before it,
even though the relevant pleading had not been previously amended, so long
as no surprise or prejudice is thereby caused to the adverse party. Put a
little differently, so long as the basic requirements of fair play had been met,
as where litigants were given full opportunity to support their respective
contentions and to object to or refute each other's evidence, the court may
validly treat the pleadings as if they had been amended to conform to the
evidence and proceed to adjudicate on the basis of all the evidence before it.
We conclude that the Court of Appeals erred when it failed to treat the
amended and supplemental complaint of TSMC and TSICA as if such
complaint had in fact been amended to conform to the evidence, and when it
limited the damages due to TSMC and TSICA to the amount prayed for in
their original complaint.
11. Coleman v Hotel de France

Holding as we do that the defendant corporation without just cause or
excuse discharged the plaintiff in flagrant violation of its contract of
employment with her, we agree with the trial judge that plaintiff is entitled
to recover not merely compensation for services rendered before the
breach of the contract by her employer, but the full amount which she
might have earned under the contract less such compensation as she
actually obtained or might have obtained in some other employment
during the term of the contract which had not yet expired at the date
of the breach, the burden of proof as to the amount by which the prima
facie damage may thus be reduced being upon the defendant
12. Daywalt v Corporacion
Suit against defendant who was found to have encroached on the land of
plaintiff. Held:
Notwithstanding this circumstance, the damages assessed are sufficient to
compensate the plaintiff for the use and occupation of the land during the
whole time it was used. There is evidence in the record strongly tending to
show that the wrongful use of the land by the defendant was not
continuous throughout the year but was confined mostly to the
season when the forage obtainable on the land of the defendant corporation
was not sufficient to maintain its cattle, for which reason it became
necessary to allow them to go over to pasture on the land in question; and it
is not clear that the whole of the land was used for pasturage at any
time.
Damages based on tortious interference:
1) The liability for damages of the original obligor must be determined in
the action to enforce the original contract (specific performance). If
not, it may not be recovered in another action. The court said:
a. “Indemnification for damages resulting from the breach of a
contract is a right inseparably annexed to every action for the
fulfillment of the obligation; and it is clear that if damages are
not sought or recovered in the action to enforce performance
they cannot be recovered in an independent action.”
EXCEPT: if you are collecting from the interferer who was not party to
the original action, to wit:
b. “As to Teodorica Endencia, therefore, it should be considered
that the right of action to recover damages for the breach of the
contract in question was exhausted in the prior suit. However,
her attorneys have not seen fit to interpose the defense of res
judicata in her behalf; and as the defendant corporation was not
a party to that action, and such defense could not in any event
be of any avail to it, we proceed to consider the question of the
liability of Teodorica Endencia for damages without reference

to this point.”
2) Rule: The stranger cannot become more extensively liable in damages
for the nonperformance of the contract than the party in whose behalf
he intermeddles.
a. In this case, Teodora was the one directly liable/ obligor, thus,
to determine the liability of the interferer (corporation), the
court studied the damages attributable to the original obligor.
3) Rule on unlawful detention of property:
a. Now, what is the measure of damages for the wrongful
detention of real property by the vender after the time has
come for him to place the purchaser in possession? The
damages ordinarily and normally recoverable against a vendor
for failure to deliver land which he has contracted to deliver is
the value of the use and occupation of the land for the time
during which it is wrongfully withheld. The rule that the
measure of damages for the wrongful detention of land is
normally to be found in the value of use and occupation is, we
believe, one of the things that may be considered certain in the
law almost as well settled, indeed, as the rule that the measure
of damages for the wrongful detention of money is to be found
in the interest.
4) Ordinary vs. Special damages - The damages recoverable in case of
the breach of a contract are two sorts, namely, (1) the ordinary,
natural, and in a sense necessary damage; and (2) special damages.
a. Ordinary damages is found in all breaches of contract
where there are no special circumstances to distinguish
the case specially from other contracts. The consideration
paid for an unperformed promise is an instance of this sort of
damage. In all such cases the damages recoverable are such as
naturally and generally would result from such a breach,
according to the usual course of things. In cases involving
only ordinary damage no discussion is ever indulged as to
whether that damage was contemplated or not. This is
conclusively presumed from the immediateness and
inevitableness of the damage, and the recovery of such damage
follows as a necessary legal consequence of the breach.
Ordinary damage is assumed as a matter of law to be within the
contemplation of the parties.
b. Special damage, on the other hand, is such as follows less
directly from the breach than ordinary damage. It is only found
in case where some external condition, apart from the
actual terms to the contract exists or intervenes, as it
were, to give a turn to affairs and to increase damage in a way
that the promisor, without actual notice of that external
condition, could not reasonably be expected to foresee. Before
such damage can be recovered the plaintiff must show
that the particular condition which made the damage a
possible and likely consequence of the breach was known
to the defendant at the time the contract was made.

