Title Xviii Damages: (New, Except Arts. 2200, 2201, 2209, and 2212.)

TITLE XVIII
DAMAGES
(New, except Arts. 2200, 2201, 2209, and 2212.)
Introductory Comment:
The fundamental principle of the law on damages is that one injured by a
breach of a contract or by a wrongful or negligent act or omission shall have a
fair and just compensation, commensurate with the loss sustained as a
consequence of the defendant’s act. Hence, actual pecuniary compensation is
the general rule, whether the action is based on a contract or in tort, except
where the circumstances warrant the allowance of other kinds of damages. (See
Western Union Teleg Co. v. Green, 153 Tenn. 69). In general, the damages
awarded should be equal to, and precisely commensurate with the injury
sustained. However, rules of law respecting the recovery of damages are
framed with reference to just rights of BOTH PARTIES, not merely what may
be right for an injured person to receive, but also what is just to compel the
other party to pay, to accord just compensation for the injury. (Kennings v.
Kline, 158 Ind. 602).
Zulueta v. Pan American World Airways, Inc.

43 SCRA 397
FACTS: Zulueta and his wife were passengers of a Pan American airplane. At
a stop-over, Zulueta was ill-treated and was left at the airport. Is he
entitled to recover damages?
HELD: Yes. Passengers should be treated by the employees of an airplane
carrier with kindness and courtesy, and should be protected against
indignities, abuses, and injurious language from such employees. In case
of breach of contract, the airline company should be held liable for
damages. Be it noted further that the contract of common air carriage
generates a relation attended with a public duty.
Air France v. CA and Morales

GR 76093, Mar. 21, 1989
Mere refusal to accede to the passenger’s wishes does not necessarily translate
into damages in the absence of bad faith.
1
CIVIL CODE OF THE PHILIPPINES
Tiu v. Court of Appeals

46 SCAD 408, 228 SCRA 51
1993
An adverse result of a suit in law does not mean that the same is wrongful as
to justify assessment of damages against the actor.
2
Chapter 1
GENERAL PROVISIONS
Art. 2195. The provisions of this Title shall be respectively applicable

to all obligations mentioned in Article 1157.
COMMENT:
Applicability to All Kinds of Legal Obligations Art. 1157.
Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punishable by law; and
(5) Quasi-delicts.
Art. 2196. The rules under this Title are without prejudice to special
provisions on damages formulated elsewhere in this Code. Compensation
for workmen and other employees in case of death, injury or illness is
regulated by special laws. Rules governing damages laid down in other
laws shall be observed insofar as they are not in confl ict with this Code.
COMMENT:
(1) Special Provisions and Laws
It is to be observed that in case of confl ict between the Civil Code and the
Special Laws, it is the Civil Code that prevails insofar as damages are
concerned — EXCEPT in the case of compensation for workmen and
other employees.
Art. 2196
3
(2) Indemnity in Workmen’s Compensation Cases
Milagros F. Vda. de Forteza v. Workmen’s

Compensation Commission and the Philippine
Charity Sweepstakes Offi ce
L-21718, Jun. 29, 1968
FACTS: Amadeo R. Forteza worked as watchman in the Philippine Charity
Sweepstakes Offi ce (PCSO) from Jul. 1, 1950 up to Jan. 17, 1955. He
was more than 60 years old, and was suffering from hypertension when
he entered the service of the offi ce. On Jan. 17, 1955, he died of cerebral
hemorrhage due to said hypertension. It was proved that he had to work
at nighttime, was exposed to colds, lacked proper sleep and rest, and had
to go up and down a 3-story building (without elevator) to check out the
premises. Is his death compensable?
HELD: Yes, his death is compensable. It is the rule in Workmen’s
Compensation cases that it need not be proven that his employment was
the sole cause of the death or injury suffered by the employee. It is
enough — to entitle him or his heirs to compensation benefi ts under the
law — that there be a showing that his employment (as in this case) had
contributed to the acceleration of his death or ailment. Moreover, the law
presumes that such death is compensable, unless the employer clearly
establishes that it was not caused or aggravated by the employment. (See
Niara v. Workmen’s Compensation Commission, L-18066, Oct. 30,
1962).
Ysmael Maritime Corp. v. Avelino

GR 43674, Jun. 30, 1987
FACTS: RGL was a licensed second mate on board a vessel owned by YMC
when the same ran aground and sank. RGL perished as a result. FL and
CG, the parents of RGL, sued YMC in the Court of First Instance
(Regional Trial Court) for damages. YMC invoked the rule in Robles v.
Yap Wing, 41 SCRA 267, that all claims for death or injuries by
employees against employers are exclusively cognizable by the
Workmen’s Compensation Commission (WCC) regardless
Art. 2196 CIVIL CODE OF THE PHILIPPINES
of the causes of said death or injuries. CG admitted that he had previously

fi led a claim for death benefi ts with the WCC and had received the
compensation payable to them under the
Workmen’s Compensation Act (WCA). The trial court denied YMC’s motion
to dismiss.
4
ISSUE: Is the compensation remedy under the WCA (now under the Labor
Code) for work-connected death or injuries sustained by an employee
exclusive of the other remedies available under the Civil Code?
HELD: The rule in Robles v. Yap Wing no longer controls. In Floresca v.
Philex, 136 Phil. 141, involving a complaint for damages for the death
of fi ve miners in a cave-in, the Supreme Court was confronted with three
divergent opinions on the exclusivity rule.
One view is that the injured employee or his heirs, in case of death, may
initiate an action to recover damages (not compensation under the
Workmen’s Compensation Act) with the regular courts on the basis of
negligence of the employer pursuant to the Civil Code. Another view, as
enunciated in the Robles case, is that the remedy of an employee for
workconnected injury or accident is exclusive in accordance with Sec. 5
of the WCA. A third view is that the action is selective and the employee
or his heirs have a choice of availing themselves of the benefi ts under
the Workmen’s Compensation Act or of suing in the regular courts under
the Civil Code for higher damages from the employer by reason of his
negligence. But once the election has been exercised, the employee or
his heirs are no longer free to opt for the other remedy, i.e., the employee
cannot pursue both actions simultaneously. The view was adopted by the
majority in the Floresca case, reiterating as main authority its earlier
decision in Pacana v. Cebu Autobus, 32 SCRA 442. In so doing, the
Court rejected the doctrine of exclusivity of the rights as remedies
granted by the WCA as laid down in the Robles case.
Claimants cannot be allowed to maintain their action to recover additional
damages against the employer if the former had previously fi led a claim
for death benefi ts with the WCC and had received the compensation
payable to them under the WCA. If they had not only opted to recover
under
Art. 2197
the Act but they had also been duly paid, at the very least, a sense of fair
play would demand that if a person entitled to a choice of remedies made
a fi rst election and accepted the benefi ts thereof, he should no longer
be allowed to exercise the second option. If one had staked his fortunes
on a particular remedy, he is precluded from pursuing the alternate
course, at least until the prior claim is rejected by the WCC.
(3) Dismissal of Action
Enrique A. Defante v. Hon. Antonio E.

Rodriguez, et al.
5
L-28380, Feb. 27, 1976

If an action for damages is sought to be dismissed by plaintiff-appellant or his
heirs when the case is already on appeal, may the dismissal be granted
despite the appeal? Yes, since the parties involved are no longer
interested in prosecuting the appeal.
Art. 2197. Damages may be:

(1) Actual or compensatory;
(2) Moral;
(3) Nominal;
(4) Temperate or moderate;
(5) Liquidated; or
(6) Exemplary or corrective.
COMMENT:
(1) Damages Distinguished from Injury
Damages (from the Latin “damnum” or “demo” — to take away) refers to
the harm done and what may be recovered (See Hale on Damages, 2nd
Ed., p. 1); injury refers to the wrongful or unlawful or tortious act. The
former is the measure of recovery, the latter is the legal wrong to be
redressed. There may be damages without injury, and an injury without
damages. (15 Am. Jur., p. 388).
Art. 2197 CIVIL CODE OF THE PHILIPPINES
(2) Damage Without Injury

There can be “damage without injury” (damnum absque injuria) (or physical
hurt or injury without legal wrong). The principle was mentioned in, among
other cases, De la Rama Steamship Co., Inc. v. Judge Tan and the NDC (99
Phil. 1034). In that case, the government exercised a contractual right to cancel
an agency, although by such cancellation, the agent would suffer damages.
Similarly, one who complies with a government-promul-
gated rule cannot be held liable for damages that may because by other
person. (Janda v. Lepanto Cons. Mining Co., L-6930, May 25, 1956).
6
(3) Some Rules on Waiver

(a) Although the right to recover civil liability whether arising from
an offense or otherwise is waivable, still, where the waiver thereof
was made in behalf of the minor heirs by a person who is not their
judicial guardian, such waiver is ineffective if it lacks judicial
approval. (People v. Verano, L-15805, Feb. 28, 1961).
(b) Waiver of the right to recover upon the civil liability of an accused
employee arising from a crime, made in favor of his employer,
embraces also the civil liability of the accused himself, since the
law makes his employer subsidiarily liable for the civil obligation
and in default of the person criminally liable, responsible for the
civil liability. (Ibid.). (QUERY: Should extinction of the subsidiary
obligation result also in extinction of the principal obligation?)
(4) Liability of Fiscal (now Prosecutor)
Lim v. De Leon
L-22554, Aug. 29, 1975
A Fiscal (now Prosecutor) who orders the seizure of property alleged to be
involved in the crime of robbery without a search warrant is liable
(except in the case of a citizen’s
Art. 2198
arrest) for actual damages (including attorney’s fees), moral damages,

and exemplary damages. There is nothing in the law (RA 732) which
gives to provincial fi scals the power to issue warrants, much less to order
the seizure without warrant, of personal property alleged to be the corpus
delicti of a crime.
(5) Damages in Voidable Contracts
Development Bank of the Phil.

v. Court of Appeals
L-28774, Feb. 28, 1980, 96 SCRA 342
A person not obliged principally or subsidiarily in a contract may nevertheless
ask for its annulment (with damages in the proper cases) if he is
prejudiced in his rights regarding one of the contracting parties. (See
Banez v. Court of Appeals, L-30351, Sep. 11, 1974, 59 SCRA 16, 21).
7
Art. 2198. The principles of the general law on damages are hereby
adopted insofar as they are not inconsistent with this Code.
COMMENT:
Adoption of the Principles of the General Law on Damages
It is clear that in case of confl ict, it is the Civil Code that prevails.
Chapter 2
ACTUAL OR COMPENSATORY DAMAGES
Art. 2199. Except as provided by law or by stipulation, one is entitled

to an adequate compensation only for such pecuniary loss suffered by him
as he has duly proved. Such compensation is referred to as actual or
compensatory damages.
COMMENT:
(1) ‘Actual or Compensatory Damages’ Defi ned
Actual or compensatory damages are those recoverable because of pecuniary
loss (in business, trade, property, profession, job, or occupation).
(Algarra v. Sandejas, 27 Phil. 284). They include:
(a) the value of the loss suffered (daño emergente);
(b) profi ts which were not obtained or realized (lucro cesante). (Art.
2199; 8 Manresa 100).
NOTE: Recovery cannot be had for the death of an unborn (aborted)
child. This is not to say that the parents are not entitled to collect
any damages at all. But all such damages must be those infl icted
directly upon them, as distinguished from the injury or violation
of the rights of the deceased, his right to life, and physical integrity.
Because the parents cannot expect either help, support, or service
from an unborn child, they would normally be limited to moral
damages for the illegal arrest of the normal development of the
spos hominis that was the foetus, i.e., on account of distress and
8
anguish attendant to its loss, and the disappointment of their

parental expectations (Art. 2217), as well as to exemplary
damages, if the circumstances should warrant them. (Art. 2230).
(Geluz v.
Court of Appeals, et al., L-16439, Jul. 20, 1961).
Art. 2199
Bert Osmeña and Associates v. Court of Appeals

GR 56545, Jan. 28, 1983
Because of a breach of contract on the part of the sellers, the buyers were not
able to construct the house they had intended to build (at a certain
estimated cost). Can they recover said cost from the delinquent party?
HELD: No, they are not entitled to be awarded said estimated costs because
after all they did not lose this amount. The amount was an expense, not
expected income that had been lost.
Radio Communications of the Philippines, Inc. v.

Court of Appeals
L-55194, Feb. 26, 1981
In transmitting a telegramic message, the RCPI er-
roneously transmitted “no truck available” instead of “truck available,”
causing damage to a freight company the Yabut Freight Express. The
RCPI was held liable:
(1) for both actual damages (damnum emergens) and compensatory
damages (lucrum cessans or unrealized profi t).
(2) for exemplary damages — because of the gross negligence or
wanton misconduct here.
(3) attorney’s fees and expenses of litigation (which may be reduced
if found unreasonable)
(4) temperate or moderate damages — for injury to one’s business
standing.
Ramos v. CA,
GR 124354, Apr. 11, 2002
The Court rules on actual or compensatory damages generally assume
that at the time of litigation, the injury suffered as a consequence
of an act of negligence, has been completed and that the cost can
be liquidated.
9
These provisions, however, neglect to take into account those

situations, as in the case at bar, where the resulting injury might be
continuing and possible future
10
Art. 2199
complications directly arising from injury, while certain to occur,

are diffi cult to predict.
[NOTE: To be able to recover actual or compensa tory damages, the
amount of loss must be proven with a reasonable degree of certainty, based on
competent proof and on the best evidence obtainable by the injured party.
(MOF Co. v. Enriquez, GR 149280, May 9, 2002).]
(2) Necessity of Pleading

To be recoverable, actual damages must be pleaded or prayed for. However,
when a prayer mentions only exemplary damages, moral damages, and
attorney’s fees and “such further relief... as this Honorable Court may
deem just and equitable,” the phrase “such further relief” may include
“actual damages” if and when they are proved. (Heirs of Justiva v. Court
of Appeals, L-16396, Jan. 31, 1963).
(3) Necessity of Proof

(a) Actual damages must be proved as a general rule (Tomassi v. Villa-
Abrille, L-7047, Aug. 21, 1958) and the amount of damages must
possess at least some degree of certainty. (Chua Teck Hee v. Phil.
Publishing Co., 34 Phil. 447).
[NOTE: It is not necessary to prove exactly how much the loss is; it is
enough that LOSS is proved; and if the amount the court awards is
fair and reasonable, this will be allowed. (Tan Ti v. Alvear, 26 Phil.
506; Hicks v. Manila Notel, 28 Phil. 235; Pedret v. Ponce Enrile,
(C.A.) 53 O.G. 2809). In Republic v. Tayengco, et al., L-23766,
Apr. 27, 1967, it was held that in expropriation, the owners of the
lands involved can recover interest from the date the expropriator
takes possession of the parcels concerned until payment or deposit
in court is made.]
Inhelder Corporation v. Court of Appeals

GR 52358, May 30, 1983
Judges and Justices must be careful not to award exorbitant damages.
There must be balanced restraint and measured objectivity.
Art. 2199
[NOTE: If there is NO proof of loss (Sanz v. Lavin
11
Brothers, 6 Phil. 299) or if the proof is fl imsy and unsubstantial, no
damages will be given (Heredia v. Salinas, 10 Phil. 157). The Court
cannot rely on its own speculations as to the fact and amount of damages,
but must depend on actual proof that damage had been suffered and
actual proof of the amount. (Suntay Tanjangco v. Jovellanos, L-12332,
Jun. 30, 1960). The Court in awarding damages, must point out specifi c
acts which afford a basis for measuring compensatory or actual damages
had been suffered. (Malonzo v. Galang, et al., L-13851, Jul. 27, 1960).
However, if there was proof, but it is not clear or satisfactory, the
appellate court may remand the case to the lower court for new trial.
(Brodeck v. Larsen, 8 Phil. 425; Roroqui v. Maiquez, et al., {C.A.} 37
O.G. 1191). In no instance may the judge give more than the damages
proved in court. (Marker v. Garcia, 5 Phil. 557). Just because the
complaint fi led by the plaintiffs against the defendant is “clearly
unfounded,” this does not necessarily mean, in the absence of specifi c
facts proving damages, that said defendants really suffered actual
damages over and above attorney’s fees and costs. A mere relief by the
Court that the sum of P500 must have been what they had actually
suffered clearly should not be countenanced. (Malonzo v. Galang, et al.,
L-13851, Jul. 27, 1960). Similarly, an alleged but unproved claim of
damages in the amount of P10,000 simply because a party had been made
a defendant in an unfounded “easement” case cannot be allowed. Indeed,
the Court cannot rely on its own speculations as to the fact and amount
of damages alleged to have been suffered. (Tanjangco v. Jovellanos, et
al., L-12332, Jun. 30, 1960; see Basilan Lumber Co. v. Cagayan Timber
Export Co., et al., L-15908, Jun. 30, 1961).]
[NOTE: If there be an award for compensatory damages, there can be no
grant of nominal damages. The reason is that the purpose of nominal
damages is to vindicate or recognize a right that has been violated, in
order to preclude further cost thereon, and “not for the purpose of
indemnifying the plaintiff for any loss suffered by him.” (Medina, et al.
v. Cresencia, et al.,
L-8194, Jul. 11, 1956).]
Art. 2199
[NOTE: The damages given must be based on the evidence given and
not on the personal knowledge of the court. (Villaroman v. Lastrella, [C.A.] L-
136-R, Feb. 11, 1947 and Romualdez v. Ysmael and Co., [C.A] 53 O.G. 8858).
Neither must the damages be remote or speculation (Tomassi v. Villa Abrille,
L-7047, Aug. 21, 1958 and Standard Oil Co. v. Castro, 54 Phil. 716), nor must
the claim be delayed unreasonably. (Strong v. INAEC, 40 O.G. [18th, S] p.
269). In Kairuz v. Pacio and Pacio (L-14506, Jul. 25, 1960), it was held that a
person who unjustifi ably withholds from another the latter’s motor engine used
12
for the hauling of logs should not be held liable for speculative and contingent
damages (in the form of possible rentals). Instead, the withholder must be held
responsible for its return (or payment of its value) plus legal interest thereon
from the date of demand. In the case of Ventanilla v. Centeno, L-14333, Jan.
28, 1961, the Supreme Court held that even if an attorney fails to perfect an
appeal in a civil case from an adverse judgment in a lower court, he should not
be held liable for the “damages that could have been recovered” since these
damages are highly speculative. In Rizal Surety and Insurance Co., Inc. v. MRR
Co., L-22409, Apr. 27, 1967, the Court ruled that a provisional claim fi led by
a consignee BEFORE knowledge of any actual shortage or damage with
respect to cargo consigned to her is a speculative claim. In Delfi n v. Court of
Agrarian Relations, L-23348, Mar. 14, 1967, the Court decreed that damages,
such as those awarded to an illegally dispossessed tenant, should not be given
the basis of guesswork or speculation.]
(b) In the following cases, actual damages need NOT be proved:
1) In case liquidated damages had been previously agreed
upon. (Art. 2216).
2) In case of damages other than actual. (Art. 2216).
3) In case loss is presumed as when a child (minor) or a spouse
dies. (Manzanares v. Moreta, 38 Phil. 821).
4) In case of forfeiture of bonds in favor of the government for
the purpose of promoting public interest
Art. 2200
or policy (like a bond for the temporary stay of an alien).

(Far Eastern Surety & Ins. Co. v. Court of Appeals, L-12019,
Oct. 16, 1958).
Radio Communications of the Philippines,

Inc. (RCPI) v. Lantin
L-59311, Jan. 31, 1985
If because of a breach in a lease contract, there is an award of
compensatory damages, this award may be ordered executed
pending appeal, but not an award for moral or exemplary
damages. The award for moral or exemplary damages
cannot be regarded as fi xed or defi nite until there is a fi nal
judgment. Otherwise stated, their grant is dependent on the
outcome of the main case.
13
Art. 2200. Indemnifi cation for damages shall comprehend not only
the value of the loss suffered, but also that of the profi ts which the obligee
failed to obtain.
COMMENT:
(1) Two Kinds of Actual Damages
There are two kinds of actual or compensatory damages:
(a) losses suffered (damno vitando or daño emergente)
(b) unrealized profits (lucro captando or lucro cesante or lucrum
cessans). (Angeles v. Lerma, [C.A.] 45 O.G. No. 6, p. 2589).
[NOTE that “lucrum cessan” is also a basis for indemnifi cation.
Hence, if there exists a basis for a reasonable expectation that profi
ts would have continued had there been no breach of contract,
indemnifi cation for damages based on such expected profi ts is
proper. (General Enterprises v. Lianga Bay Logging Co., L-18487,
Aug. 31, 1964).]
St. Louis Realty Corporation v. Court of Appeals

L-46061, Nov. 14, 1984
If a person’s house is used as advertising material without the consent
of the owner, and without apologizing
Art. 2200
to him, he is entitled to an award of actual and moral damages.
BA Finance Corp. v. CA
GR 61464, May 28, 1988
The court cannot sustain the award of unrealized profi ts if the same
have not been proved or justifi ed before the trial court, and the
basis of the alleged unearned profi ts is too speculative and
conjectural to show actual damages for a future period.
Batong Buhay Gold Mines, Inc. v. CA

GR 45048, Jan. 7, 1987
Damages by way of unrealized profi ts (lucro cesante) may not be
awarded in the absence of supporting evidence or merely on the
basis of pure assumption, speculation or conjecture. Speculative
damages cannot be recovered.
14
Aguilar v. Chan
GR 28688, Oct. 9, 1986
Where the actual damages suffered by plaintiff exceeded the amount
awarded her by the lower court, but plaintiff did not appeal, the
appellate court cannot award her more than the amount awarded
by the lower court.
(2) Examples of Daño Emergente

(a) destruction of things. (19 Scaevola 557).
(b) fines or penalties that had to be paid. (19 Scaevola 557).
(c) medical and hospitalization expenses. (See Araneta, et al. v.
Arreglado, et al., 104 Phil. 529).
[NOTE: If the injured party claims actual damages because a jaw injury
prevented him from going to school for one year, will not be given
said damages because damages due to a lost school year and the
resulting reduction in the victim’s earning capacity are manifestly
Art. 2201
speculative, and may not exist at all. (Araneta, et al. v. Arreglado,

et al., 104 Phil. 529). In one case, however, where the victim’s
mental capacity was so reduced that according to a psychiatrist, he
could no longer fi nish his studies as a medical student; had
become a misfi t for any kind of work; and unable to walk around
without someone helping him, compensatory damages amounting
to P25,000 were awarded by the Court. (Carriaga, et al. v. Laguna-
Tayabas Bus Co., et al., L-11037, Dec. 29, 1960).]
(d) rents and agricultural products not received in an agricultural lease.
(J.M. Tuason, Inc. v. Santiago, et al., L-5079, Jul. 31, 1956).
(3) Examples of Lucro Cesante

(a) profits that could have been earned had there been no interruption
in the plaintiff’s business as evidenced by the reduced receipts of
the enterprise. (See Algarra v. Sandejas, 27 Phil. 284; Tan Ti v.
Alvear, 26 Phil. 566).
(b) profi ts because of a proposed future re-sale of the property being
purchased — if the existence of a contract there was known to the
delinquent seller. (See Enriquez de la Cavoda v. Diaz, 37 Phil.
982).
15
(c) interest on rentals that were not paid. (Here, the interest undeniably
forms profi ts which could have been realized had the rents been
given.) (See J.M. Tuason, Inc. v. Santiago, et al., L-5079, Jul. 31,
1956).
Art. 2201. In contracts and quasi-contracts, the damages for which

the obligor who acted in good faith is liable shall be those that are the
natural and probable consequences of the breach of the obligation, and
which the parties have foreseen or could have reasonably foreseen at the
time the obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor
shall be responsible for all damages which may be reasonably attributed
to the non-performance of the obligation.
Art. 2201
COMMENT:
(1) Liability of Debtor in Contracts and Quasi-Contracts
(a) if in GOOD FAITH ––
It is essential that the damages be:
1) the NATURAL and PROBABLE consequences of the
breach of the obligation;
2) those which the parties FORESAW or COULD HAVE
REASONABLY FORESEEN at the time the obligation was
constituted.
(b) if in BAD FAITH
It is ENOUGH that the damages may be REASONABLY
ATTRIBUTED to the non-performance of the obligation.
(Relation of cause and effect is enough.)
[NOTE: There is no necessity of the damage be-
ing a natural or probable consequence, and there is no necessity of
foreseeing or foreseeability. (See 8 Manresa 103-104).]
[NOTE: The fundamental difference between the fi rst paragraph and
the second paragraph in Art. 2201 is this: in the fi rst, there was
mere carelessness; in the second, there was deliberate or wanton
wrongdoing (Verzesa v. Baytan, et al., L-14092, Apr. 29, 1960).
Mere carelessness or negligence of a bus driver in a collision with
a train would make his liability fall under the fi rst paragraph.
16
(Carriaga, et al. v. Laguna, Tayabas Bus Co., et al., L-11037, Dec.
29, 1960).]
(2) Examples of Reasonably Foreseen or Foreseeable Damages in

Contracts
(a) ORDINARY DAMAGES (generally inherent in a breach of typical
contract)
1) Value of the use of the land if same is withheld, computed
for the duration of the withholding. (Daywalt v.
Corporacion de P.P. Agustinos Recoletos, 39 Phil. 587).
Art. 2201
2) Difference in the value of goods at the time of stipulated

delivery and the time of actual delivery (common
carriers). (Uy Chaco v. Admiral Line, 46 Phil. 418).
3) Cost of completing or repairing a defective building (in
the case of building contracts). (Marker v. Garcia, 5 Phil.
551).
4) The income which an injured bus passenger could have
earned (had he fi nished his medical course and passed
the corresponding board examinations) must be deemed
within the category of “natural and probable
consequences which parties should have foreseen by the
parties at the moment said passenger boarded the bus.
(Carriaga, et al. v. Laguna, Tayabas Bus. Co., et al., L-
111037, Dec. 29, 1960).
5) Salary for the entire period agreed upon in an
employment contract in case the employer breaks it
without just cause MINUS income actually earned or
could have been earned during the unexpired period.
(Lemoine v. Alkan, 33 Phil. 162; see Sotelo v. Behn,
Meyer & Co., 57 Phil. 775; Berbari v. General Oil Co.,
43 Phil. 414 and Logan v. Phil. Acetylene Co., 33 Phil.
177).
[NOTE: The breach is generally indivisible, and therefore action may
be brought AT ONCE for both present and future salaries, without
waiting for the stipulated end of the contract. Failure to sue for all
damages by suing only for the damages already accrued will BAR
17
future suits on the same point. (Hicks v. Manila Hotel, 78 Phil. 325
and Garcia v. Hotel de Francia, 42 Phil. 660).]
[NOTE: The employer has the duty to prove the earnings made or
which could have been earned during the unexpired period. (Hicks
v. Manila Hotel, supra; Garcia v. Hotel de Francia, supra).]
(b) SPECIAL DAMAGES (Those which exist because of special
circumstances and for which a debtor in GOOD
Art. 2202
FAITH can be held liable only if he had been previously informed

of such circumstances.)
Example: If a carrier fails to deliver a movie fi lm intended for showing
at a fi esta, it cannot be held liable for the extraordinary profi ts realizable at a
fi esta showing, if it had not been told that the fi lm had to be delivered in time
for said fi esta. (Mendoza v. PAL, 90 Phil. 836).
[NOTE: If a debtor is in BAD faith, special damages can be assessed
against him even if he had NO knowledge of the special
circumstances. It is enough that the damage be reasonably
attributed to the non-performance of obligation. (8 Manresa 103).]
Art. 2202. In crimes and quasi-delicts, the defendant shall be liable

for all damages which are the natural and probable consequences of the
act or omission complained of. It is not necessary that such damages have
been foreseen or could have reasonably been foreseen by the defendant.
COMMENT:
(1) Damages in Crimes and Quasi-Delicts
(a) Note here that as distinguished from the rule in the preceding
article, it “is not necessary that such damages have been foreseen
or could have reasonably been foreseen by the defendant.”
(b) The Article applies to CRIMES and QUASI-DELICTS.
Maranan v. Perez
L-22272, Jun. 26, 1967
If a taxi driver should kill his passenger, the civil liability of the offender
is based on his having committed a crime. On the basis of
contracts, it is the taxicab owner-operator who should be held
18
liable for damages, not the driver-killer, for said driver is not a
party to the contract of carriage.
Art. 2202
People v. Salig
L-53568, Oct. 31, 1984
During their appeal in a criminal case where they were convicted, one
of the accused died. The estate of the person who died, can be held
solidarily liable with others in case of a fi nal judgment of
conviction. [NOTE: Justice Serafi n Cuevas dissents because
under Art. 89 of the Revised Penal Code, the pecuniary liability of
the deceased was extinguished because of his death before fi nal
judgment.]
(2) What Victim Must Prove in a Tort or Quasi-Delict Suit

In a tort action the alleged victim must prove: (a) a causal
connection between the tort and the injury; (b) the amount and
extent of the injury.
(3) Unfair Competition

If unfair competition deprives the victims of certain profits, the person liable
must respond if the two things stated above are proved. Liability may,
however, be reduced if loss was suffered by the plaintiff not only because
of the unfair competition but also because of his fault, e.g., inferior
quality or service. (Castro, et al. v. Ice and Cold Storage Industries, et
al., L-10147, Dec. 27, 1958).
(4) Concealment of an Existing Marriage

Concealment of an existing marriage from a girl whom a man intends to
seduce can make a man liable for damages. Thus, if on account of his
concealment, the woman lives with him and bears a child, and
relinquishes her employment to attend to a litigation fi led to obtain
support for her child — he must be held liable for all the consequent
damages. This concealment of the marriage in fact is NOT mere
negligence, but actual fraud (dolo) practiced upon the girl. While the
liability may be considered extra-contractual in nature, still under the
old Civil Code as well as, it is believed, the new Civil Code, said liability
is equivalent to that of a contractual
Art. 2203
19
debtor in bad faith. (Silva, et al. v. Peralta, et al., L-13114, Aug. 29,
1961). Should the man be also held liable for moral damages? YES. It is
true that no moral damages are gener-
ally allowable as a consequence of sexual relations outside of wedlock, but in
the instant case it appears that after the girl had fi led the action for
support the man avoided the service of summons and then exercised
improper pressure upon her to make her withdraw the suit. When she
refused, the man and his lawful wife even fi led an action against her,
thus calling to her employer’s attention the fact that she was an unwed
mother. These are deliberate maneuvers causing her anguish and
physical suffering in which she got sick as a result. As this injury was
infl icted after the new Civil Code became operative, it constitutes a
justifi cation for the award of moral damages. (Ledesma Silva, et al. v.
Peralta, L-13114, Aug. 29, 1961).
Budiong v. Judge Apalisok

GR 60151, Jun. 24, 1983
Even if there is no specifi c allegation of damages in the complaint or
information, civil liability may still be claimed in the criminal case.
Brinas v. People
GR 50309, Nov. 25, 1983
Even if a separate civil case is brought because of an accident, the Court in
the criminal case can still impose civil liability (arising from the
commission of a crime). In the civil case, if it is the employer who is
sued, it will be an obligation arising from culpa contractual (not one
arising from the commission of the criminal act).
People v. Castañeda
GR 49781, Jun. 24, 1983
If the accused in a criminal case is acquitted on reasonable doubt, a civil action
for damages may still be instituted.
Art. 2203. The party suffering loss or injury must exercise the
diligence of a good father of a family to minimize the damages resulting
from the act or omission in question.
Art. 2203
20
COMMENT:
(1) Victim Must Minimize the Damage
Prudent men must minimize the damage done to them by others. Thus, one
prevented from entering a particular hacienda must complain to the
proper offi cials in time. (Del Castelvi v. Compania Gen. de Tabacos, 49
Phil. 998). One ousted from a job must try to seek other employment.
(Lemoine v. Alkan, 33 Phil. 162).
(2) Burden of Proof

The person sued has the burden of proving that the victim could have
mitigated the damage. (Lemoine v. Alkan, supra).
(3) Plastic Surgery Which Could Have Been Performed in the Philippines
A victim cannot recover the cost of plastic surgery in the United
States if it is proved that the operation could have been completely
performed in the Philippines by local practitioners. (Araneta, et al. v.
Arreglado, et al., 104 Phil. 529).
(4) Case
Abelardo Lim & Esmadito Gumalan v.

