CHAPTER 2

TITLE XVIII Actual or Compensatory Damages

Damages
ARTICLE 2199. Except as provided by law or by stipulation, one is
CHAPTER 1 entitled to an adequate compensation only for such pecuniary loss
General Provisions suffered by him as he has duly proved. Such compensation is
referred to as actual or compensatory damages.
ARTICLE 2195. The provisions of this Title shall be respectively
applicable to all obligations mentioned in article 1157. ARTICLE 2200. Indemnification for damages shall comprehend not
only the value of the loss suffered, but also that of the profits which
the obligee failed to obtain. (1106)
ARTICLE 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, ARTICLE 2201. In contracts and quasi-contracts, the damages for
injury or illness is regulated by special laws. Rules governing which the obligor who acted in good faith is liable shall be those that
damages laid down in other laws shall be observed insofar as they are the natural and probable consequences of the breach of the
are not in conflict with this Code. obligation, and which the parties have foreseen or could have
reasonably foreseen at the time the obligation was constituted.
ARTICLE 2197. Damages may be:
In case of fraud, bad faith, malice or wanton attitude, the obligor
(1) Actual or compensatory;
shall be responsible for all damages which may be reasonably
(2) Moral; attributed to the non-performance of the obligation. (1107a)
(3) Nominal;
(4) Temperate or moderate; ARTICLE 2202. In crimes and quasi-delicts, the defendant shall be
(5) Liquidated; or liable for all damages which are the natural and probable
(6) Exemplary or corrective. consequences of the act or omission complained of. It is not
necessary that such damages have been foreseen or could have
ARTICLE 2198. The principles of the general law on damages are reasonably been foreseen by the defendant.
hereby adopted insofar as they are not inconsistent with this Code.
ARTICLE 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.

ARTICLE 2204. In crimes, the damages to be adjudicated may be

respectively increased or lessened according to the aggravating or
mitigating circumstances.
ARTICLE 2205. Damages may be recovered: ARTICLE 2208. In the absence of stipulation, attorney’s fees and
(1) For loss or impairment of earning capacity in cases of temporary expenses of litigation, other than judicial costs, cannot be recovered,
or permanent personal injury; except:
(2) For injury to the plaintiff’s business standing or commercial (1) When exemplary damages are awarded;
credit. (2) When the defendant’s act or omission has compelled the plaintiff
to litigate with third persons or to incur expenses to protect his
ARTICLE 2206. The amount of damages for death caused by a interest;
crime or quasi-delict shall be at least three thousand pesos, even (3) In criminal cases of malicious prosecution against the plaintiff;
though there may have been mitigating circumstances. In addition: (4) In case of a clearly unfounded civil action or proceeding against
the plaintiff;
(1) The defendant shall be liable for the loss of the earning capacity (5) Where the defendant acted in gross and evident bad faith in
of the deceased, and the indemnity shall be paid to the heirs of the refusing to satisfy the plaintiff’s plainly valid, just and demandable
latter; such indemnity shall in every case be assessed and awarded claim;
by the court, unless the deceased on account of permanent physical (6) In actions for legal support;
disability not caused by the defendant, had no earning capacity at (7) In actions for the recovery of wages of household helpers,
the time of his death; laborers and skilled workers;
(2) If the deceased was obliged to give support according to the (8) In actions for indemnity under workmen’s compensation and
provisions of article 291, the recipient who is not an heir called to employer’s liability laws;
the decedent’s inheritance by the law of testate or intestate (9) In a separate civil action to recover civil liability arising from a
succession, may demand support from the person causing the death, crime;
for a period not exceeding five years, the exact duration to be fixed
(10) When at least double judicial costs are awarded;
by the court;
(11) In any other case where the court deems it just and equitable
(3) The spouse, legitimate and illegitimate descendants and
that attorney’s fees and expenses of litigation should be recovered.
ascendants of the deceased may demand moral damages for mental
anguish by reason of the death of the deceased.
In all cases, the attorney’s fees and expenses of litigation must be
reasonable.
ARTICLE 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, ARTICLE 2209. If the obligation consists in the payment of a sum of
the insurance company shall be subrogated to the rights of the money, and the debtor incurs in delay, the indemnity for damages,
insured against the wrongdoer or the person who has violated the there being no stipulation to the contrary, shall be the payment of
contract. If the amount paid by the insurance company does not the interest agreed upon, and in the absence of stipulation, the legal
fully cover the injury or loss, the aggrieved party shall be entitled to interest, which is six per cent per annum. (1108)
recover the deficiency from the person causing the loss or injury.
ARTICLE 2210. Interest may, in the discretion of the court, be
allowed upon damages awarded for breach of contract.
