Damages

Q: What is covered by the term “damages”?

A: Damages refer to the pecuniary compensation, recompense, or satisfaction for an
injury sustained by the injured party to be paid by the person who caused the injury.
Stated otherwise, the term “damages” refers to the pecuniary consequences imposed by
law or by agreement of the parties for breach of some duty or violation of some right (See:
8 R.C.L., 420-422).
Damages may be refined as a pecuniary compensation, recompense or satisfaction for
an injury sustained, or as otherwise expressed, the pecuniary consequences which the
law imposes for the breach of some duty or the violation of some right (People vs.
Ballesteros, 285 SCRA 438).

What is the distinction between damages and injury?

Answer: Damages refer to the harm done and what may be recovered (Hale on Damages,
2nd Ed., p.1); while injury refers to the wrongful or unlawful or tortious act. The former is
the measure of recovery; while the latter is the legal wrong to be redressed. (Cited in
Paras, Civil Code of the Phils. Annotated, 1969 Ed., p. 842)

Q: What are the actual or compensatory damages?

A: Art. 2199. Except as provided by law or stipulation, one is entitled to an adequate
compensation only for such pecuniary loss suffered by him as he has duly proved. Such
compensation is referred to as actual or compensatory damages.
Actual or compensatory damages are those awarded to the aggrieved party as adequate
compensation only for such pecuniary loss suffered by him as he has alleged and duly
proved. Pecuniary loss is a measurement in terms of money.
The pecuniary loss may be in business, trade, property, profession, job or occupation
(Algarra vs. Sandejas, 27 Phil. 284). For actual damages to be received, it is necessary
that the claimant produce competent proof – such as receipts to justify an award therefor
(People vs Ereño, 326 SCRA 157).
Q: How do you prove actual or compensatory damages?
A: 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 (People vs Guillermo, 302 SCRA 257).
Only expenses supported by receipts which appear to have been actually expended in
connection with the death of the victim should be allowed (People vs. sanchez, 308 SCRA
264).
Claims for actual or compensatory damages must be especially alleged and substantiated
by proof. Generally, what is not alleged, may not be proved.
Except as provided by law or by stipulation, one is entitled only to such pecuniary loss as
he has duly proved (People vs Panado, 348 SCRA 679).

Q: How do you prove actual or compensatory damages?

A: If in the complaint, what is prayed for are only moral damages, exemplary damages
and attorney’s fees without any specific mention of actual or compensatory damages, the
latter are deemed included if there is a general prayer for “such further relief” as may be
just and equitable under the premises, if and when they are proved (See: Heirs of Justiva
vs. Gustilo, 7 SCRA 72).
However, in rape cases, the conventional requirement of allegata et probate in civil cases
where the civil aspect is included in the prosecution as the mental, physical, and
psychological trauma suffered by the victim is too obvious to require the recital thereof at
the trial by the victim (People vs. Dela Cruz, 338 SCRA 582).

Q: When does actual or compensatory damages need not be proven?

A: The general rule that damages must be proved is subject to the following exceptions
–
(1) When a penalty clause is agreed upon in the contract between the parties (Art. 1226);
(2) When liquidated damages have been agreed upon (Art. 2226);
(3) When loss is presumed as when a child or spouse dies as a result of the act or
omission of a person (Manzanares vs. Moreta, 38 Phil. 821);
(4) Forfeiture of bonds in favor of the Government for the purpose of promoting public
policy or interest (Far Eastern Surety and Insurance Co. vs. Court of Appeals, 104 Phil.
702);
(5) Death caused within the contemplation of Article 2206.
Q: What are two (2) Kinds of Actual or Compensatory Damages?
(1) Damnum Emergens (or dano emergente) –
This is the value of the actual pecuniary loss for what the claimant already possesses
before the incident which must be supported by receipts or the best evidence available.
Illustration: If the watch unlawfully taken from the victim is worth P20,000 (evidence by
receipt or best evidence available), this is amount is dano emergente that must be paid
as adequate compensation for the watch, if the same is not recovered from the offender.

(2) Lucrum cessans (or lucro cessante) –

This refers to the expected profits which were not realized by reason of the act of the
offender or tortfeasor.
Illustration: If “A” is delivering 1000 chicken eggs to a Hotel at a rice P10.00 a piece
which he bought from a poultry farm at P6.00 a piece, he expects to earn a profit of
P4,000.00, but by the acts of “B” all the eggs were broken, “A” can recover P4,000.00 as
unrealized profits as well as the P6,000.00 representing the capital he spent for the eggs
as actual loss. Another name is amno vitando.
Another name is lucro captando.

Q: What is meant by “indemnification for actual damages”?

It was held in one case that indemnification for damages comprehends not only the value
of the loss suffered, but also the profits which the oblige failed to obtain, had he sold the
lot at that time.
Lucro cessante is usually the price which the thing could have commanded on the date
that the obligation should have been fulfilled (Associated Realty Dev. Co. vs CA, 121 Phil.
55).