CA & Donato H. Gonzales
GR 125817, Jan. 16, 2002
FACTS: Private respondent left his passenger jeepney by the roadside at the
mercy of the elements.
HELD: Art. 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. Anyway, he can recover
from the wrong doer’s money lost in reasonable efforts to preserve the
property injured and for injuries incurred in attempting to prevent
damages to it.
Arts. 2204-2205
Art. 2204. In crimes, the damages to be adjudicated may be

respectively increased or lessened according to the aggravating or
mitigating circumstances.
21
COMMENT:
Effect of Aggravating or Mitigating Circumstances The Article explains
itself.
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.
COMMENT:
Damages to Earning Capacity and to Business
(a) The Article is self-explanatory.
(b) Lameness is a permanent personal injury. (Marcelo v. Veloso, 11
Phil. 287). If a dancer’s leg is amputated, it is clear that recovery
is proper. (Julio v. Manila Railroad Co., 58 Phil. 176).
Consolidated Plywood Industries, Inc. & Henry

Lee v. CA, Willie Kho & Alfred C.H. Kho
GR 101706, Sep. 23, 1992
While it is the Court’s belief that petitioner is entitled to an award for
moral damages, the award granted by the trial court in the amount
of P200,000 is excessive. It should be stated here that the hauling
agreement between the petitioners and the private respondent had
no fi xed date of termination; it was a verbal agreement where the
private respondents bound themselves until the loan with
Equitable Bank in the personal account of petitioners had been
fully paid. There was substantial compliance by the private
respondents of their obligations in the contract for about a year.
The record showed
Art. 2205
that the remaining balance owing to the bank was only P30,000 which
was not due until one year and 6 months after the breach by the private
respondents, or on Sep. 4, 1980. However, the trial court found that
private respondents acted with bad faith when it surreptitiously pulled
22
out their hauler trucks from petitioner’s jobsite before the termination of
the contract.
The trial court held that the act of defendants in suddenly and surreptitiously
withdrawing its hauler trucks from the jobsite and abandoning its
obligation of hauling the logs is indubitably a wanton violation of its
obligation, under the contract, a neglect to perform its obligation in bad
faith more particularly in its stipulation to liquidate the cash advance
obtained from Equitable Bank, for the law would not permit said
defendants to enrich themselves at the expense of the plaintiffs. Thus, an
award of P50,000 for moral damages is suffi cient.
Francisco, et al. v.
Ferrer, Jr., et al.
GR 142029, Feb. 28, 2001
FACTS: A couple engaged to be married had ordered a 3-layered cake from a
bakeshop to be delivered at 5 p.m. of the wedding day itself. On the
wedding day, the now newly-married couple arrived at the country club
(venue-reception of the wedding) at around 6 p.m., but the wedding cake
was nowhere to be found. At 10 p.m., the wedding cake fi nally arrived,
but by then rejected because of the lateness of the hour. One other reason
for its rejection: what arrived was only a 2-layered cake and not a 3-
layered one as originally agreed upon. The bakeshop owner was sued for
breach of contract, with the complaints alleging personal
embarrassments, mental anguish, serious anxiety, and sleepless nights.
Issue: To recover moral damages, is it enough that one suffered sleepless
nights, mental anguish, serious anxiety, social embarrassment, or
besmirched reputation?
HELD: No. To recover moral damages, it must be proven that the
guilty party acted in bad faith. In the
23
CIVIL CODE OF THE PHILIPPINES Art. 2206
instant case, no such bad faith existed. The bakeshop owner was
quick to apologize and offered to repair whatever damage was done. Note that
the bakeshop owner sent a letter of apology accompanied by a P5,000 check
for the harm done, but which was unacceptable to the couple who considered
the amount offered as inadequate. Nevertheless, while not liable for moral
damages, the bakeshop owner must pay nominal damages in the amount of
P10,000 for prevarication when confronted with failure to deliver the cake on
time, this, in addition to paying the cost of the cake in the sum of P3,175 and
attorney’s fees of P10,000.
Art. 2206. The amount of damages for death caused by a crime or

quasi-delict shall be at least three thousand pesos, even though there may
have been mitigating circumstances. In addition:
(1) The defendant shall be liable for the loss of the earning capacity
of the deceased, and the indemnity shall be paid to the heirs of the latter;
such indemnity shall in every case be assessed and awarded by the court,
unless the deceased on account of permanent physical disability not caused
by the defendant, had no earning capacity at the time of his death;
(2) If the deceased was obliged to give support according to the
provisions of Article 291, the recipient who is not an heir called to the
decedent’s inheritance by the law of testate or intestate succession, may
demand support from the person causing the death, for a period not
exceeding fi ve years, the exact duration to be fi xed by the court;
(3) The spouse, legitimate and illegitimate descendants and
ascendants of the deceased may demand moral damages for mental
anguish by reason of the death of the deceased.
COMMENT:
(1) Damages for Death — Reason for Awarding Damages
(a) “Human life has heretofore been very cheap, in law and the practice
thereunder. Before the passage of Commonwealth Act 284, in Jun. 1938,
the practice was to allow P1,000 to the heirs of the deceased in case of
death caused by a crime. Later, by virtue of that special law, a minimum
of P2,000 was fi xed, but the courts usually award only the minimum,
without taking the trouble to inquire into the earning capacity of the
victim, and regardless of aggravating circumstances.” (Report of the
Code Com., p. 34).
24
(b) Note that under Art. 2206, the minimum to be given is P3,000, but this
does not mean that the court should stop after awarding that amount,
because the life of a captain of industry, scientist, inventor, a great writer
or statesman, is materially more valuable to the family and community
than that of an ordinary man. Moreover, exemplary damages may be
justifi ed by aggravating circumstances. The earning capacity of the
deceased, his obligation to support dependents, and the moral damages
suffered by his kin must also be considered. (Report of the Code Com.,
p. 35). It is clear from Art. 2206 that P3,000 is the minimum award.
Hence, a greater sum can be given. (Nita Lira v. Gonzalo Mercado, et al.
and Gonzalo Mercado, et al. v. Ramon Ura, et al., L-13358, L-13328, L-
13329, Sept. 29, 1961).
(c) In fact in many decisions, the appellate courts awarded P6,000, then
P12,000, and now, P50,000, as damages. The Court gave as its reason
the great rise in prices and declining purchasing power of the peso.
Independently of its fi nancial capacity, a common carrier, if liable for
the death of a passenger or of a pedestrian, must be made to pay the
minimum amount. But if its fi nancial capacity enables it to pay more,
said greater sum should be given. It is here where fi nancial capacity is
material and signifi cant.
(d) Cases
Mckee, et al. v. IAC, et al.

GR 68102, Jul. 16, 1992
In light of recent decisions of the Supreme Court, the indemnity for death is
now P50,000.
(2) Factors Which May Be Considered in Determining the Amount
(a) life expectancy (considering the state of health and habit of the
deceased; mortality tables are inconclusive evidence) and consequent loss of
earning capacity.
Monzon, et al. v. IAC and Theo H.

Davies and Co., Far East Ltd.
GR 72828, Jan. 31, 1989
Life expectancy fl uctuates with several factors but it is for that very
reason that a generally accepted formula has been established by
this Court in a long line of cases.
It would be most unfair and illogical for a court to reduce the
compensation due for the loss of the earning capacity of a deceased
25
by discarding the well-established formula by taking a pessimistic

and depressed view of every situation instead of an average
standard. For as a man grows older, and gains more experience,
his income generally increases, with each passing year.
Smith Bell Dodwell Shipping Agency Corp. v. Catalino

Borja and International Towage & Transport Corp.
GR 143008, Jun. 10, 2002
FACTS: Petitioner contends that respondent Borja died nine years after
the incident and, hence, his life expectancy of 80 years should
yield to the reality that he was only 59 when he actually died.
ISSUE: Is this contention correct?
HELD: No. The Court uses the American Experience/Expectancy
Table of Morality or the Actuarial Combined Experience Table of
Mortality, which consistently pegs the life span of the average
Filipino at 80 years, from which it extrapolates the estimated
income to be earned by the deceased had he not been killed.
(People v. Villanueva, 302 SCRA 380 [1999]).
The owner or the person in possession and control of a vessel is liable
for all natural and proximate damages caused to persons and
property by reason of negligence in its management or navigation.
Negligence is conducted that creates undue risk of harm to another.
It is failure to observe that degree of care, precaution, and vigilance
that circumstances justly demand — whereby that other person
suffers injury. (Jarco Marketing Corp. v. CA, 321 SCRA 375
[1999]; Bulitan v. COA, 300 SCRA 445 [1998]; and Valenzuela v.
CA, 253 SCRA 303 [1996]). Petitioner’s vessel was carrying
chemical cargo — alkyl benzene and methyl methacrylate
monomer. While knowing that their vessel was carrying dangerous
infl ammable chemicals, its offi cers and crew failed to take all the
necessary precautions to prevent an accident. Petitioner was,
therefore, negligent and held liable for damages and loss of
respondent Borja’s income.
As a result of the fi re and the explosions during the unloading of the
chemicals from petitioner’s vessel, respondent Borja suffered damages
and injuries, thus: 1. chemical burns of the face and arms;
2. inhalation of fumes from burning chemicals;
26
3. exposure to the elements while fl oating in sea water for about 3

hours;
4. homonymous hemianopsia or blurring of the right eye which was
of possible toxic origin; and
5. cerebral infract with neo-vascularization, left occipital region with
right sided headache and the blurring of vision of right eye.
Respondent Borja’s demise earlier than the estimated life span is of no
moment. For purposes of determining loss of earning capacity, life
expectancy remains at 80. Otherwise, the computation of loss of earning
capacity will never become fi nal, being always subject to the eventuality
of the victim’s death. The computation should not change even if Borja
lived beyond 80 years. Fair is fair.
(b) pecuniary loss, loss of support and service.
(c) moral and mental suffering. (Alcantara, et al. v. Surro, et al., 93 Phil.
472).
[NOTE: The minimum award (actual) for the debt of a person does NOT
cover the case of an unborn foetus, because it is NOT endowed with
juridical personality. (Geluz v. C.A. and Lazo, L-16439, Jul. 20, 1961).
However, under certain circumstances, moral damages may be
awarded.]
Villa-Rey Transit v. Bello

L-18957, Apr. 23, 1963
FACTS: The Villa-Rey Transit, Inc. committed a breach of contract when it
failed to comply with its obligation of bringing safely the passenger,
Felipe Tejada, to his place of destination. Issue: How much damages may
Tejada’s heirs recover?
HELD: Had not Tejada met this fatal accident on Jul. 17, 1961, he would have
continued to serve in the government for some 27 years until his
retirement with a compensation of P6,000. As consequential damages,
the heirs having been deprived of the earning capacity of their husband
and father, respectively, they are entitled to P3,300 a year for at least 17
years the average life of a Filipino being between 50 and 60 years (17
years because he could have died at the age of 50 only). For failure of
the transportation company to exercise due diligence in employing a
careful and prudent driver, the amount of P2,000 as exemplary damages
is hereby awarded. And for the agony, mental anguish and sorrow
suffered by the heirs because of the sudden death of Tejada and the
27
mutilated and gory condition of the body, the amount of P5,000 is

awarded as moral damages. (See Art. 2234; Velayo v. Shell Co., 100 Phil.
187; Singson v. Aragon and Lerza, 92 Phil. 514; Estopa v. Piansay, L-
14733, Sep. 30, 1962 and Yutuk v. Manila Electric Co., L-13106, May
31, 1961).
Davila v. Phil. Air Lines

49 SCRA 497
At the age of 30, one’s normal life expectancy is 33-1/3 years more. This is
the formula adopted by the Supreme Court in Villa-Rey Transit v. Court
of Appeals, 31 SCRA 511, based on the American Expectancy Table of
mortality. Earning capacity under Art. 2206(1) means gross earning
LESS the necessary living expenses of the deceased.
Budiong v. Judge Apalisok

GR 60161, Jun. 24, 1983
After the accused has pleaded guilty in a criminal case, the judge must set the
case for hearing so that the offended party’s evidence on the civil liability
may be received. And this is true even if the accused has already fi led
an application for probation.
Dangwa Transportation v. CA
GR 95582, Oct. 7, 1991
The amount recoverable by the heirs of a victim, a tort is not the loss of the
entire earnings, but rather the loss of that portion of the earnings which
the benefi ciary would have received. In other words, only net earnings,
not gross earnings, are to be considered, that is, the total of the earnings
less expenses necessary in the creation of such earnings or income and
minus living and other incidental expenses.
The deductible living and other expenses of the deceased may fairly and
reasonably be fi xed at P500 a month or P6,000 a year. In adjudicating
the actual or compensatory damages, the appellate court found that the
deceased was 48 years old, in good health with a remaining productive
life expectancy of 12 years and then earning P24,000 a year. Using the
gross annual income as the basis, and multiplying the same by 12 years,
it accordingly awarded P288,000. Applying the aforesaid rule on
computation based on the net earnings, said award must be rectifi ed and
28
reduced to P216,000. However, in accordance with prevailing

jurisprudence, the death indemnity is hereby increased to P50,000.
Metro Manila Transit Corp. (MMTC), et al. v. CA &
Spouses Rodolfo V. Rosales and Lily R. Rosales
GR 116617, Nov. 16, 1998
FACTS: Pedro Musa, a bus driver of MMTC, was found guilty by the trial
court of reckless imprudence resulting in homicide for the death of Liza
Rosalie Rosales. Liza Rosalie’s parents fi led an independent civil action
for damages against MMTC, Musa, MMTC Actg., Gen. Mgr. Conrado
Tolentino, the GSIS, and Felicinao Celebrado, an MMTC dispatcher.
The trial court found MMTC and Musa guilty of negligence and ordered
them to pay damages and attorney’s fees. The Court of Appeals (CA) affi
rmed the trial court’s decision, but deleted the award of actual damages
and awarded instead death indemnity. On appeal, the Supreme Court set
aside the CA’s decision.
HELD: Both MMTC and Musa, respectively, are liable for negligence for the
death of Liza Rosalie. The responsibility of employers for the negligence
of their employees is primary, i.e., the injured party may recover from
the employers directly, regardless of the solvency of their employees.
Employees may be relieved of responsibility for the negligent act of their
employees within the scope of their assigned tasks only if they can show
that they observed all the diligence of a good father of a family to prevent
damage. For this purpose, they have the burden of proving that they have
indeed exercised such diligence, both in the selection of employee who
committed the quasi-delict and in the supervision of the performance of
his duties.
In addition to the death indemnity, the heirs of Liza Rosalie are awarded moral
damages, exemplary damages, attorney’s fees, and compensation for loss
of earning capacity. Compensation for loss of earning capacity was
awarded because Liza Rosalie’s parents had adduced proof that the
victim was a good student, a promising artist, and an obedient child. Such
form of damages, computed in accordance with the formula laid down in
decided cases, may use as basis for the victim’s projected
gross annual income the minimum wage for workers in the non-
agricultural sector at the time of her death.
(3) Moral Damages

(a) If the victim dies because of a CRIME, QUASI-DELICT (Art. 2206),
or BREACH OF CONTRACT BY COMMON CARRIER (Art.
29
1764 read together with Art. 2206), moral damages may be

recovered by:
1) the spouse (legitimate);
2) legitimate descendants and ascendants:
3) illegitimate descendants and ascendants [Art. 2206;
Necesito, etc. v. Paras, et al., 104 Phil. 75 –– where the court
said that moral damages may be recovered here as an
EXCEPTION to the general rule against moral damages in
breach of contract under Art. 2220. Indeed, once the heirs are
able to prove that they are entitled to the actual damages of
at least P3,000, it becomes the duty of the court to award
moral damages to the claimants in an amount commensurate
with their mental anguish. (Mercado v. Lira, L-13328-29,
Sept. 29, 1961).]
[NOTE: In the case of Tamayo v. Aquino
(Nos. L-12634, L-12720, May 29, 1959), the Court
apparently forgot the ruling in the case of Necesito v. Paras
(supra), when it denied moral damages for the heirs of a
passenger who died as a result of culpa contractual. The
Court obviously forgot to consider Art. 1764 read together
with Art. 2206. However, the error was obviously corrected
in later cases which correctly granted moral damages in case
of death. One such case is Mercado v. Lira, L-13328-29, Sep.
29, 1961).]
[NOTE: In ordinary breaches of contract, moral damages may be
recovered only if the defendant acted fraudulently or in bad
faith. (Art. 2220).]
[NOTE: In Heirs of Gervacio Gonzales v. Ale-
garbes, et al., 99 Phil. 213, it was held that Arts. 2206 (No.
3) and 2217, do NOT grant brothers and sisters of the
deceased who left a child a right to recover moral damages
arising out of or from the death of the deceased caused by
the wrongful or tortuous act of the defendant. (See Art. 2219,
last paragraph, which excludes brothers, and sisters, if a
descendant is present).]
(b) If the victim does not die, but merely suffers physical injuries, may
moral damages be recovered?
ANS.: Yes, but only in the following instances:
30
1) if caused by a crime. (Art. 2219, No. 1).

2) if caused by a quasi-delict. (Art. 2219, No. 2).
3) if caused by a breach of contract BUT ONLY if the
defendant acted fraudulently or in bad faith (Art. 2220) or in
case of wanton and deliberately injurious conduct on the part
of the carrier. (LTB v. Cornista, L-22193, May 29, 1964).
Thus, if a passenger is merely injured due to the negligence
of a common carrier there is no right to recover moral
damages, unless the common carrier acted fraudulently or in
bad faith. (Art. 2220). This is DIFFERENT from a case of
death. (Necesito, et al. v. Paras, et al., supra). Indeed, proof
of fraud, malice, or bad faith must be given if only physical
injuries were sustained. The mere bursting of a tire while a
passenger bus was overspeeding cannot be considered
evidence of fraud, malice, or bad faith. (Lira v. Mercado, L-
13328, Sept. 29, 1961 and Consolidated Plywood Industries,
Inc. & Henry Lee v. CA, Willie Kho & Alfred C. H. Kho, GR
101706, Sep. 23, 1992).
(4) Right of Recovery Not Affected By Testimony
People v. Santiago Manos

L-27791, Dec. 24, 1970
FACTS: A son was convicted for having killed his fa-
ther. May he be required to indemnify the victim’s heirs (the defendant’s
mother, brothers, and sisters) even if they had testifi ed in his favor?
31
Art. 2207
HELD: Yes, for they have suffered, even if their natural impulses compelled
them to seek exoneration of the guilty son.
(5) Liability for Reckless Imprudence
People v. Eutiquia Carmen, et al.

GR 137268, Mar. 26, 2001
FACTS: Accused-appellants, none of whom was a medical practitioner,
belonged to a religious group engaged in faithhealing. Upon advise of
one of the accused-appellants, the parents of the victim agreed to subject
their child, who had earlier suffered from a nervous breakdown, to a
“treatment,” but which, resulted in the child’s death. Charged with and
later convicted of murder by the trial court, the Supreme Court modifi ed
the accused-appellants’ judgment upon appeal.
HELD: Accused-appellants can only be made liable for reckless imprudence
resulting in homicide as qualifying circumstance of treachery cannot be
appreciated absent an intent to kill.
As to the their civil liability, accused-appellants should pay the heirs of the
victim an indemnity in the amount of P50,000 and moral damages also
in the amount of P50,000. (Arts. 2206[3] and 2219[1], Civil Code). (See
People v. Silva, 321 SCRA 647 [1999]). (See also People v. Silvestre,
307 SCRA 60 [1999]). In addition, they should pay exemplary damages
in the amount of P30,000 in view of accused-appellants’ gross
negligence in attempting to “cure” the victim without a license to practice
medicine and to give an example or correction for the public good. (Arts.
2229 and 2231). (See People v. Medroso, Jr., 62 SCRA 245 [1975]).
Art. 2207. If the plaintiff’s property has been insured, and he has
received indemnity from the insurance company for the injury or loss
arising out of the wrong or breach of contract complained of, the insurance
company shall be subrogated to the rights of the insured against the
wrongdoer or the person who has violated the contract. If the amount paid
by the insurance company does not fully cover
Art. 2207
32
the injury or loss, the aggrieved party shall be entitled to recover the defi
ciency from the person causing the loss or injury.
COMMENT:
(1) Effect if Property Was Insured
(a) According to American jurisprudence, the fact that the plaintiff has
been indemnifi ed by an insurance company cannot lessen the
damages to be paid by the defendant. Such rule gives more
damages than those actually suffered by the plaintiff, and the
defendant, if also sued by the insurance company for
reimbursement, would have to pay in many cases twice the
damages he has caused. The proposed article would seem to be a
better judgment of the rights of the three parties. (Report of the
Code Commission, p. 73).
(b) The principle enunciated in this article can apply even to cases that
accrued prior to the effectivity of this article and the new Civil
Code — otherwise, the general principle against unjust enrichment
would be violated. (Africa v. Caltex, L-12986, Mar. 21, 1966).
Hence, the amount of insurance recovered shall be deducted from
the total liability of the defendant. (Ibid.)
(2) Meaning of “Authorized Driver” in Car Insurance
CCC Insurance Corp. v. Court of Appeals and Carlos

F. Robes
L-25920, Jan. 30, 1970
FACTS: A car insured against loss or damage was being driven by a driver,
who was licensed, WITHOUT an examination (he was illiterate). The
car was subsequently damaged in an accident, but the insurance company
refused to pay on the ground that the driver was not an “authorized
driver.” Is the insurance company liable?
HELD: Yes, the insurance company is liable for under Sec. 24 of the Revised
Motor Vehicles Law, Act 3992, as amended by Republic Acts 587, 1204,
and 2363, an examination or demonstration of the applicant’s ability to
operate a motor vehicle may (only) be required in the discretion of the
Chief, Motor Vehicles Offi ce. Sec. 26 even allows a non-examination.
Whether discretion on the part of the government offi cial was abused or
not is a matter of legislative policy. The issuance of the license is proof
that the driver was entitled to drive. Besides, insurance contracts must be
construed liberally in favor of the insured and strictly against the insurer.
33
(3) Subrogation of Insurer
Fireman’s Fund Insurance Co., et al. v.