5) Explanation: We recognize the possibility that more extensive
damages (special damages) may be recovered where, at the time of
the creation of the contractual obligation, the vendor, or lessor, is
aware of the use to which the purchaser or lessee desires to put the
property which is the subject of the contract, and the contract is
made with the eyes of the vendor or lessor open to the
possibility of the damage which may result to the other party from
his own failure to give possession. Case at bar: The case before us is
not of this character, inasmuch as at the time when the rights of the
parties under the contract were determined, nothing was known to
any of them about the San Francisco capitalist who would be willing
to back the project.
6) Tip on how the buyer may protect his interest: The extent of the
liability for the breach of a contract must be determined in the light of
the situation in existence at the time the contract is made; and the
damages ordinarily recoverable are in all events limited to such as
might be reasonably foreseen in the light of the facts then known to
the contracting parties. Where the purchaser desires to protect
himself, in the contingency of the failure of the vendor
promptly to give possession, from the possibility of incurring
other damages than such as are incident to the normal value of
the use and occupation, he should cause to be inserted in the
contract a clause providing for stipulated amount to be paid
upon failure of the vendor to give possession; and no case has
been called to our attention where, in the absence of such a
stipulation, damages have been held to be recoverable by the
purchaser in excess of the normal value of use and occupation.
7) THUS, NB: To bring damages which would ordinarily be treated
as remote within the category of recoverable special damages,
it is necessary that the condition should be made the subject of
contract in such sense as to become an express or implied term
of the engagement.
8) Case at bar, held: damages laid under the second cause of action in
the complaint could not be recovered from her, first, because the
damages in question are special damages which were not within
contemplation of the parties when the contract was made, and
secondly, because said damages are too remote to be the subject of
recovery. This conclusion is also necessarily fatal to the right of the
plaintiff to recover such damages from the defendant corporation, for,
as already suggested, by advising Teodorica not to perform the
contract, said corporation could in no event render itself more
extensively liable than the principal in the contract.

13. Cariaga v LTB
Facts: Cariaga was aUST med student who was rode an LTB bus. The LTB
bus was negligent, causing the bus to collide with an MRR train. The victim
became a veggie. Parents sued LTB for B of K and MRR for QD. Claimed

actual damages in behalf of their child, and also separately for themselves,
and also moral damages.
Held:
i. MRR proved not liable for QD.
ii. LTB liable for B of K. But,
a. Actual damages in behalf of victim – Yes
b. Actual damages for the parents – No
c. Moral damages – No
Discussion on Damages:
i. Actual damages in behalf of victim
The court awarded actual damages based on the medical expenses and also
the future income he might receive (value of which testified to by an expert
witness who is a doctor).
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.
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
(Query: What if they filed a QD case versus LTB? Will LTB be liable for the
future income he could have earned as a doctor even if no reasonably
foreseen?)
ii. Moral damages – disallowed
Predicated on the fact that the suit against LTB was for breach of contract of
carriage. Moral damages, if ever, could be awarded, only in QD suits.
iii. Actual damages for parents - disallowed
The claim made by said spouses for actual and compensatory damages is
likewise without merits. As held by the trial court, in so far as the LTB is
concerned, the present action is based upon a breach of contract of
carriage to which said spouses were not a party, and neither can they
premise their claim upon the negligence or quasi-delict of the LTB
for the simple reason that they were not themselves injured as a

result of the collision between the LTB bus and train owned by the Manila
Railroad Company.
14. OMC Carriers Inc v. Nabua
A first year IE student died due to a collision. Parents sued for damages. The
damages awarded were questioned as follows:
i. RTC awarded 60k for death indemnity. The court modified this as only
50k is the amount established in jurisprudence as the proper
amount.
ii. Attorney’s fees: LCs awarded attorneys fees but did not state reason
therefor. The SC held: The CA did not explain why it was still
awarding attorney’s fees to respondents, therefore, such an award
must be deleted.
iii. SC upheld the award of moral damages: It must be stressed that
moral damages are not intended to enrich a plaintiff at the expense
of the defendant. They are awarded to allow the plaintiff to obtain
means, diversion or amusements that will serve to alleviate the
moral suffering he/she has undergone due to the defendant’s
culpable action and must, perforce, be proportional to the
suffering inflicted. Thus, given the circumstances of the case at
bar, an award of P50,000.00 as moral damages is proper.
iv. ACTUAL DAMAGES
a. Must be substantiated by receipts: For one to be entitled to
actual damages, it is necessary to prove the actual amount of
loss with a reasonable degree of certainty, premised upon
competent proof and the best evidence obtainable by the
injured party. 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.
Based on the foregoing, the RTC erred when it awarded the
amount of P110,000.00 as actual damages, as the said amount
was not duly substantiated with receipts. Hence, the amount of
actual damages that can only be recovered is P59,173.50.
b. On proof of future income- Here the SC affirmed the deletion
of the 2mio award for loss of earning capacity. The SC said:
Compensation of this nature is awarded not for loss of earnings
but for loss of capacity to earn money. Evidence must be
presented that the victim, if not yet employed at the time
of death, was reasonably certain to complete training for
a specific profession. Court cited 2 cases:
i. where damages awarded - In sharp contrast with the
situation obtaining in People v. Teehankee, where the