ARTICLE 2211. In crimes and quasi-delicts, interest as a part of the CHAPTER 3
damages may, in a proper case, be adjudicated in the discretion of Other Kinds of Damages
the court. ARTICLE 2216. No proof of pecuniary loss is necessary in order
that moral, nominal, temperate, liquidated or exemplary damages,
ARTICLE 2212. Interest due shall earn legal interest from the time may be adjudicated. The assessment of such damages, except
it is judicially demanded, although the obligation may be silent upon liquidated ones, is left to the discretion of the court, according to the
this point. (1109a) circumstances of each case.

ARTICLE 2213. Interest cannot be recovered upon unliquidated SECTION 1

claims or damages, except when the demand can be established Moral Damages
with reasonable certainty.
ARTICLE 2217. Moral damages include physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded
ARTICLE 2214. In quasi-delicts, the contributory negligence of the feelings, moral shock, social humiliation, and similar injury. Though
plaintiff shall reduce the damages that he may recover. incapable of pecuniary computation, moral damages may be
recovered if they are the proximate result of the defendant’s
ARTICLE 2215. In contracts, quasi-contracts, and quasi-delicts, the wrongful act or omission.
court may equitably mitigate the damages under circumstances
other than the case referred to in the preceding article, as in the ARTICLE 2218. In the adjudication of moral damages, the
following instances: sentimental value of property, real or personal, may be considered.
(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.
ARTICLE 2219. Moral damages may be recovered in the following ARTICLE 2222. The court may award nominal damages in every
and analogous cases: obligation arising from any source enumerated in article 1157, or in
(1) A criminal offense resulting in physical injuries; every case where any property right has been invaded.
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts; ARTICLE 2223. The adjudication of nominal damages shall
(4) Adultery or concubinage; preclude further contest upon the right involved and all accessory
questions, as between the parties to the suit, or their respective
(5) Illegal or arbitrary detention or arrest;
heirs and assigns.
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
SECTION 3
(8) Malicious prosecution;
Temperate or Moderate Damages
(9) Acts mentioned in article 309;
ARTICLE 2224. Temperate or moderate damages, which are more
(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, than nominal but less than compensatory damages, may be
34, and 35. recovered when the court finds that some pecuniary loss has been
The parents of the female seduced, abducted, raped, or abused, suffered but its amount can not, from the nature of the case, be
referred to in No. 3 of this article, may also recover moral damages. proved with certainty.

The spouse, descendants, ascendants, and brothers and sisters may ARTICLE 2225. Temperate damages must be reasonable under the
bring the action mentioned in No. 9 of this article, in the order circumstances.
named.
SECTION 4
ARTICLE 2220. Willful injury to property may be a legal ground for Liquidated Damages
awarding moral damages if the court should find that, under the
circumstances, such damages are justly due. The same rule applies ARTICLE 2226. Liquidated damages are those agreed upon by the
to breaches of contract where the defendant acted fraudulently or in parties to a contract, to be paid in case of breach thereof.
bad faith.
ARTICLE 2227. Liquidated damages, whether intended as an
SECTION 2 indemnity or a penalty, shall be equitably reduced if they are
iniquitous or unconscionable.
Nominal Damages
ARTICLE 2221. Nominal damages are adjudicated in order that a
right of the plaintiff, which has been violated or invaded by the ARTICLE 2228. When the breach of the contract committed by the
defendant, may be vindicated or recognized, and not for the purpose defendant is not the one contemplated by the parties in agreeing
of indemnifying the plaintiff for any loss suffered by him. upon the liquidated damages, the law shall determine the measure
of damages, and not the stipulation.
 SECTION 5 ARTICLE 2235. A stipulation whereby exemplary damages are
Exemplary or Corrective Damages renounced in advance shall be null and void.
ARTICLE 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. Meaning of Damages
As used in the Civil Code “damages” may mean either:
ARTICLE 2230. In criminal offenses, exemplary damages as a part (a) The injury or loss caused to another by the violation of his
of the civil liability may be imposed when the crime was committed legal rights; or
with one or more aggravating circumstances. Such damages are
separate and distinct from fines and shall be paid to the offended
(b) The sum of money which the law awards or imposes as
party.
pecuniary compensation, recompense, or satisfaction for an
injury done or a wrong sustained as a consequence either of a
ARTICLE 2231. In quasi-delicts, exemplary damages may be breach of contractual obligation or a tortious act.
granted if the defendant acted with gross negligence.
The law on damages-where found
ARTICLE 2232. In contracts and quasi-contracts, the court may The law governing damages is found in Articles 2195 to 2235 of the
award exemplary damages if the defendant acted in a wanton, Civil Code.
fraudulent, reckless, oppressive, or malevolent manner.