Jamila and Co., Inc.
L-27427, Apr. 7, 1976
FACTS: Firestone Corporation had its properties insured by Fireman’s Fund
Insurance Co. Some of said properties were lost allegedly because of the
acts of its own employees, who were in connivance with security guards
from the Jamila agency. These security guards were supposed to
safeguard the Firestone properties, and under the contract, Jamila
assumed responsibility for the guards’ actuations. The First Quezon City
Insurance guaranteed this obligation of Jamila. The losses of Firestone
Corporation were paid by Fireman’s Fund Insurance Company as
insurer. Does Fireman’s Fund Insurance Company have a cause of action
against Jamila and the First Quezon City Insurance Company, so that the
money paid may be reimbursed? Can there be subrogation even without
Jamila’s consent?
HELD: Yes, it has a valid cause of action, under Art. 2207, Civil Code. Said
article states that the insurer who has paid shall be subrogated in the place
of the injured party in the latter’s rights against the offender or violator
of a contractual commitment. This is an instance when the consent of the
debtor is not required for the subrogation in favor of the Fireman’s Fund
Insurance Company.
Art. 2208. In the absence of stipulation, attorney’s fees and expenses

of litigation, other than judicial costs, cannot be recovered except:
(1) When exemplary damages are awarded;
34
(2) When the defendant’s act or omission has compelled the plaintiff
to litigate with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against
the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in
refusing to satisfy the plaintiffs plainly valid, just and demandable claim;
(6) In actions for illegal support;
(7) In actions for the recovery of wages of household helpers,
laborers and skilled workers;
(8) In actions for indemnity under workmen’s compensation and
employer’s liability laws;
(9) In a separate civil action to recover civil liability arising from a
crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable
that attorney’s fees and expenses of litigation should be recovered.
In all cases, the attorney’s fees and expenses of litigation must be
reasonable.
COMMENT:
(1) Concept of Attorney’s Fees As Damages
The attorney’s fees referred to in this article do not refer to the duty of a client
to pay his own attorney. Such payment generally involves only the client
and his attorney. The fees stated in the article apply rather to instances
when a client may recover from the other party the fees which the former
may pay the former’s attorney. (See Tan Ti v. Alvear, 26 Phil.
566).
Luz G. Cristobal v. Employees’
Compensation Commission
L-49280, Feb. 26, 1981
While a pauper litigant is exempt from the payment of legal fees and from fi
ling an appeal bond, a printed record on appeal, and a printed brief, he is
not exempted from the payment of attorney’s fees. An award of
35
attorney’s fees whether in favor of or against a litigant in “forma

pauperis” is thus proper.
Borcena, et al. v. IAC

GR 70099, Jan. 7, 1987
The Supreme Court has invariably fi xed counsel fees on a quantum meruit
basis whenever the fees stipulated appear excessive, unconscionable, or
unreasonable, because a lawyer is primarily a court offi cer charged with
the duty of assisting the court in administering impartial justice between
the parties. Hence, the fees should be subject to judicial control. Sound
public policy demands that courts disregard stipulations for counsel fees,
whenever they appear to be a source of speculative profi t at the expense
of the debtor or mortgagor.
In determining the compensation of an attorney, the following circumstances
should be considered: the amount and character of the services rendered;
the responsibility imposed; the amount of money or the value of the
property affected by the controversy, or involved in the employment; the
skill and experience called for in the performance of the service; the
professional standing of the attorney; the results secured; and whether or
not the fee is contingent or absolute, it being a recognized rule that an
attorney may properly charge a much larger fee when it is to be
contingent than when it is not.
Sun Insurance Offi ce, Ltd. v. CA & Nerissa Lim

GR 92383, Jul. 17, 1992
FACTS: Petitioner issued a personal accident policy to Felix Lim, Jr. with a
face value of P200,000. Two months later, he was shot dead with a bullet
wound in his head. As benefi ciary, his wife Nerissa Lim sought payment
on the policy but her claim was rejected. The petitioner agreed that there
was no suicide. It argued, however, that there was no accident either.
HELD: The petitioner is liable to the private respondent in the sum of
P200,000 representing the face value of the insurance contract, with interest at
the legal rate from the date of the fi ling of the complaint until the full amount
is paid, but modifi ed with the deletion of all awards for damages, including
attorney’s fees, except the costs of the suit.
In order that a person may be made liable to the payment of moral damages,
the law requires that his act be wrongful. The adverse result of an action
does not per se make the act wrongful and subject the act or to the
payment of moral damages. The law could not have meant to impose a
36
penalty on the right to litigate; such right is so precious that moral

damages may not be charged on those who may exercise it erroneously.
For these, the law taxes costs. If a party wins, he cannot, as a rule, recover
attorney’s fees and litigation expenses, since it is not the fact of winning
alone that entitles him to recover such damages of the exceptional
circumstances enumerated in Art. 2208. Otherwise, every time a
defendant wins, automatically the plaintiff must pay attorney’s fees
thereby putting a premium on the right to litigate, which should not be
so. For those expenses, the law deems the award of costs as suffi cient.
(2) Generally Not Part of Damages

Generally, attorney’s fees, as understood in this article are not a proper
element of damage, for it is NOT sound public policy to place a penalty
on the right to litigate. To compel the defeated party to pay the fees of
counsel for his successful opponent would throw wide the door of
temptation to the opposing party and his counsel to swell the fees to
undue proportions. (Tan Ti v. Alvear, 26 Phil. 566). Thus, no right to
such fees can accrue merely because of an adverse decision. Otherwise
stated, if a party loses in court, this does not mean necessarily that the
court will compel him to award attorney’s fees (as damages) to the
winning party. (Ramos v. Ramos, 61 SCRA 284). This is precisely the
rationale for taxing costs in certain cases against the losing party. The
payment of said costs is deemed a suffi cient sanction. How-
ever, under the new Civil Code, it may truly be said that in certain cases,
attorney’s fees are an element of recoverable damages, whether they be
in writing or not stipulated at all. (Santiago v. Dimayuga, L-17883, Dec.
30, 1961). The appellate court may fi x attorney’s fees even when the
trial court did not award attorney’s fees, and even when no appeal on this
point was interposed before the appellate tribunal. (Medenilla v.
Kayanan, 40 SCRA 154).
Salao v. Salao
L-26699, Mar. 16, 1976
FACTS: Plaintiffs lost in a reconveyance case although they presented 15
witnesses in a protracted fi ve (5)-year case, and fought vigorously. They
honestly thought that their action could prosper because they believed
(albeit erroneously) that the property involved had been acquired by the
funds of the common ancestor of plaintiffs and defendants. Should said
plaintiffs be held liable for moral damages and attorney’s fees?
HELD: No, they should not be assessed moral damages and attorney’s fees.
Although their causes of action turned out to be unfounded, still, the
37
pertinacity and vigor with which they pressed their claim indicate
sincerity and good faith. Thus, the action was not manifestly frivolous.
With respect to attorney’s fees, while the case was unfounded (Art.
2208[4], Civil Code), still there was the element of good faith, and,
therefore, neither attorney’s fees or litigation expenses should be
awarded. (See Rizal Surety and Insurance Co., Inc. v. Court of Appeals,
L-23729, May 16, 1967).
Public Estates Authority v. Elpidio S. Uy

GR 147933-34, Dec. 12, 2001
FACTS: Anent petitioner’s claim for attorney’s fees, suffi ce it to state that it
was represented by the Government Corporate Counsel in the
proceedings before the Construction Industry Arbitration Commission.
HELD: Attorney’s fees are in the nature of actual damages, which must be
duly proved. Petitioner failed to show with convincing evidence that it
incurred attorney’s fees.
(3) Given to Party, Not to Counsel
The Court’s award of attorney’s fees is an indemnity to the party and NOT to
counsel, and the fact that the contract between the client and his counsel was
on a CONTINGENT basis does not affect the client’s right to counsel fees. A
litigant who improvidently stipulates higher counsel fees than those to which
he is lawfully entitled, does NOT for that reason earn the right for a larger
indemnity, but by parity of reasoning, he should NOT be deprived of counsel
fees if by law he is entitled to recover. (Necesito, et al. v. Paras, et al., 104
Phil. 75).
Tiu Po v. Bautista
L-55514, Mar. 17, 1981
A claim for attorney’s fees which arises out of the fi ling of a complaint
partakes of the nature of a compulsory counterclaim. Therefore, if it is
not pleaded or prayed for in the answer to the complaint, it is barred.
What has been said above applies also to all damages claimed to have been
suffered by the defendant as a consequence of the action fi led against
him.
Quirante and Cruz v. IAC, et al.

GR 73886, Jan. 31, 1989
38
Attorney’s fees as an item of damages provided for under Art. 2208 of the
Civil Code is an award made in favor of the litigant, not of his counsel.
And the litigant, not his counsel, is the judgment creditor who may
enforce the judgment for attorney’s fees by execution.
What is being claimed in this case as attorney’s fees by petitioners is,
however, different. Herein, the petitioners’ claims are based on an
alleged contract for professional services, with them as the creditors and
the private respondents as the debtors.
(4) Express Stipulation

(a) Note that aside from the eleven instances enumerated, attorney’s fees and
expenses of litigation may be recov-
ered also should there be an express stipulation to that effect.
(Introductory paragraph, Art. 2208). However, if despite an express
stipulation for attorney’s fees, there is an implied WAIVER thereof (as
when instead of demanding specifi c fulfi llment of an obligation — with
attorney’s fees in compelling such fulfi llment — there is a demand for
cancellation of a contract), attorney’s fees cannot be recovered. (Luneta
Motor Co. v. Baguio Bus Co., L-15157, Jun. 30, 1960).
(b) If the parties agree on attorney’s fees based on a certain percentage of
the amount of the principal obligation, the stipulation is valid. (Luneta
Motor v. Mora Limlengco, 73 Phil. 80).
(c) Where the contract does not expressly stipulate that a fi xed sum by way
of attorney’s fees shall be paid by defendant in case of collection even if
the same is subsequently settled by compromise, it is just and fair to
reduce the amount of counsel’s fees in the court’s discretionary power,
where the case is partially or fully settled out of court. (Santiago v.
Dimayuga, L-17833, Dec. 30, 1961).
(d) Be it noted, however, that an agreement whereby a non-lawyer will be
given part of the attorney’s fees, is condemned by legal ethics, is immoral
and cannot be justifi ed. (PAFLU v. Binalbagan Isabela Sugar Co., 42
SCRA 302).
Kapol v. Masa
L-50473, Jan. 21, 1985
(1) When exemplary damages are recovered, there can be an award
of attorney’s fees.
39
(2) Exemplary damages may be awarded even if not expressly

prayed for in the complaint and even if not proved.
(3)
Moral damages may be proved by documentary evidence even
without testimonial proof.
(5) Paragraph 2 (Defendant’s Act or Omission)
If the litigation was caused not by the defendant’s failure to pay but by the
plaintiff’s exorbitant charge, the plaintiff cannot get attorney’s fees. (Cachero
v. Manila Yellow Taxicab Co., 101 Phil. 523 and Globe Assurance Co. v.
Arcache, L12378, May 28, 1958). Similarly, if the plaintiff goes to court after
refusing an amicable settlement by the guilty party, said plaintiff cannot
recover attorney’s fees if it is proved that he was asking “too much.” Here, the
defendant was justifi ed in resisting the unjust claim. (Juana Soberano & Jose
B. Soberano v. The Manila Railroad Co., L-19407, Nov. 23, 1966). If the suit,
however, was prompted by the defendant’s deliberate failure to pay for the
trucks it had purchased, compelling the plaintiff to litigate and incur expenses
in order to protect its interest, the plaintiff is entitled both to attorney’s fees
under Art. 2208(2) and to costs under Rule 131 of the Rules of Court (now
Rule 142) as the prevailing party. (Luneta Motor Co. v. Baguio Bus Co., Inc.,
L-15167, Jun. 30, 1960; see also Suntay Tanjangco v. Jovellanos, et al., L-
12332, Jun. 30, 1960).
Bert Osmeña and Associates v. Court of Appeals

GR 56545, Jan. 28, 1983
If the prevailing party in a case was compelled to litigate to protect his
interests he is entitled to an award of attorney’s fees.
Sarming v. Dy
GR 133643, Jun. 6, 2002
The award of attorney’s fees for P2,000 is justifi ed under Art. 2208(2) of the
Civil Code.
This is, in view of the trial court’s fi nding, that the unjustifi ed refusal of
petitioners to reform or to correct the document of sale compelled
respondents to litigate to protect their interest.
(6) Paragraph 3 (Malicious Prosecution)

(a) There is malicious prosecution only if the person concerned acted
deliberately and knew that his accusation was false or groundless.
(Buenaventura v. Sto. Domingo, 54 O.G.
40
8439).
(b) Hence, if there is in the record no indication that the action was
malicious and intended only to prejudice the other party, attorney’s
fees on this ground cannot be recovered. (Mercader v. Manila Polo
Club, L-8373, Sep. 28, 1956).
(7) Paragraph 4 (Unfounded Civil Action)

(a) If A’s complaints against B are found to be insincere, baseless and
intended to harass, annoy, and defame B, B can now sue for and be
granted attorney’s fees, for the “clearly unfounded civil actions or
proceedings against the plaintiff (A).” (See Heirs of Justiva v.
Court of Appeals, L-16396, Jan. 31, 1963 and Suntay Tanjangco
v. Jovellanos, et al., L-12332, Jun. 30, 1960; See also Enervida v.
De la Torre, 55 SCRA 339).
(b) Paragraph 4 also applies in favor of a defendant under a
counterclaim for attorney’s fees, because a counterclaim is a
complaint fi led by the defendant against the original plaintiff.
(Malonzo v. Galang, et al., L-13851, Jul. 27, 1960).
Hermosa, Jr. v. Zobel y Roxas

L-11836, Oct. 1958
FACTS: A sued B for annulment of a contract. A did not take part in the
contract itself, and he did not know the circumstances under which
it was entered into. It turned out that the contract was valid, and
therefore was not annulled. Shortly thereafter, B asked A for
attorney’s fees incurred in the prior litigation.
HELD: Under the circumstances (good faith and lack of knowledge of
the actual facts), A is not liable for attorney’s fees.
Roque Enervida v. Lauro De la Torre and

Rosa De la Torre L-38037, Jan. 28, 1974
FACTS: The owner (Ciriaco Enervida) of land covered by a homestead
patent issued Nov. 17, 1952 sold the same on Nov. 20, 1957 to the
spouses Dela Torre. In 1965, Roque Enervida, son of the seller,
sued the spouses
for the cancellation of the deed of sale stating that the sale had been
made within the 5-year prohibitory period. Incidentally, at the pre-
trial, Roque admitted his father is still alive. The trial court
dismissed the complaint and
41
awarded attorney’s fees and moral damages in favor of the

spouses. Is the decision correct?
HELD:
(1) The dismissal of the case is proper because the property was
sold after the 5-year prohibitory period, and besides,
Roque’s father is still alive.
(2) The award of attorney’s fees is proper because the suit is
clearly unfounded (Art. 2208, No. 4) but –– there should be
no award of moral damages because same is not provided for
in Art. 2219. Art. 2208 cannot be applied by analogy.
Metropolitan Bank v. Tan Chuan Leong, et al.

GR 46539, Jun. 25, 1986
FACTS: On Apr. 22, 1965, “A” sold his house and lot to his son
“B”. “A” twice mortgaged the same property: fi rst to “C”
on Apr. 21, 1965, and then to “D” on Feb. 11, 1966. The fi
rst mortgage had been cancelled on Sep. 21, 1967.
On Dec. 17, 1967, the trial court ordered “A” to pay Metrobank
the unliquidated balance of an overdraft line secured by “A”
from the bank on Mar. 4, 1965. Unable to obtain satisfaction
of this judgment, the bank sued “A,” “B,” and “C” for
rescission to annul the sale and mortgages. It alleged that
these transactions were in fraud of creditors, the sale being
fi ctitious and the mortgages having been entered into in bad
faith.
The trial court dismissed the complaint and
ordered “A” to pay “C” and “D” (fi rst and second
mortgagees) P5,000 as attorney’s fees. The appellate court
modifi ed this decision by nullifying the sale as fi ctitious,
but affi rming it in all respects. Petition for review was
lodged with the Supreme Court. Pending said petition, the
Court approved a compromise agreement whereby “A” and
“B” paid their monetary liability to “X” to the satisfaction
of the latter. The award of attorney’s fees, however,
remained unresolved.
HELD: Attorney’s fees cannot be recovered, except in cases of clearly
unfounded civil action or proceeding against plaintiff.
42
The mortgage did not in anyway affect the bank’s rights. It were as if said
mortgage had never existed. With the mortgage no longer existing, the
same could not be cited as reason for the bank’s failure to collect its
credit. Although “C” may have had knowledge of the simulated sale
between “A” and his son “B” and had entered into the contract of
mortgage pursuant to a design to defraud “A’s” creditors, no damage or
prejudice was suffered by the bank thereby. The cancellation of “C’s”
lien over the property had rendered the issues of rescissibility and bad
faith moot and academic. The fact that the bank nevertheless impleaded
“C,” in its complaint, compelling the latter to litigate to protect its rights,
justifi es the award of attorney’s fees. At the time the second mortgage
was entered into, the certifi cate of title was in the name of “B” without
any annotation of encumbrance in favor of the bank or any one else.
Mortgage “D” then had every right to rely on what appeared in that certifi
cate of title and there being none to excite suspicion, did not have to
inquire further. There being good faith, “D” is an innocent purchaser for
value. Since “D” had no intention to defraud “X,” and in fact he is also a
creditor of “A,” the bank had no cause of action against “D”. The award
of attorney’s fees in favor of “D” should also be beyond question.
Phoenix Publishing House v. Ramos

GR 32339, Mar. 29, 1988
FACTS: Phoenix charged Ramos with gross violation of the copyright law
and prayed for actual, moral and exemplary damages as well as
attorney’s fees. The trial court dismissed the complaint and ordered
Phoenix to pay Ramos P5,000 attorney’s fees
as and by way of damages. The Court of Appeals
affi rmed the judgment of the trial court. Phoenix appealed
contending that the court erred in assigning attorney’s fees
against it for no other apparent reason than for losing its case.
HELD: The award of attorney’s fees, if at all, is proper in case of
a “clearly unfounded civil action or proceeding.” It cannot
be said that the case fi led by Phoenix is clearly an
unfounded civil action. Phoenix secured the corresponding
copyrights for its books. These copyrights were found to be
all right by the Copyright Offi ce, and Phoenix was conceded
to be the real owner thereof. It was on the strength of these
facts that Phoenix fi led the complaint against Ramos. Thru
a proper search warrant obtained after Phoenix was
convinced that Ramos was selling spurious copies of its
copyrighted books, the books were seized from the latter and
43
were identifi ed to be spurious. There is therefore not enough

justifi cation for such an award under paragraph 11 of Art.
2208 of the Civil Code.
(8) Paragraph 5 (Bad Faith of Defendant)

(a) Here, the defendant (in the suit for attorney’s fees) must have acted
in GROSS and EVIDENT BAD FAITH in refus-
ing to satisfy plaintiff’s claim. (Art. 2208, No. 5). (See Carlos M.
Sison v. Gonzalo D. David, L-11268, Jan. 28, 1961).
(b) Therefore, where the defendant’s refusal to pay the amount
claimed was due not to malice but to the fact that the plaintiff
demanded more than what it should, and consequently, the
defendant had the right to refuse it, plaintiff is not entitled to
attorney’s fees. (Globe Assurance Co., Inc. v. Arcache, L-12378,
May 28, 1958).
(c) Similarly, where the defendant did not deny the debt but merely
pleaded for adjustment in accordance with the Ballantine Scale, the
refusal is not done in bad faith. (Jimenez v. Bucoy, L- 10221, Feb.
28, 1958 and Intestate Estate of Luther Young v. Bucoy, 54 O.G.
7560). As a matter of fact, even clearly untenable defenses would
be no ground for awarding attorney’s fees unless the plea thereof
amounts to gross and evident bad faith. (Jimenez v. Bucoy, L-
10221, Feb. 28, 1958).
(d) Indeed, mere failure of the defendant to pay his obligation without
bad faith does not warrant recovery of attorney’s fees. (Lasedeco
v. Gaston, L-8938, Oct. 31, 1956; Koster, Inc. v. Zulueta, 99 Phil.
945 and Francisco v. GSIS, L18155, Mar. 30, 1963).
(9) Paragraph 8 (Workmen’s Compensation and Employer’s Liability)

Because Sec. 31 of the Workmen’s Compensation Act does not govern
attorney’s fees recoverable from the adverse party, Art. 2208(8) of the
Civil Code will apply — to supply the defi ciency in the said Act, in
accordance with Art. 18 of the new Civil Code. (MRR v. Manalang, L-
20845, Nov. 29, 1965 and Nat. Development Corp. v. WCC, L-19863,
Apr. 29, 1964).
44
(10) Paragraph 9 (Civil Liability Arising from a Crime)

Attorney’s fees by express provision of law may be awarded in a separate
civil action to recover the civil liability arising from a crime. (Art. 2208,
par. 9). Moreover, an award of attorney’s fees granted by a trial court
can envisage the services of counsel only up to the date of its judgment.
Therefore, if the decision is appealed, attorney’s fees should perhaps be
at least doubled. (Bantoto, et al. v. Bobis, et al. & Vallejo, L-18966, Nov.
22, 1966).
Ebajan v. CA
GR 77930-31, Feb. 9, 1989
Reiterating its ruling in People v. Biador, CA-GR 19589-R, Jan. 21, 1959 (55
O.G. No. 32, p. 6384), the Court ruled that attorney’s fees, under Art.
2208 (No. 9) of the Civil Code, can
only be recovered in a separate civil action to recover civil liability
arising from crime.
(11) Paragraph 11 (Any Other Case)

(a) Paragraph 11 does not apply if the case was instituted before the
effectivity of the new Civil Code. This was the ruling in the case
of Bureau of Lands v. Samia (L-8068, Aug. 26, 1956), where the
court said that unless authorized by statute, attorney’s fees cannot
be recovered from the government if it abandons expropriation
proceedings. It would be otherwise if the abandoner is a private
entity or a quasi-public corporation.
Thus also, if the award of attorney’s fees would be just and equitable,
still if the suit was brought before the new Civil Code became
effective, attorney’s fees (other than those allowed as costs under
the Rules of Court) could not be recovered as damages against the
losing party (otherwise, there would be a sort of penalty on the
right to litigate). (See Receiver for North Negros Sugar Co., Inc. v.
Ybanez, L-22183, Aug. 30, 1968 and Koster v. Zulueta, 99 Phil.
945).
(b) Attorney’s fees and expenses of litigation may be recovered when
deemed by the court as just and equitable as when the defendant
never questioned the correctness and legality of the plaintiff’s case
but based its defense and appeal entirely on a pure technicality
which took up the time of two appellate courts, and delayed giving
of appropriate relief to plaintiff for more than three years. (Phil.
45
Milling Co. v. Court of Appeals, L-9404, Dec. 27, 1956). Indeed,

the award of attorney’s fees is essentially discretionary in the trial
court (Francisco v. GSIS, L18165, Mar. 30, 1963), and in the
absence of abuse of discretion, the same should not be disturbed.
(Lopez, et al. v. Gonzaga, L-18788, Jan. 31, 1964). The allowance,
for example, of counsel’s fees in probate proceedings rests largely
on the sound discretion of the Court which shall not be interfered
with except for manifest abuse. (In Re Estate of Raquel, L-16349,
Jan. 31, 1964).
46
(12) Instance When the Insurance Code Grants Damages
Prudential Guarantee and Assurance, Inc. v.

Trans-Asia Shipping, Lines, Inc.
491 SCRA 411 (2006)
Sec. 244 of the Insurance Code grants damages consisting of attorney’s fees
and other expenses incurrd by the insured after a fi nding by the
Insurance Commissioner or the Court, as the case may be, of an
unreasonable denial or withholding of payment of the claims due. Sec.
244 of the Code does not require a showing of bad faith in order that
attorney’s fees be granted.
In the instant controversy, Sec. 244 thereof is categorical in imposing an
interest twice the ceiling prescribed by the Bangko Sentral’s Monetary
Board due the insured, from the date following the time prescribed in
Sec. 242 or in Sec. 243 of the Code, as the case may be, until the claim
is fully satisfi ed.
Art. 2209. If the obligation consists in the payment of a sum of

money, and the debtor incurs in delay, the indemnity for damages, there
being no stipulation to the contrary, shall be the payment of the interest
agreed upon, and in the absence of stipulation, the legal interest, which is
six per cent per annum.
COMMENT:
(1) Monetary Obligations
This applies to a monetary obligation where the debtor is in default.
(2) Rules
(a) give the indemnity (other than interest) agreed upon
[NOTE: Attorney’s fees may be stipulated. (Andreas
v. Green, 48 Phil. 463).]
(b) if none was specifi ed, give the interest agreed upon.
(c) if none, give the legal interest (now this is 12% per annum).
47
State Investment House, Inc. v. CA

GR 90676, Jun. 19, 1991
FACTS: The promissory note executed by respondent had three
components: (a) principal of the loan in the amount of P110,000;
(b) regular interest in the amount of 17% per annum; and (c)
additional or penalty interest in case of non-payment at maturity,
at the rate of 2% per month or 24 per cent per annum. In the
dispositive of his resolution, the trial judge did not specify which
of these components of the loan he was ordering respondent to pay
and which component or components he was in effect defecting. It
cannot be assumed that the judge meant to grant the relief prayed
for by respondent in all its parts. The decision was ambiguous in
the sense that it was cryptic. It must be assumed that the judge
meant to decide in accordance with law, that it cannot be fairly
assumed that the judge was grossly ignorant of the law or that he
intended to grant the respondent relief to which he was not entitled
under the law. The ultimate question which arises is: If respondent
was not in delay, what should he have been held liable for in
accordance with law?
HELD: Since the respondent was held not to have been in delay, he is
properly liable only for: (a) the principal of the loan or P110,000;
and (b) regular or monetary interest in the amount of 17% per
annum. He is not liable for penalty or compensatory interest, fi xed
in the promissory note at 2% per month or 24% per annum. The
fact that the respondent was not in default did not mean that he, as
a matter of law, was relieved from the payment not only of penalty
or compensatory interest at the rate of 24% per annum but also of
regular monetary interest of 17 per cent per annum. The regular or
monetary interest continued to accrue under the terms of the
relevant promissory note until actual payment is effected. The
payment of regular interest continues to accrue since the debtor
continues to use such principal amount. In the instant case, since
respondent, while he
is properly regarded as having made a written tender or payment to the
creditor, failed to consign in court the amount due at the time of the
maturity of the obligation. Hence, his obligation to pay principal-cum-
regular or monetary interest under the terms and conditions of the note
was not extinguished by such tender of payment alone. For the
respondent to continue in possession of the principal of the loan
amounting to P110,000 and to continue to use the same after maturity of
the loan without payment of regular or monetary interest, would
48
constitute unjust enrichment on the part of the respondent at the expense

of the creditor even though the respondent had not been guilty of mora.
It is precisely this unjust enrichment which Art. 1256 Of the Civil Code
prevents by requiring, in addition to tender of payment, the consignation
of the amount due in court which amount would thereafter be deposited
by the Clerk of Court in a bank and earn interest to which the creditor
would be entitled.
Tio Khe Chio v. CA

GR 76101-02, Sep. 30, 1991
FACTS: Tio Khe Chio imported 1,000 bags of fi sh meal valued at $36,000
which were insured with Eastern Assurance and shipped on Board the
M/V Peskev, owned by Far Eastern Shipping. When the goods reach
Manila, they were found to have been damaged by sea water which
rendered the fi shmeal useless. Chio fi led a claim with Eastern
Assurance and Far Eastern Shipping. Both refused to pay. So Chio sued
them before the Court of First Instance (Regional Trial Court) for
damages. Eastern Assurance fi led a counterclaim against Chio for
recovery of unpaid insurance premiums. The trial court ordered Eastern
Assurance and Far Eastern Shipping to pay Chio solidarily P105,986,
less P18,387 for unpaid premiums with interest at the legal rate from the
fi ling of the complaint. Judgment became fi nal as to Eastern Assurance,
but Far Eastern Shipping appealed and was absolved from liability by the
Court of Appeals. The trial court issued a writ of execution against
Eastern Assur-
ance. The sheriff enforcing the writ fi xed the legal rate of interest
at 12%. Eastern Assurance moved to quash the writ alleging that the legal
interest to be computed should be 6% in accordance with Art. 2209 of the Civil
Code and not 12%. The trial court denied Eastern Assurance’s motion. The
Court of Appeals (CA) reduced the interest to 6%. Chio maintains that not only
is it unjust and unfair but it is also contrary to the correct interpretation of the
fi xing of interest rates under Secs. 243 and 244 of the Insurance Code. Since
Chio’s claim is based on an insurance contract, then it is the Insurance Code
that must govern and not the Civil Code.
HELD: The Supreme Court sustained the Court of
Appeals and held that the legal rate of interest in the case at bar is
6% per annum. Secs. 243 and 244 of the Insurance Code are not
pertinent to the instant case. They apply only when the court fi nds
an unreasonable delay or refusal in the payment of the claims.
Neither does Circular 416 of the Central Bank which took effect
49
on Jul. 29, 1974 pursuant to Presidential Decree No. 116 (Usury

Law) which raised the legal rate of interest from 6% to 12% per
annum apply to the case at bar as contended by the petitioner. The
adjusted rate mentioned in the circular refers only to loans or
forbearances of money, goods or credits and court judgments
thereon but not to court judgments for damages arising from injury
to persons and loss of property which does not involve a loan.
The legal rate of interest is 6% per annum and not 12% where a
judgment award is based on an action for damages for personal
injury, not use or forbearance of money, goods or credit. In the
same vein, the court held that the rates under the Usury law
(amended by PD 116) are applicable only to interest by way of
damages is governed by Art. 2209 of the Civil Code. Since the
contending parties did not allege the rate of interest stipulated in
the insurance contract, the legal interest was properly pegged by
the appellate court, at 6% per annum.
(3) Absence of Stipulation
In the absence of stipulation, only the legal interest can be recovered. This is
true even if a chance to make more in business can be proved, inasmuch
as here, the profi t would be SPECULATIVE. The Court in the case of
Lopez v. Del Rosario and Quiogue (44 Phil. 98) said that “the deprivation
of an opportunity for making money, which might have proved benefi
cial or might have been ruinous, is of too uncertain a character to be
weighed in the even balance of the law.”
(4) From What Moment Interest Runs

In the absence of stipulation, interest (as damages) runs from default (after a
judicial or extrajudicial demand, except when demand is NOT essential
to put the debtor in default). (Art. 2209 which states “in delay’’; Zobel
v. City of Manila, 47 Phil. 169). If there is no evidence of an extrajudicial
demand, the period starts from the judicial demand (Vda. de Murciano v.
Auditor General, et al., L-11744, May 28, 1958), which naturally is in
the form of fi ling a complaint in court. (Cabarroguis v. Vicente, 107
Phil. 340).
Consuelo Piczon, et al. v. Esteban Piczon, et al.