prosecution merely presented evidence to show the fact
of the victim’s graduation from high school and the fact
of his enrollment in a flying school, the spouses Rosales
did not content themselves with simply establishing Liza
Rosalie’s enrollment at UP Integrated School. They
presented evidence to show that Liza Rosalie was a good
student, promising artist, and obedient child. She
consistently performed well in her studies since grade
school.
ii. where damages not awarded- In People v. Teehankee,
no award of compensation for loss of earning capacity
was granted to the heirs of a college freshman because
there was no sufficient evidence on record to show that
the victim would eventually become a professional pilot.
But compensation should be allowed for loss of earning
capacity resulting from the death of a minor who has not
yet commenced employment or training for a specific
profession if sufficient evidence is presented to establish
the amount thereof
c. Thus: In the case at bar, respondents only testified to the fact
that the victim, Reggie Nabua, was a freshman taking up
Industrial Engineering at the Technological Institute of the
Philippines in Cubao. Unlike in Metro Transit where
evidence of good academic record, extracurricular
activities, and varied interests were presented in court,
herein respondents offered no such evidence. Hence, the
CA was correct when it deleted the award of compensatory
damages amounting to P2,000,000.00, as the same is without
any basis.
15. Continental Cement v Asea
Facts: Plaintiff entered into a contract with defendant to repair his
equipment. But the defendant not only incurred delay, but failed to repair
entirely. Now, plaintiff is claiming for actual damages and consequential
damages (losses, expenses by reason of the delay, for the duration that the
defendant incurred delay).
Held:
i. On the non-liability clause - Respondents contend that under Clause 7
of the General Conditions their liability “does not extend to
consequential damages either direct or indirect.” This contention,
however, is unavailing because respondents failed to show that
petitioner was duly furnished with a copy of said General
Conditions.
ii. On penalty clauses - Under Article 1226 of the Civil Code, the penalty
clause takes the place of indemnity for damages and the payment
of interests in case of non-compliance with the obligation, unless
there is a stipulation to the contrary. Since there is no stipulation

to the contrary, the penalty in the amount of P987.25 per day of
delay covers all other damages (i.e. production loss, labor cost, and
rental of the crane) claimed by petitioner.
iii.On consequential damages - Consequential damages, such as loss of
profits on account of delay or failure of delivery, may be recovered
only if such damages were reasonably foreseen or have been
brought within the contemplation of the parties as the probable
result of a breach at the time of or prior to contracting respondent
ABB, at the time it agreed to repair petitioner’s Kiln Drive Motor,
could not have reasonably foreseen that it would be made
liable for production loss, labor cost and rental of the crane
in case it fails to repair the motor or incurs delay in
delivering the same, especially since the motor under repair
was a spare motor.
16. Mendoza v PAL
Facts: Here, plaintiff wanted to show a movie in his theater to maximize his
profits in an upcoming fiesta. He ordered copies of a film from Manila, and
the film was to be brought to his place via PAL. But PAL failed to drop the
items off at the airport. Thus, for a few days, plaintiff lost profits. He is now
claiming for the profits which he should have gained.
Held: Denied. Liability for damages due to delay both under the NCC and
Code of Commerce only cover ordinary damages. To be liable for special
damages, he should notify the carrier of the 1) nature of the items to be
delivered, 2) purpose and 3) desire to rush.
i. Even applying the provisions of the Code of Commerce, as already stated,
the pertinent provisions regarding damages only treats of ordinary damages
or damages in general, not special damages.
ii. But before defendant could be held to special damages, such as the
present alleged loss of profits on account of delay or failure of delivery, it
must have appeared that he had notice at the time of delivery to him of the
particular circumstances attending the shipment, and which probably would
lead to such special loss if he defaulted. Or, as the rule has been stated in
another form, in order to impose on the defaulting party further liability
than for damages naturally and directly, i.e., in the ordinary course of things,
arising from a breach of contract, such unusual or extraordinary damages
must have been brought within the contemplation of the parties as the
probable result of a breach at the time of or prior to contracting. Generally,
notice then of any special circumstances which will show that the
damages to be anticipated from a breach would be enhanced has
been held sufficient for this effect.
iii. What he should have done: 1) either ordered the films earlier, or 2)
entered into a special contract with the carrier.
17. Villa Rey Transit v CA

How to compute for loss of earning capacity
i. The determination of such amount depends, mainly upon TWO (2)
FACTORS, namely: (1) the number of years on the basis of
which the damages shall be computed and (2) the rate at
which the losses sustained by said respondents should be
fixed.
ii. First factor: life expectancy.
a. Formula (2/3 x [80-30] = life expectancy)
b. Thus, life expectancy is, not only relevant, but, also, an
important element in fixing the amount recoverable by
private respondents herein. Although it is not the sole
element determinative of said amount, no cogent reason has
been given to warrant its disregard and the adoption, in the
case at bar, of a purely arbitrary standard, such as a four year
rule.
iii. Second factor: earning capacity
a. Petitioner impugns the decision appealed from upon the ground
that the damages awarded therein will have to be paid now,
whereas most of those sought to be indemnified will be suffered
years later. Held: Although payment of the award in the
case at bar will have to take place upon the finality of the
decision therein, the liability of petitioner herein had
been fixed at the rate only of P2,184.00 a year, which is the
annual salary of Policronio Quintos, Jr. at the time of his
death, as a young “training assistant”
b. We are mainly concerned with the determination of the
losses or damages sustained by the private respondents,
as dependents and intestate heirs of the deceased, and
that said damages consist, not of the full amount of his
earnings, but of the support they received or would have
received from him had he not died in consequence of the
negligence of petitioner’s agent. In fixing the amount of that
support, We must reckon with the “necessary expenses of his
own living”, which should be deducted from his earnings.
c. Thus, it has been consistently held that EARNING CAPACITY,
as an element of damages to one’s estate for his death by
wrongful act is necessarily his net earning capacity or his
capacity to acquire money, “less the necessary expense for
his own living Stated otherwise, the amount recoverable is
not loss of the entire earning, but rather the loss of that
portion of the earnings which the beneficiary would have
received. In other words, only net earnings, not gross
earning, are to be considered that is, the total of the
earnings less expenses necessary in the creation of such
earnings or income and less living and other incidental
expenses.