Fundamental rule on damages
ARTICLE 2233. Exemplary damages cannot be recovered as a
The fundamental principle of the law of damages is that one injured
matter of right; the court will decide whether or not they should be
by a breach of a contract or by a wrongful or negligent act or
adjudicated.
omission shall have fair and just compensation commensurate with
the loss sustained in consequence of the defendant’s act, which gives
ARTICLE 2234. While the amount of the exemplary damages need rise to the action. Hence, actual pecuniary compensation is the
not be proved, the plaintiff must show that he is entitled to moral, general rule, whether the action is on contract or in tort, except
temperate or compensatory damages before the court may consider where the circumstances warrant the allowance of exemplary
the question of whether or not exemplary damages should be damages.
awarded. In case liquidated damages have been agreed upon,
although no proof of loss is necessary in order that such liquidated
In general, the damages awarded should be equal to, and precisely
damages may be recovered, nevertheless, before the court may
commensurate with, the injury sustained. The injured party is
consider the question of granting exemplary in addition to the
entitled to recover full indemnity for his loss, and be placed as near
liquidated damages, the plaintiff must show that he would be
as may be in the condition which he would have occupied had he
entitled to moral, temperate or compensatory damages were it not
not suffered the injury complained of. His recovery must be limited
for the stipulation for liquidated damages.
to fair compensation and indemnity. Although actual compensation
is not always possible, the object of the law is to reach this measure
as nearly as possible, and, except in cases fit for punitive damages, compensatory damages cannot be presumed but must be duly
nothing more than this is to be given. proved.

However, rules of law respecting the recovery of damages are Only proximate cause, not remote cause recoverable
framed with reference to the just rights of both parties, not merely In order to maintain an action for damages for injuries claimed to
what may be right for an injured person to receive, but also what is have been caused by negligent or other tortious or wrongful act or
just to compel the other party to pay, to afford just compensation for omission, it should be made to appear that such act or omission was
his injury. the proximate cause of the injuries complained of. In other words, in
the ascertainment of liability, the law always refers an injury to the
The fundamental principle of the law of damages being proximate, as distinguished from the remote, cause of such injury.
compensation for the injury sustained, the plaintiff in a civil action The damages which the plaintiff is entitled to recover in a civil
for damages cannot hold a defendant liable in damages for more action for damages are, in the absence of any statutory modification
than the actual loss which he has inflicted by this wrong. In other of the rule, such only as are the natural and probable consequences
words, one injured by a breach of a contract or the commission of a of the wrongful act or breach of contract. The law of damages is not
tort is entitled to a just and adequate compensation for such injury, concerned with the effect of remote causes, but only with those
but no more. The law will not put him in a better position than he consequences of which the act complained of is the natural and
would be in had the wrong not been done or the contract not been proximate cause – that is, those which naturally and proximately
broken. flow from the original wrongful act. No rule of damages embraces
within its scope all the resulting consequences of a given act. The
effect would be to impose a liability entirely disproportionate to the
Damages and its amount must be proved
act committed or to the failure to perform the duty assumed.
The unbroken line of decisions has established the doctrine
constantly recognized that every judgment for damages, whether
arising from a breach of contract or whether the results of some Proximate damages are said to be such as are the ordinary and
provision of the law, must rest upon satisfactory proof of the natural result of the omission or commission of acts of negligence,
existence in reality of the damages alleged to have been suffered. and such as are usual and might have been reasonably expected or
contemplated. Remote damages are such as are the unusual
unexpected result not reasonably to be anticipated from an
Except in those cases where the law authorizes the imposition of accidental or unusual combination of circumstances – a result
punitive or exemplary damages, a party claiming damages must beyond and over which the negligent has no control. The test is
establish by competent evidence the amount of such damages and whether the facts shown constitute a continuous succession of
courts cannot give judgment for a greater amount than that actually events so linked together as to make a natural whole or whether
proven. there was a new and independent cause intervening between the
wrong and the injury.