L-29139, Nov. 15, 1974
FACTS: In a contract of loan, Esteban Piczon, as guarantor, promised to pay
in default of the principal debtor, the sum of P12,500 with interest,
“commencing from the date of execution” (Sept. 28, 1956) of the
50
contract. On Aug. 6, 1964 demand was made for payment, but neither
the principal debtor nor the guarantor was able to pay. Issue: From what
time will interest run on the debt: from Sept. 28, 1956 or from Aug. 6,
1964?
HELD: Interest will run from Sept. 28, 1956, in view of the express stipulation
in the contract. Under Art. 2209, Civil Code, the indemnity of damages
in a monetary obligation shall be the payment of interest agreed upon, as
a general rule. Here it was expressly agreed that interest should
commence from the execution of the contract. (See Firestone Tire &
Rubber Co. v. Delgado, 104 Phil. 920). [NOTE — the statement in the
decision that Art. 1169, Civil Code (damages in case
of default) applies only to obligations other than monetary is only an
obiter dictum.]
[NOTE: While it is true that interest (by way of com pensation for the use of
money) cannot be demanded unless it was previously stipulated upon in writing
(Art. 1956), still interest (by way of damages or penalty) can be recovered in
case of default even if there be no stipulation to the effect. (See Zobel v. City
of Manila, 47 Phil. 169).]
[NOTE: If the amount of the debt is unliquidated, it is the fi nal judgment that
will ascertain the amount. In such a case, interest by way of damages
shall be counted only from the date the decision becomes fi nal. (Montilla
v. Agustinian Corp., 25 Phil. 477; Seton Donna v. Inouye, 40 Phil. 728
and See Art. 2213). However, the court should not require the collection
of interest when the judgment on which it is issued does not give it, and
interest is not allowed by statute. This has been held to be the rule even
where interest on judgments is allowed by statute, if the judgment does
not include it. (Robles, et al. v. Timario, L-13911, Apr. 28, 1960).]
[NOTE: If the contract stipulates from what time interest by way of damages
will be counted, said stipulated time controls, and therefore the interest
is payable from such time, and not from the date of the fi ling of the
complaint. (Firestone Tire & Rubber Co. v. Ines Chavez & Co., Ltd., et
al., L-11162, Dec. 4, 1958).]
[NOTE: If the term for payment was left to the will of the debtor, the interest
should not run from the time the action was commenced in court, but
only from default of payment AFTER the period was fi xed by the Court.
(Tiglao v. Manila Railroad Co., L-7900, Jan. 2, 1956).]
Arwood Industries, Inc.

v. D.M. Consunji, Inc.
GR 142277, Dec. 11, 2002
51
FACTS: Petitioner and respondent, as owner and con-

tractor, respectively, entered into a Civil, Structural, and Architectural
Works Agreement, dated Feb. 6, 1989 for the construction of petitioner’s
Westwood Condominium at 23 Eisenhower St., Greenhills, San Juan,
Metro Manila. The contract price for the condominium project
aggregated to P20,800,000. Despite completion of the condominium
project, the amount of P962,434.78 remained unpaid by petitioner.
Repeated demands by respondent for petitioner to pay went unheeded.
Respondent specifi cally prayed for payment of the amount of
P962,434.78 with interest of 2% per month or a fraction thereof, from
Nov. 1990 up to the time of payment. Issue: Is the imposition of a 2%
per month interest on the award of P962,434.78 correct?
HELD: Yes. Upon the fulfi llment by respondent of its obligation to complete
the construction project, petitioner had the correlative duty to pay for
respondent’s services. However, petitioner refused to pay the balance of
the contract price. From the moment respondent completed the
construction of the condominium project and petitioner refused to pay in
full, there was delay on the part of petitioner.
Delay in the performance of an obligation is looked upon with disfavor
because, when a party to a contract incurs delay, the other party who
performs his part of the contract suffers damages thereby. Dilationes in
lege sunt idiosae (“Delays in law are idious”). Obviously, respondent
suffered damages brought about by the failure of petitioner to comply
with its obligation on time. And, sans elaboration of the matter at hand,
damages take the form of interest. Accordingly, the appropriate measure
of damages in this case is the payment of interest at the rate agreed upon,
which is 2% interest for every month of delay.
Art. 2209 specifi es the appropriate measure of damages where the obligation
breached consisted of the payment of sum of money. (See State
Investment House, Inc. v. CA, 198 SCRA 390 [1991]). (See also Pacifi c
Mills, Inc. v. CA, 206 SCRA 317 [1992]). Payment of interest as penalty
is a necessary consequence of petitioner’s failure to exercise diligence in
the discharge of its obligation under the contracts. And even in the
absence of a stipulation on interest, under Art. 2209, respondent would
still be entitled to recover the balance of the contract price with interest.
Respondent court, therefore, correctly interpreted the terms of the
agreement which pro-
vides that “the owner shall be required to pay the interest at a rate of 2%
per month or the fraction thereof in days of the amount due for payment
by the owner.”
52
(5) Query
In a loan, is it permissible to stipulate that in addition to 10% interest for use
of the money, the debtor would pay an additional 10% by way of penalty
(penal clause) in case of default?
ANS.: Generally, the answer should be in the affi rma-
tive, for after all, if there is NO default, the additional 10% cannot be
recovered, and there would be no violation of the Usury Law which in
essence regulates only interest (by way of compensation for the use of
the money). The two interests referred to are indeed distinct and therefore
separately demandable, and should NOT be added. (See Lopez v.
Hernaez, 32 Phil. 631 and Bachrach Motor Co. v. Espiritu, 52 Phil. 346).
However, under the present Usury Law (as amended), the word “penalties” is
referred to, in case of a SECURED debt, aside from the word “interests.”
It would seem therefore that a strict construction of the present Usury
Law results in a negative answer (in case of SECURED debts) to the
query posed hereinabove. The Lopez and Bachrach cases referred to
above were decided PRIOR to the amendment of the Usury Law.
(6) Recovery of Interest in Case of Usury
Angel Jose Warehousing Co., Inc. v.

Chelda Enterprises and David Syjuico
L-25704, Apr. 24, 1968
FACTS: A partnership (Chelda Enterprises and David Syjuico) borrowed
some P20,000 from Angel Jose Warehousing Co. at clearly usurious
rates from 2% to 2-1/2% PER MONTH).
Issues:
(a) Can creditor recover the PRINCIPAL debt?
(b) If the entire usurious rate has been paid by the debtor, how much
of it can be recovered by said debtor from the creditor?
HELD:
(a) Yes, the creditor can recover the PRINCIPAL debt. The contract of loan
with usurious interest is valid as to the interest is valid as to the loan, and
void only with respect to the interest — for the loan is the principal
contract while the interest is merely an accessory element. The two are
separable from each other. (See Lopez v. El Hogar Filipino, 47 Phil.
53
249). The ruling on this point by the Court of Appeals in the case of
Sebastian v. Bautista, 58 O.G. No. 15, p. 3146, holding that even the loan
itself is void is WRONG.
(b) With respect to the usurious interest, the entire interest agreed upon is
void, and if already paid, may be recovered by the debtor. It is wrong to
say that the debtor can recover only the excess of 12% or 14% as the case
may be –– for the simple reason that the entire interest stipulated is
indivisible, and being illegal, should be considered entirely void. It is
true that Art. 1413 of the Civil Code states: “interest paid in excess of
the interest allowed by the usury laws may be recovered by the debtor
with interest thereon from the date of payment.” But as we construe it,
Art. 1413, in speaking of “interest paid in excess of the interest allowed
by the usury laws” means the whole usurious interest; i.e., in a loan of
P1,000, with interest of 20% per annum or P200 for one year, if the
borrower pays said P200, the whole P200 is the usurious interest not just
that part thereof in excess of the interest allowed by law. It is in this case
that the law does not allow division. The whole stipulation as to interest
is void since payment of said interest is the cause or object and said
interest is illegal. Note that there is no confl ict on this point between the
new Civil Code and the Usury Law. Under the Usury Law, in Sec. 6, any
person who for a loan shall have paid a higher rate or greater sum or
value than is allowed in said law, may recover the whole interest paid.
The only change effected therefore by Art. 1413, of the New Civil Code
is not to provide for the recovery of interest paid in excess of that allowed
by law, which the Usury Law already provided for, but to add that the
same can be recovered “with interest thereon from the date of payment.”
The foregoing interpretation is reached with the philosophy of usury
legislation in mind; to discourage stipulation on usurious interest. Said
stipulation is treated as wholly void, so that the loan becomes one
without stipulation as to payment of interest. It should not, however be
interpreted to mean forfeiture even of the principal, for this would
unjustly enrich the borrower at the expense of the lender. Furthermore,
penal sanctions are available against a usurious lender, as further
deterrence to usury.
The principal debt remaining without stipulation for payment of interest
can thus be recovered by judicial action. And in case of such
demand, and the debtor incurs in delay, the debt earns interest from
the date of the demand, whether judicial or extrajudicial (in the
instant case, from the fi ling of the complaint). Such interest is not
due to stipulation, for there was none, the same being void. Rather,
it is due to the general provision of law that in obligation to pay
54
money, where the debtor incurs in delay, he has to pay interest, by

way of damages. (Art. 2209).
(NOTE: As already adverted to, the Usury Law has been repealed.)
GSIS v. CA, et al.

GR 52478, Oct. 30, 1986
The Civil Code permits the agreement upon a penalty apart from the
interest. Should there be such an agreement, the penalty does not
include the interest, and as such the two are different and distinct
things which may be demanded separately. The stipulation about
payment of such additional rate is a penalty clause, which is
sanctioned by law.
The usury law applies only to interest by way of compensation for the
use or forbearance of money. Inter-
55
Art. 2210
est by way of damages is governed by Art. 2209 of the Civil Code.
Florendo v. Hon. Ruiz, et al.

GR 64571, Feb. 21, 1989
Central Bank (Bangko Sentral) Circular 416 (dated July 29, 1974),
which fi xes the legal rate of interest at 12% per annum, applies
only to loans or forbearances of money, goods or credits and court
judgments thereon.
Said Circular does not apply to actions based on a breach of
employment contract.
[NOTA BENE: In Reformina, et al. v. Hon. Tomol, Jr., et al., L-59096,
Oct. 11, 1985, the Supreme Court held that the judgments spoken
of and referred to in CB (BS) Circular 416 are judgments in
litigations involving loans or forbearance of any money, goods or
credits. Any other kind of monetary judgment which has nothing
to do with, nor involving loans or forbearance of any money, goods
or credits does not fall within the coverage of the said law for it is
not within the ambit of the authority granted by the Central Bank
(Bangko Sentral).]
Art. 2210. Interest may, in the discretion of the court, be allowed

upon damages awarded for breach of contract.
COMMENT:
Interest on Damages for Breach of Contract
Actual damages given by a court in a breach of contract case shall earn legal
interest, not from the date of the fi ling of the complaint but from the date
the judgment of the trial court is rendered. (Juana Soberano & Jose B.
Soberano v. The Manila Railroad Co., L-19407, Nov. 23, 1966).
Pleno v. Court of Appeals and Manila Gas Corp.

GR 56919, Oct. 23, 1981
A CFI (RTC) judgment ordering payment of a sum of money with interest
was appealed to the Court of Appeals on
Arts. 2211-2212
56
the question of prescription. The Court of Appeals affi rmed the CFI
(RTC) judgment but neglected to give interest. In executing the
judgment, should interest be also given?
HELD: Yes, despite the silence of the Court of Appeals judgment. The reason
is the Court of Appeals decided merely the issue of prescription. Interest
was not discussed in the Court of Appeals judgment. Its affi rmance of
the CFI (RTC) decision can only mean affi rmance also of the grant of
interest.
Art. 2211. In crimes and quasi-delicts, interest as a part of the

damages may, in a proper case, be adjudicated in the discretion of the
court.
COMMENT:
Interest on Damages Because of Crimes and QuasiDelicts
The Article explains itself.
Art. 2212. Interest due shall earn legal interest from the time it is
judicially demanded, although the obligation may be silent upon this point.
COMMENT:
Interest on Interest Due
(a) Interest due is also referred to as “accrued interest.”
(b) Note that accrued interest earns legal interest, not from default
(which may be from judicial OR extrajudicial demand) but from
JUDICIAL DEMAND. (Art. 2212; Cu Unjieng v. Mabalacat
Sugar Co., 54 Phil. 976; Sunico v. Ramirez, 14 Phil. 500 and
Bachrach v. Golingco, 39 Phil. 912).
(c) An agreement to charge interest on interest is valid even if in
adding the combined interest, the limits under the Usury Law are
exceeded. (Valdezco v. Francisco, 52 Phil. 350 and Government
v. Conde, 61 Phil. 14).
(d) If a stipulation governing the rate of interest is inserted in a
contract for the payment of money, this rate, if lawful,
Art. 2213
57
remains in force until the obligation is SATISFIED. The interest
that accrues prior to the date of the fi ling of the complaints should
be capitalized and consolidated as of that date with the capital,
after which the whole bears interest at the contract rate until the
amount is paid. The contracted obligation is not merged in the
judgment, but remains in full force until the debt is paid. (Zobel v.
City of Manila, 47 Phil. 169).
Art. 2213. Interest cannot be recovered upon unliquidated claims or

damages, except when the demand can be established with reasonable
certainty.
COMMENT:
(1) Interest on Unliquidated Claims or Damages
Bareng v. Court of Appeals, et al.

L-12973, Apr. 25, 1960
FACTS: The buyer of a certain equipment, because of cer-
tain alleged violations of warranties, refused to pay the balance to the
seller. Instead of tendering payment of said balance and instead of
depositing said balance in Court, the buyer sought to have the sale
rescinded on account of the alleged breach of warranty. The alleged
breach was not however, proved. Issue: Should the buyer pay interest on
the balance?
HELD: Yes, on account of the default, counted from the date of the fi ling of
the complaint by the seller (there apparently having been no extrajudicial
demand). Incidentally, the arguments that the debt was unliquidated until
its amount was determined by the appellate court at P3,600 and that
consequently, he cannot be made answerable for interest on the amount
due before the judgment in said court is completely untenable. The price
of the equipment under their contract of sale was determined and known;
hence, liquidated; and the obligation to pay any unpaid balance thereof
did not cease to be liquidated and determined simply because the vendor
and the vendee, in the suit for collection disagrees as to its amount. If the
buyer had wanted to free himself from any responsibility for interests on
the amount he had already ac-
Art. 2213
knowledged he still owed his vendor, he should have deposited the same
in Court at the very start of the action.
58
(2) No Liquidated Obligation
Abelardo Lim & Esmadito Gumabon v.

CA & Donato H. Gonzales,
GR 125817, Jan. 16, 2002
FACTS: Assessment of the damage on the vehicle was heavily debated upon
by the parties with private respondent’s demand for P236,000 being
refuted by petitioners who argue that they could have the vehicle repaired
easily for P20,000.
ISSUE: Was the matter a liquidated obligation?
HELD: The amount due private respondent was not a liquidated amount that
was already demandable and payable. 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 defi nitely ascertained, assessed, and determined by courts
after proof — interest at the rate of 6% per annum should be due from
the date the judgment of the court is made (at which time the quantifi
cation of damages may be deemed to be reasonably ascertained.)
Sadly, petitioners failed to offer in evidence the estimated amount of the
damage caused by private respondent’s unconcern towards the damaged
vehicle. It is the burden of petitioners to show satisfactorily not only that
the injured party could have mitigated his damages but also the amount
thereof; failing in this regard, the amount of damages award cannot be
proportionally reduced.
The questioned decision awarding private respondent P236,000 with legal
interest from Jul. 22, 1990 as compensatory damages and P30,000 as
attorney’s fees is modifi ed. Interest at the rate of 6% per annum shall be
computed from the time judgment of the lower court is made until the fi
nality of this decision. If the adjudged principal and interest remain
59
CIVIL CODE OF THE PHILIPPINES Arts. 2214-2215
unpaid thereafter, interest shall be 12% per annum computed from the
time judgment becomes fi nal and executory until it is fully satisfi ed.
Art. 2214. In quasi-delicts, the contributory negligence of the

plaintiff shall reduce the damages that he may recover.
COMMENT:
Contributory Negligence of Plaintiff in Quasi-Delicts
Note that here the damages shall be reduced.
Art. 2215. In contracts, quasi-contracts, and quasidelicts, the court

may equitably mitigate the damages under circumstances other than the
case referred to in the preceding article, as in the following instances:
(1) That the plaintiff himself has contravened the terms of the
contract;
(2) That the plaintiff has derived some benefi t 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 fi ling of the action, the defendant has done his best
to lessen the plaintiffs loss or injury.
COMMENT:
Mitigation of Damages in Contracts, Quasi-Contracts, and Quasi-Delicts
Note that the enumeration is not exclusive for the law uses the phrase “as in
the following instances.”
60
Chapter 3
OTHER KINDS OF DAMAGES
Art. 2216. No proof of pecuniary loss is necessary in order that

moral, nominal, temperate, liquidated or exemplary damages may be
adjudicated. The assessment of such damages, except liquidated ones, is
left to the discretion of the court, according to the circumstances of each
case.
COMMENT:
(1) When No Proof of Pecuniary Loss Is Necessary
The Article was applied in Del Castillo v. Guerrero, L-11994, Jul. 26, 1960.
(2) Necessity of Proving the Factual Basis

While no proof of pecuniary loss is necessary in order that moral damages
may be awarded, the amount of indemnity being left to the discretion of
the Court, it is, nevertheless, essential that the claimant satisfactorily
prove the existence of the factual basis of the damages (Art. 2217) and
its causal relation to the defendant’s acts. This is because moral damages
though incapable of pecuniary estimation, are in the category of an award
designed to compensate the claimant for actual injury suffered, and not
to impose a penalty on the wrongdoer. The mere fact that a party was
sued for instance without any legal foundation, does not entitle him to an
award of moral damages, for it would make a moral damage a penalty,
which they are not, rather than a compensation for actual injury suffered,
which they are intended to be. Moral damages, in other words, are not
corrective or exemplary damages. (Malonzo v. Galang, et al., L-13851,
Jul. 27, 1960).
Art. 2217
61
(3) In Civil Case to Recover or for Restitution, Reparation of Damages or

Indemnifi cation for Consequential and Other Damages or Any
Other Civil Actions under the New Civil Code or Other Existing
Laws Filed with the Sandiganbayan against Ferdinand E. Marcos,
et al., the Sandiganbayan is Not to Look for Proof Beyond
Reasonable Doubt. But to Determine, Based on the Evidence
Presented, in Light of Common Human Experience, which of the
Theories Proffered by the Parties is More
Worthy of Credence
Yuchengco v. Sandiganbayan
479 SCRA 1 (2006)
“Juries must often reason,” says one author, ”according to probabilities,
drawing an inference that the main fact in issue existed from collateral
facts not directly proving, but strongly tending to prove, its existence.
The vital question in such cases is the cogency of the proof afforded by
the secondary facts. How likely, according to experience, is the existence
of the primary fact if certain secondary facts exist?”
For the Supreme Court ––
if the required quantum of proof obtains to establish illegal acquisition,

accumulation, misappropriation, fraud, or illicit conduct –– ours
is the duty to affi rm the recovery efforts of the Republic but should
such proof be wanting, we have the equally-exacting obligations
to declare that it is so –– the guarantee against deprivation of
property without due process, which, like other basic
constitutional guarantees, applies to all individuals, including
tyrants, charlatans, and scoundrels of enemy stripe.
Section 1
MORAL DAMAGES
Art 2217. Moral damages include physical suffering, mental anguish,

fright, serious anxiety, besmirched reputation, wounded feelings, moral
shock, social humiliation, and similar injury. Though incapable of
pecuniary computation,
62
moral damages may be recovered if they are the proximate result of the
defendant’s wrongful act or omission.
COMMENT:
(1) Requisites for the Recovery of Moral Damages
(a) There must be physical suffering, mental anguish, fright, etc.
NOTE:
1) Physical suffering includes pain incident to a surgical
operation or medical treatment (Serio v. American Brewing
Co., 141 La. 290), as well as possible FUTURE pain.
(Southern Brewery & Ice Co. v. Schmidt, 226 U.S. 162).
2) Mental anguish is a high degree of mental suffering and not
a mere disappointment or regret (Southwestern Bell Tel. Co.
v. Cooks, 30 S.W. 497) or from annoyance or vexation.
(Johnson v. Western Union Teleg Co., 128 Am. Rep. 905).
However, inconvenience amounting to physical discomforts
is a subject of compensation.
3) Fright is one form of mental suffering. (Eastern v. United
Trade School Contracting Co., 77 Am. State Rep. 859).
(b) The suffering, etc. must be the proximate result of the wrongful act
or omission. (St. Francis High School v. CA, GR 82466, Feb. 25,
1991).
Thus, the grant of moral damages is NOT subject to the whims and
caprices of judges or courts. The court’s discretion in granting or
refusing it is governed by reason and justice. In order that an
individual may be made liable, the law requires that his act be
WRONGFUL. The adverse result of an action does not per se
make the act wrongful and subject the actor to the payment of
moral damages. (Barreto v. Arevalo, et al., 99 Phil. 771).
St. Mary’s Academy v. William Carpitanos
& Lucia S. Carpitanos, Guada Daniel,
James Daniel II, James Daniel, Sr., &
Vivencio Villanueva
GR 143363, Feb. 6, 2002
FACTS: Petitioner St. Mary’s Academy was made liable for the death of
Sherwin Carpitanos under Arts. 218 and 219 of the Family Code. It was
63
pointed out that petitioner was negligent in allowing a minor to drive and
in not having a teacher accompany the minor students in the jeep.
Respondents, however, failed to show that the negligence of petitioner was
the proximate cause of the death of the victim. Respondents Daniel
spouses and Villanueva admitted that the immediate cause of the
accident was not the negligence of petitioner or the reckless driving of
James Daniel II, but the detachment of the steering wheel guide of the
jeep.
ISSUES: (1) Was petitioner liable for damages for the death of Sherwin
Carpitanos?; and (2) Was the award of moral damages against petitioner
proper?
HELD: On the first issue, considering that the negligence of the minor driver
or the detachment of the steering wheel guide of the jeep owned by
respondent Villanueva was an event over which petitioner St. Mary’s
Academy had no control, and which was the proximate cause of the
accident, petitioner may not be held liable for the death resulting from
such accident.
On the second issue, petitioner cannot be held liable for moral damages in the
amount of P500,000 awarded by the trial court and affi rmed by the Court
of Appeals. Though incapable of pecuniary computation, moral damages
may be recovered if they are the proximate result of defendant’s wrongful
act or omission. (Art. 2217). In the instant case, the proximate cause was
not attributable to petitioner.
There was no question that the registered owner of the vehicle was respondent
Villanueva, and who never denied and, in fact, admitted this fact. Hence,
with the overwhelming evidence presented by petitioner and respondent
Daniel spouses that the accident occurred because of the detachment of
the steering wheel guide of the jeep, it is not the school, but the registered
owner of the vehicle who shall be held responsible for the death of
Sherwin Carpitanos.
[NOTE: 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. (Aguilar, Sr. v.
Commercial Savings Bank, GR 128705, Jun. 29, and Erezo v.
Depte, 102 Phil. 103 [1957]).]
(c) There must be clear testimony on the anguish, etc. (Thus, if the
plaintiff fails to take the witness stand and testify as to her social
humiliation, wounded feelings, anxiety, etc., moral damages
64
cannot be recovered. (Francisco v. GSIS, L-18166, Mar. 30,

1963).
People v. Manero
218 SCRA 85
1993
It is only when a juridical person has a good reputation that is
DEBASED, resulting in social humiliation, that moral damages
may be awarded.
Carlota P. Valenzuela, et al. v. CA, et al.

GR 56168, Dec. 22, 1988
The grant of moral damages is expressly allowed by law in instances
where proofs are shown that mental anguish, serious anxiety, and
moral shock have been suffered by the private respondent as a
consequence of the fraudulent act committed by the petitioner who
took advantage of the very limited education of the respondent.
Danao v. CA
GR 48276, Sep. 30, 1987
The fi ling alone of the foreclosure application should not be a ground
for an award of moral damages.
Boysaw, et al. v. Interphil Promotions, Inc.

GR 22590, Mar. 20, 1987
Moral damages cannot be imposed on a party litigant, although such
litigant exercises it erroneously because if the action has been
erroneously fi led, such litigant may be penalized for costs.
(2) Social and Financial Standing

In Layda v. Court of Appeals (90 Phil. 724), the Supreme Court held that the
social and fi nancial standing (including the earning capacity) of the
victim, is NOT important in the assessment of moral damages, because
the controlling element is the dignity of man and his human value.
However, in Domingding and Aranas v. Ng, et al. (103 Phil. 111), the
Court seemingly reversed its former stand when it held that the social
and fi nancial standing of the offender and offended party should be
taken into account in the computation of moral damages. In that case,
65
where the trial court ordered the offender, an overseer of a mango store
to pay the victim (a customer of the store, whom he had subjected to
indignities by embracing and kissing her inside a taxi) P50,000 as moral
damages, the Supreme Court reduced the award to a measly P1,000,
considering the lack of wealth or fi nancial consequence on the part of
both parties. In Yutuk v. Manila Electric Co., L-13016, May 31, 1961,
the Court held that the aggrieved party’s moral feeling and personal pride
should be weighed in the determination of the indemnity.
(3) Need for Certain Steps

The husband of a woman, who voluntarily procured her abortion, cannot
recover moral damages from the physician who caused the same where
the said husband appeared to have taken no steps to investigate or
pinpoint the causes thereof, and obtain the punishment of the responsible
practitioner.
(Geluz v. Court of Appeals, et al., L-16439, Jul. 20, 1961).
(4) Necessity of Personal Injury

(a) As a general rule, if a person is not himself physically hurt, he
cannot obtain moral damages. Thus, mere sympathy for a close
relative’s physical injuries cannot grant moral damages to the
sympathizer, even if he also suffers mental anguish, as a result of
such sympathy. (See Strebel v. Figueras, et al., 96 Phil. 321; 15
Am. Jur. 597-598 and Araneta, et al. v. Arreglado, et al., 104 Phil.
529). Thus also, if it is the wife who suffered the physical injuries,
moral damages may be recovered only by her, and not by her next
of kin or the husband. (Juana Soberano & Jose B. Soberano v.
Manila Railroad Co., L-19407, Nov. 23, 1966).
(b) Exceptions to the rule
Exceptions to the rule may be found in the last two paragraphs of Art.
2219.
(5) Rule Under the Old Law

Under the old Civil Code, moral damages could not be recovered for pain and
suffering, even by the person personally injured. (Marcelo v. Velasco, 11
Phil. 287 and Algarra v. Sandejas, 7 Phil. 84).
The Code Commission decided to revise the rule, with the following
explanation:
66
“Denial of the award of moral damages has been predi-

cated on the idea that physical suffering, mental anguish, and similar
injury are incapable of pecuniary estimation. But it is unquestionable
that the loss or injury is just as real as in other cases. The ends of justice
are better served by giving the judge discretion to adjudicate some defi
nite sum as moral damages. That is more equitable than that the sufferer
should be uncompensated. The wrongdoer cannot complain because it
was he who caused the injury. In granting moral damages, the court
proceeds upon the ancient maxim that when there is a wrong, there is a
remedy.” (Report of the Code Commission, p. 74).
(6) Mental Anguish
Ramos v. Ramos
L-19872, Dec. 3, 1974
FACTS: Because an action for reconveyance of real properties brought
against them had already prescribed, and was resultantly dismissed, the
defendants sued the plaintiffs for moral damages, alleging that they had
suffered from worries, anxieties, and mental anguish because of the suit
that had been brought against them. However, while the action for
reconveyance had indeed prescribed, there was no showing that the
action had been maliciously brought. The plaintiffs in the reconveyance
case had honestly believed that they had a good and valid cause of action.
Issue: May moral damages be assessed against the unsuccessful
plaintiffs?
HELD: No, moral damages cannot be awarded in favor of the defendants, and
against the unsuccessful plaintiffs. The reason is because there was no
malice in the institution of the suit for reconveyance. If a case is fi led in
good faith, and the defendant suffers from worries and anxieties, said
mental anguish is not the anguish where the law allows a recovery of
moral damages. The law does not impose a penalty on the right to litigate.
American Express International, Inc. v.