18. Cruz v Sun Holidays
Sample computation of Actual Damages:
Civil Code holds the common carrier in breach of its contract of carriage
that results in the death of a passenger liable to pay the following: (1)
indemnity for death, (2) indemnity for loss of earning capacity and (3) moral
damages.
Petitioners are entitled to indemnity for the death of Ruelito which is fixed at
P50,000.
As for damages representing unearned income, the formula for its
computation is:
Life expectancy is determined in accordance with the formula:
2 / 3 x [80 — age of deceased at the time of death]
i. The first factor, i.e., life expectancy, is computed by applying the formula
(2/3 x [80 — age at death])
ii. The second factor is computed by multiplying the life expectancy by the
net earnings of the deceased, i.e., the total earnings less expenses
necessary in the creation of such earnings or income and less living and
other incidental expenses. The loss is not equivalent to the entire
earnings of the deceased, but only such portion as he would have
used to support his dependents or heirs. Hence, to be deducted from his
gross earnings are the necessary expenses supposed to be used by the
deceased for his own needs.
iii. In computing the third factor – necessary living expense: when there
is no showing that the living expenses constituted the smaller
percentage of the gross income, the living expenses are fixed at half
of the gross income.
Applying the above guidelines, the Court determines Ruelito's life
expectancy as follows:
Life expectancy = 2/3 x [80 - age of deceased at the time of death]
= 2/3 x [80 - 28]
=2/3 x [52]
Life expectancy = 35

Documentary evidence shows that Ruelito was earning a basic
monthly salary of $900 which, when converted to Philippine peso
applying the annual average exchange rate of $1 = P44 in
2000,amounts to P39,600. Ruelito’s net earning capacity is thus
computed as follows:
Net Earning Capacity = life expectancy x (gross annual income reasonable and necessary living expenses). = 35 x (P475,200 P237,600)
= 35 x (P237,600) Net Earning Capacity = P8,316,000
Interest Computation
Finally, Eastern Shipping Lines, Inc. v. Court of Appeals teaches that when
an obligation, regardless of its source, i.e., law, contracts, quasi-contracts,
delicts or quasi-delicts is breached, the contravenor can be held liable for
payment of interest in the concept of actual and compensatory damages,
subject to the following rules, to wit —
1. When the obligation is breached, and it consists in the payment of a sum
of money, i.e., a loan or forbearance of money, the interest due should be
that which may have been stipulated in writing. Furthermore, the interest
due shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of interest shall be 12%
per annum to be computed from default, i.e., from judicial or extrajudicial
demand under and subject to the provisions of Article 1169 of the Civil
Code.
2. When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be imposed at
the discretion of the court at the rate of 6% per annum. No interest,
however, shall be adjudged on unliquidated claims or damages except when
or until the demand can be established with reasonable certainty.
Accordingly, where the demand is established with reasonable certainty, the
interest shall begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so
reasonably established at the time the demand is made, the interest shall
begin to run only from the date the judgment of the court is made (at which
time the quantification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest shall, in
any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final
and executory, the rate of legal interest, whether the case falls under
paragraph 1 or paragraph 2, above, shall be 12% per annum from such
finality until its satisfaction, this interim period being deemed to be by then
an equivalent to a forbearance of credit. (emphasis supplied).
Since the amounts payable by respondent have been determined with
certainty only in the present petition, the interest due shall be computed

upon the finality of this decision at the rate of 12% per annum until
satisfaction, in accordance with paragraph number 3 of the immediately
cited guideline in Easter Shipping Lines, Inc.
19. De Caliston v CA
The pension of the decedent being a sure income that was cut short by her
death for which Dalmacio was responsible, the surviving heir of the former
is entitled to the award of P10,000.00 which is just equivalent to the pension
the decedent would have received for one year if she did not die.
The P5,000.00 paid to the herein petitioner by the insurer of the passenger
bus which figured in the accident may be deemed to have come from the bus
owner who procured the insurance. Since the civil liability (ex-delicto) of the
latter for the death caused by his driver is subsidiary and, at bottom, arises
from the same culpa, the insurance proceeds should be credited in favor of
the errant driver.
20. Tamayo v Senora
PNP officer died in a car accident. The RTC modified the formula for net
earning capacity – instead of (80-age at death), it used (55-aged at death)
since 55 yo is the retirement age for the PNP. Proper?
Held: No. Hence, the RTC erred in modifying the formula and using the
retirement age of the members of the PNP (55) instead of “80.”
On the other hand, gross annual income requires the presentation of
documentary evidence for the purpose of proving the victim’s annual
income. The victim’s heirs presented in evidence Señora’s pay slip from the
PNP, showing him to have had a gross monthly salary of P12,754.00.
Meanwhile, the victim’s net income was correctly pegged at 50% of his
gross income in the absence of proof as regards the victim’s living expenses.
21. Phil Hawk Corp v. Lee
i. General Rule: Actual damages must be substantiated by documentary
evidence, such as receipts, in order to prove expenses incurred as a result of
the death of the victim or the physical injuries sustained by the victim. As a
rule, documentary evidence should be presented to substantiate the claim
for damages for loss of earning capacity.
EXCEPT: By way of exception, damages for loss of earning capacity may be
awarded despite the absence of documentary evidence when: (1) the
deceased is self-employed and earning less than the minimum wage under
current labor laws, in which case, judicial notice may be taken of the fact
that at in the deceased's line of work no documentary evidence is available;
or (2) the deceased is employed as a daily wage worker earning less than the
minimum wage under current labor laws.
ii. Here, competent proof of income was one’s Certificate of Tax Withheld.

