[DAMAGES; TEMPERATE-EXEMPLARY

DAMAGES]
PART TWO REVIEWER

TEMPERATE OR MODERATE
DAMAGES
Articles 2224-2225, NCC
Article 2224. Temperate or moderate
damages, which are more nominal but less
then compensatory damages, may be
recovered when the court finds that some
pecuniary loss has been suffered but its
amount cannot from the nature of the case,
be proved with certainty.
CONCEPT:

These are the damages where the

amounts are left with the sound discretion of
the court, but it still necessary that there be
some injury or pecuniary loss established
which just cannot be proved with certainty
by reason of the nature of the case.
RATIONALE BEHIND:

When the court is

convinced that there has been such loss, the
judge is empowered to calculate for
moderate damages, rather than let the
complainant suffer without redress from the
defendants wrongful act (Government
Service Insurance System v. Labung-Deang,
365 SCRA 341)
to justify award of Temperate or
Moderate Damages:
1. Some pecuniary loss has been suffered;
but
2. Its exact amount cannot be proven with
certainty, by reason of the nature of the
case.
REQUISITES

Article 2225. Temperate damages must be

reasonable under the circumstances.
Reasonableness of Temperate Damages
What is reasonable will depend upon
the circumstances of each particular case.
Generally, what is reasonable is one which is
neither excessive nor very low in the
estimation of men of ordinary diligence and
discretion. The court must use its sound

discretion. Whims and caprices should never

be the swaying factors but honest-togoodness estimation based on sound reason.
Temperate damages should be one
half of the indemnity for death (People v.
Abrazaldo, 397 SCRA 137).
ILLUSTRATIVE CASES
1. People v. Principe, G.R. no. 135862,
May 2, 2002
The list of expenses for the wake,
funeral and burial of the victim is self-serving
and not proved. Thus, the trial courts award
cannot be availed of. However, under
Art.2224 of the Civil Code, temperate
damages may be recovered if it is shown
that such party suffered some pecuniary loss
but the amount cannot, from the nature of
the case, be proved with certainty. As the is
no doubt that the heirs of the victim incurred
funeral expenses, although the amount has
not been proves, it is appropriate to award
Php15,000.00 by way of temperate damages
to the heirs of the victim.
HELD:

2. Tanay Recreation Center and

Development Corp. v. Fausto, 455
SCRA 436
An award of damages for loss of
goodwill or reputation falls under actual or
compensatory damages. Even if it is not
recoverable as compensatory damages, it
may still be awarded in the concept of
temperate or moderate damages.
HELD:

3. Necesito v. Paras, 104 Phil. 75

A passenger was injured due to an
accident caused by the faulty equipment of
the carrier. No moral damages may be
recovered but the court is empowered to
grant moderate damages although there is
HELD:

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no definite proof as to the pecuniary loss
suffered by the injured party.
4. Araneta v. Bank of America, 40 SCRA
144; Singson v. BPI, 132 Phil. 597
the bank mistakenly dishonored the
plaintiffs check and within 4 hours, the
mistake was rectified and the dishonored
check was subsequently honored. No moral
damages were imposed. However, moderate
damages and attorneys fees were imposed.
HELD:

5. LBC Express v. Ado, 468 SCRA 216

while the failure to deliver the
respondents passport does not per se
amount to willful misconduct or bad faith,
the evidence on record shows that the
petitioner indeed acted on bad faith and in
wanton disregard of their contractual
obligation to the respondent. Where there is
preponderant evidence that the respondents
HELD:

Penalty distinguished from Liquidated

Damages
PENALTY
A sum inserted in a contract, not a measure of
compensation for its breach, but rather as
punishment for default, or by way of security
for actual damages which may be sustained by
reason of non-performance, and it involves the
idea of punishment.
An agreement to pay a stipulated sum on
breach of contract, irrespective of the damages
sustained.