IAC and Jose M. Alejandrino, Nov. 9, 1988
Private respondent Alejandrino was awarded moral damages amounting to
P100,000 with 6% interest thereon computed from the fi nality of this
decision until paid because of the alleged humiliation suffered by him
when he was forced to surrender his credit card at Bon Department Store
in Seattle. But as there are no pre-set spending limits to the use of the
Amexco credit card, petitioner could not be faulted for ordering the
67
immediate seizure of private respondent’s credit card. Considering the

large number of people availing themselves of the pre-set spending
privilege in the use of the credit card, petitioner’s only protection consists
in its ability to stop with dispatch anyone wrongfully using the credit
card.
Whatever humiliation or embarrassment Alejandrino might have suffered on
account of the seizure incident in Seattle, the Director of Operations of
Amexco’s Hongkong offi ce apologized to private respondent. The Director
offered to write a letter of explanation to Bon Department Store. He even
offered to reopen Alejandrino’s account. Alejandrino, however, rejected the
offers. Clearly then, while petitioner was not in bad faith, its negligence caused
the private respondent to suffer mental anguish, serious anxiety,
embarrassment and humiliation, for which he is entitled to recover reasonable
moral damages.
Pan American World Airways, Inc. v. IAC

GR 44442, Aug. 31, 1987
The award of moral damages by the trial court and the Court of Appeals in
favor of a Pan American passenger, who was bumped off, in the amount
of P500,000 as moral damages, P200,000 as exemplary damages and
P100,000 as attorney’s fees was considered by the Supreme Court to be
exorbitant and consequently reduced the moral and exemplary damages
to the combined total sum of P200,000 and the attorney’s fees to
P20,000. It retained the award of actual damages in the amount of
US$1,546.15 computed at the exchange rate prevailing at the time of
payment.
Danao v. CA
GR 48276, Sep. 30, 1987
The creditor not only fi led an unwarranted foreclosure proceedings, but also
carried out the proceedings in a manner as to embarrass the debtor by
publishing the notice of extrajudicial foreclosure and sale in the society
page of a Sunday edition of a widely circulated newspaper, instead of in
the “legal notices” or “classifi ed ads” sections as usual in these types of
notices, in extraordinarily large and boxed advertisements, which
allegedly bespoke of the bank’s malicious intent to embarrass and harass
the defendant in alleged violation of the canons of conduct provided for
in Articles 19, 20 and 21 of the Civil Code.
Both the Court of Appeals (CA) and the lower court took cognizance of the
debtor’s mental anguish, serious anxiety and besmirched reputation
68
traceable to the unfortunate publication. The lower court awarded

P100,000 moral damages, but the CA reduced said amount to P30,000.
The Supreme Court increased the amount to P60,000.
(7) Courts Given Discretion to Award Moral Damages
Prudenciado v. Alliance Transport System, Inc.

GR 33836, Mar. 16, 1987
Trial courts are given discretion to determine the amount of moral damages.
The Court of Appeals can only modify or change the amount awarded
when they are palpably and scandalously excessive “so as to indicate that
it was the result of passion, prejudice or corruption on the part of the trial
court.” But where the awards of moral and exemplary damages are far
too excessive compared to the actual losses sustained by the aggrieved
party, they should be reduced to more reasonable amounts.
While the amount of moral damages is a matter left largely to the sound
discretion of a court, the same when found excessive should be reduced
to more reasonable amounts, considering the attendant facts and
circumstances. Moral damages, though incapable of pecuniary
estimation, are in the category of an award designed to compensate the
claimant for actual injury suffered and not to impose a penalty on the
wrongdoer. Moral damages are not intended to enrich a complainant at
the expense of a defendant. They are awarded only to enable the injured
party to obtain means, diversion or amusements that will serve to
alleviate the moral suffering he has undergone, by reason of the
defendants’ culpable action. The award of moral damages must be
proportionate to the suffering infl icted.
Isabelita Vital-Gozon v. CA & Alejandro dela Fuente

GR 129132, Jul. 8, 1998
A public offi cer, like petitioner herein, may be liable for moral
damages for as long as the moral damages suffered by private
respondent were the proximate result of petitioner’s wrongful act or
omission, i.e., refusal to perform an offi cial duty or neglect in the
performance thereof.
Since moral damages are, in the language of Art. 2217, “incapable of
pecuniary estimation,” courts have the discretion to fi x the
corresponding amount, not being bound by any self-serving assessment
by the claimants.
69
Development Bank of the Phils. v.

CA & Emerald Resort Hotel Corp.
GR 125838, Jun. 10, 2003
FACTS: DBP maintains that ERHC, a juridical person, is not entitled to moral
damages. ERHC counters that its reputation was debased when the
sheriffs and several armed men intruded into Hotel Ibalon’s premises and
inventoried the furniture and fi xtures in the hotel. The Court of Appeals
(CA) affi rmed the trial court’s award of moral damages.
HELD: The CA erred in awarding moral damages to
ERHC, the latter having failed to present evidence to warrant the award.
In a long line of decisions, the Supreme Court has ruled that the claimant
for moral damages must present concrete proof to justify its award.
(Enervida v. Dela Torre, 154 Phil. 301 [1974], citing Algara v. Sandejas,
27 Phil. 284 [1914]).
Moreover, as a general rule, moral damages are not awarded to a corporation
because, being an artifi cial 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. The statement in
People v. Manero and Mamburao Lumber Co. v. PNB that a corporation
may recover moral damages if it “has a good reputation that is debased,
resulting in social humiliation” is an obiter dictum. On this core alone,
the award for damages must be set aside. (ABS-CBN Broadcasting Corp.
v. CA, 361 Phil. 499 [1999] and Napocor v. Philipp Brothers Oceanic,
Inc., GR 126204, Nov. 20, 2001).
70
Arts. 2218-2219
Art. 2218. In the adjudication of moral damages, the sentimental

value of property, real or personal, may be considered.
COMMENT:
Sentimental Value
Sentimental value may be considered both in civil li-
abilities arising from crimes (Art. 106, Rev. Penal Code) and in civil
cases, where there are fraudulent or deceitful motives. (See Arnaldo v.
Famous Dry Cleaners, [C.A.] 52 O.G. 282).
Art. 2219. Moral damages may be recovered in the following and

analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in article 309;
(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32,
34, and 35.
The parents of the female seduced, abducted, raped, or abused,
referred to in No. 3 of this article, may also recover moral damages.
The spouse, descendants, ascendants, and brothers and sisters may
bring the action mentioned in No. 9 of this article, in the order named.
COMMENT:
(1) Instances (Not Exclusive) When Moral Damages May Be Recovered
(a) The law here speaks of 9 instances and “analogous cases.”
71
Mayo y Agpaoa v. People
GR 91201, Dec. 5, 1991
Article 2219 of the New Civil Code provides: “Moral damages may be
recovered in the following and analogous cases:
(1) A criminal offense resulting in physical inju-
ries;
(2) Quasi-delicts causing physical injuries;
Equitable Leasing Corp. v. Lucita Suyom,

Marissa Enano, Myrna Tamayo & Felix Oledan
GR 143360, Sep. 5, 2002
FACTS: Petitioner claims it is not liable for moral damages, because
respondents failed to establish or show the causal connection or
relation between the factual basis of their claim and their wrongful
act or omission, if any.
HELD: Having established the liability of petitioner as the registered
owner of the vehicle, respondents have satisfactorily shown the
existence of the factual basis for the award and its causal
connection to the acts of the driver, who is deemed as petitioner’s
employee. Indeed, the damages and injuries suffered by
respondents were the proximate result of petitioner’s tortuous act
or omission.
(3) Seduction, abduction, rape or other lascivious
acts;
(4) Adultery or concubinage;
(5) Illegal search;
(6) Libel, slander or any other form of defama-
tion;
(7) Malicious prosecution;
(8) Acts mentioned in article 309;
(9) Acts and actions referred to in Articles 21, 26,
27, 28, 29, 30, 32, 34 and 35.”
Garciano v. CA, et al.

GR 96126, Aug. 10, 1992
72
Moral damages are recoverable only if the case falls under Art. 2219 in
relation to Art. 21. In the case at bar, petitioner is not without fault.
Firstly, she went on an indefi nite leave of absence and failed to report
back in time for the regular opening of classes. Secondly, for reasons
known to herself alone, she refused to sign a written contract of
employment. Lastly, she ignored the Board of Directors’ order for her to
report for duty on July 5, 1982. The trial court’s award of exemplary
damages to her was not justifi ed for she is not entitled to moral,
temperate, or compensatory damages.
In sum, the Court of Appeals correctly set aside the damages awarded by the
trial court to the petitioner for they did not have any legal or factual basis.
(b) “Analogous cases” refers to instances similar to the cases enumerated in the
article, and not to ALL causes of mental anguish. (People v. Plaza,
[C.A.] 52 O.G. 6609). One example is the institution of unfounded suits,
one after another, all resulting in the dismissal of said suits; the anguish
and embarrassment suffered by the defendant cannot be denied. (Haw
Pia v. Court of Appeals, L20047, Jun. 30, 1967). Ordinarily, a breach of
contract cannot be considered as included in the descriptive term
“analogous cases” used in Art. 2219, not only because Art. 2220 specifi
cally provides for the damages that are caused by a contractual breach
but because the defi nition of quasi-delict in Art. 2176 of the Code
expressly excludes the cases where there is a pre-existing contractual
relation between the parties. The advantageous position of a party suing
a carrier for breach of the contract of transportation explains to some
extent, the limitations imposed by the new Code on the amount of the
recovery. The action for breach of contract imposes on the defendant
carrier a presumption of liability upon mere proof of injury to the
passenger; the latter is relieved from the duty to establish the fault of the
carrier, or of his employees; and the burden is placed on the carrier to
prove that it was due to an unforeseen event or to force majeure.
Moreover, the carrier, unlike in suits involving quasi-delict, may not
escape liability by proving that it has exercised due diligence in the
selection and supervision of the employees. Incidentally, regarding the
claim that moral damages may be awarded because of Art. 1170
(incidental fraud), suffi ce it to state that said article merely sets forth a
general principle on damages. (See Geraldez v. CA, GR 108253, Feb. 23,
1994, 48 SCAD 508). As regards moral damages, Art. 2219 is
controlling, it being a specifi c provision thereon and as such, it prevails
over Art. 1170. (Verzosa v. Baytan, et al., 107 Phil. 1010).
Bert Osmeña and Associates v.

Court of Appeals
GR 56545, Jan. 28, 1983
73
(1) When fraud or bad faith has been proved, moral damages may be
awarded.
(2) When moral damages are awarded, exemplary damages may also be
decreed.
Darang v. Ty Belizar
L-19487, Jan. 31, 1967
To recover moral damages, there must be pleading and proof of moral
suffering, anguish, fright, etc.
Imperial v. Ziga
L-19726, Apr. 13, 1967
Moral damages, imposed in a judgment, can earn interest, if so provided in
the judgment, and reckoning can begin from the time the judgment is
promulgated.
Gatchalian v. Delim
GR 56487, Oct. 21, 1991
Since respondent and his driver had been grossly negligent in connection with
the bus mishap which had injured petitioner and other passengers and
recalling the aggressive maneuvers of respondent, thru his wife, to get
the victims to waive their right to recover damages even as they were
still hospitalized for their injuries, petitioner must be held entitled to such
moral damages. Considering the extent of pain and anxiety which
petitioner must have suffered as a result of her physical injuries including
the permanent scar on her forehead, the amount of P30,000 would be a
reasonable award. Petitioner’s claim for P1,000 as attorney’s fees is in
fact even more modest.
Mayo y Agpaoa v. People

GR 91201, Dec. 5, 1991
FACTS: June Navarette was driving a Lancer car owned by Linda Navarette,
her sister. On board the car were Linda, Legionaria, Mae, Noel,
Reymond, Antonette and Mercy. Before the accident took place, the
Tamaraw jeep driven by Danilo was fi rst ahead, followed by the Lancer
car and behind the Lancer car was the Rabbit bus driven by Mayo
travelling towards the direction of Manila. The Lancer car as well as the
Rabbit bus following one after the other overtook the Tamaraw jeep. The
Lancer car was then cruising steadily at the right lane of the road at a
speed rate of about 40 kilometers per hour. As the vehicle approached
the vicinity of Mabalacat Institute, the Rabbit bus picked up speed and
74
swerved to the left lane to overtake the Lancer car which was running on
the right lane of the highway. When the Rabbit bus was abreast with the
Lancer, an oncoming vehicle from the opposite direction appeared and fl
ashed its headlights to warn the bus to give way. The bus swerved to its
right in an effort to return to the right lane to avoid collision with the
oncoming vehicle, and in the process it hit the left rear side portion of
the Lancer car with its right front bumper. Because of the impact, the
driver of the Lancer lost control of the wheel and the car crashed against
the concrete fence. Mayo was charged and convicted with the crime of
reckless imprudence resulting in damage to property with multiple
serious, less serious and slight physical injuries. He fi led an appeal with
the Court of Appeals (CA) which affi rmed the trial court’s decision with
the modifi cation that the appellant suffered a straight penalty of three
months, on the ground that the Indeterminate Sentence Law is not
applicable, the maximum penalty imposable not exceeding one year. The
complainants in the criminal case were awarded damages. The CA
sustained the trial court.
ISSUE: Whether the fi ndings of the trial court justify the award of moral
damages in the amount of P700,000 in favor of Linda Navarette.
HELD: The Supreme Court modifi ed the amount of P700,000 as moral
damages granted to complainant by reducing it to P200,000 and holding
that Linda is entitled to moral damages. She suffered injuries as a result
of the criminal offense of Mayo. Moreover, her injuries resulting in a
permanent scar at her forehead and the loss of her right eye gave her
mental anguish, wounded feelings and shock. The psychological effect
on her as regards the scar on her forehead and her false eye must have
devastated her considering that women in general are fastidious on how
they look. More important was the loss of vision of her right eye which
was severely injured as a result of the accident. Since the accident, Linda
had to contend with the loss of her eyesight on her right eye which
necessarily hampers her not only physically but also professionally for
the rest of her life. Before the accident, Linda who is a home economist
by profession was doing well in her career. A graduate of the University
of the Philippines with the degree of Home Economics, she is the
Assistant Vice President as well as the Resident Manager of Club
Solviento receiving a gross income of P10,000 a month. Simultaneously
with her work at Club Solviento, she served as Food Consultant of Food
City where she received a monthly salary of P7,000. However, she had
to give up her consultancy job after the accident not only because of her
prolonged absences but because of the physical handicap she suffered.
Nevertheless, there is no justifi cation toward moral damages in favor of
Linda for the loss of her boyfriend. No doubt, the loss of her boyfriend
after the accident added to her mental and emotional sufferings and
75
psychologically affected and disturbed her. However, there is no
evidence to show that her boyfriend left her after the accident due to her
physical injuries. He may have left her even if she did not suffer the
slightest injury. The reasons for the break-up of a courtship are too many
and too complicated such that they should not form the basis of damages
arising from a vehicular accident. Moreover, granting that her boyfriend
left her due to her physical injuries, there is no legal basis for the award
of moral damages in favor of Linda because of the loss of a boyfriend.
Art. 2219 of the new Civil Code enumerates cases wherein moral
damages may be granted. Loss of a boyfriend as a result of physical
injuries suffered after an accident is not one of them. Neither can it be
categorized as an analogous case. The award of P700,000 as moral
damages in favor of Linda is unconscionable and excessive. The Court
rejects Linda’s claim for the amount of P1,000,000 as moral damages for
the loss of her boyfriend. She asked for the amount of P500,000 as moral
damages due to her personal injuries. Therefore, the award for moral
damages should not exceed P500,000. Under the circumstances, the
amount of P200,000 as moral damages in favor of Linda is reasonable,
just and fair. Thus, moral damages may be awarded where gross
negligence on the part of the common carrier is shown.
Spouses Quisumbing v. Manila Electric Co.

GR 142943, Apr. 3, 2002
Art. 2219 lists the instances when moral damages may be recovered. One such
instance is when the rights of individuals, including the right against
deprivation of property without due process of law, are violated.
Although incapable of pecuniary computation, such damages may be
recovered if they are the proximate results of the defendant’s
wrongful act or omission.
(2) Rule With Respect to Contracts

Note that contracts are not referred to in this article. However:
(a) Under Art. 2220, moral damages may be recovered where the
defendant acted fraudulently or in bad faith.
Filinvest Credit Corp. v. Mendez

GR 66419, Jul. 31, 1987
FACTS: A credit corporation sued an installment buyer of a car to
recover said car and/or the sum of money when the latter’s check
intended for the February, March and April installments bounced
76
due to insuffi ciency of funds. By virtue of an order of seizure by
the court, the car was repossessed. The buyer later redeposited the
check and credited for the months mentioned. When the buyer
negotiated with the credit company for the release of the car, the
latter demanded payment of the total outstanding balance on the
promissory note. Due to the persistent pleas of the buyer, the credit
company released the car to him upon payment of the installment
remaining unpaid for the months of April, May and June, in
addition to the costs incurred in repossessing. The court dismissed
the case on motion of the credit company.
HELD: The buyer is not entitled to damages. The willingness of the
credit company to allow the buyer to pay only the unpaid
installments for April, May and June, instead of the total
outstanding balance and to release the car as well as its voluntary
motion to dismiss the case indicates lack of fraud or bad faith on
the part of the credit company. The buyer was not without fault.
He was three months behind in his payments and he issued a
bouncing check.
Moral damages cannot be awarded in the absence of a wrongful act or
omission or fraud or bad faith. When the action is fi led in good
faith there should be no penalty on the right to litigate. One may
have erred, but error alone is not a ground for moral damages.
(b) If death is caused to a passenger by the negligence of a common
carrier, moral damages may be recovered. (Arts. 1764, 2206).
(3) Re Par. 1 (Physical Injuries Because of a Crime)

“A criminal offense resulting in physical injuries.”
(a) If a passenger dies or is injured, and a criminal case is brought by
himself or by his heirs, in the proper case, moral damages may be
recovered.
(b) If there be no death or physical injuries, moral damages cannot be
recovered. (People v. Plaza, [C.A.] 52 O.G. 6609; Strebel v.
Figueras, 96 Phil. 321).
(c) If a taxi driver was negligent and injures a passenger, he can be
liable for moral damages, but not the taxi company, for the
company did not commit the crime. (See Cachero v. Manila Yellow
Taxicab Co., Inc., 101 Phil. 523).
[NOTE: Rule in Civil Actions: Moral damages are NOT recoverable in
damage actions predicated on a breach of the contract of
transportation in view of the provisions of Arts. 2219 and 2220 of
77
the new Civil Code. (Verzosa v. Baytan, et al., 107 Phil. 1010).
The exceptions to this rule are (a) where the mishap results in the
death of a passenger, and (b) where it is proved that the carrier was
guilty of fraud or bad faith, even if death does not result. (Fores v.
Miranda, 105 Phil. 266). The mere carelessness of the carrier’s
driver does not per se constitute or justify an inference of malice
or bad faith on said carrier’s part (Rex Taxicab Co. v. Bautista, L-
15392, Sept. 30, 1960), because fraud, malice, or bad faith must be
proved. (Soberano and Soberano v. Manila
Railroad Co., L-19407, Nov. 23, 1966).]
(4) Re Par. 3 (Seduction, etc.)
“Seduction, abduction, rape or other lascivious acts.”
People of the Philippines v. Mariano Fontanilla

L-25354, Jun. 28, 1968
FACTS: Mariano Fontanilla, 52 years of age, was accused by his servant, Fe
Castro, a 15-year-old virgin of repeated carnal knowledge with her for
three months. She could not recall the total number of times. She testifi
ed that she repeatedly yielded because of his promises of marriage
(despite the fact that he was a married man), and because she was
frightened by his acts of intimidation. The accused made love to her
during the day when his wife was away, and at night, when the latter was
already asleep. One night, they were caught in fl agrante on the kitchen
fl oor. Fontanilla denied the accusation stating, inter alia, that because
of his age, it was impossible for him to make love to his wife more than
once a week, much less, to have had Fe carnally day and night. Fontanilla
was found guilty in view of the evidence presented. Regarding the
repeated acts of carnal knowledge, there is a presumption that an adult
male has normal powers of virility. The Court also awarded Fe or her
parents moral damages amounting to P500. Issue: Is this award of moral
damages proper?
HELD:
(a) The award of only P500 is inadequate. The victim was a virgin,
and she was defl owered by Fontanilla. This loss of virginity,
together with the attendant shame and scandal, entitles her to the
sum of P2,500 in moral damages. Her future as a woman is defi
nitely impaired, and the resultant prejudice against her engendered
in the male population of the barrio where she resides, cannot be
blinked away.
78
(b) The award must not be in the alternative, for under Art. 2219 of
the Civil Code, the parents are ALSO entitled to recover moral
damages. The conviction of the accused suffi ces as a basis to
adjudge him, in the same action, liable for an award of moral
damages, without independ-
ent proof thereof, to the victim AND her parents, because the law
presumes that the parents also naturally suffered besmirched reputation,
social humiliation, mental anguish, and wounded feelings.
People v. Manalo
GR 49810, Oct. 13, 1986
In rape cases, moral damages have been raised to P20,000.
People v. Bondoy
41 SCAD 432
1993
The indemnity to a rape victim has been increased to P50,000.
People v. Eric Baid y Ominta

GR 129667, Jul. 31, 2000
FACTS: Appellants was accusing of raping a 27-year old woman diagnosed
with schizophrenia. Found guilty, appellant assailed victim’s credibility
on account of her ailment.
HELD: It is medically established that schizophrenic persons do not suffer
from a clouding of consciousness and gross defi cits of memory. The
victim could understand the questions propounded to her relating to the
rape and could give responsive answers to them despite exhibiting
inappropriate emotions in the course of her testimony. Notably,
complainant’s submission to the sexual advances of appellant
notwithstanding, the intercourse was without consent considering that
schizophrenia caused an impairment of the judgment on complainant.
Hence, appellant may be convicted of rape under Art. 335(2) of the
Revised Penal Code for the victim was completely insane or deprived of
reason when he had carnal knowledge of her. The phrase “deprived of
reason” includes those suffering from mental abnormality, or defi ciency,
or some form of mental retardation, those who are feeble-minded
although coherent.
The trial court is correct in awarding moral damages in the amount of
P50,000 in accordance with jurisprudence that moral damages may
be awarded in rape cases without any need of proof of moral
suffering. Additionally, civil indemnity in the amount of P50,000
79
should have been awarded the complainant consistent with the
ruling that rape victims are entitled to such an award without need
of proof except the fact of the commission of the offense. (People
v. Capillo, GR 123059, November 25, 1999). The prosecution’s
plea that the indemnity should be raised to P75,000 cannot be
granted because such amount is awarded only in cases of qualifi
ed rape. In the case at bar, there have been no qualifying
circumstances raising the penalty to death. (People v. Lasola, GR
123152, Nov. 17, 1999).
(5) Re Par. 7 (Libel, Slander, Defamation)

“Libel, slander, or any other form of defarmation.”
If there is no libel, etc. because of the defense of “privileged communication”
and malice is not proved, there will be no award of moral damages. This
is particularly true in the case of court pleadings which may contain
libelous remarks. (See De la Rosa, et al. v. Maristela, [C.A.] 50 O.G.
254).
On the other hand, the allegation of forgery in a document is all but a
defamation, which in the light of Art. 2217 could by analogy be a ground
for payment of moral damages, considering the wounded feelings and
besmirched reputation of the parties involved. (Heirs of Justiva v. Court
of Appeals, L-16396, Jan. 31, 1963).
(6) Re Par. 8 (Malicious Prosecution)

“Malicious Prosecution”
The defendant, to be liable, must have acted deliberately knowing that his
charges were false and groundless. Indeed, the mere act of submitting a
case to the authorities for prosecution does not make him liable for
malicious prosecution, for generally, it is the Government or
representative of the State that takes charge of the prosecution of the
offense.
There must be proof that the prosecution was prompted by a sinister
design to vex and humiliate a person, for if the rule were otherwise, every
acquitted person can turn against the complainant in a civil action for
damages. (Buenaventura, et al. v. Sto. Domingo, et al., L-10661, Mar. 2,
1958). In order that moral damages may be recovered as a result of a writ
of attachment wrongfully issued, malice must be proved to be present.
(Lazatin v. Tuano, et al., L-12736, Jul. 31, 1961).
Alejo Madera, et al.
80
v. Heirs of Salvador Lopez L-37105, Feb.
10, 1981
Statutory basis for an action for moral damages due to malicious prosecution
can be found in Arts. 19, 2176, and 2219 of the Civil Code.
PCIB v. IAC
GR 73610, Apr. 19, 1991
An action to recover damages from the plaintiff who secures a writ of
attachment based on a false affi davit is identical with or analogous to
the ordinary action for malicious prosecution. Moral damages may be
recovered by the defendant on account of an improperly and irregularly
issued writ of attachment.
Albenson Enterprises Corp., et al. v.