iii. In the absence of documentary evidence, it is reasonable to peg
necessary expenses for the lease and operation of the gasoline station at 80
percent of the gross income, and peg living expenses at 50 percent of
the net income (gross income less necessary expenses).
22. Simex v CA (1990)
Plaintiff here is a corporation who is a depositor of a bank. The bank
negligently dishonored the checks drawn by the plaintiff. Thus, the plaintiff’s
reputation was damaged. It sued not for actual damages, but for moral
damages etc.
Held:
Actual damages
The fact is that the petitioner’s credit line was canceled and its orders were
not acted upon pending receipt of actual payment by the suppliers. Its
business declined. Its reputation was tarnished. Its standing was reduced in
the business community. All this was due to the fault of the respondent bank
which was undeniably remiss in its duty to the petitioner.
Article 2205 of the Civil Code provides that actual or compensatory damages
may be received “(2) for injury to the plaintiff’s business standing or
commercial credit.”. There is no question that the petitioner did sustain
actual injury as a result of the dishonored checks and that the existence of
the loss having been established “absolute certainty as to its amount is not
required.” Such injury should bolster all the more the demand of the
petitioner for moral damages and justifies the examination by this Court of
the validity and reasonableness of the said claim.
Moral damages:
Its claim of moral damages in the amount of P1,000,000 is nothing short of
preposterous. Its business certainly is not that big, or its name that
prestigious, to sustain such an extravagant pretense. Moreover, a
corporation is not as a rule entitled to moral damages because, not
being a natural person, it cannot experience physical suffering or
such sentiments as wounded feelings, serious anxiety, mental
anguish and moral shock. The only exception to this rule is where the
corporation has a good reputation that is debased, resulting in its
social humiliation.
Petitioner did suffer injury because of the private respondent’s negligence
that caused the dishonor of the checks issued by it. The immediate
consequence was that its prestige was impaired because of the bouncing
checks and confidence in it as a reliable debtor was diminished.
Exemplary damages
Since banks are affected with public interest, the court here imposed

exemplary damages as well.
23. NPC v CA
“And such actual or compensatory damages must be established by clear
evidence. In justifying its award of damages in the amount of P 500,000.00
for alleged injury to WILMAG's business standing or commercial credit, the
appellate court merely took as good WILMAG's bare assertion that its
"credit standing in the community were [sic] completely shattered, its entire
business destroyed and its mortgages lost" but cites no evidence whatsoever
to support the same. More importantly, these damages have no legal basis in
view of our finding that WILMAG has no cause of action against NPC. As
NPC submits in its brief, WILMAG has no business reputation or
commercial credit standing in the community (in its decision, the Court of
Appeals did not even mention or discuss the business reputation or standing
of WILMAG)”
WILMAG enumerated a litany of "34 civil and 2 criminal cases for estafa"
filed against it and its controlling stockholder Natividad M. Fajardo by third
parties, seeking to justify the present action for damages against NPC
allegedly because it could not as a result pay its loans to banks and fulfill its
obligations to their subdivision buyers. Suffice it to state that NPC has
nothing whatever to do with such suits and certainly cannot be held in any
way liable for WILMAGs (apparently known to its creditors also as
RAMAWIL) failure to live up to their contractual undertakings with them.
(NB: Differences with Simex case – (1) moral damages claimed in simex, but
here actual damages, (2) simex, it was really the fault of the defendant,
while in here, it was not the fault of the defendant)
24. Tanay Recreation Center v. Fausto (query: overturns Simex?)
Facts: Violation of lessor of right of first refusal.
Held:
i. The rule is that actual or compensatory damages cannot be
presumed, but must be proved with reasonable degree of certainty. A
court cannot rely on speculations, conjectures, or guesswork as to
the fact and amount of damages, but must depend upon competent
proof that they have been suffered by the injured party and on the
best obtainable evidence of the actual amount thereof. It must point
out specific facts, which could afford a basis for measuring whatever
compensatory or actual damages are borne.
RCDC’s accountant, Merle Cruz, stated that based on the corporation’s
financial statement for the years 1990 and 1991, they derived the amount of
P120,000.00 as annual income from rent. From said financial statement, it is
safe to presume that TRCDC generated a monthly income of P10,000.00 a
month (P120,000.00 annual income divided by 12 months). At best
therefore, whatever actual damages that petitioner suffered from the