Q: Illustrative Cases of Damnum Emergens or Dano Emergente –

(1) Cortes is entitled to recover damages for the loss of his boat from Odilao, Collector of
Customs at Mactan Island. Odilao, as the head of the committee for reenactment of the
battle of Mactan directed that a payloader be used in removing the boat of Cortes. The
boat was destroyed in the process because of the recklessness of the operator in
removing the boat (Cortes vs. CA, 161 SCRA 444).
(2) Actual damages of P600,000.00 were granted due to the wrongful attachment of
respondent’s property but the claim for P500,000.00 for unrealized profits was denied (BA
Finance Corp. vs. CA, 161 SCRA 608).

(3) For failure of the cable company to deliver to respondent spouses a cablegram for
Mercy Hospital, Buffalo, New York, admitting the wife to a rotating internship, thus causing
the wife to lose the job of rotating internship, the cable company was ordered to pay (a)
actual damages of $2,703; (b) moral damages of P5,000.00; (c) exemplary damages of
P5,000.00 and attorney’s fees of P8,000.00 (Globe-Mackay Cable & Radio Corp. vs
Barrios, 119 SCRA 461).

Q: Illustrative Cases of Lucrum Cessans (Or Lucro Cessante) –

(1) Lucrum cessans is a basis for a claim for damages. Where it is shown that had the
defendant continued the distribution contract, plaintiff distributor would have continued
earning thhe commission, the plaintfiff is entitled to damages for defendant’s breach of
the agency contract (Gen. Enterprises, Inc. vs. Lianga vs. Bay Logging Co., Inc., 120 Phil.
702).
(2) By reason of the violation of a boxing contract, damages of P250,000.00 as unrealized
profits were awarded to the aggrieved party (Boysaw vs. Sarreal, 148 SCRA 535).
(3) Loss of profits of an established business which was yielding fairly steady returns at
the time of its interruption by defendant’s wrongful act is not so speculative or contingent
that a court may refuse to allow any damages at all (Algarra vs. Sandejas, 27 Phil. 284).

(4) Goodwill, according to Justice Story, is the advantage and benefit which is acquired
by an establishment beyond the mere value of the capital stock fund or property employed
therein, in consequence of the general public patronage and encouragement which it
receives from constant or habitual customers on account of its local position, or common
celebrity, or reputation for skill, or affluence or punctuality, or other accidental
circumstances or necessities, or even from partialities or prejudices (Bachrach Motor Co.
vs. Esteva, supra).

(5) If goodwill has been damaged, to find its reasonable value, the average net profits for
a period of year is multiplied by a number being suitable and proper, having reference to
the nature and character of the particular business under consideration.
An indemnity equivalent to the profits obtained for one year was considered a sufficient
award as damge to the goodwill of the business (Bachrach Motor co. vs. Esteva, 67 Phil.
16).
What damages may be awarded to the aggrieved party in case of breach of
contract?
Answer: In contracts and quasi-contracts, the damages for which the obligor who acted
in good faith is liable shall be those that are the natural and probable consequences of
the breach of the obligation, and which the parties have foreseen or could have
reasonably foreseen at the time the obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for
all damages which may be reasonably attributed to the non-performance of the obligation.
(Art. 2201, NCC).

What damages may be awarded to the victim or heirs of the victim in case of crimes
or quasi-delicts?
Answer:
In crimes and quasi-delicts, the defendant shall be liable for all damages which are the
natural and probable consequences of the act or omission complained of. It is not
necessary that such damages have been foreseen or could have reasonably been
foreseen by the defendant. (Art. 2202, NCC).

Under what circumstances may the court mitigate liability?

Answer:
In contracts, quasi-contracts and quasi-delicts, the court may equitably mitigate the
damages under circumstances other than the case referred to in the preceding articles,
as in the following instances:

(1) that the plaintiff himself has contravened the terms of contract;
(2) that the plaintiffs 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 had done his best to lessen the
plaintiff’s loss or injury. (Art. 2215, NCC)
Q: Is bad faith or good faith relevant?
Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted
in good faith is liable shall be those that are the natural and probable consequences of
the breach of obligation, and which the parties have foreseen or could have reasonably
foreseen at the time the obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for
all damages which may reasonably attributed to non-performance of the obligation.

If the defendant acted in good faith for the natural and probable consequences of the
breach of the obligations arising from the contract which consequences have been
foreseen or could have been reasonably foreseen at the time of the execution of the
contract or at the time the obligation was generated.
If the defendant is in bad faith, he will be liable for all damages which may be reasonably
attributed to the breach of the obligation. The defendant is in bad faith, he will be liable
for all damages which may be reasonably attributed to the breach of the obligation. The
defendant is considered in bad faith if he acted with fraud, malice, or wanton attitude.
Unlike in the first paragraph, there is no necessity of the damage being the natural or
probable consequence of the act or omission complained of. Neither is there a necessity
of the foreseeability of the consequences. It is sufficient that the damage may be
reasonably attributed to the breach or non-performance of the obligation.