CA & Eugenio S. Baltao
GR 88694, Jan. 11, 1993
A civil action for damages for malicious prosecution is allowed under the
Civil Code, more specifi cally Arts. 19, 20, 26, 29, 32, 33, 35, and
2219(8) thereof.
In order that such a case can prosper, however, the following three (3)
elements must be present, to wit: (1) the fact of the prosecution and the
further fact that the defendant was further fact that the defendant was
himself the prosecutor, and that the action was fi nally terminated with
an acquittal; (2) that in bringing the action, the prosecutor acted without
probable cause; and (3) the prosecutor was actuated or impelled
by legal malice. Thus, a party injured by the fi ling of a court case against
him, even if he is later on absolved, may fi le a case for damages
grounded either on the principle of abuse of rights, or on malicious
prosecution. It is well-settled that one cannot be held liable for
maliciously instituting a prosecution where one has acted with probable
cause (defi ned as the existence of such facts and circumstances as would
excite the belief, in a reasonable mind, acting on the facts within the
knowledge of the prosecutor, that the person charged was guilty of the
crime for which he was prosecuted). To constitute malicious prosecution,
there must be proof that the prosecution was prompted by a sinister
design to vex and humiliate a person, that it was initiated deliberately by
the defendant knowing that his charges were false and groundless.
Concededly, the mere act of submitting a case to the authorities for
prosecution does not make one liable for malicious prosecution. Proof
and motive that the institution of the action was prompted by a sinister
81
design to vex and humiliate a person must be clearly and preponderantly
established to entitle the victims to damages.
In the case at bar, there is no proof of a sinister design on the part of petitioners
to vex or humiliate private respondent by instituting the criminal case
against him. While petitioners may have been negligent to some extent
in determining the liability of private respondent for the dishonored
check, the same is not so gross or reckless as to amount to bad faith
warranting an award of damages. The questioned judgment in the instant
case attests to the propensity of trial judges to award damages without
basis. Lower courts are hereby cautioned anew against awarding
unconscionable sums as damages without bases therefor.
(7) Re Par. 10 (Articles on Human Relations)

Bar Question
(a) Is a breach of promise to marry an actionable wrong? Explain
briefl y.
(b) A promised to marry his sweetheart B. Later, both applied for and
obtained a marriage license. Thereafter, they sent out wedding
invitations to friends and rela-
tives. B purchased her wedding trousseau, and dresses for other
participants in the wedding. Two days before the wedding, A left for the
province, and sent a note to B stating that he could not go on with the
wedding because his mother was opposed to it. He was nowhere to be
found on the date of the wedding. Question: Is A liable for damages?
Reasons:
ANS.: (a) A breach of promise to marry is by itself not an actionable wrong.
(Hermosisima v. Court of Appeals, L-14628, Sept. 30, 1960 and Estopa
v. Piansay, Jr., L-14733, Sept. 30, 1960). And neither does it give rise to
an action for specifi c performance. Therefore, only actual damages
(wedding dress, etc.) may be asked; not moral damages unless there is
criminal or moral seduction or abuse of a right.
(b) A is liable for actual, moral and exemplary damages. His acts constituted a
palpable, unjustifi able, and willful violation of morals and good
customs, for which he can be held answerable for damages in accordance
with Art. 21. And inasmuch as he acted in a wanton, reckless, and
oppressive manner, he should be made to pay moral and exemplary
damages pursuant to the provisions of Art. 2219, par. 10 and Art. 2232
of the Civil Code. (Wassmer v. Velez, L-20089, Dec. 26, 1964).
82
Arturo de Guzman v. NLRC, et al.
GR 90856, Jul. 23, 1992
Under Art. 2219(10) of the Civil Code, moral dam-
ages may be recovered for the acts referred to in art. 21 which reads:
“Any person who willfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall
compensate the latter for the damage.”
In Bert Osmeña & Associates v. CA (120 SCRA 396), the Court held that
“fraud and bad faith having been established, the award of moral
damages is in order. And in Pan Pacifi c Co. (Phil.) v. Phil. Advertising
Corp.
(23 SCRA 977), moral damages were awarded against the
defendant for its wanton and deliberate refusal to pay the just debt
due the plaintiff. It is settled that the court can grant the relief
warranted by the allegation and the proof even if it is not specifi
cally sought by the injured party. (Heirs of Celso Amarante v. CA,
185 SCRA 585).
In the case at bar, while the private respondents did not categorically
pray for damages, they did allege that the petitioner, taking
advantage of his position as general manager, had appropriated the
properties of the Affi liated Machineries Agency Ltd. (AMAL) in
payment of his own claims against the company. That was
averment enough of the injury they suffered as a result of the
petitioner’s bad faith. It is stressed that the petitioners’ liability to
the private respondents is a direct liability in the form of moral and
exemplary damages and not a solidary liability with AMAL for the
claims of its employees against the company. He is being held
liable not because he is the general manager of AMAL but because
he took advantage of his position by applying the properties of
AMAL to the payment exclusively of his own claims to the
detriment of the other employees. In the instant case, the fact that
no actual or compensatory damages was proven before the trial
court does not adversely affect the private respondents’ right to
recover moral damages. Thus, moral damages may be awarded in
the cases referred to in the Chapter on Human Relations of the
Civil Code (Arts. 19-31) without need of proof that the wrongful
act complained of had caused any physical injury upon the
complainant.
83
(8) Moral and Exemplary Damages Were NOT Given in the Following
Cases:
(a) When no evidence was introduced thereon, and the case was
submitted simply on a stipulation of facts. (Tabora v. Montelibano,
et al., L-8667, Apr. 3, 1956).
(b) When a complaint contained nothing derogatory to the good name
or reputation of the other party, and bad
faith was not shown. (Litam v. Espiritu, et al., L-7644, Nov. 27, 1956).
(c) When there was no allegation or proof that a mayor, in dismissing
a policeman, had acted with motives other than the promotion of
the public interest. (Covacha v. Amante, L-8358, May 25, 1956).
(d) When a broker believed in good faith that he was entitled to a
commission for having intervened in a sale, and thus sued
unsuccessfully his principal. (Worcester v. Lorenzana, 104 Phil.
234).
(e) When a common-law wife, Esther Peralta, was prohibited by the
court to represent herself as Mrs. Saturnino Silva, or as the lawful
wife of her paramour. In this case, the court held that the
unwarranted misrepresentation had been made in GOOD FAITH,
inasmuch as she did NOT know that her common-law mate was
already married to another. (Elenita Ledesma Silva, et al. v. Esther
Peralta, L-13114, Aug. 29, 1961).
(f) In a case of a clearly unfounded or unreasonable suit. Note that in
a case like this, attorney’s fees may be recovered (Art. 2208, No.
4) but NOT moral damages, for this is not one of the cases
contemplated under Art. 2219. (Malonzo v. Galang, et al., L-
13581, Jul. 27, 1960). It is true that Art. 2219 also provides that
moral damages may be awarded in “analogous cases” but we do
not think the Code intended a “clearly unfounded civil action
proceeding” to be one of those analogous cases wherein moral
damages may be recovered or it would have expressly mentioned
it in Art. 2219 as it did in Art. 2208; or else incorporated Art. 2208
by reference in Art. 2219. Besides, Art. 2219 specifi cally
mentions “quasidelicts causing physical injuries” as an instance
when moral damages may be allowed, thereby implying that all
other quasi-delicts not resulting in physical injuries are excluded
(Strebel v. Figueras, 96 Phil. 321), excepting of course, the special
torts referred to in Art. 309 (par. 9, Art. 2219) — relating to
disrespect for the dead and wrongful interference with funerals —
and in Arts. 21, 26, 27, 28, 29, 30, 32, 34, and 35 on the chapter on
Hu-
84
man Relations. (par. 10, Art. 2219; Malonzo v. Galang, et al., L-
13851, Jul. 27, 1960).
(g) A brother cannot recover moral damages for his brother’s death in
1937 caused by a negligent train engineer (while this was under
the old Civil Code which apparently allowed such recovery, based
on FRENCH decisions, still the less severe sanction under the new
Civil Code should be applied (Art. 2257) and the new Civil Code
is clearly less severe because under the last paragraph of Art. 2219,
brothers and sisters are NOT among these who can recover moral
damages.)
(h) The passenger’s contributory negligence will justify the deletion
of moral damages.
Philippine National Railways v. CA

GR 55347, Oct. 4, 1985
FACTS: A train passenger insists in sitting on the open platform
between the coaches of the train and does not hold on tightly to the
upright metal bar found at the said platform. Because of his
precarious position, he falls off the speeding train.
HELD: The passenger is chargeable with contribu-
tory negligence. But his contributory negligence will not exempt
the carrier from liability. It will merely justify the deletion of moral
damages.
(9) Liability of the State Governmental & Proprietary

Functions
Fontanilla v. Maliaman
GR 55913, Feb. 27, 1991
FACTS: On December 1, 1989, through its Second Division, the Supreme
Court rendered a decision declaring the National Irrigation
Administration (NIA) a government agency performing proprietary
functions. Like an ordinary employer, NIA was held liable for the
injuries, resulting in the death of Francisco Fontanilla, caused by the fault
or negligence of NIA’s driver-employee Hugo Garcia. The Court ordered
NIA to pay the Fontanilla spouses, the victim’s parents, for the death of
the victim, for hospitalization and burial expenses, for moral and
exemplary damages, and attorney’s fees. NIA moved for
reconsideration, alleging that it does not perform solely or primarily
proprietary functions but as an agency of the government tasked with
85
governmental functions. Thus, it may not be held liable for damages for
injuries caused by its employees to a third person.
HELD: The Supreme Court en banc denied the motion for reconsideration
and held that the National Irrigation Administration is a government
agency invested with a corporate personality separate and distinct from
the government and thus is governed by the Corporation Law (now
Corporate Code). It had its own assets and liabilities. It also has corporate
powers to be exercised by a Board of Directors. To quote Sec. 2,
subsection (f): “x x x and to transact such business, as are directly or
indirectly necessary, incidental or conducive to the attainment of the
above powers and objectives, including the power to establish and
maintain subsidiaries, and in general, to exercise all the powers of a
corporation under the Corporation Law, insofar as they are not
inconsistent with the provisions of this Act.” (Sec. 2, subsection [f]). The
National Irrigation Administration is a government agency with a
juridical personality separate and distinct from the government. It is not
a mere agency of the government but a corporate body performing
proprietary functions. Therefore, it may be held liable for damages
caused by the negligent act of its driver who was not its special agent.
(10) Closure of Bank Account Due to “Kiting”
Reyes v. Court of Appeals

GR 95535, Jan. 21, 1991
The bank is not liable for damages for closing a depositor’s current account,
where the latter is guilty of “kiting” activities as defi ned in the Central
Bank Manual, i.e., “where a depositor, having only one account of his
own, can still engage in kiting by using the account or accounts of other
persons who may be willing to act and cooperate with him.”
86
Art. 2220
(11) No Hard and Fast Rule
Ayala Integrated Steel

Manufacturing Co., Inc. v. CA
GR 94359, Aug. 2, 1991
Moral damages includes physical suffering, mental an-
guish, fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar injury. Though incapable of
pecuniary computation, they may be recovered if they are the proximate
result of the defendant’s wrongful act or omission. Damages are not
intended to enrich the complainant at the expense of a defendant. They
are awarded only to alleviate the moral suffering that the injured party
had undergone by reason of the defendant’s culpable action.
There is no hard and fast rule in the determination of what would be a fair
amount of moral damages, since each case must be governed by its own
peculiar circumstances. Although the Court of Appeals increased the
moral and actual damages awarded by the trial court, the awards are not
excessive but only commensurate with the mental anguish, hardships,
inconvenience, and expenses that respondent suffered and incurred as a
result of the malicious prosecutions initiated by the petitioners against
him.
Art. 2220. Willful injury to property may be a legal ground for

awarding moral damages if the court should fi nd that, under the
circumstances, such damages are justly due. The same rule applies to
breaches of contract where the defendant acted fraudulently or in bad
faith.
COMMENT:
(1) Willful Injury to Property and Breaches of Contracts
If the breach of a contract is neither malicious nor fraudulent, no award of
moral damages may be given. (Francisco v.
GSIS, L-18155, Mar. 30, 1963).
Art. 2221
87
(2) Case
Vicente & Michael Lim v. CA

GR 118347, Oct. 24, 1996
75 SCAD 574
The evidence shows that private respondent made little more than taken effort
to seek the ejectment of squatters from the land, revealing her real
intention to be fi nding a way of getting out of her contract. Her failure
to make use of her resources and her insistence on rescinding the sale
show quite clearly that she was indeed just looking for a way to get out
of her contractual obligation by pointing to her own abject failure to rid
the land of squatters.
The award of moral damages is in accordance with Art. 2220 which provides
that moral damages may be awarded in case of a breach of contract where
the defendant acted fraudulently or in bad faith.
[NOTE: In view of Art. 2220, it has been held that in culpa contractual or
breach of contract, moral damages may be recovered when the defendant
acted in bad faith or was guilty of gross negligence (amounting to bad
faith) or in wanton disregard of his contractual obligation. Since the law
presumes good faith, the person claiming moral damages must prove bad
faith or ill motive by clear and convincing evidence. (MOF Co. v.
Enriquez, GR 149280, May 9, 2002).]
Section 2
NOMINAL DAMAGES
Art. 2221. Nominal damages are adjudicated in order that a right of

the plaintiff, which has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered by him.
COMMENT:
(1) The Grant of Nominal Damages — Reason Therefor
“There are instances when the vindication or recognition of the plaintiff’s
right is of the utmost importance to him as
Art. 2221
in the case of trespass upon real property. The awarding of nominal

damages does not therefore run counter to the maxim de minimio non curat lex
88
(the law does not cure or bother with trifl es).” (Report of the Code
Commission, p. 74).
LRT v. Navidad,
GR 145804, Feb. 6, 2003
Nominal damages are adjudicated in order that a right of the plaintiff, which
has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any
loss suffered by him. (Art. 2221).
It is an established rule that nominal damages cannot co-exists with
compensatory damages. (Medina v. Cresencia, 99 Phil. 506). Nor is the
award of nominal damages. Nor is the award of nominal damages in
addition to actual damages tenable.
(2) Effect of Granting Compensatory and Exemplary Damages

If compensatory and exemplary damages have been ex-
emplary damages have been awarded, this award is by itself a judicial
recognition that the plaintiff’s right has been violated. Therefore, a
further award, this time of nominal damages, is unnecessary and
improper. (Meding, et al. v. Cresencia, et al., L-8194, Jul. 11, 1956). It
should be remembered that nominal damages are merely for the
VINDICATION of a right that has been violated, not for indemnifi cation
of the loss suffered. (Ventanilla v. Centeno, L-14333, Jan. 28, 1961).
Sumalpong v. CA
GR 123404, Feb. 26,1997
79 SCAD 969
FACTS: Some species of injury have been caused to complainant because of
the medical expenses he has incurred in having his wounds treated, and
the loss of income due to his failure to work during his hospitalization.
Art. 2221
ISSUE: In the absence of competent proof of the amount of actual damages,

is the complainant entitled only to nominal damages?
HELD: Yes. Whenever there has been a violation of an ascertained legal right,
although no actual damages resulted or none are shown, the award of
nominal damages is proper. Nominal damages are adjudicated in order
that a right of the plaintiff, which has violated or invaded by the
89
defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him.
Philippine Telegraph & Telephone Corp.

& Louie Cabalit v. CA & Lolita Sipe Escoro GR 139268,
Sep. 3, 2002
FACTS: Petitioner PT&T, for a fee, undertook to send private respondent two
telegraphic money orders in the sum of P3,000. Petitioner, however,
failed to deliver the money to respondent immediately after the money
order was transmitted to its Cubao branch. It was almost two months
from transmitted that respondent was fi nally able to have her money.
Issue: For the violation of the right of private respondent to receive
timely delivery of the money transmitted thru petitioner corporation, is
an award of nominal damages appropriate?
HELD: Yes. An amount of P20,000 by way of nominal damages, considering
all that private respondent has had to go thru, is reasonable and fair.
“Nominal damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated
or recognized and not for the purpose of indemnifying the plaintiff for
any loss suffered by him.” (Art. 2221, Civil Code). (Sumalpong v. CA,
268 SCRA 764). Nominal damages may be awarded in every obligation
arising from any source enumerated in Art. 1157 or, generally, in every
case where property right is invaded.
(3) Liability of a Negligent Lawyer

A lawyer who thru negligence fails to deposit on time the appeal bond, and to
fi le the record of appeal within the extension period (asked for by him)
and granted by the Court,
Arts. 2222-2224
while not liable for actual damages, may nevertheless be liable for
nominal damages. This is discretionary on the part of the Court.
(Ventanilla v. Centeno, L-14333, Jan. 28, 1961).
90
Art. 2222. The court may award nominal damages in every
obligation arising from any source enumerated in Article 1157, or in every
case where any property right has been invaded.
COMMENT:
When Nominal Damages May Be Awarded
The assessment of nominal damages is left to the discretion of the court,
according to the circumstances of the case. (Ventanilla v. Gregorio
Centeno, L-14333, Jan. 28, 1961). An award of nominal damages
precludes the recovery of actual, moral, temperate, or moderate damages.
(Ibid.).
Dee Hua Liong Electrical Equipment

Corp. v. Reyes
GR 72182, Nov. 25, 1986
Nominal damages may be awarded, although plaintiff is not entitled to actual,
moral, or exemplary damages.
Art. 2223. The adjudication of nominal damages shall preclude

further contest upon the right involved and all accessory questions, as
between the parties to the suit, or their respective heirs and assigns.
COMMENT:
Effect of Granting Nominal Damages The Article
explains itself.
Section 3
TEMPERATE OR MODERATE DAMAGES
Art. 2224. Temperate or moderate damages, which are more than

nominal but less than compensatory damages, may be recovered when the
court fi nds that some pecuni-
Art. 2224
91
ary loss has been suffered but its amount can not, from the nature of the
case, be proved with certainty.
COMMENT:
(1) Reason for allowing Temperate or Moderate Damages
“In some States of the American union, temperate damages are allowed. There
are cases where from the nature of the case, defi nite 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 fi rm is often hard to show with certainty in terms
of money. Should damages be denied for that reason? The judge should
be empowered to calculate moderate damages in such cases, rather than
that the plaintiff should suffer, without redress, from the defendant’s
wrongful act.” (Report of the Code Commission, p. 75).
(2) Suffering of Some Pecuniary Loss

It is imperative under Art. 2224 that “some pecuniary loss has been suffered”
(though uncertain); otherwise, temperate damages cannot be recovered.
(See Victorino, et al. v. Nora [C.A.] 52 O.G. 911). As long, however, as
there has been an injury (such as a physical injury) the fact that the same
is incapable of pecuniary estimation does not preclude the right to an
indemnity. Here the judge may calculate moderate damages. (Necesito v.
Paras, 104 Phil. 75).
(3) Cases
Consolidated Plywood Industries, Inc., et al. v.

CA, et al.
GR 101706, Sep. 23, 1992
In the case at bar, there was no showing nor proof that petitioner was entitled
to an award of this kind of damages in addition to the actual damages it
suffered as a direct consequence of private respondents’ act.
The nature of the contract between the parties is such that damages which the
innocent party may have incurred can be substantiated by evidence.
Arts. 2225-2226
Ramos v. CA
GR 124354, Apr. 11, 2002
The amount of damages which should be awarded, if they are to adequately
and correctly respond to the injury caused, should be one which compensates
92
for pecuniary loss incurred and proved, up to the time of trial, and one which
would meet pecuniary loss certain to be suffered but which could not, from the
nature of the case, be made with certainty.
Temperate damages can and should be awarded on top of actual or
compensatory damages in instances where the injury is chronic and
continuing. And because of the unique nature of such cases, no
incompatibility arises when both actual and temperate damages are
provided for. The reason is that these damages cover two distinct phases.
As it would not be equitable — and certainly not in the best interests of the
administration of justice — for the victim in such cases to constantly
come before the courts and invoke their aid in seeking adjustments to the
compensatory damages previously awarded — temperate damages are
appropriate. The amount given as temperate damages, though to a certain
extent speculative, should take into account the cost of proper care.
Art. 2225. Temperate damages must be reasonable under the

circumstances.
COMMENT:
Reasonable Temperate Damages
What is reasonable is a question of fact, depending on the relevant
circumstances.
Section 4
LIQUIDATED DAMAGES
Art. 2226. Liquidated damages are those agreed upon by the parties
to a contract, to be paid in case of breach thereof.
Arts. 2227-2228
COMMENT:
Nature of Liquidated Damages
In effect, “liquidated damages” and “penalty” are the same. Neither requires
proof of actual damages. (Lambert v. Fox, 26 Phil. 588). After all, they
had been previously agreed upon.
93
Art. 2227. Liquidated damages, whether intended as an indemnity
or a penalty, shall be equitably reduced if they are iniquitous or
unconscionable.
COMMENT:
(1) Equitable Reduction of Liquidated Damages
The reason is that in both, the stipulation is contra bonos mores. It is a mere
technicality to refuse to lessen the damages to their just amount simply
because the stipulation is not meant to be a penalty. An immoral
stipulation is nonetheless immoral because it is called an indemnity.
(Report of the Code Commission, p. 75).
(2) Effect of Partial or Irregular Performance

Under Art. 2227, liquidated damages shall be reduced if iniquitous or
unconscionable. Now then, suppose there has been partial or irregular
performance, can there also be reduction?
HELD: Yes, because the fundamental rules governing “liquidated damages”
and “a penalty clause” are the same. Moreover, the liquidated damages
are presumed to be only for a total breach. Therefore, if out of 500
television sets to be delivered, 63 only are given, there can be a reduction
in the amount of liquidated damages. (Joe’s Electrical Supply v. Alto
Electronics, L-12376, Aug. 22, 1958).
Art. 2228. When the breach of the contract committed by the

defendant is not the one contemplated by the parties in agreeing upon the
liquidated damages, the law shall determine the measure of damages, and
not the stipulation.
94
COMMENT:
Rule if Breach Was Not Contemplated in the Agreement on Liquidated
Damages
The Article explains itself.
Section 5
EXEMPLARY OR CORRECTIVE DAMAGES
Art. 2229. Exemplary or corrective damages are imposed, by way of

example or correction for the public good, in addition to the moral,
temperate, liquidated or compensatory damages.
COMMENT:
(1) Reason for Imposing Exemplary or Corrective Damages
Although in the United States exemplary damages are also called “punitive”
damages, still the term “corrective” is in harmony with the modern
theory of penology.
Exemplary damages are required by public policy for wanton acts must be
suppressed. They are an antidote so that the poison of wickedness may
not run through the body politic. (Report of the Code Com., pp. 75-76).
In the absence of moral, temperate, liquidated, or compensatory damages, no
exemplary damages can be granted, for exemplary damages are allowed
only in ADDITION to any of the four kinds of damages mentioned.
(Ventanilla v. Centeno, L-14333, Jan. 28, 1961; Fores v. Miranda, 105
Phil. 266 and Francisco v. GSIS, L-18155, Mar. 30, 1963). It is advisable
to specifi cally ask in the complaint for exemplary damages (in the proper
cases), but the general prayer in the complaint for “other remedies which
may be just and equitable in the premises” can allow, if warranted, the
grant of exemplary damages. (See Darang v. Belizor, L-19487, Jan. 31,
1967).
Guilatco v. City of Dagupan and CA

GR 61516, Mar. 21, 1989
To serve as an example for the public good, it is high time that the court should
serve warning to the city or cities concerned to be more conscious of
their duty and responsibility to their constituents, especially when they
are engaged in construction work or when there are manholes on their
95
sidewalks or streets which are uncovered, to immediately cover the same,

in order to minimize or prevent accidents to the poor pedestrians.
Too often in the zeal to put up “public impact” projects such as beautifi cation
drives, the end is more important than the manner in which the work is
carried out. Because of this obsession for showing off, such trivial details
as misplaced fl ower pots betray the careless execution of the projects,
causing public inconvenience and inviting accidents.
Prudenciado v. Alliance Transport System, Inc.

GR 33836, Mar. 16, 1987
The rationale behind exemplary or corrective damages is to provide an
example or correction for the public good.
A driver running at full speed on a rainy day, on a slippery road in complete
disregard of the hazards to life and limb of other people cannot be said
to be acting on anything less than gross negligence. The frequent
incidence of accidents of this nature caused by taxi drivers, indeed,
demands corrective measures.
(2) Examples of Exemplary Damages

(a) Exemplary damages were imposed against a corporation which
persisted in oppressively invading another’s rights despite “cease
and desist orders” from the Public Service Commission. This
imposition of exemplary damages would be a reminder that
economic power will never justify a reckless disregard of the rights
of others. (Castro, et al.
v. Ice and Cold Storage Industries, et al., L-10147, Dec. 27, 1958).
(b) A victim shot in the jaw by the minor son of the defendant with the
father’s gun was given an award of P18,000. The Court said that
this will remind licensed possessors of fi rearms of their
peremptory duty to adequately safeguard such dangerous weapons
at all times, and to
take all requisite measures to prevent minors and other
unauthorized parties from having access thereto. Moreover, competent
observers have recently called attention to the fact that the growing teenage
hooliganism in our society is principally due to parent’s complacency in and
neglect of their progeny. (Araneta, et al. v. Arreglado, et al., 104 Phil. 529).
(c) Exemplary damages in the amount of P2,000 was awarded in a
case where the overseer of a mango store abused the confi dence
96
of a female customer by subjecting her to indignities. According

to the Court, this bespeaks of a perverse nature, dangerous to the
community. (Doming-ding and Aranas v. Ng, et al., 103 Phil. 111).
[NOTE: If a mayor in good faith dismisses an em-
ployee although the former was not authorized, exemplary
damages of P2,000 should be considered excessive, and must be
reduced to P1,000. Exemplary damages, in a case like this,
according to the Court, should be imposed only to curtail the
abuses that some public offi cials are prone to commit upon
coming to power, in utter disregard of the civil service rules which
constitute the only safeguard of the tenure of offi ce guaranteed by
the Constitution. (Diaz, et al. v. Amante, L-9228, Dec. 26, 1958)].
People v. Erlindo Talo

GR 125542, Oct. 25, 2000
FACTS: Accused-appellant Erlindo Talo was charged and found guilty
of forcible abduction with rape and sentenced to death and to pay
complainant Doris Saguindang the amount of P30,000 as moral
damages and costs of the suit.
HELD: The trial court’s decision was upheld but the penalty was
reduced to reclusion perpetua and with the damages awarded
modifi ed. In accordance with jurisprudence (People v. Baid, GR
129667, Jul. 31, 2000; People v. Dreu, GR 126282, Jun. 20, 2000;
and People v. Licanda, GR 134084, May 4, 2000), complainant
Saguindang must be paid P50,000 as civil indemnity, P50,000 as
moral damages, and the additional amount of P25,000 as
exemplary damages, in view of the attendance of aggravating
circumstances, pursuant to Art. 2229 of the Civil Code. (See
People v. Santos, GR 131103, and 143472, Jun. 29, 2000).
(d) If an employee commits a wrongful act, may his employer be required to
pay exemplary damages? NO, except insofar as said employer had
participated in or ratifi ed the act. The rule is that exemplary damages are
imposed primarily on the wrongdoer as a deterrent in the commission of
similar acts in the future. Since exemplary damages are penal in
character, the motive authorizing their infl iction will not be imputed by
presumption to the principal when the act is committed by an agent or
servant. Inasmuch as they are granted not by way of compensation, but
as a punishment to the offender and as a warning to others, they can only
be awarded against one who has participated in the offense and the
principal therefore cannot be held liable for them merely by reason of
97
wanton, oppressive, or malicious intent on the part of the agent.

Moreover in this jurisdiction, in case of crimes, exemplary damages may
be imposed only when the crime is committed with one or more
aggravating circumstances. (Art. 2230, Civil Code and Rotea v. Halili,
L-1203, Sep. 30, 1960).
Phoenix Construction, Inc. v. IAC

GR 65295, Mar. 10, 1987
In a suit for damages arising from a quasi-delict where the plaintiff’s
negligence was contributory, the demands of substantial justice may be
satisfi ed by allocating most of the damages (compensatory, moral, lucro
cesante on a 20-80 ratio). Thus, 20% of the damage. awarded by the
appellate court, except the award of P10,000 as exemplary damages and
P4,500 as attorney’s fees and costs, shall be borne by defendant driver.
Only the balance of 80% needs to be paid by the driver and his employer
who shall be solidarily liable therefor to the plaintiff. The award of
exemplary damages shall be borne exclusively by the defendants. The
employer, of course, is entitled to reimbursement from the driver.
(3) Proper Court
If the amount of exemplary damages is NOT specifi c the court can grant same
only in an amount that should NOT exceed its jurisdiction. (Singson, et al. v.
Aragon, et al., 92 Phil. 514).
(4) Effect of Granting Exemplary Damages on a Claim for Nominal

Damages
If exemplary damages are granted, nominal damages can not be given.
(Medina, et al. v. Cresencia, et al., L-8194, Jul. 11, 1956).
(5) Cases
Pan American World Airways, Inc.

v. IAC, et al.
L-74442, Aug. 31, 1987
A contract to transport passengers is quite different in kind and degree from
any other contractual relation. And this is because of the relation which
an air carrier sustains with the public. Its business is mainly with the
travelling public. It invites people to avail of the comforts and advantages
it offers. The contract of carriage, therefore, generates a relation attended
with a public duty. Neglect or malfeasance of the carrier’s employees,
naturally, could give ground for an action for damages.
98
By not allowing Ms. Teofi sta P. Tinitigan to board Flight 431 on April 29,
1973, plaintiff was not able to sign a contract with Mrs. Lilibeth Warner
who had earlier placed an order for a sizeable number of “capiz” shells
in which transaction Ms. Tinitigan expected to derive a profi t of
US$1,000. Ms. Tinitigan had to return to the Hotel El Embajador from
the aircraft costing her US$20. She had to pay for additional
accommodations in said hotel for US$26.15 and the damage to her
personal property amounted to US$600. The carrier, Pan American
World Airways, Inc. should be held liable to Ms. Tinitigan in the amount
of US$1,646.15 or its equivalent in Philippine currency at the present
rate of exchange as actual or compensatory damages. Pan Am having
breached
its contract with Ms. Tinitigan in bad faith, it is not error for the trial
court to have awarded exemplary damages. The rationale behind
exemplary or corrective damages is, as the name implies, to provide an
example or correction for public good. In view of its nature, it should be
imposed in such amount as to suffi ciently and effectively deter similar
breach of contract in the future by Pan Am and other airlines.
Arturo de Guzman v. NLRC

GR 90856, Jul. 23, 1992
When moral damages are awarded, exemplary damages may also be decreed.
Exemplary damages are imposed by way of example or correction for
the public good, in addition to moral, temperate, liquidated or
compensatory damages.
According to the Code Commission, “exemplary damages are required by
public policy, for wanton acts must be suppressed. They are an antidote
so that the poison of wickedness may not run through the body politic.”
These damages are legally assessible against him.
Sociedad Europea de Financiacion,

S.A., et al. v. Court of Appeals
GR 75787, Jan. 21, 1991
FACTS: Muñoz, representing a New York business fi rm, Carum Trading,
Inc. gave Rocha US$40,000 to open an insurance company in the
Philippines. With the money, Rocha organized the Capital Insurance.
Under Rocha’s direction, the company prospered. A sister corporation,
Capital Life, was later set up by Rocha. In 1958, Rocha transferred all
the Capital Insurance shares to Carum Trading. Garrido replaced Rocha
in the insurance corporation. Effective control over Capital Insurance
99
then passed to the hands of Sociedad Europea de Financiacion (SEF).