Actual damages must be proved and a court cannot rely on
speculation, conjecture or guesswork as to the fact and amount of The principle that damages may be recovered only for such injuries
damages, but must depend on actual proof that damages had been as flow directly from and as the probable and natural result of, the
suffered and on evidence of the actual amount. Actual or
wrong complained of necessarily excludes all those consequences of questions the conclusion of the respondent court drawn from this
the act which are remote and indirect and all investigation of losses finding of fact.
which are purely speculative. Assuming that the defendant is liable
in damages to the plaintiff by reason of a tortious act or the violation The CFI of Cebu erred when it absolved the carrier from any liability
of a contract, no damages can be allowed for injuries which are the upon a finding that the tire blow out is a fortuitous event. The CFI of
remote consequences of that wrongful act and distinguished from Cebu ruled that:
those consequences which may be considered direct or proximate
or for those injuries which are too uncertain, speculative, or "After reviewing the records of the case, this Court finds that the
contingent. The law does not regard an injury from a remote cause accident in question was due to a fortuitous event. A tire blow-
and denies an allowance of damages for injuries remotely out, such as what happened in the case at bar, is an inevitable
consequent upon the wrong. However, damages which are the legal accident that exempts the carrier from liability, there being
and natural result of the act done, though to some extent contingent, absence of a showing that there was misconduct or negligence on
are not too remote to be recovered. the part of the operator in the operation and maintenance of the
vehicle involved. The fact that the right rear tire exploded, despite
JUNTILLA VS. FONTANAR being brand new, constitutes a clear case of caso fortuito which
Facts: Herein plaintiff was a passenger of the public utility jeepney can be a proper basis for exonerating the defendants from
on course from Danao City to Cebu City. The jeepney was driven by liability. x x x"
driven by defendant Berfol Camoro and registered under the
franchise of Clemente Fontanar. When the jeepney reached
Mandaue City, the right rear tire exploded causing the vehicle to The CFI relied on the ruling of the Court of Appeals in Rodriguez v.
turn turtle. In the process, the plaintiff who was sitting at the front Red Line Transportation Co., CA-G.R. No. 8136, December 29, 1954,
seat was thrown out of the vehicle. Plaintiff suffered a lacerated where the Court of Appeals ruled that:
wound on his right palm aside from the injuries he suffered on his
left arm, right thigh, and on his back. "A tire blow-out does not constitute negligence unless the tire was
already old and should not have been used at all. Indeed, this
Plaintiff filed a case for breach of contract with damages before the would be a clear case of fortuitous event."
City Court of Cebu City. Defendants, in their answer, alleged that the
tire blow out was beyond their control, taking into account that the The foregoing conclusions of the CFI of Cebu are based on a
tire that exploded was newly bought and was only slightly used at misapprehension of overall facts from which a conclusion should be
the time it blew up. drawn. The reliance of the Court of First Instance on the Rodriguez
case is not in order. In La Mallorca and Pampanga Bus Co., v. De
Issue: Whether or not the tire blow-out is a fortuitous event? Jesus, et al. (17 SCRA 23), we held that:

Held: The City Court and the CFI of Cebu found that the right rear "Petitioner maintains that a tire blow-out is a fortuitous event and
tire of the passenger jeepney in which the petitioner was riding gives rise to no liability for negligence, citing the rulings of the
blew up causing the vehicle to fall on its side. The petitioner Court of Appeals in Rodriguez v. Red Line Transportation Co., CA-
 G.R. No. 8136, December 29, 1954, and People v. Palapad, CA-G.R. occurrence, or of the failure of the debtor to comply with his
No. 18480, June 27, 1958. These rulings, however, not only are obligation, must be independent of the human will. (2) It must be
not binding on this Court but were based on considerations quite impossible to foresee the event which constitutes the caso
different from those that obtain in the case at bar. The appellate fortuito, or if it can be foreseen, it must be impossible to avoid. (3)
court there made no findings of any specific acts of negligence on The occurrence must be such as to render it impossible for the
the part of the defendants and confined itself to the question of debtor to fulfill his obligation in a normal manner. And (4) the
whether or not a tire blow-out, by itself alone and without a obligor (debtor) must be free from any participation in the
showing as to the causative factors, would generate liability. x x aggravation of the injury resulting to the creditor.' (5 Encyclopedia
x" Juridica Española, 309.)"

In the case at bar, there are specific acts of negligence on the part of In the case at bar, the cause of the unforeseen and unexpected
the respondents. The records show that the passenger jeepney occurrence was not independent of the human will. The accident
turned turtle and jumped into a ditch immediately after its right was caused either through the negligence of the driver or because of
rear tire exploded. The evidence shows that the passenger jeepney mechanical defects in the tire. Common carriers should teach their
was running at a very fast speed before the accident. We agree with drivers not to overload their vehicles, not to exceed safe and legal
the observation of the petitioner that a public utility jeep running at speed limits, and to know the correct measures to take when a tire
a regular and safe speed will not jump into a ditch when its right blows up thus insuring the safety of passengers at all times.