cockpit’s closure for a period of two months can be reasonably summed up
only to P20,000.00.
ii. An award of damages for loss of goodwill or reputation falls under
actual or compensatory damages as provided in Article 2205 of the
Civil Code, to wit:
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.
Even if it is not recoverable as compensatory damages, it may still be
awarded in the concept of temperate or moderate damages. In arriving at a
reasonable level of temperate damages to be awarded, trial courts are
guided by the ruling that:
. . . There are cases where from the nature of the case, definite proof
of pecuniary loss cannot be offered, although the court is convinced
that there has been such loss. For instance, injury to one's commercial
credit or to the goodwill of a business firm is often hard to show
certainty in terms of money…
iii. The award of moral damages cannot be granted in favor of a corporation
because, being an artificial person and having existence only in legal
contemplation, it has no feelings, no emotions, no senses. It cannot,
therefore, experience physical suffering and mental anguish, which can be
experienced only by one having a nervous system. Petitioner being a
corporation, the claim for moral damages must be denied.
25. MMTC v CA
Facts: High school UP student died because she was hit by a speeding bus
along Katip.
Held:
i. indemnity for death:
Art. 2206 provides for the payment of indemnity for death caused by a crime
or quasi-delict. Initially fixed in said article of the Civil Code at P3,000.00,
the amount of the indemnity has through the years been gradually increased
based on the value of the peso. At present, it is fixed at P50,000.00.
ii. Actual damages
However, during the trial, they submitted receipts showing that
expenses for the funeral, wake, and interment of Liza Rosalie
amounted only to P60,226.65. Hence, apart from the indemnity for death,
the spouses Rosales are entitled to recover the above amount as actual
damages.

iii. Moral damages
Under Art. 2206, 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 reason for the grant of moral
damages has been explained thus:
The award of moral damages is aimed at a restoration, within the limits of
the possible, of the spiritual status quo ante; and therefore, it must be
proportionate to the suffering inflicted. The intensity of the pain experienced
by the relatives of the victim is proportionate to the intensity of affection for
him and bears no relation whatsoever with the wealth or means of the
offender.
In People v. Teehankee, Jr., this Court awarded P1 million as moral
damages to the heirs of a 17-year-old girl who was murdered. This amount
seems reasonable to us as moral damages for the loss of a minor
child, whether he or she was a victim of a crime or a quasi-delict.
iv. Compensation for loss of earning capacity
Art. 2206 of the Civil Code provides that in addition to the indemnity for
death caused by a crime or quasi-delict, 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.
Compensation of this nature is awarded not for loss of earnings but for loss
of capacity to earn money. Evidence must be presented that the victim,
if not yet employed at the time of death, was reasonably certain to
complete training for a specific profession.
The spouses Rosales did not content themselves with simply
establishing Liza Rosalie’s enrollment at UP Integrated School. They
presented evidence to show that Liza Rosalie was a good student, promising
artist, and obedient child. She consistently performed well in her studies
since grade school. A survey taken in 1984 when Liza Rosalie was 12 years
old showed that she had good study habits and attitudes. Cleofe Chi,
guidance counselor of the University of the Philippines Integrated School,
described Liza Rosalie as personable, well-liked, and with a balanced
personality.
Considering her good academic record, extracurricular activities, and varied
interests, it is reasonable to assume that Liza Rosalie would have enjoyed a
successful professional career had it not been for her untimely death.
Computation:
Wage Order (1984) = 37.00
37 x 365 = 13,50513,505 / 12 = 1,125.42 (equivalent monthly rate)

1,125.42 x 13 (representing 13
income)

th

month pay) = 14,630.46 (gross annual

14,630.46 x 50% = 7,315.23 (net annual income)
7,315.23 x 44 (life expectancy) = 321,870.12 (net earning capacity)

26. People v Beduya
"Moral damages are mandatory in cases of murder and homicide without
need of allegation and proof other than the death of the victim. Consistent
with this rule, we award the amount of P50,000.00 as moral damages in
accordance with prevailing jurisprudence.” (so if asked: T/F, ALL moral
damages must be proved. False)
27. People v Anticamara
i. murder
P75,000.00 as civil indemnity, P75,000.00 as moral damages, P30,000.00 as
exemplary damages, and other proved actual damages.
In People v. Quiachon, even if the penalty of death is not to be imposed
because of the prohibition in R.A. 9346, the civil indemnity of P75,000.00 is
proper, because it is not dependent on the actual imposition of the death
penalty but on the fact that qualifying circumstances warranting the
imposition of the death penalty attended the commission of the offense.
Anent moral damages, the same are mandatory in cases of murder,
without need of allegation and proof other than the death of the victim.
However, consistent with recent jurisprudence on heinous crimes where the
imposable penalty is death but reduced to reclusion perpetua pursuant to
R.A. No.9346, the award of moral damages should be increased from
P50,000.00 to P75,000.00.
The award of exemplary damages is in order, because of the presence of
the aggravating circumstances of treachery and evident premeditation in the
commission of the crime. The Court awards the amount of P30,000.00, as
exemplary damages, in line with current jurisprudence on the matter.
ii. rape
P75,000.00 as civil indemnity, P75,000.00 as moral damages and P30,000.00
as exemplary damage
In addition, AAA is entitled to moral damages pursuant to Article 2219 of
the Civil Code,71 without the necessity of additional pleadings or proof other
than the fact of rape. Moral damages is granted in recognition of the