Garrido exercised that control, and was named General Manager of the
insurance fi rms. He also served as director of the companies, together
with Muñoz, Amat, Araneta and Gamboa. In 1966, Garrido and Araneta
proposed to the Board of Directors that Capital Insurance obtain a loan
of P600,000 from progressive Bank, so that a better fi nancial position
could be projected when renewal was sought of the license of its sister
corporation Capital Life. Security of the loan would consist of the SEF
shares in Capital Insurance. Garrido and Araneta also gave assurance
that the loan will not be used and would instead be placed on time deposit
in Progressive Bank. The assurance was of considerable weight since
Progressive was owned by Araneta and his family, and Garrido was
himself a director thereof. The Board approved the arrangement and the
loan was obtained with maturity of 90 days and interest at 11% per
annum. The money was deposited in favor of Capital Life. In 1966,
Garrido, as Capital Life President, executed a deed assigning to
Progressive all the rights of Capital Life in said time deposit and granted
Progressive full control of the deposit of P600,000. On the pretext that
the loan was unpaid, Progressive caused the foreclosure of the pledged
SEF shares and its sale at public auction through a notary public,
resulting in said shares being auctioned off to Progressive. SEF, Muñoz
and Amat fi led a derivative suit against Garrido, Araneta and
Progressive. They sued in their own behalf and in behalf of Capital
Insurance and prayed for annulment of the loan and the accompanying
pledge of SEF stock on the ground of breach of trust on the part of
Garrido, Araneta and the latter’s bank. They also accused Garrido and
Araneta of mismanagement of the corporation and prayed for damages.
The trial court declared the loan and foreclosure null and void. It ordered
the return of the shares to Capital Insurance, while Garrido, Araneta and
Progressive were sentenced to pay P100,000 as exemplary or corrective
damages. The Court of Appeals affi rmed the judgment of the trial court.
HELD: The Supreme Court modifi ed the judgment so as to increase to
P600,000 the exemplary or corrective damage that Garrido, et al. were
sentenced, jointly and severally, and held that it fi nds inexplicable, not
to say ludicrous, unjust and inequitable, to hold petitioners liable to the
Progressive Bank for anything on account of the latter’s so-called
“accomodation loan” of P600,000, considering that: (1) the proceeds of
the loan were immediately placed on time deposit with the same lending
institution; (2) a day after its placement, the time deposit was assigned to
the same Bank, together with all rights to the interest thereon, full control
of the deposit being given to said Bank until the accommodation loan
was fully paid; (3) the Bank was at no time under any risk whatsoever,
100
for an “accommodation” that it could recall at its pleasure because it

retained total control of the loan proceeds under time deposit with it; (4)
while retaining full disposition of the amount fi ctitiously loaned, said
Bank reserved and did exercise rights proper and appropriate only to the
lender under a genuine forbearance, such as charging interests and later,
even foreclosing on the security for alleged nonpayment; there is no
evidence that it ever set off interests on the loan with interests that the
time deposit should justly have earned, only fair arrangement in the
circumstances; (5) as found by the trial court and affi rmed by the Court
of Appeals, the loan and accompanying pledge were simulated and the
bank was a party to the simulation. The Court feels that the award of
P100,000 in exemplary or corrective damages lets the respondents off
too lightly for the part they played in this affair. Both the trial court and
the Court of Appeals found that the defendants had concocted a scheme
“to divest SEF of its interests in capital insurance and for themselves to
own the controlling interest therein,” and carried out that illicit objective.
Said award of damages should be increased to P600,000.
Northwest Airlines v. Dr. Jaime F. Laya

GR 145956, May 29, 2002
FACTS: Respondent Dr. Jaime F. Laya, a medical prac-
titioner, was bound for San Francisco via a fi rst class booking with
Northwest Airlines (NWA). After his luggage passed and was cleared
thru the x-ray machine of the Ninoy Aquino International Airport
(NAIA). Laya proceeded to NWA’s check-in counter and was issued a
boarding pass. However, while on his way requested to proceed to a long
table where passengers were lined up. There, the passenger’s Samsonite
hand-carried attaché cases were being subjected to further inspection.
Since he noticed that he was carrying an attaché case similar to those
being inspected, Laya acceded to the request.
In the course of the inspection, however, Laya noticed that his attaché case
was treated differently. While the other passengers were eventually
allowed to carry their cases on board the plane, he was asked to place his
attaché case in a black garbage bag for which he was handed two paper
envelopes where he could put its contents. Laya felt that he
was singled out for this extraordinary treatment. His situation was aggravated
when the envelopes turned out to be too fragile for the contents of his
attaché case. The envelopes were eventually torn. Laya asked for a
replacement and provided with a used Duty-Free bag.
On May 25, 1991, Laya wrote to NWA and reported the rude treatment
accorded him by its personnel. An exchange of communication ensued
101
but NWA did not heed his complaint. On Oct. 31, 1991, he fi led a
complaint for damages against NWA before Br. 84 of RTC QC. After
trial, judgment was rendered in favor of Laya, and against NWA. Both
parties appealed the decision. NWA appealed the unfavorable ruling
against it while Laya appealed the award in his favor of only P1 million
as moral damages and P500,000 exemplary damages. In its decision,
promulgated on Aug. 16, 2000, the Court of Appeals (CA) affi rmed the
trial court with modifi cations by reducing the award of moral damages
to P500,000 and the exemplary damages to P250,000.
Its motion for reconsideration having been denied, NWA went to the Supreme
Court for relief, alleging the CA: (1) gravely erred in ruling that
respondent is entitled to the award of damages, and (2) not ruling that the
lower court erred in fi nding that the United States Federal Airation
Administration (FAA) Security Directive 91-11 is unreasonable and did
not coincide with the carrier’s promise of polite and gracious service.
HELD: The Supreme Court is convinced that Laya suffered mental anguish
and serious anxiety because of his experience with NWA personnel for
which he should be awarded moral damages. He is also entitled to
exemplary damages by way of correction to the NWA for the public good
(Art. 2229, Civil Code) and in view of the malevolent manner by which
the NWA personnel treated him. Damages are not intended to enrich a
plaintiff at the expense of the defendant (See Philtranco Services, Inc. v.
CA, 273 SCRA 562 [1987]), hence, the Court is further reducing the
award of moral damages form P500,000 to P100,000 and the amount of
exemplary damages is reduced from P250,000 to P50,000. The Court
likewise awards attorney’s fees in the amount of P25,000. (Art. 2208,
Civil Code).
On the other point raised in the instant case, the Supreme Court opined that
the tragic event that unfolded on Sept. 11, 2001 underscores, more than
ever, that airport and airline personnel cannot afford any lapse in the
implementation of security measures mean to ensure the safety of
airplane crew and passengers. Airline carriers hold the lives of
passengers in their hands and they must at all times be vigilant on matters
affecting their safety.
After a careful review of the records of this case, the Court fi nds that the
security procedures adopted issued by the NWA was only the result of a
directive issued by the FAA of which the NWA, being a U.S. carrier, is
subject to FAA Security Directive 91-11, which was in effect at the time
of the incident. Thus, on the action required by U.S. Air Carriers the
following procedures, in part, shall be applied to all hardshell black,
102
brown, or burgundy samsonite briefcase by all U.S. air carrier on fl ights

departing Asia, Africa, and Europe. All black, brown, or burgundy
Samsonite briefcases shall only be transported as check baggage. The air
carrier shall deny the passenger any access to the briefcase after it has
been tendered until the briefcase is claimed by the passenger upon arrival
at destination. Following the application of the procedures above, the
briefcase, shall be transported as checked baggage. However, the
contents of the briefcase may be returned to the passenger for personal
use aboard the fl ight.
It may be true that Laya was greatly inconvenienced by the act of the NWA
when his attaché case was subjected to further inspection and not allowed
to bring it on board the plane. Nevertheless, while the protection of
passengers must take precedence over convenience, the implementation
of security measures must be attended by basic courtesies. The Court is
inclined to believe the testimony of Laya that the personnel who
examined his attaché case were rude, brusque, arrogant, and
domineering. On this score, the Supreme Court agrees with the trial court
and the CA in stating that “[a]ny security measure must coincide with
the passenger’s right to
103
Arts. 2230-2232
be treated by the carrier with kindness, respect, and utmost consideration

in all matters relative to his trip.”
Art. 2230. In criminal offenses, exemplary damages as a part of the civil

liability may be imposed when the crime was committed with one or more
aggravating circumstances. Such damages are separate and distinct from
fi nes and shall be paid to the offended party.
COMMENT:
Exemplary Damages in Criminal Offenses
If a driver, in a criminal case, is convicted and made civilly liable, but
exemplary damages are NOT IMPOSED, the employer cannot in a
subsequent case brought to recover subsidiary civil liability against him
— be made liable for exemplary damages. As Justice JBL Reyes has
aptly pointed out — “No such 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. (Cf. Civil Code, Art.
2064).” (Vicente Bantoto, et al. v. Salvador Bobis, et al. & Crispin
Vallejo, L-18966, Nov. 22, 1966).
Art. 2231. In quasi-delicts, exemplary damages may be granted if the

defendant acted with gross negligence.
COMMENT:
Exemplary Damages in Quasi-Delicts
Here the defendant must have acted with GROSS NEGLIGENCE. And even
then, the grant is only discretionary on the part of the Court.
Art. 2232. In contracts and quasi-contracts, the court may award

exemplary damages if the defendant acted in a wanton, fraudulent,
reckless, oppressive, or malevolent manner.
Art. 2232
104
COMMENT:
(1) Exemplary Damages in Contracts and Quasi-Contracts
Under Art. 2232, exemplary damages may be awarded in contracts and quasi-
contracts if defendant acts in a wanton, fraudulent, reckless, oppressive,
or malevolent manner. (MOF Co. v. Enriquez, GR 149280, May 9, 2002).
(2) When Employer Is Also Liable for Exemplary Damages
Lourdes Munsayac v. Benedicta de Lara

L-21151, Jun. 26, 1968
FACTS: A driver of a jeepney was found recklessly negligent in causing
injuries to his passenger. Is the owner-operator of the jeepney liable for
exemplary damages (in addition to other kinds of damages)?
HELD: Not necessarily. A principal or master can be held liable for
exemplary or punitive damages based upon the wrongful act of his agent
or servant only when he participated in the doing of such wrongful act
or has previously authorized or subsequently ratifi ed it, with full
knowledge of the facts. Exemplary damages punish the intent — and this
cannot be presumed on the part of the employer merely because of the
wanton, oppressive, or malicious intent on the part of the agent.
Silverio Marchan and Philippine Rabbit Bus Co., Inc. v.

Arsenio Mendoza, et al.
L-24471, Jan. 31, 1969
FACTS: The driver of a common carrier, thru gross or reckless negligence
caused injury to some of the passengers. Issue: May exemplary or
corrective damages be awarded?
HELD: Yes, exemplary damages may be awarded in contracts and quasi-
contracts if the defendant company, thru its driver, acted in a “wanton,
fraudulent, reckless, oppressive or malevolent manner.” (Art. 2232; see
also Laguna-Tayabas Bus Co. v. Diasanta, L-19882, Jun. 30, 1964).
Arts. 2233-2234
Noda v. Cruz-Arnaldo
GR 67322, Jun. 22, 1987
The insured’s claim or demand for exemplary damages cannot be sustained
if he fails to show that the insurer, in contesting payment, had acted in a wanton,
105
oppressive or malevolent manner to warrant the imposition of corrective
damages.
Art. 2233. Exemplary damages cannot be recovered as a matter of

right; the court will decide whether or not they should be adjudicated.
COMMENT:
Exemplary Damages Not a Matter of Right
The grant is discretionary. Be it noted, however, that in the Court’s discretion,
the same may be granted even if not expressly pleaded or prayed for.
(See Singson v. Aragon, 92 Phil. 514).
Isabelita Vital-Gozon v.
CA & Alejandro dela Fuente
GR 129132, Jul. 8, 1998
Under Art. 2233, exemplary damages cannot be recovered as a matter of right;
the court will decide whether or not they should be adjudicated.
Considering that a public offi cial is the culprit here, the propriety of such an
award cannot be questioned. It serves as an example or deterrent so that
other public offi cials be always reminded that they are public servants
bound to adhere faithfully to the constitutional injunction that a public
offi ce is a public trust. That the aggrieved party happened to be another
public offi cial will not serve to mitigate the effects of petitioner’s having
failed to observe the required degree of accountability and responsibility.
Art. 2234. While the amount of the exemplary damages need not be
proved, the plaintiff must show that he is entitled to moral, temperate or
compensatory damages before
Art. 2234
106
the court may consider the question of whether or not exemplary damages
should be awarded. In case liquidated damages have been agreed upon,
although no proof of loss is necessary in order that such liquidated
damages may be recovered, nevertheless, before the court may consider
the question of granting exemplary in addition to the liquidated damages,
the plaintiff must show that he would be entitled to moral, temperate or
compensatory damages were it not for the stipulation for liquidated
damages.
COMMENT:
(1) Amount of Exemplary Damages Need Not Be Proved
Exemplary damages need NOT be alleged and proved (Singson, et al. v.
Aragon, et al., 92 Phil. 514) but note the conditio sine qua non in the
article.
(2) Culpa Contractual

In a case of culpa contractual, while diligence of a good father of a family in
selecting and supervising employees is NOT a proper or complete
defense for the employer, still it is important that such damages be shown
or proved: fi rstly, because the damages may be mitigated or decreased;
and secondly, because if this diligence be not shown, exemplary damages
may be charged against the employer. (See Villa Rey Transit v. Bello, L-
18957, Apr. 23, 1963).
(3) Case
Philippine National Bank v. CA, Spouses Antonio

So Hu & Soledad del Rosario and Spouses
Mateo Cruz & Carlita Ronquillo
GR 126908, Jan. 16, 2003
FACTS: Spouses So Hu have not suffi ciently proved that PNB acted
maliciously and in bad faith when it foreclosed the property. On the
contrary, PNB believed, although mistakenly, that it still had an unpaid
claim for which the property stood as a security.
Art. 2235
HELD: Records do not support any basis for awarding moral damages to
private respondents, spouses So Hu. Such damages, to be recoverable, must be
the proximate result of a wrongful act or omission the factual basis for which
107
is satisfactorily established by the aggrieved party. (Expertravel & Tours, Inc.
v. CA, 309 SCRA 141 [1991]).
Art. 2235. A stipulation whereby exemplary damages are renounced

in advance shall be null and void.
COMMENT:
The Renouncing in Advance of Exemplary Damages This renouncing is
NULL and VOID.
108
TITLE XIX
CONCURRENCE AND PREFERENCE
OF CREDITS
Chapter 1
GENERAL PROVISIONS
Introductory Comment (Features of the Title)

“The title on ‘Concurrence and Preference of Credits’ characterized by four
(4) features:
(1) the liens and mortgages with respect to specifi c movable and
immovable property have been increased;
(2) the proposed Civil Code and the Insolvency Law have been
brought into harmony;
(3) preferred claims as to the free property of the insolvent have also
been augmented; and
(4) the order of the preference laid down in articles 1926 and 1927 of
the Civil Code, among claims with respect to specifi c personal and
real property, has been abolished, except that taxes must fi rst be
satisfi ed.” (Report of the Code Commission, pp. 163-164).
Art. 2236. The debtor is liable with all his property, present and
future, for the fulfi llment of his obligations, subject to the exemptions
provided by law.
COMMENT:
(1) What Creditor Can Do if Debtor Has NO Money
If a debtor has no money, what can the creditor do to collect the credit?
Art. 2236
109
ANS.:
(a) attach properties not exempt from attachment, forced sale, or
execution
(b) exercise accion subrogatoria (the right to exercise all rights and
actions except those inherent in the person)
(c) exercise accion pauliana (impugn or rescind acts or contracts done
by the debtor to defraud the creditors). (Art. 1177; see Arts. 1380
to 1389).
(d) in certain cases ask for datio in solutom, cession (assignment in
favor of creditors), fi le insolvency proceedings (provided all the
requisite conditions are present)
(e) wait till the debtor has money or property in the future (after all,
liability is with present and future property).
[NOTE: The obligations must already be DUE.
(Jacinto v. De Leon, 5 Phil. 992).]
(2) Examples of Properties Exempt from Attachment

(a) the family home except in certain cases. (Art. 155, Family Code).
(b) the right to support, annuities, pensions (in certain instances).
(c) property in custodia legis. (Springer v. Odlin, 3 Phil. 348).
(d) properties of a municipal corporation used for governmental
purposes. (Viuda de Tan Toco v. Mun. Council of Iloilo, 49 Phil.
52).
(e) in certain cases, homesteads acquired under the Public Land Act.
(See Beach v. PCC & Sheriff, 49 Phil. 365).
(f) those mentioned in Rule 39, Sec. 13, Rules of Court.
(3) Case
DBP v. Minister of Labor
GR 75801, Mar. 20, 1991
FACTS: The Samahan, in representation of its 1,000 members, fi led a
complaint against Riverside Mills Corporation
Art. 2237
110
for non-payment of Presidential Decree 1713’s P1.00 daily wage

increase and P60 monthly emergency cost of living allowance with the
Ministry of Labor. The MOLE ordered Riverside to pay the complainant-
Samahan additional mandatory ECOLA of P60 a month and P1.00
increase in the minimum wage, retroactive as of August 1981.
Thereafter, the balance of the judgment award was computed at P3.3
million. It appears that the Development Bank of the Philippines had
instituted extrajudicial foreclosure proceedings as early as 1983 on the
properties and other assets of Riverside, as a result of the latter’s failure
to meet its obligations on the loan it had previously secured from DBP.
Thereafter, Samahan sought to enforce the decision-award against DBP.
A notice of garnishment was served upon DBP for the amount of P3.3
million.
ISSUE: Whether a writ of garnishment may be issued against the proceeds of
Riverside’s properties foreclosed by DBP and sold to Rosario Textile
Mills, by the application of the worker’s right of preference under Art.
110 of the Labor Code.
HELD: The Supreme Court set aside the order of the Ministry of Labor and
held that the disputed garnishment of the money paid by Rosario to DBP
corresponding to the partial installment of the sales price of RMC’s
foreclosed properties is not justifi ed. The authority of the sheriff is
limited to money or properties belonging to the judgment debtor in the
labor case concerned. Hence, when the sheriff garnishes the moneys paid
by the employer (Rosario Textile Mills) to Development Bank of the
Philippines, the sheriff, in effect garnished funds not belonging to the
employer but to the DBP. This is violative of the basic rule that the power
of the court or tribunal in the execution of its judgment extends only over
properties unquestionably belonging to the judgment debtor.
Undoubtedly, when the sheriff garnished the funds belonging to the
Development Bank of the Philippines, he exceeded the authority vested
in him in the writ of execution, and when the Deputy Minister of Labor
sustained the same in his order, he acted with grave abuse of discretion
correctible by certiorari.
Art. 2237. Insolvency shall be governed by special laws insofar as

they are not inconsistent with this Code.
Arts. 2238-2239
COMMENT:
Civil Code Superior to Special Laws on Insolvency
(a) In Velayo v. Shell Co. (Phil.) (100 Phil. 187), the Supreme Court
held that while the acts of a creditor who disposes of his own credit,
111
and not the insolvent’s property, but in a scheme to remove such

property from the possession and ownership of the insolvent, may
not come within the purview of Sec. 37 of the Insolvency Law
which makes a person coming under it liable for double the value
of the property sought to be disposed of, still said creditor can be
so held liable for such damages under Arts. 2229, 2232, 2142 and
2143.
(b) It is clear under the Article that in case of conflict, it is the Civil
Code that prevails.
Art. 2238. So long as the conjugal partnership or absolute

community subsists, its property shall not be among the assets to be taken
possession of by the assignee for the payment of the insolvent debtor’s
obligations, except insofar as the latter have redounded to the benefi t of
the family. If it is the husband who is insolvent, the administration of the
conjugal partnership or absolute community may, by order of the court,
be transferred to the wife or to a third person other than the assignee.
COMMENT:
Exemption of Properties of the Conjugal Partnership or of the Absolute
Community
The exemption applies provided that:
(a) the conjugal partnership or the absolute community subsists AND
(b) the obligation did NOT redound to the benefi t of the family.
Art. 2239. If there is property, other than that mentioned in the

preceding article, owned by two or more persons, one of whom is the
insolvent debtor, his undivided share
Art. 2240
or interest therein shall be among the assets to be taken possession of by

the assignee for the payment of the insolvent debtor’s obligations.
COMMENT:
Rule in Case of Co-Ownership
The undivided share or interest shall be possessed by the assignee.
112
Art. 2240. Property held by the insolvent debtor as a trustee of an

express or implied trust, shall be excluded from the insolvency
proceedings.
COMMENT:
Property Held Because of an Express or Implied Trust
The reason for the exemption is obvious: the trustee is NOT the owner of the
property held. Hence, it should not respond for the insolvent trustee’s
obligations.
113
Chapter 2
CLASSIFICATION OF CREDITS
Art. 2241. With reference to specifi c movable property of the debtor,

the following claims or liens shall be preferred:
(1) Duties, taxes and fees due thereon to the State or any subdivision
thereof;
(2) Claims arising from misappropriation, breach of trust, or
malfeasance by public offi cials committed in the performance of their
duties, on the movables, money or securities obtained by them;
(3) Claims for the unpaid price of movables sold, on said movables,
so long as they are in the possession of the debtor, up to the value of the
same; and if the movable has been resold by the debtor and the price is
still unpaid, the lien may be enforced on the price, this right is not lost by
the immobilization of the thing by destination, provided it has not lost its
form, substance and identity, neither is the right lost by the sale of the
thing together with other property for a lump sum, when the price thereof
can be determined proportionally;
(4) Credits guaranteed with a pledge so long as the things pledged
are in the hands of the creditor, or those guaranteed by a chattel mortgage,
upon the things pledged or mortgaged, up to the value thereof;
(5) Credits for the making, repairs, safekeeping or preservation of
personal property, on the movable thus made, repaired, kept or possessed;
(6) Claims for laborers’ wages, on the goods manufactured or the
work done;
(7) For expenses of salvage, upon the goods salvaged;
Art. 2241
114
(8) Credits between the landlord and the tenant, arising from the
contract of tenancy on shares, on the share of each in the fruits or harvest;
(9) Credits for transportation, upon the goods carried, for the price
of the contract and incidental expenses, until their delivery and for thirty
days thereafter;
(10) Credits for lodging and supplies usually furnished to travellers
by hotel keepers, on the imovables belonging to the guest as long as such
movables are in the hotel, but not for money loaned to the guests;
(11) Credits for seeds and expenses for cultivation and harvest
advanced to the debtor, upon the fruits harvested;
(12) Credits for rent for one year, upon the personal property of the
lessee existing on the immovable leased and on the fruits of the same, but
not on money or instruments of credit;
(13) Claims in favor of the depositor if the depositary has wrongfully
sold the thing deposited, upon the price of the sale.
In the foregoing cases, if the movables to which the lien or preference
attaches have been wrongfully taken, the creditor may demand them from
any possessor, within thirty days from the unlawful seizure.
COMMENT:
(1) Credits Over Specifi c Personal Properties (a) The order
in this Article is NOT important.
(b) What is important is that:

1) those credits which enjoy preference with respect to specifi
c movables exclude all others to the extent of the value of the
personal property to which the preference refers (Art. 2246);
2) if there are two or more credits with respect to the same
specifi c movable property, they shall be satis-
Art. 2241
fi ed pro rata, after the payment of duties, taxes and fees due
the State or any subdivision thereof. (Art. 2247).
3) Duties, taxes, and fees due the Government enjoy priority
only when they are with reference to a specifi c movable
property, under Art. 2241(1) of the new Civil Code, or
immovable property, under Art. 2242(1) of the same Code –
– with reference to the other real and personal property of
115
the debtor, sometimes referred to as “free property,” the

taxes and assessments due the National Government, other
than those in Arts. 2241(1) and 2242(2) of the new Civil
Code, will come only in ninth place in the order of
preference. (In Re: Petition for Assistance in the Liquidation
of the Rural Bank of Bokod [Benguet], Inc., PDIC v. BIR,
511 SCRA 123 [2006]).
(2) Example
Sonia has one car, the taxes on which have not yet been paid. Once, the car
fell into the sea, was salvaged, was repaired, and has now been pledged
with a creditor. If Sonia is insolvent and has not paid for any of the acts
done on her car, how will the following be paid: the State, the person
who salvaged it, the repairer, and the pledgee?
ANS.:
(a) All said 4 credits have preference over the car to the exclusion of
all other creditors. (Art. 2246).
(b) The State will fi rst be paid for taxes on the car. (Art. 2247).
(c) The salvagor, the repairman, and the pledgee will all be paid pro
rata from the remaining value of the car. (Art. 2247). There is no
preference as among them; there is only a CONCURRENCE.
(3) Nature of the Claims or Credits

The claims or credits enumerated in Art. 2241 are considered:
Art. 2241
(a) pledges of personal property;

(b) or liens within the purview of legal provisions governing
insolvency. (Art. 2243).
[NOTE: As liens, they are considered charges; generally, unless
otherwise stated, they are NOT possessory liens with the right of
retention. (See Graño v. Paredes, 50 Phil. 6).]
(4) Par. 1 — Taxes, etc.

The duties, taxes, and fees referred to are those ON the specifi c movable
concerned.
116
(5) Par. 3 — Unpaid Price of Movables SOLD There are two

liens referred to here:
(a) possessory lien (as long as the property is still in the possession of
the debtor)
(b) ordinary lien on the PRICE (not a possessory lien) if the property
has been resold and still unpaid. (See Banco Español-Filipino v.
Peterson, 7 Phil. 409 and Hunter, Kerr & Co. v. Murray, 48 Phil.
499).
(6) Par. 4 — Pledge or Chattel Mortgage

Under the old law, the Court held that a repairer has preferential rights over a
chattel mortgage of the same property; thus, the chattel mortgagee
cannot get the property from the repairer without fi rst paying for the
services. (Bachrach Motor Co. v. Mendoza, 43 Phil. 410; PCC v. Webb
and Falcon, 51 Phil. 745 and Phil. Trust Co. v. Smith Navigation Co.,
64 Phil. 830).
It would seem, however, that the preference has now been abolished under
Art. 2247 of the Civil Code.
(7) Par. 6 — Laborers’ Wages

(a) This applies only to personal, not to real property. (The latter is
governed by Par. 3 of Art. 2242).
Art. 2242
(b) The laborer must have been employed by the owner of the goods,
not by the contractor who in turn was employed to do the work.
(See Bautista v. Auditor General,
97 Phil. 244).
(8) Last Paragraph — Wrongful Taking

This applies only when the debtor still OWNS the property wrongfully taken,
not when he has lost ownership over the same. (See Peña v. Mitchell, 9
Phil. 588).
(9) Case
Ouano v. CA, et al.