Its essence is a payment of money stipulated

as a terrorem of the offending party
Similarities with penalty in a contract with
a penalty clause

indeed suffered some pecuniary loss due to

the loss of the passport but failed to adduce
preponderant evidence of the passports
value, they are entitled only to temperate
damages.

LIQUIDATED DAMAGES
Articles 2226-2228, NCC
Article 2226. Liquidated damages are those
agreed upon by the parties to a contract, to
be paid in case of breach thereof.
NATURE:

FIXED DAMAGES previously agreed

by the parties to a contract and payable to
the innocent party in case of breach by the
other. However, where the principal
obligation is void, there is no contract that
could be breached the nullity of the
principal obligation carries with it the nullity
of the accessory obligation of liquidated
damages (Menchavez v. Teves, Jr., 449 SCRA
380)
1) As far as legal results are concerned,
liquidated damages are identical with
penalty under Article 1226.
2) A stipulation for liquidated damages is
a penalty clause where the obligor
assumes a greater liability in case of a
breach of an obligation.
Article 2227. Liquidated damages, whether
intended as an indemnity or a penalty, shall
be equitably reduced if they are iniquitous or
unconscionable.
EQUITABLE REDUCTION:

If the amount fixed as

liquidated damages is iniquitous or
unconscionable, the court may reduce it to a
reasonable level (NPC v. National
Merchandising Corp., 117 SCRA 789).
EFFECT OF PARTIAL PERFORMANCE:

the total
amount of liquidated damages agreed upon
cannot be enforced. Liquidated damages are
presumed to be only for total breach of the
contract. Hence, there can be a
corresponding reduction of the liquidated

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damages (Joes Electrical Supply v. Alto
Electronics, 104 Phil. 333).
Article 2228. When the breach of the
contract committed by the defendant is not
the one contemplated by the parties in
agreeing upon the liquidated damages, the
law shall determine the measure of
damages, and not the stipulation.
Disregarding the stipulation may be applied
by analogy as expressed in Article 1229:
Article 1229. The judge shall equitably reduce the
penalty when the principal obligation has been partly or
irregularly complied with the debtor. Even if there has
been no performance, the penalty may also be reduced if
it is iniquitous or unconscionable.

ILLUSTRATIVE CASES
a. Albert v. University Publishing Co.,
Inc., 103 Phil. 351
The defendant breached the contract
for the publication of Alberts Revised Penal
Code. The stipulation for damages was
considered as one for liquidated damages,
although it was reduced for being excessive.
HELD:

b. Yu Tuk & Co. v. Gonzales, 29 Phil. 384

In an agreement to sell sugar, the
vendor agreed to pay P1,200.00 If there was
no delivery. The vendor failed to deliver. It
was made to pay the said damages.
HELD:

c. Lirag Textile Mills, Inc. v. SSS, 153

SCRA 338
For violating a purchase agreement,
the Lirag firm was ordered to pay
P146,000.00 as liquidated damages.
HELD:

d. Polytrade Corp., v. Blanco, 30 SCRA

187; SSS v. Almeda, 168 SCRA 474
Attorneys fees expressly provided in
contracts recoverable as damages against
the other party are in the nature of liquidated
HELD:

damages and the stipulation may be aptly

called a penalty clause.

EXEMPLARY OR CORRECTIVE
DAMAGES
Articles 2229-2235, NCC
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.
Punitive or Vindicative Damages also
known as exemplary or corrective damages,
are intended to serve as a deterrent to
serious wrongdoings and as a vindication of
undue sufferings and wanton invasion of the
rights of an injured or a punishment for those
guilty of outrageous conduct (People v.
Catubig, 363 SCRA 621)
RATIONALE BEHIND:

Exemplary damages are

intended to serve as a deterrent to serious
wrongdoings (People v. Orilla, 422 SCRA 620)
it is not imposed to enrich one party or
impoverish another but to serve as a
deterrent against or as a negative incentive
to curb socially deleterious actions (Lamis v.
Ong, 466 SCRA 510)
NATURE:

Mere ACCESSORIES to other forms

of damages except nominal damages. they
are mere additions to actual, moral,
temperate and liquidated damages which
may or may not be granted at all depending
upon the necessity of setting an example for
the public good as a form of deterrent to the
repetition of the same act by any one.
CASES WHERE EXEMPLARY DAMAGES MAY BE
IMPOSED AS ACCESSORY DAMAGES

Criminal offense when the crime was

committed with one or more
aggravating circumstances
(Article2230);

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Quasi-delicts when the defendant

acted in gross negligence (Article
2331);and
Contracts and Quasi-contracts when
defendant acted in wanton,
fraudulent, reckless, oppressive, or
malevolent manner (Article 2332).

While the exact amount of exemplary

damages need not be proved, there is a sine
qua non for its grant. Plaintiff must prove
that he is entitled to MORAL, TEMPERATE, or
ACTUAL DAMAGES (Article 2334).
ILLUSTRATIVE CASES
a) Rotea v. Halili, 109 Phil. 495
The actual driver of the vehicle who
caused the injuries to the victim is the one
liable for exemplary damages and not the
owner of the said vehicle.
HELD:

b) Equitable Leasing Corporation v.

Suyom, 388 SCRA 445
Petitioner is held liable for the deaths
and the injuries complained of because it
was the registered owner of the tractor at
the time of the incident on July 17, 1994.
Regardless of sales made of a motor vehicle,
the registered owner is the lawful operator
insofar as the public and third persons are
concerned. In contemplation of law, the
owner/operator of record is the employer of
the driver, the actual operator and employer
being considered as merely its agent.
HELD:

c) Munsayac v. De Lara, 132 SCRA 534

a principal or master can be held liable
for exemplary or punitive damages based
upon the wrongful doing of his agent or
servant only when he participated in the
doing of wrongful act or has previously
authorized or subsequently ratified it, with
full knowledge of the facts. Exemplary
damages punish the intent and this cannot
be presumed on the part of the employer
HELD:

merely because of the wanton, oppressive or

malicious intent of the agent.
d) St. Marys Academy v. Carpitanos, 376
SCRA 473
The registered owner of any vehicle,
even if not used for public service, would
primarily be responsible to the public or to
third persons for injuries caused the latter
while the vehicle was being driven on the
highways or streets.
HELD:

e) Republic v. CA, 454 SCRA 516

the courts finds it proper to award
temperate and exemplary damages in light
of NIAs misuse of its power of eminent
domain any arm of the State that exercises
the delegated power of eminent domain
must wield that power with circumspection
and utmost regard for procedural
requirements.
HELD:

f) Ledesma v. CA, 160 SCRA 449

Exemplary damages were imposed
upon the President of the West Visayan
College who through neglect of duty and
moral callousness, did not award Violeta
Delmo the academic honors of magna cum
laude which the latter deserved.
HELD:

g) Producers Bank v. CA, 365 SCRA 326

Moral and exemplary damages may be
awarded without proof of pecuniary loss. the
financial credit of a businessman is a prized
and valuable asset, it being a significant part
of the foundation of its business, and any
adverse reflection thereon constitutes some
financial loss to him.
HELD:

Article 2230. In criminal offenses,

exemplary damages as a part of the civil
liability may be imposed when the crime was
committed with one or more aggravating
circumstances. Such damages are separate

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[DAMAGES; TEMPERATE-EXEMPLARY
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and distinct from fines and shall be paid to
the offended party.

damages if this fact was not alleged in

the information.