Illustrative Cases of Foreseen Or reasonably Foreseen Damages Or Consequences

–
(1) In building contracts, if there is delay, the cost of the work for completing a building or
the repairing of a defective building is forseeable (Marker vs. Garcia, 5 Phil. 551).
(2) When the employer violates the contract of employment of the employee, the salary
of the latter for the entire period agreed upon is a forseeable damage minus the income
he actually earned or could have earned during the unexpired period (Lemoine vs. Alkan,
33 Phil. 162).
(3) In the contract of common carriage, the difference in the value of the goods at the time
of stipulate delivery and the value thereof at the time of actual delivery is a forseeable
damage.

(4) The income which an injured bus passenger could have earned had he finished his
medical course and passed the medical board examination is a forseeable damage at the
time he boarded the bus as a passenger (Cariaga vs. Laguna, Tayabas Bus Co., supra).
(5) When the defendant ordered a ten-year old boy (Ronquillo) to climb a high and slippery
santol tree to gather fruits with a promise to give him a part thereof and the boy slipped
and fell to his death, the former was made liable for damages and for not taking due care
to a void a reasonably forseeable injury to the boy (Ronquillo vs. Singson, [CA] L-22612-
R, April 22, 1959).

What is the civil liability of a defendant in crimes and quasi-delicts?

A: Art. 2202. In crimes and quasi-delicts, the defendants shall be liable for all damages
which are the natural and probable consequences of the act or omission complained of.
It is not necessary that such damages have been foreseen or could have reasonably been
foreseen by the defendant.

Q: Who has the burden of proof?

A: Art. 2203. The party suffering loss or injury must exercise the diligence of a good father
of a family to minimize the damages resulting from the act or omission in question.
It is the duty of the party injured by the unlawful act of another to take such measures as
prudent men usually take under such circumstances as would reduce the damage as
much as possible. The defendant, who caused the injury, has the burden to show that the
plaintiff might have reduced the damages (Cerrano vs. Tan Chuco, 38 Phil. 329).
The defendant has the burden of proof to establish that the victim by the exercise of the
diligence of a good father of a family could have mitigated the damages (Lemoine vs.
Alkan, supra). He has also the burden of proving the amount of damages which could
have been avoided. In the absence of such proof, the amount of damages cannot be
reduced.

Q: Is it relevant to consider aggravating and mitigating circumstances?

A: Art. 2204. In crimes, the damages to be adjudicated may be respectively increased or
lessened according to the aggravating or mitigating circumstances.
Aggravating circumstances are those which, if present in the commission of the crime,
serve to increase the penalty because of the unusual perversity manifested by the
offender. (See Article 14 of the Revised Penal Code).
Mitigating circumstances are those which, if present in the commission of the crime,
serve to decrease the penalty imposable by law. The decrease may either be on the
periods or on the degrees depending on whether the circumstances are ordinary or
privileged mitigating circumstances. They are enumerated in Article 13 of the Revised
Penal Code.
Q: Is it relevant to consider aggravating and mitigating circumstances?
A: The presence of aggravating circumstance or circumstances in crimes will have the
effect of increasing the amount of damages payable to the victim, whereas the presence
of mitigating circumstance or circumstances has the effect of lessening the amount of
damages (See: Heirs of Castro vs. Bustos, 136 Phil. 553).
The presence of aggravating circumstance of cruelty warrants the award of exemplary
damages (People vs. Lagarto, 326 SCRA 693).
If there is no aggravating circumstance, exemplary damages shall not be imposed.

Q: When may damages be recoverable?

A: Art. 2205. Damages may be recovered:
(1) For the 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.
Actual damages are recoverable in crimes, quasi-delicts (Art. 2202), contracts and quasi-
contracts (Art. 2201) which are all sources of civil obligations (Art. 1157).
It is not enough that the damage be capable of proof but must be actually proved with
reasonable degree of certainty, pointing out specific facts that afford a basis for measuring
whatever compensatory damages are borne.

Q: When may damages be recoverable?

A:
(1) Loss of earning capacity was allowed in the death of Raymundo Castro, school
teacher killed by Apolonio Bustos who was found guilty of homicide instead of murder
(Heirs of Castro vs. Bustos, 27 Phil. 327).
(2) A dancer was injured in an accident when the jeepney she was riding collided with the
train of the defendant company. Her right leg was amputated. In addition, her right arm
was fractured. She could dance no more.
She was granted damages (Junio vs. Manila Railroad Co., 58 Phil. 176).
Q: When may damages be recoverable?
A: Formula For Computation of Unearned Income – The formula for the computation
of unearned income is: net earning capacity (x) = life expectancy x gross annual income
less living expenses (50% of gross annual income).
Life expectancy is determined in accordance with the formula – 2/3 x (80 – age of the
deceased). (See also: Art. 2206; People vs. Lopez, 312 SCRA 684).

Q: When may damages be recoverable?

A: Injury to plaintiff’s business standing or commercial credit –
Compensatory damages were awarded for the injury caused to plaintiff’s business or
commercial credit consisting in the loss of goodwill and loss of customers or shippers who
shifted their patronage to competitors caused by a transmission of an erroneous telegram
from “No truck available” to “Truck Available” (Radio Communications of the Philippines,
Inc. vs. CA, 190 Phil. 1058; 103 SCRA 395; ABS-CBN Broadcasting Corp. vs. CA, 302
SCRA 572).