victim’s injury necessarily resulting from the odious crime of rape. Such
award is separate and distinct from the civil indemnity. However, the amount
of P100,000.00 awarded as moral damages is reduced to P75,000.00, in line
with current jurisprudence.
iii. kidnapping
P50,000.00 as civil indemnity and P50,000.00 as moral damages.
28. People v Rarugal (2013 case)
Facts:
Victim, while riding his bike, was suddenly stabbed by the accused. He
didn’t suddenly die. He was able to go home and tell his bros who killed him
(dying declaration). He died 7 days later. SC ruled that qualifying
circumstance of treachery was present. Thus, he is guilty of murder.
Damages?
Held:
i. Damages allowable if death due to a crime
Anent the award of damages, when death occurs due to a crime, the
following may be recovered: (1) civil indemnity ex delicto for the death of
the victim; (2) actual or compensatory damages; (3) moral damages; (4)
exemplary damages; (5) attorney’s fees and expenses of litigation; and (6)
interest, in proper cases. (ICA MEA)
ii. There is no distinction between ordinary and qualifying circumstance
insofar as damages are concerned
Withal, the ordinary or qualifying nature of an aggravating circumstance is a
distinction that should only be of consequence to the criminal, rather than to
the civil, liability of the offender. In fine, relative to the civil aspect of
the case, an aggravating circumstance, whether ordinary or
qualifying, should entitle the offended party to an award of
exemplary damages within the unbridled meaning of Article 2230 of the
Civil Code.”

iii. Amount of civil liability ex delicto and exemplary damages under current
jurisprudence:
We, however, increase the award of exemplary damages to P30,000.00 and
the award for mandatory civil indemnity to P75,000.00 to conform to recent
jurisprudence.
iv. Moral damages to be awarded when death is caused by crime even with
the absence of proof.

We sustain the RTC’s award for moral damages in the amount of
P50,000.00 even in the absence of proof of mental and emotional
suffering of the victim’s heirs. As borne out by human nature and
experience, a violent death invariably and necessarily brings about
emotional pain and anguish on the part of the victim’s family.

29. Padilla Machine shop v Javilgas
Illegal dismissal case.
Held:
Finally, there is no merit in petitioners’ claim that attorney’s fees may
not be awarded to the respondent since his case was being handled
pro bono by the U.P. Office of Legal Aid, which provides free legal
assistance to indigent litigants. In this jurisdiction, there are two concepts of
attorney’s fees. In the ordinary sense, attorney’s fees represent the
reasonable compensation paid to a lawyer by his client for the legal services
he has rendered to the latter. On the other hand, in its extraordinary
concept, attorney’s fees may be awarded by the court as indemnity
for damages to be paid by the losing party to the prevailing party,
and not counsel. In its extraordinary sense, attorney’s fees as part of
damages is awarded only in the instances specified in Article 2208 of the
Civil Code, among which are the following which obtain in the instant case:
(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;
xxxx
(11) In any other case where the court deems it just and equitable that
attorney's fees and expenses of litigation should be recovered.

30. David v Misamis
Facts: Contract of sale of equipment. A contract of sale was perfected, and
the items were already delivered. Since the vendee was not able to pay at
the stipulated date, the parties agreed to extend the term but with a 24%
interest rate.
Held:
i. Stipulated interest rate will be decreased if unconscionable.

That being said, the Court now comes to David’s prayer that MOELCI be
made to pay the total sum of P5,472,722.27 plus the stipulated interest at
24% per annum from the filing of the complaint. Although the Court agrees
that MOELCI should pay interest, the stipulated rate is, however,
unconscionable and should be equitably reduced. Accordingly, the excessive
interest of 24% per annum stipulated in the sales invoice should be reduced
to 12% per annum.
ii. Attorneys fees
Indeed, David was compelled to file an action against MOELCI but this
reason alone will not warrant an award of attorney’s fees. It is settled that
the award of attorney’s fees is the exception rather than the rule.
(Also discussed ordinary and extraordinary attorney’s fees)
iii. Attorney’s fees will be awarded for cases outside the enumeration under
Art. 2208 of NCC only when:
a. If stipulated.
b. In the absence of stipulation, a winning party may be awarded
attorney’s fees only in case plaintiff’s action or defendant’s stand is
so untenable as to amount to gross and evident bad faith.
MOELCI’s case cannot be similarly classified.
31. Lacson v Reyes
Facts: Lawyer, as administrator and lawyer of heirs, filed a petition for
probate of a will. No oppositors. Granted. He then filed a motion for
attorney’s fees.
Held:
The rule (ROC) is therefore clear that an administrator or executor may be
allowed fees for the necessary expenses he has incurred as such, but he may
not recover attorney’s fees from the estate. Compensation is fixed by the
rule but such compensation is in the nature of executor’s or
administrator’s commissions, and never as attorney’s fees. A greater
sum other than that established by the rule may be allowed ‘in any
special case, where the estate is large, and the settlement has been
attended with great difficulty, and has required a high degree of
capacity on the part of the executor or administrator.’ It is left to the
sound discretion of the court.
Accordingly, to the extent that the trial court set aside the sum of
P65,000.00 as and for Mr. Serquina’s attorney’s fees, to operate as a “lien on
the subject properties,” the trial judge must be said to have gravely abused
its discretion.
We have held that a lawyer of an administrator or executor may not charge
the estate for his fees, but rather, his client. Mutatis mutandis, where the