NOTE:

c) People v. Lambid, 412 SCRA 417

In criminal cases, exemplary damages

cannot be awarded if there is no aggravating
circumstance present. The aggravating
circumstance, whether ordinary or qualifying,
should entitle the offended party to an award
of exemplary damages. The term
aggravating circumstance used by the Civil
Code is to be understood in its broad or
generic sense. Even if the aggravating
circumstances which have not been alleged
in the information cannot be appreciated for
the purpose of fixing a heavier penalty, they
can, however, be considered as bases for an
award of exemplary damages. Evidence
proving these circumstances forms part of
the actual commission of the crime and
justifies the award of exemplary damages
even when said aggravating circumstances
were not alleged in the information (People
v. Durohom, 392 SCRA 403)

the presence of an aggravating

circumstance justifies an award for
exemplary damages under Article 2230 of
the Civil Code even in the absence of an
allegation of the aggravating
circumstance in the information.
HELD:

d) People v. Dagami, 415 SCRA 417

Aggravating circumstances, even if
not alleged in the information, can be
considered as basis for an award of
exemplary damages.
HELD:

e) People v. Legaspi, 397 SCRA 672

DISTINCTION FROM FINES

Notwithstanding the failure to

allege the aggravating circumstances, the
proven presence thereof is still material in
the determination of exemplary damages
to be awarded to the complainant.

EXEMPLARY DAMAGES
Payable to the injured party

f) People v. Suela, 373 SCRA 163; People

v. Opuran, 425 SCRA 672

HELD:

while a non-alleged but proven

aggravating circumstance cannot be used
to increase the penalty, nonetheless it
can be the source of civil awards.
HELD:

ILLUSTRATIVE CASES
a) Bantoto v. Bobis,18 SCRA 690
Considering that no exemplary
damages were imposed on the driver. And
the master, as person subsidiarily liable,
cannot incur greater civil liability than his
convicted employee, any more than a
guarantor can be held responsible for
more than the principal debtor.
HELD:

b) People v. Ariola, 366 SCRA 539

The generic aggravating
circumstance, although proven by the
prosecution and admitted by the accused,
cannot justify the award of exemplary
HELD:

HOWEVER, in the following cases, the

decisions require the proper allegation
and proof of the aggravating
circumstance:
g) People v. Manalo, 396 SCRA 573
Exemplary damages cannot be
granted inasmuch as no aggravating
circumstance was alleged in the
information or proven during trial.
HELD:

h) People v. Cachapero, 428 SCRA 744;

People v. Garalde, 348 SCRA 38;

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[DAMAGES; TEMPERATE-EXEMPLARY
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Malunay v. Velasquez, 419 SCRA 118;
People v. Catbagan, 423 SCRA 535

NOTES:

Exemplary damages may be given

only when one or more aggravating
circumstances are alleged in the
information and proved during the trial.
HELD:

Article 2231. In quasi-delicts, exemplary

damages may be granted if the
defendant acted with gross negligence.

NOTES:

Gross negligence must be shown

on the part of the defendant to
justify grant of exemplary damages
to plaintiff (Palisoc v. Brillantes, 41
SCRA 548; Tiu v. Arriesgado, 437
SCRA 426).
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
(National Power Corporation v. CA,
453 SCRA 47).
Article 2331 mandates that in
cases of quasi-delicts, exemplary
damages may be recovered
ADDITIONALLY if the defendant
acted with gross negligence.
Gross negligence is tantamount to
bad faith (FEBTC v. Hon Luis Luna,
241 SCRA 671).
Even if there is gross negligence,
the grant is not automatic, it is still
subject to the discretion of the
court.

Article 2232. In contracts and quasicontracts, the court may award exemplary
damages if the defendant acted in WANTON,
FRAUDULENT, RECKLESS, OPPRESSIVE, OR
MALEVOLENT in manner.