rear tire blows up. There is also evidence to show that the Relative to the contingency of mechanical defects, we held
passenger jeepney was overloaded at the time of the accident. The in Necesito, et al v. Paras, et al. (104 Phil. 75), that:
petitioner stated that there were three (3) passengers in the front
seat and fourteen (14) passengers in the rear. "x x x 'The preponderance of authority is in favor of the doctrine
that a passenger is entitled to recover damages from a carrier for
While it may be true that the tire that blew-up was still good an injury resulting from a defect in an appliance purchased from a
because the grooves of the tire were still visible, this fact alone does manufacturer, whenever it appears that the defect would have
not make the explosion of the tire a fortuitous event. No evidence been discovered by the carrier if it had exercised the degree of
was presented to show that the accident was due to adverse road care which under the circumstances was incumbent upon it, with
conditions or that precautions were taken by the jeepney driver to regard to inspection and application of the necessary tests. For
compensate for any conditions liable to cause accidents. The the purposes of this doctrine, the manufacturer is considered as
sudden blowing-up, therefore, could have been caused by too much being in law the agent or servant of the carrier, as far as regards
air pressure injected into the tire coupled by the fact that the the work of constructing the appliance. According to this theory,
jeepney was overloaded and speeding at the time of the accident. the good repute of the manufacturer will not relieve the carrier
from liability' (10 Am. Jur. 205, s, 1324; see also Pennsylvania R.
In Lasam v. Smith (45 Phil. 657), we laid down the following Co. v. Roy, 102 U.S. 451; 20 L. Ed. 141; Southern R. Co. v. Hussey, 74
essential characteristics of caso fortuito: ALR 1172; 42 Fed. 2d 70; and Ed Note, 29 ALR 788; Ann. Cas.
"x x x 'In a legal sense and, consequently, also in relation to 1916E 929).
contracts, a caso fortuito presents the following essential
characteristics: (1) The cause of the unforeseen and unexpected "The rationale of the carrier's liability is the fact that the
 passenger has neither choice nor control over the carrier in the Branch IV appealed from is hereby REVERSED and SET ASIDE, and
selection and use of the equipment and appliances in use by the the decision of the City Court of Cebu, Branch I is REINSTATED, with
carrier. Having no privity whatever with the manufacturer or the modification that the damages shall earn interest at 12% per
vendor of the defective equipment, the passenger has no remedy annum and the attorney's fees are increased to SIX HUNDRED
against him, while the carrier usually has. It is but logical, PESOS (P600.00). Damages shall earn interests from January 27,
therefore, that the carrier, while not an insurer of the safety of his 1975.
passengers, should nevertheless be held to answer for the flaws of
his equipment if such flaws were at all discoverable. x x x" Speculative damages, not recoverable
Remote and speculative damages are not recoverable. Thus, in
It is sufficient to reiterate that the source of a common carrier's an action for breach of contract to sell land the plaintiff claimed
legal liability is the contract of carriage, and by entering into the Pesos 500,000 damages because had the land been sold and
said contract, it binds itself to carry the passengers safely as far as delivered as agreed upon, the plaintiff could have sold the same to a
human care and foresight can provide, using the utmost diligence of sugar growing and milling enterprise, the successful launching of
a very cautious person, with a due regard for all the circumstances. which depended on the ability of the plaintiff to get possession of
The records show that this obligation was not met by the the land and the Torrens certificate of title, it was held that this
respondents. alleged damage was too speculative and remote to be recoverable.

The respondents likewise argue that the petitioner cannot recover A claim by a client against his former lawyer who failed to perfect
any amount for failure to prove such damages during the trial. The the client’s appeal from a judgment on the theory that because the
respondents submit that if the petitioner was really injured, why appeal was not perfected, the client was not able to recover on
was he treated in Danao City and not in Mandaue City where the appeal, moral and actual damages from the adverse party, is highly
accident took place. The respondents argue that the doctor who speculative. Damages suffered by one whose property was
issued the medical certificate was not presented during the trial, wrongfully attached alleged to arise from the fact that in
and hence not cross-examined. The respondents also claim that the consequence of the attachment one of his creditors withheld further
petitioner was not wearing any wrist watch during the accident. credit and forced him to sell sugar at a price lower than he would
have received if he had been able to hold it a few weeks longer, are
It should be noted that the City Court of Cebu found that the remote and speculative. In an action for ejectment, damages claimed
petitioner had a lacerated wound on his right palm aside from by plaintiff on the basis of interest that could have been realized had
injuries on his left arm, right thigh and on his back, and that on his the lands been converted into a subdivision and sold were too
way back to Danao City, he discovered that his "Omega" wrist watch speculative to sustain an award, in the absence of evidence that the
was lost. These are findings of facts of the City Court of Cebu which lands could have been sold at the prices claimed and the purchase
we find no reason to disturb. More so when we consider the fact money collected.