administrator is himself the counsel for the heirs, it is the latter who must
pay therefor. In that connection, attorney’s fees are in the nature of
actual damages, which must be duly proved. They are also subject to
certain standards, to wit:
(1) they must be reasonable, that is to say, they must have a bearing on the
importance of the subject matter in controversy;(2) the extent of the
services rendered; and(3) the professional standing of the lawyer. In all
cases, they must be addressed in a full-blown trial and not on the bare word
of the parties. And always, they are subject to the moderating hand of the
courts. (REP)
Case at bar:
Court observes that these are acts performed routinely since they form part
of what any lawyer worth his salt is expected to do. The will was
furthermore not contested. They are not, so Justice Pedro Tuason wrote, “a
case [where] the administrator was able to stop what appeared to be an
improvident disbursement of a substantial amount without having to employ
outside legal help at an additional expense to the estate,” to entitle him to a
bigger compensation. He did not exactly achieve anything out of the
ordinary.
32. Petron Corp v. NCBA
i. Art 2208 (5) construed:
Article 2208(5) contemplates a situation where one refuses unjustifiably and
in evident bad faith to satisfy another’s plainly valid, just and demandable
claim, compelling the latter needlessly to seek redress from the courts. It
does not mean, however, that the losing party should be made to pay
attorney’s fees merely because the court finds his legal position to be
erroneous and upholds that of the other party, for that would be an
intolerable transgression of the policy that no one should be penalized for
exercising the right to have contending claims settled by a court of law. In
fact, even a clearly untenable defense does not justify an award of
attorney’s fees unless it amounts to gross and evident bad faith.
Case at bar;
Petron’s claim to the V. Mapa properties, founded as it was on final deeds of
sale on execution, was far from untenable. No gross and evident bad faith
could be imputed to Petron merely for intervening in NCBA’s suit against
DBP and the Monserrats in order to assert what it believed (and had good
reason to believe) were its rights and to have the disputed ownership of the
V. Mapa properties settled decisively in a single lawsuit.
ii. When exemplary damages may be awarded:
With respect to the award of exemplary damages, the rule in this
jurisdiction is that the plaintiff must show that he is entitled to

moral, temperate or compensatory damages before the court may
even consider the question of whether exemplary damages should be
awarded. In other words, no exemplary damages may be awarded
without the plaintiff’s right to moral, temperate, liquidated or
compensatory damages having first been established.

33. Buan v Camaganacan
Attorney’s fees:
i. Rule: The text of the decision should state the reason why attorneys’ fees
are being awarded, otherwise, the award is disallowed.
ii. The very opening paragraph of Article 2208 reveals that the award of
attorneys’ fees remains exceptional in our law. The GENERAL RULE
being still that it is not sound public policy to place a penalty on the
right to litigate nor should counsel fees be awarded every time a
party wins a lawsuit.
iii. In the present case, for the award of P2,680.00 in actual damages the
appealed decisions awards no less than P2,000.00 in counsel fees, which is
hardly reasonable. Hence, the exercise of judicial discretion in the
award of attorneys’ fees under Article 2208 (11) of the Civil Code
demands a factual, legal, or equitable justification upon the basis of
which the court exercises its discretion. Without such justification, the
award is a conclusion without a premise, as basis being improperly left to
speculation and conjecture.
34. Villanueva v Salvador
i. Moral damages:
While proof of pecuniary loss is unnecessary to justify an award of moral
damages, the amount of indemnity being left to the sound discretion of the
court, it is, nevertheless, essential that the claimant satisfactorily proves the
existence of the factual basis of the damages and its causal connection to
defendant’s wrongful act or omission. This is so because moral damages,
albeit incapable of pecuniary estimation, are designed to compensate the
claimant for actual injury suffered and not to impose a penalty on the
wrongdoer. There is thus merit on petitioners’ assertion that proof of moral
suffering must precede a moral damage award.
The conditions required in awarding moral damages are: (1) there
must be an injury, whether physical, mental or psychological, clearly
sustained by the claimant; (2) there must be a culpable act or
omission factually established; (3) the wrongful act or omission of
the defendant must be the proximate cause of the injury sustained by
the claimant; and (4) the award of damages is predicated on any of

the cases stated in Article 2219 of the Civil Code.
(ICPP)
While there need not be a showing that the defendant acted in a wanton or
malevolent manner, as this is a requirement for an award of exemplary
damages, there must still be proof of fraudulent action or bad faith for a
claim for moral damages to succeed. Then, too, moral damages are generally
not recoverable in culpa contractual except when bad faith supervenes and
is proven. (NB: This ruling applies only for CULPA CONTRACTUAL)
Clear it is from the above that before moral damages may be assessed
thereunder, the defendant’s act must be vitiated by bad faith or that there is
willful intent to injure. Simply put, moral damages cannot arise from simple
negligence.
ii. Attorney’s fees:
As a matter of sound practice, an award of attorney’s fee has always been
regarded as the exception rather than the rule. And it is necessary for the
trial court to make express findings of fact and law that would bring the case
within the exception
35. Eastern Shipping v CA
(Discussed in Cruz v Sun Holidays)

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