To justify the award of exemplary

damages in contracts and quasicontracts, it is essential that the
defendant must have acted in
wanton, fraudulent, reckless,
oppressive and malevolent manner.
Willful, Wanton, and Reckless
manner they have been grouped
together as an aggravated form of
negligence, differing in quality
rather than in degree from ordinary
lack of care. They apply to conduct
which is merely negligent, rather
than actually intended to do harm,
but which is so far from a proper
state of mind that is treated in
many respects as if it were
intended (Prosser, Law on Torts,
3rd ed., 1964, p. 183-189).
Bad faith bad faith does not
simply connote bad judgment or
negligence, it imports a dishonest
purpose or some moral obliquity
and conscious doing of a wrong a
breach of known duty through
some motive or interest or ill will
that partakes of the nature of the
fraud (Francisco v. Ferrer, Jr., 353
SCRA 261).
Fraudulent Oppressive, and
Malevolent manner if the act is
tainted with deception or injurious
misrepresentation of which the
plaintiff is unaware, the act is
considered fraudulent. If it is
arbitrary or compulsive, it is
considered oppressive. If it is done
in bad faith, it is considered
malevolent.

Article 2333. Exemplary damages cannot

be recovered as a matter of right; the court
will decide whether or not they should be
adjudicated.
NOTE:

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[DAMAGES; TEMPERATE-EXEMPLARY
DAMAGES]

Exemplary damages cannot be

claimed as a matter of right. They are
merely additional to the other forms of
damages (except nominal damages)
which the court may or may not grant.
If there is a need to set an example for
the public good, the court may grant
exemplary damages.
Although exemplary damages cannot
be recovered as a matter of right, they
also need not be proved (Lao v.
Standard Insurance, Co, Inc., 409
SCRA 43)

Article 2334. While the amount of

exemplary damages need not be proved, the
plaintiff must show that he is entitled to
moral, temperate, or compensatory
damages before the court may consider the
question of whether or not exemplary
damages should be awarded. In case
liquidated damages should be have been
agreed upon, although no proof of loss is
necessary in order that such liquidated
damages may be recovered, nevertheless,
before the court may consider the question
of granting exemplary in addition to the
liquidated damages, the plaintiff must show
that he would be entitled to moral,
temperate, or compensatory damages were
it not for liquidated damages.
NOTES:

This provision presents the conditions

for the grant of Exemplary damages.
No exemplary damages can be
awarded in the absence of moral or
actual damages and where the
awards for moral and exemplary
damages are eliminated, so must the
award for attorneys fees (Philippine
Long Distance Telephone Company,
Inc. vs. Paguio, 472 SCRA 453).
Amount of exemplary damages need
not be alleged or proved; the amount
depends upon the sound discretion of

the court when the other forms of

damages have been established,
except nominal damages.
Amount of exemplary damages need
to be pleaded in the complaint
because the same cannot be
predetermined (Benguet Electric
Cooperative, Inc. v. CA, 321 SCRA
524), it is enough that compensatory,
moral or temperate damages have
been established.
Public officials ought to act with the
highest degree of professionalism,
excellence, intelligence and skill, and
for failure to act with such. A public
official may thus be held liable, in his
personal capacity, for exemplary
damages (Sison v. CA, 492 SCRA 497).

REQUIREMENTS

for award of Exemplary

Damages:
1. They may be imposed by way of
example in addition to compensatory
damages, and only after the
claimants right to them has been
established;
2. They cannot be recovered as a matter
of right, their determination depending
upon the amount of compensatory
damages that may be awarded to the
claimant;
3. The act must be accompanied by bad
faith or done in a wanton, fraudulent,
reckless, and malevolent manner.
Article 2235. A stipulation whereby
exemplary damages are renounced in
advance shall be null and void.
NOTES:

Future renunciation of exemplary

damages is null and void.
Impliedly, exemplary damages
already determined by the court in
a final judgment may be renounced
by the winning party to a case.

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[DAMAGES; TEMPERATE-EXEMPLARY
DAMAGES]
Article 2235 is similar with Article
1171 which renders void for future
fraud.

By: Angel Lai Central Philippine University; JURIS DOCTOR- 2