that the Court of First Instance of Cebu impliedly concurred in these
matters when it confined itself to the question of whether or not the
tire blow out was a fortuitous event. Damages recoverable
Art. 2200. Indemnification for damages shall comprehend not
WHEREFORE, the decision of the Court of First Instance of Cebu, only the value of the loss suffered, but also that of the profits
which the obligee failed to obtain. when in fact they had none, defendant willfully and knowingly
placed itself into the position of having to breach its aforesaid
Two kinds of actual or compensatory damages under the contract with plaintiffs should there be no last-minute cancellation
above-quoted legal provision: by other passengers before flight time, as it turned out in this case.
Such actuation of defendant may indeed have been prompted by
(1) the “loss suffered”, and
nothing more than the promotion of its self-interest in holding on to
(2) “the profits which the obligee failed to obtain” by reason of the plaintiffs as passengers in its flight and foreclosing their chances to
breach of contract or as a consequence of the quasi-delict. The “loss seek the services of other airlines that may have been able to afford
suffered” is known as the “dano emergente” or the “dannum them first class accommodations. All the same, in legal
emergens”, while “the profits which the obligee failed to obtain” is contemplation, such conduct already amounts to action in bad faith.
known as the “lucro cesante” or the “lucrum cesans”.

It has been held that where defendant erroneously Bad faith means a breach of a known duty through some
transmitted plaintiff’s telegram reading “No truck available” as motive of interest or ill-will. Self-enrichment or fraternal interest,
“truck available”, the plaintiff was allowed to recover not only its and not personal ill-will, may have been the motive, but it is malice
actual loss but also loss of goodwill and customers. (Radio nevertheless.
Communications of the Philippines vs. Court of Appeals, 103
SCRA 359). First, moral damages are recoverable in breach of contracts
where the defendant acted fraudulently or in bad faith (Art. 2220,
LOPEZ, ET AL. VS. PANAM New Civil Code). Second, in addition to moral damages, exemplary or
corrective damages may be imposed by way of example or
FACTS: Plaintiffs, Sen. Fernando Lopez, his wife, his son-in-law and
correction for the public good, in breach of contract where the
his daughter, made first class reservations with defendant in its
defendant acted is a wanton, fraudulent, reckless, oppressive or
Tokyo-San Francisco flight. The reservations having been
malevolent manner (Arts. 2229, 2232, New Civil Code). And third, a
confirmed, first class tickets were subsequently issued in favor of
written contract for an attorney’s services shall control the amount
plaintiffs. Through mistake, however, defendant’s agents cancelled
to be paid therefore unless found by the court to be unconscionable
the said reservations. Expecting that some cancellations of bookings
or unreasonable.
would be made before flight time, the reservations supervisor
decided to withhold from plaintiffs the information that their
As a proximate result of defendant’s breach in bad faith of
reservations have been cancelled. Upon arrival in Tokyo, defendant
its contract with plaintiffs, the latter suffered humiliation, wounded
informed plaintiffs that there was no accommodation for them in
feelings, serious anxiety and mental anguish, for plaintiffs were
the first class stating that they could not go unless they take the
traveling with first class tickets issued by defendant and yet they
tourist class. Due to pressing engagements in the United States,
were given only the tourist class. At stopovers they were expected
plaintiffs were constrained to take the flight as tourist passengers,
to be among the first-class passengers by those waiting to welcome
but they did so under protest.
them, only to be found among the tourist passengers. Sen. Lopez
was Senate President Pro Tempore. For the moral damages
Held: In so misleading plaintiffs into purchasing first class tickets in
sustained by him an award of Pesos 100,000.00 was deemed
the conviction that they had confirmed reservations for the same,
appropriate.
 this is bad faith. Unless of course, bad faith has assumed a meaning
** His wife was awarded Pesos 50,000.00 for her suffering and different from what is understood in law. For ‘bad faith’
humiliation. His daughter and son-in-law were awarded Pesos contemplates a ‘state of mind affirmatively operating with furtive
25,000.00 each for their social humiliation. design or with some motive of self-interest or ill-will or for ulterior
purpose’ “.
** Plaintiffs were awarded Pesos 75,000.00 exemplary or corrective
damages “to provide an example or correction for public good”. ** Air France was, therefore, held liable to Carrascoso in the amounts
of Pesos 25,000.00 as moral damages, Pesos 10,000.00 as exemplary
** Attorney’s fees of Pesos 50,000.00 were also awarded. damages, and Pesos 3,000.00 as attorney’s fees.
** The damages awarded have been determined by adequately
considering the official, political, social and financial standing of the
offended parties, on one hand, and the business and financial position ORTIGAS VS. LUFTHANSA GERMAN AIRLINES
of the offended party on the other. FACTS: Plaintiff Ortigas was the holder of a First Class airplane
ticket from Manila to Hongkong, the U.S., Europe, Asia, the Far East
and back to Manila issued by the Lufthansa German Airlines. While
AIR FRANCE VS. CARRASCOSO in Rome he booked a flight to Hong Kong first class. Plaintiff’s flight
FACTS: Plaintiff Rafael Carrascoso, a civil engineer, was a member was confirmed and validated by a representative of the defendant.
of a group of 48 Filipino pilgrims that left Manila for Lourdes, On the date of the flight he went to the airport and his luggage was
France on March 30, 1948. On March 28, 1948 Air France, through weighed and accepted by the defendant. He handed his ticket at the
its agent the Philippine Air Lines, issued a ‘first class’ round trip airport and was told that everything was all right. Later defendant’s
airplane ticket from Manila to Rome. From Manila to Bangkok, employees asked for his passport where his Filipino nationality
plaintiff traveled ‘first class’ but at Bangkok, the Manager of Air appeared. Later he was told that there was no space for him in first
France forced plaintiff to vacate the ‘first class’ seat that he was class because his seat was given to a Belgian. Ortigas was persuaded
occupying because there was a ‘white man’ who, the Manager to take an economy class seat on the promise by defendant’s
alleged, had a better right to the seat. Carrascoso refused but employees that he would be given first class accommodations at
notwithstanding his protests he was forced to transfer to the ‘tourist Cairo. At Cairo he asked for a first class seat but was promised that
class’. He brought this action for damages against Air France. he will be given one at Dharham. At Dharham he again demanded a
first class seat and was promised one at Calcutta. In Calcutta he was
not given the promised seat. It was only in Bangkok where he was
HELD: “It is really correct to say that the Court of Appeals in the
offered a first class seat but he refused because it was already near
quoted portion first transcribed did not use the term ‘bad faith’. But
Hong Kong and he did not want to accept the seat as a sign of
can it be doubted that the recital of facts therein points to bad faith?
protest having already been humiliated and embarrassed. Ortigas
The manager not only prevented Carrascoso from enjoying his right
sued the defendant for damages.
to a first class seat; worst, he imposed his arbitrary will; he forcibly
ejected him from his seat, made him suffer the humiliation of having
to go to the tourist class compartment – just to give way to another HELD: “The acts of the defendant amounted to fraud and bad faith
passenger whose right thereto has not been established. Certainly, and entitled plaintiff to moral damages under Art. 2220 of the Civil
Code. The breach by the defendant was a graver nature because reasonable attributed to the non-performance of the obligation”
preference was given to a Belgian in wanton disregard of plaintiff’s without regard to whether such damages could be foreseen or not;
dignity as a human being and as a Filipino who may be and
discriminated against with impunity. Ortigas was a prominent
lawyer, a businessman and social leader. He was awarded Pesos Second, whether the debtor is in good faith or in bad faith the
150,000 as moral damages, Pesos 30,000 exemplary or corrective damages for which he is liable are only those which represent the
damages, and Pesos 20,000 as attorney’s fees.” “loss suffered” and “the profits which the obligee failed to obtain”. In
other words, the damages recoverable under Art. 2201 of the Civil
Code, is limited to the kinds of damages specified in Art. 2200.
Damages recoverable in contracts and quasi-contracts
The damages resulting from a tort are measured in the same
Art. 2201. In contracts and quasi-contracts, the damages for manner as those due from a contractual debtor in bad faith, since he
which the obligor who acted in good faith is liable shall be must answer for such damages whether he had foreseen them or
those that are the natural and probable consequences of the not, just as he must indemnify not only for damnum emergens but
breach of the obligation, and which the parties have foreseen also for lucrum cesans as required by Article 1106.
or could have reasonably foreseen at the time the obligation
was constituted.
In case of fraud, bad faith, malice or wanton attitude, the Damages recoverable in quasi-delict
obligor shall be responsible for all damages which may be
reasonably attributed to the non-performance of the
Art. 2202. In crimes and quasi-delicts the defendant shall be
obligation.
liable for all damages which are the natural and probable
consequences of the act or omission complained of. It is not
This Article prescribes and determines the damages that are necessary that such damages have been foreseen or could have
recoverable in contracts and quasi-contracts. In construing and reasonably been foreseen by the defendant.
applying this Article, the provisions of Article 2200 must be
considered and taken into account.
In the foregoing provision the defendant (or accused) is liable for all
damages which are the “natural and probable” consequences of the
There are two important considerations which must be borne in crime or quasi-delict even if such damages were not foreseen or
mind in the application of the above-quoted legal provision: could not reasonably have been foreseen by the defendant (or
First, in contracts and quasi-contracts the law distinguishes the accused). “Natural and probable” consequences implies that the
liability of a “debtor in good faith” from that of a “debtor in bad damage would not have resulted without the fault or negligence of
faith”. A debtor in good faith is liable only for the damages which are the defendant (or accused) and that the fault of the defendant (or
the “natural and probable consequences of the breach of the accused) would normally or ordinarily result in the damage suffered
obligation, and which the parties have foreseen or could have by the injured or offended party.
reasonably foreseen at the time the obligation was constituted”.
While a debtor in bad faith is liable “for all damages which may be
 Duty of injured party to minimize damages Civil Code and general principles of law, and whatever he earns or
gains from working other land is to be deducted from his damages.”
Art. 2203. The party suffering loss or injury must exercise the
diligence of a good father of a family to minimize the damages LASAM VS. SMITH
resulting from the act or omission in question. FACTS: Facts: Defendant owner of a public garage in the town of
San Fernando, La Union, undertook to take plaintiffs from San
One who is injured by the wrongful or negligent acts of another, Fernando to Currimao, Ilocos Norte. On leaving San Fernando, the
whether as the result of a breach of contract or a tort, is bound to automobile was operated by a licensed chauffeur but later the
exercise reasonable care and diligence to avoid loss or to minimize chauffeur allowed his assistant, who had no driving license but who
or lessen the resulting damage, and to the extent that his damages had some experience in driving, to drive. After crossing the Abra
are the result of his failure to exercise such care and diligence, he River in Tagudin, the car zigzagged for about half a kilometer, left
cannot recover; or, as the rule is sometimes stated, he is bound to the road and went down an embankment. The car overturned and
protect himself if he can do so with reasonable exertion or at trifling the plaintiffs were pinned down under it. Lasam escaped with a few
expense, and can recover from the delinquent party only such contusions but his wife received serious injuries, among which was
damages as he could not, with reasonable effort, have avoided; it is compound fracture of one of the bones in her left wrist. There is a
also an elementary principle that a party claiming damages must conflict of evidence as to the cause of the accident, plaintiffs
not be in fault in contributing to them by his own want of proper claiming that it was due to the reckless driving of the driver’s
care; and such case must extend to the protection from further loss assistant and the defendant claiming that it was due to a defect in
after the act complained of. If he fails to use such diligence, his the steering gear. The Supreme Court, however, held that in view of
negligence is regarded as contributing to his injury, and the fact that defendant’s liability to plaintiffs was contractual,
furthermore, such damages as could have been so avoided are not defendant was liable unless it is shown that the accident was due to
regarded as the natural and probable result of the defendant’s acts. a fortuitous event. The lower court granted the plaintiff Pesos
1,254.10 as damages. From this decision, plaintiffs appealed
claiming that they are entitled to Pesos 7,832.80 damages.
The law requires that an injured creditor exercise diligent efforts to
minimize resulting damages. Although the creditor has suffered
damages by reason of a breach of contract, no liability can be HELD: “There can be no doubt that the expenses incurred by the
enforced when he did nothing to minimize them, being in a position plaintiffs as a result of the accident greatly exceeded the amount of
to do so. A person injured by the breach of a contract cannot recover the damages awarded. But bearing in mind that in determining the
damages for a loss which he might have avoided with ordinary care extent of the liability for losses for damages resulting from
and at reasonable expense. The fact that the plaintiff in an action for negligence in the fulfillment of a contractual obligation, the courts
wrongful dismissal could by reasonable diligence, obtain like have a ‘discretionary power to moderate the liability according to
employment in the same locality, under the same conditions as the circumstances.’ We do not think that the evidence is such as to
formerly, and at the same rate of wages is not a defense, but may be justify us in interfering with the discretion of the court below in this
pleaded in mitigation of damages. Where an agricultural share respect. As pointed out by that court in its well-reasoned and well-
cropper is unjustly evicted by the landlord, it is nevertheless his considered decision, by far the greater part of the damages claimed
duty to obtain other work or land to cultivate, under Art. 2203 of the by the plaintiffs resulted from the fracture of a bone in the left wrist
of Joaquina Sanchez (plaintiff’s wife) and from her objections to
having a decaying splinter of the bone removed by a surgical
operation. As a consequence of infections ensued and which
required constant and expensive medical treatment for several
years. We agree with the court below that the defendant should not
be charged with these expenses.”

** Judgment affirmed.