GR 95900, Jul. 23, 1992
117
Art. 667 of the Code of Commerce, the period during which the lien shall
subsist is 20 days, has been modifi ed by the Civil Code. Article 2241,
whereof, provides that credits for transportation of the goods carried, for
the price of the contract and incidental expenses shall constitute a
preferred claim or lien on the goods carried until their delivery and for
30 days thereafter. During this period, the sale of the goods may be
requested, even though there are other creditors and even if the shipper
or consignee is insolvent. But this right may not be made use of where
the goods have been delivered and were turned over to a third person
without malice on the part of the third person and for a valuable
consideration. In the present case, the cargo of cement was unloaded
from the vessel and delivered to the consignee on Oct. 3, 1980, without
any oral or written notice or demand having been made on respondent
Supreme Merchant Construction Supply, Inc. for unpaid freight on the
cargo. Consequently, after the lapse of 30 days from the date of delivery,
the cargo of cement had been released from any maritime lien for unpaid
freight.
Art. 2242. With reference to specifi c immovable property and real

rights of the debtor, the following claims, mortgages and liens shall be
preferred, and shall constitute an encumbrance on the immovable or real
right:
Art. 2242
118
(1) Taxes due upon the land or building;

(2) For the unpaid price of real property sold, upon the immovable
sold;
(3) Claims of laborers, masons, mechanics and other workmen, as
well as of architects, engineers and contractors, engaged in the
construction, reconstruction or repair of buildings, canals or other works,
upon said buildings, canals or other works;
(4) Claims of furnishers of materials used in the construction,
reconstruction, or repair of buildings, canals and other works, upon said
buildings, canals or other works;
(5) Mortgage credits recorded in the Registry of Property, upon the
real estate mortgaged;
(6) Expenses for the preservation or improvement of real property
when the law authorizes reimbursement, upon the immovable preserved
or improved;
(7) Credits annotated in the Registry of Property, in virtue of a
judicial order, by attachments the executions, upon the property affected,
and only as to later credits;
(8) Claims of co-heirs for warranty in the partition of an immovable
among them, upon the real property thus divided;
(9) Claims of donors of real property for pecuniary charges or other
conditions imposed upon the donee, upon the immovable donated;
(10) Credits of insurers, upon the property insured, for the insurance
premium for two years.
COMMENT:
(1) Credits Over Specifi c Real Properties
Comments Nos. 1 and 2 in the preceding article are ap-
plicable to this article, except that the reference to “movables” should
now apply to “real property or immovables.” (See Arts.
2248 and 2249, Civil Code).
Art. 2242
(2) Concurrence, Not Preference

Again, it must be stressed that with the sole exception of the State, the
creditors with respect to the SAME specifi c immovable merely CONCUR;
there is NO PREFERENCE.
119
(See Arts. 2248 and 2249, Civil Code).
(3) Case
Carried Lumber Co. v. ACCFA

L-21836, Apr. 22, 1975
FACTS: The owner of a certain warehouse was indebted to two persons:
the mortgagee thereof, and the person who furnished materials
used in its construction. There are no other creditors. Is there a
need for insolvency proceedings?
HELD: There is no need for insolvency proceedings, because the two
credits can be satisfi ed PRO RATA from the amount that can be
obtained in the foreclosure sale of the warehouse, applying Arts.
2242 and 2249 of the Civil Code.
(4) Refectionary Credit

This is a credit for the repair or reconstruction of something that had
previously been made. (See Art. 2242, No. 3). Ordinarily, an entirely new
work is not included, although Spanish jurisprudence appears to have
sanctioned this broader conception in certain cases. (Director of Public
Works v. Sing Joco, 53 Phil. 205).
(5) Case
Atlantic Erectors, Inc. v. Herbal Cove Realty

Corp.
GR 146568, Mar. 20, 2003
FACTS: Petitioner avers that its money claim on the cost of labor and
materials for the townhouses it constructed on the respondent’s land is a
proper lien that justifi es the annotation of a notice of lis pendens on the
land titles. For
Art. 2242
petitioner, the money claim constitutes a lien that can be enforced to

secure payment for the said obligations. It argues that, to preserve the
alleged improvement it had made on the subject land, such annotation on
the property titles of respondent is necessary.
Respondent Herbal Cove, upon the other hand, argues that the annotation, is
bereft of any factual or legal basis, because petitioner’s complaint does
not directly affect the title to the property, or the use of the possession
120
thereof. It also claims that petitioner’s complaint did not assert

ownership of the property or any right to possess it. Respondent attacks
as baseless the annotation of the Notice of Lis Pendens thru the
enforcement of a contractor’s lien under Art. 2242. It points out that the
said provision applies only to cases in which there are several creditors
carrying on a legal action against an insolvent debtor.
Petitioner proceeds on the premise that its money claim involves the
enforcement of a lien and since the money claim is for the non-payment
of materials and labor used in the construction of townhouses, the lien
referred to would have to be that provided under Art. 2242, which
describes a contractor’s lien over an immovable property.
ISSUE: Whether or not money claims representing costs of materials for and
labor on the houses constructed on property are a proper lien for
annotation of lis pendens on the property title.
HELD: The pendency of a simple collection suit arising from the alleged non-
payment of construction services, materials, unrealized income, and
damages does not justify the annotation of a notice of lis pendens on the
title to a property where construction has been done.
A careful examination of petitioner’s complaint, as well as the relief it seeks,
reveals that no such lien or interest over the property was ever alleged.
The complaint merely asked for the payment of construction services and
materials plus damages, without mentioning — much less asserting — a
lien or an encumbrance over the property. Verily, it was a purely personal
action and a simple collection case. It did
Art. 2243
not contain any material avertment of any enforceable right, interest or

lien in connection with the subject property. As it is, petitioner’s money
claim cannot be characterized as an
action that involves the enforcement of a lien or an encumbrance, one that
would warrant the annotation, of the Notice of Lis Pendens. Indeed, the
nature of an action is determined by the allegations of the complaint.
(Producers Bank of the Phils. v. Bank of the Philippine Islands, 340
SCRA 87 [2000] and City of Olongapo v. Stallholders of the East Bajac-
Bajac Public Market of Olongapo City, 343 SCRA 705 [2000]).
Even assuming that petitioner has suffi ciently alleged such lien or
encumbrance in its complaint, the annotation of the Notice of Lis
Pendens would still be unjustifi ed, because a complaint for collection
and damages is not the proper mode of the enforcement of a contractor’s
lien.
121
Clearly then, neither Art. 2242 nor the enforcement of the lien thereunder is
applicable here, because petitioner’s complaint failed to satisfy the
requirement. Nowhere does it show that respondent’s property was
subject to the claims of other creditors or was insuffi cient to pay for all
concurring debts. Moreover, the complaint did not pertain to insolvency
proceedings or to any other action in which the adjudication of claims of
preferred creditors could be ascertained.
Art. 2243. The claims or credits enumerated in the two preceding

articles shall be considered as mortgages or pledges of real or personal
property, or liens within the purview of legal provisions governing
insolvency. Taxes mentioned in No. 1, Article 2241, and No. 1, Article 2242,
shall fi rst be satisfi ed.
COMMENT:
(1) Nature of the Claims or Credits
They are considered as pledges or mortgages.
(2) Comment of the Code Commission

“The question as to whether the Civil Code and the Insolvency Law can be
harmonized is settled in this article. The
122
preference named in Arts. 2241 and 2242 are to be enforced in
accordance with the Insolvency Law. Taxes on the specifi c property will
be paid fi rst.” (Report of the Code Commission, p. 164).
Art. 2244. With reference to other property, real and personal, of the
debtor, the following claims or credits shall be preferred in the order
named:
(1) Proper funeral expenses for the debtor, or children under his or
her parental authority who have no property of their own, when approved
by the court;
(2) Credits for services rendered the insolvent by employees,
laborers, or household helpers for one year preceding the commencement
of the proceedings in insolvency;
(3) Expenses during the last illness of the debtor or of his or her
spouse and children under his or her parental authority, if they have no
property of their own;
(4) Compensation due the laborers or their dependents under laws
providing for indemnity for damages in cases of labor accident, or illness
resulting from the nature of the employment;
(5) Credits and advancements made to the debtor for support of
himself or herself, and family, during the last year preceding the
insolvency;
(6) Support during the insolvency proceedings, and for three months
thereafter;
(7) Fines and civil indemnification arising from a criminal offense;
(8) Legal expenses, and expenses incurred in the administration of
the insolvent’s estate for the common interest of the creditors, when
properly authorized and approved by the court;
(9) Taxes and assessments due the national government, other than
those mentioned in Articles 2241, No. 1, and 2242, No. 1;
Art. 2244
123
(10) Taxes and assessments due any province, other than those
mentioned in Articles 2241, No. 1, and 2242, No. 1;
(11) Taxes and assessments due any city or municipality, other than those
mentioned in Articles 2241, No. 1, and 2242, No. 1;
(12) Damages for death or personal injuries caused by a quasi-delict;
(13) Gifts due to public and private institutions of charity or benefi
cence;
(14) Credits which, without special privilege, appear in (a) a public
instrument; or (b) in the fi nal judgment, if they have been the subject of
litigation. These credits shall have preference among themselves in the
order of priority of the dates of the instruments and of the judgments,
respectively.
COMMENT:
(1) Order of Preference in Connection With OTHER Properties
(a) The order of preference here in Art. 2244 is VERY IMPORTANT.
(See Art. 2251).
(b) The order of preference here does not refer to specifi c real or
personal property. It refers to other property.
(2) Example
A, an insolvent, owes P500,000 in favor of a funeral parlor, P1 million for the
hospital expenses during the cancer illness of his late wife, and P100,000
in favor of a pedestrian whom he had hurt while driving his car carelessly
and for which he was held criminally and civilly liable. Unfortunately,
he has only P600,000 and an automobile, the purchase price of which he
has not yet paid. Give the order of preference of the various creditors
involved.
ANS.:
(a) With respect to the automobile specifi c personal property the
unpaid seller shall be preferred. (Art. 2241).
(b) With respect to the P600,000 Art. 2244 (should be applied). The
funeral parlor comes fi rst, then the hospital, then the pedestrian.
Here there is NO pro rata sharing; there is a preference. Therefore,
the funeral parlor will be given P500,000; the hospital only
P100,000. The hospital cannot recover the defi ciency of
P900,000; and the pedestrian cannot recover his P100,000.
124
(3) Taxes
Note that under Art. 2244, taxes (duties, assessments) are placed only as Nos.
9, 10, 11. This rule applies to property other than specifi c. If the property
is specifi c, taxes are given fi rst preference. (See Arts. 2243, 2247, 2249).
(4) Re Par. 14 (Ordinary Credits and Final Judgments)

It would seem here that an ordinary credit evidenced by a public instrument
and a fi nal judgment are placed on an EQUAL PLANE; hence, if both
are of the same date, there will be a pro rata sharing.
(5) Some Decided Cases
Jesus Gigante v. Republic Savings Bank and Rolando

Mallari
L-29696, Nov. 29, 1968
FACTS: A parcel of land located in Caloocan City was registered in the name
of Rolando Mallari, but a house thereon was in the name of his father,
Dominador Mallari (in the tax assessment rolls of Caloocan City).
However, the son, Rolando, declared the house to be in his name; he
presented the tax declaration in his name, and had the tax declaration by
his father cancelled.
On Apr. 23, 1959, Rolando borrowed P18,000 from the Republic Bank, with
the land and the house as security in the form of a mortgage; the
mortgage was duly registered on Apr. 24, 1959, Rolando failed to pay
the loan; the Bank foreclosed on the mortgaged; the Bank then bought
on Jun. 28, 1960 the land and the house, and a Torrens Transfer Certifi
cate of Title was issued to it on Jul. 5, 1961.
Art. 2244
In the meantime the father, Dominador, had borrowed from one Jesus Gigante
P1,570. And on May 6, 1958, for failure to pay, Dominador was ordered to give
Jesus the sum borrowed with interest and attorney’s fees. Pursuant to a writ of
execution, the Sheriff levied — on May 29, 1961 — the house in question.
Jesus bought the house at public auction on Jun. 23, 1961, and asked for a writ
of possession. Neither judgment nor levy nor sale was recorded on the Torrens
Title. The Bank blocked this writ of possession on the ground that it was
already the owner of the land and the house. Jesus, alleging ownership to the
house, now sues the Bank and Rolando on the ground that the transfer from
Dominador to Rolando was fi ctitious and void, but Dominador was not made
a party to the suit. Issue: Who should be considered the owner of the house?
125
HELD:
(a) The Republic Bank should be considered the owner of the house
(and of the land). Reason: The judgment, levy and sale in Jesus’
favor is not recorded on the Torrens Title. Upon the other hand,
the Bank’s right is based on a real estate mortgage duly recorded
on Apr. 24, 1959. The Bank’s registered mortgage is thus superior
to both said judgment and levy and sale. By virtue of the
foreclosure sale, the land and the house cannot now be taken by
Jesus. Note that the Bank never acted in bad faith.
(b) The transfer of the house — alleged to be fi ctitious and fraudulent
— from Dominador, the father, to Rolando, the son, cannot prosper
— for Dominador, an indispensable party, is not a party to the
present case. Dominador is entitled to be heard to defend the
validity of the transfer to his son, Rolando.
Reyes v. De Leon
L-22331 Jun. 6, 1967
FACTS: To secure an obligation, a house owner sold it a retro to X (the
evident purpose was to create an equitable mortgage). This sale a
retro was unrecorded.
Later, the owner mortgaged the same property to Y. This time, the
mortgage was registered. Which mortgagee is preferred?
HELD: The second mortgagee is preferred because the mortgage in his favor
was registered. It would have been different had the equitable mortgage
(in the guise of the pacto de retro sale) been registered.
Manabat v. Laguna Federation of Facomas

L-23888, Mar. 18, 1967
FACTS: Over a certain real property, several at-
tachments and executions were annotated in the Registry of Property —
the 1st for P17,000; the 2nd for P3,000; the 3rd for P12,000; and the 4th
for P26,000. If a public sale is made and the property is sold for only
P37,000, who should share in this amount of P37,000?
HELD: It is true that under the New Civil Code, there is no preference among
specifi c creditors over the same property (except the government’s
preference as taxes over the specifi c property involved); instead, there
merely is pro rata concurrence. BUT there is one exception to this: when
there have been attachments and executions, there is still preference
among them in order of time they were levied upon in the Registry;
126
otherwise, the advantage of attachments and executions would be lost by
the simple expedient of simply obtaining other attachments and
executions, no matter how much later in point of time. Therefore, the
P37,000 should satisfy fi rst the fi rst three attachments (total of
P32,000). The excess P5,000 can now be applied to the 4th attachment.
DBP v. Hon. Labor Arbiter Ariel C. Santos,

et al.
GR 78261-62, Mar. 8, 1989
Owing to the fact that a declaration of bankruptcy or a judicial liquidation
must be present before the worker’s preference may be enforced, such is
not confi ned to the situation contemplated in Arts. 2236-2245
Art. 2245
of the Civil Code, where all the preferred creditors must

necessarily be convened and the import of their claims ascertained.
Art. 2245. Credits of any other kind or class or by any other right or
title not comprised in the four preceding articles, shall enjoy no
preference.
COMMENT:
All Other Kinds of Credits
No preference — this is the rule indicated for these credits.
127
Chapter 3
ORDER OF PREFERENCE OF CREDITS
Art. 2246. Those credits which enjoy preference with respect to

specifi c movables, exclude all others to the extent of the value of the
personal property to which the preference refers.
COMMENT:
Preference of the Credits Over Specifi c Movables See comments under
Art. 2241.
Art. 2247. If there are two or more credits with respect to the same
specifi c movable property, they shall be satisfi ed pro rata, after the
payment of duties, taxes and fees due the State or any subdivision thereof.
COMMENT:
Pro Rata Sharing
See comments under Art. 2241.
Art. 2248. Those credits which enjoy preference in relation to specifi

c real property or real rights, exclude all others to the extent of the value
of the immovable or real right to which the preference refers.
COMMENT:
Preference of the Credits Over Specifi c Immovables See comments under
Art. 2242.
Arts. 2249-2251
128
Art. 2249. If there are two or more credits with respect to the same
specifi c real property or real rights, they shall be satisfi ed pro rata, after
the payment of the taxes and assessments upon the immovable property
or real right.
COMMENT:
Pro Rata Sharing
Art. 2250. The excess, if any, after the payment of the credits which
enjoy preference with respect to specifi c property, real or personal, shall
be added to the free property which the debtor may have, for the payment
of the other credits.
COMMENT:
What Should Be Done With the Excess The Article
explains itself.
Art. 2251. Those credits which do not enjoy any preference with
respect to specifi c property, and those which enjoy preference, as to the
amount not paid, shall be satisfi ed according to the following rules:
(1) In the order established in Article 2244;
(2) Common credits referred to in Article 2946 shall be paid pro rata
regardless of dates.
COMMENT:
Order of Preference
TRANSITIONAL PROVISIONS
129
Art. 2252. Changes made and new provisions and rules laid down by
this Code which may prejudice or impair vested or acquired rights in
accordance with the old legislation shall have no retroactive effect.
For the determination of the applicable law in cases which are not
specifi ed elsewhere in this Code, the following articles shall be observed.
COMMENT:
(1) Comment of the Code Commission (Re Non-Impairment of Vested
Rights)
“Laws shall have no retroactive effect, unless the contrary is provided. The
question of how far the new Civil Code should be made applicable to
past acts and events is attended with the utmost diffi culty. It is easy
enough to understand the abstract principle that laws have no retroactive
effect because vested or acquired rights should be respected. But what
are vested or acquired rights? The Commission did not venture to
formulate a defi nition of a vested or acquired right seeing that the
problem is extremely complicated.
“What constitutes a vested or acquired right will be determined by the courts
as each particular issue is submitted to them, by applying the transitional
provisions sets forth, and in case of doubt, by observing Art. 9 governing
the silence or obscurity of the law. In this manner, the Commission is
confi dent that the judiciary with its enlightenment and high sense of
justice will be able to decide in what cases the new one should be
binding. This course has been preferred by the Commission, which did
not presume to be able to foresee and adequately provide for each and
every question that may rise.” (Report of the Code Commission, pp. 165-
166).
Art. 2252
(2) When Retroactivity Is Allowed

By implication, new provisions of the Code that do not prejudice vested rights
can be given retroactive effect. Ex-
amples are those found in the chapter on Human Relations. (Velayo v.
Shell Co., 100 Phil. 187).
(3) ‘Vested Right’ Defi ned

In the case of Benguet Consolidated Mining Co. v. Pineda (L-7231, Mar. 28,
1951), the Supreme Court defi ned a vested right as property which has
become fi xed and established, and is no longer open to doubt or
controversy. “It is an immediately fi xed right of present or future
130
enjoyment.” Rights are “vested” in contradistinction to being “expectant
or contingent.” (See Balboa v. Farrales, 51 Phil. 498).
Under the Code of Commerce, a “sociedad anonima” could extend its
corporate life; under the Corporation Law, corporate life cannot be
extended beyond the original period; and said period must not exceed 50
years. Now then, if a “sociedad anonima” organized in 1903 could
extend its corporate existence apparently without limit, could the
Corporation Law passed in 1906 limit its life to 50 years? In the Benguet
Case, the Court held that the answer was in the affi rmative, for in 1903,
the “sociedad’’ did not have any vested right to have a life longer than
50 years. The Court said that the prolongation of corporate existence in
1906 was merely a possibility in futuro, a contingency that did not fulfi
ll the requirement of a vested right entitled to constitutional protection.
In said case, it was also held that there can be no vested interest in any rule of
law entitling a person to insist that it shall remain unchanged for his
benefi t.
(4) Example of the Non-Impairment of a Vested Right

In Manalansan v. Manalang, et al. (L-13646, Jul. 26, 1960), it was held that
Art. 1607 (requiring a judicial order before the registration of the
cobsolidation of ownership in the vendee a retro for failure to redeem)
cannot be applied to a sale con pacto de retro executed in 1949, for to
do so would impair and diminish the rights that had already vested in the
vendee a retro under the old Code.
131
Art. 2253
Art. 2253. The Civil Code of 1889 and other previous laws shall
govern rights originating, under said laws, from acts done or events which
took place under their regime, even though this Code may regulate them
in a different manner, or may not recognize them. But if a right should be
declared for the fi rst time in this Code, it shall be effective at once, even
though the act or event which gives rise thereto may have been done or
may have occurred under the prior legislation, provided said new right
does not prejudice or impair any vested or acquired right, of the same
origin.
COMMENT:
(1) Comment of the Code Commission (When the Old and the New Codes
Apply)
“The fi rst sentence is an application of the fundamental principle of respect
for vested or acquired rights. But the second sentence gives a retroactive
effect to newly created rights, provided they do not prejudice or impair
any vested or acquired right. The retroactive character of the new right
is the result of the exercise of the sovereign power of legislation, when
the law-making body is persuaded that the new right is called for by
considerations of justice and public policy. But such new right must not
encroach upon a vested right.” (Report of the Code Commission, p. 167).
(2) Recovery of Damages

Damages recoverable under Art. 21 can be given effect even if the acts
complained of were done before the effective date of the new Code.
(Gatus v. Si Huy, [C.A.] 53 O.G. 866).
(3) Successional Rights

New successional rights cannot be granted if the deceased died under the old
Code, for ownership over the estate is transferred from the moment of
death. Hence, a vested right was acquired upon such death under the old
law. (Uson v.
Del Rosario, et al., 92 Phil. 530).
Arts. 2254-2255
132
Art. 2254. No vested or acquired right can arise from acts or
omissions which are against the law or which infringe upon the rights of
others.
COMMENT:
(1) Comment of the Code Commission (Acts Contrary to Law)
“It is evident that no one can validly claim any vested or acquired right if the
same is founded upon his having violated the law or invaded the rights
of others. The principle is universally accepted.” (Report of the Code
Commission, p. 167).
(2) Against Whom Prohibition Is Directed

The prohibition referred to in this Article is directed against the OFFENDER,
not the offended party. Hence, if a husband committed concubinage prior
to the effectivity of the new Civil Code, and an absolute divorce action
was fi led also before the new Civil Code, the case can continue now.
The offended party in a sense acquired a vested right to still prosecute;
the offender cannot, however, claim any vested right. (Raymundo v.
Penas, 96 Phil. 311).
Art. 2255. The former laws shall regulate acts and contracts with a
condition or period, which were executed or entered into before the
effectivity of this Code, even though the condition or period may still be
pending at the time this body of laws goes into effect.
COMMENT:
Acts and Contracts With a Condition or Period
(a) The reason for the Article is that the legal relation was already
created, although the condition or period is still pending. (Report
of the Code Commission, p. 167).
(b) Art. 1687 providing for an extension in lease cannot apply to lease
contracts entered into prior to the new Civil
Arts. 2256-2257
Code. (Acasio v. Corporacion de los P.P. Dominicos de Filipinas,

100 Phil. 523).
133
(c) A sale a retro executed in 1949 is governed by the old Code, not
by the new Civil Code. And this is so even if the resolutory
condition of the repurchase was still pending at the time the new
Civil Code became effective. (Manalansan v. Manalang, et al., L-
13646, Jul. 26, 1960).
Flores and Gallano v. So

L-28527, Jun. 16, 1988
Since the pacto de retro sale executed in Feb., 1950, before the
effectivity of the New Civil Code in Aug. of 1950, was a contract
with a resolutory condition, and the condition was still pending at
the time the new law went into effect, the provisions of the old
Civil Code would still apply.
Art. 2256. Acts and contracts under the regime of the old laws, if they
are valid in accordance therewith, shall continue to be fully operative as
provided in the same, with the limitations established in these rules. But
the revocation or modifi cation of these acts and contracts after the
beginning of the effectivity of Code, shall be subject to the provisions of
this new body of Laws.
COMMENT:
Revocation and Modifi cation of Acts and Contracts
Reason for the second sentence — “These subsequent acts being executed
after the new legislation has taken effect, the new requirements must of
course be fulfi lled.” (Report of the Code Commission, p. 168).
Art. 2257. Provisions of this Code which attach a civil sanction or

penalty or a deprivation of rights to acts or omissions which were not
penalized by the former laws, are not applicable to those who, when said
laws were in force, may have executed the acts or incurred in the omission
forbidden or condemned by this Code.
Art. 2257
134
If the fault is also punished by the previous legislation, the less severe
sanction shall be applied.
If a continuous or repeated act or omission was com menced before
the beginning of the effectivity of this Code, and the same subsists or is
maintained or repeated after this body of laws has become operative, the
sanction or penalty prescribed in this Code shall be applied, even though
the previous laws may not have provided any sanction or penalty therefor.
COMMENT:
(1) Comment of the Code Commission (Re: Civil Sanctions and Penalties)
“The article is just, for penalties and forfeitures with a retroactive effect
cannot be countenanced. The last paragraph is just, for the reason that
when continuous or repeated acts, though begun before the new Civil
Code, extend beyond the termination of the old Code, the effect of the
new body of laws must necessarily apply to them.” (Report of the Code
(2) Application of the Less Severe Sanction
Receiver for North Negros Sugar Co.,

Inc. v. Ybañez
L-22183, Aug. 30, 1968
FACTS: In 1937, Cesar V. Ybañez, riding in a car, was killed in a collision
with a train owned by the North Negros Sugar Company. The mishap
having been caused by the train’s negligence, the Sugar Company was
held liable for actual damages such as lost earnings, death indemnity, and
funeral expenses, and said damages were paid to a brother, Pedro
Ybañez. The brother, however, also asked for MORAL DAMAGES,
because of the mental anguish suffered by him. Issue: Should said moral
damages be granted the brother?
HELD: The accident having taken place in 1937, the old Civil Code (Art.
1902) should be applied. Under said Article, apparently any one who
suffered, whether he was a relative or
Art. 2258
not, and even if the damage was only moral, could recover (in view of
the generality of the Article). In view of the absence of a precedent in
Spanish and Filipino jurisprudence, reference was made to French
decisions of persuasive authority (since Art. 1383 of the French Civil
135
Code was more or less identical with Art. 1902 of the old Civil Code).
Under French decisions, under Article 1383 of the French Civil Code,
moral damages were awarded to brothers and sisters, among others. If
we were to stop here, the brother would be entitled to recover moral
damages for the death of the victim. BUT under Art. 2257 of the new
Civil Code, if an act is punished both under the old and the new
legislation, the “less severe sanction shall be applied.”
Now then under Art. 2206 of the new Civil Code, those who can recover
moral damages for DEATH caused by a crime or quasi-delict includes
only the spouse, ascendants (whether legitimate of illegitimate) and
descendants (whether legitimate or illegitimate); note that brothers and
sisters are NOT INCLUDED. Inasmuch as the new Civil Code is less
severe on this point, it should be applied; hence, the brother cannot
obtain the moral damages sought.
(3) Moral and Exemplary Damages

In the case of Jalandoni v. Martin Guanzon, et al., (54 O.G. 2907), the Court
said that the moral and exemplary (corrective) damages allowed under
the new Civil Code cannot be given for acts that occurred prior to the
new Civil Code. The reason is because of their deterrent, punitive
character.
Art. 2258. Actions and rights which came into being but were not
exercised before the effectivity of this Code, shall remain in full force in
conformity with the old legislation; but their exercise, duration and the
procedure to enforce them shall be regulated by this Code and by the Rules
of Court. If the exercise of the right or of the action was commenced under
the old laws, but is pending on the date this Code takes effect, and the
procedure was different from that established in this new body of laws, the
parties concerned may choose which method or course to pursue.
Arts. 2259-2261
COMMENT:
Actions and Right Under the Old Law, Whether Exercised or Not
“The article makes the new provisions on the exercise, duration, and
procedure to enforce rights applicable to those that came into being
before the effectivity of the new Code. In other words, the adjective law
whereby such rights are put into operation is made retroactive. Adjective
provisions may be properly made retroactive according to the principle
accepted in modern legislation. These adjective rules are mere methods
136
for rendering substantive law effective.” (Report of the Code
Art. 2259. The capacity of a married woman to execute acts and

contracts, is governed by this Code, even if her marriage was celebrated
under the former laws.
COMMENT:
Capacity of a Married Woman
Note that the new Family Code governs said capacity. This is true even if the
marriage was celebrated under the old laws.
Art. 2260. The voluntary recognition of a natural child shall take

place according to this Code, even if the child was born before the
effectivity of this body of laws.
COMMENT:
Voluntary Recognition of a Natural Child
The Article explains itself. See the Family Code.
Art. 2261. The exemption prescribed in Article 302 shall also be

applicable to any support, pension or gratuity already existing or granted
before this Code becomes effective.
Arts. 2262-2263
COMMENT:
Exemption for Support, Pension, or Gratuity
“As an aftermath of the last World War, there are thousands of persons
receiving pension. The foregoing Article is calculated to protect them.”
(Report of the Code Commission, p. 170).
137
Art. 2262. Guardians of the property of minors, appointed by the
courts before this Code goes into effect, shall continue to act as such,
notwithstanding the provisions of Article 320.
COMMENT:
Guardians of the Property of Minors
“These guardians should continue as such, to avoid disturbances in the
administration of property of minor children.” (Report of the Code
Art. 2263. Rights to the inheritance of a person who died, with or

without a will, before the effectivity of this Code, shall be governed by the
Civil Code of 1889, by other previous laws, and by the Rules of Court. The
inheritance of those who, with or without a will, die after the beginning of
the effectivity or this Code, shall be adjudicated and distributed in
accordance with this new body of laws and by the Rules of Court; but the
testamentary provisions shall be carried out insofar as they may be
permitted by this Code. Therefore, legitimes, betterments, legacies and
bequests shall be respected; however, their amount shall be reduced if in
no other manner can every compulsory heir be given his full share
according to this Code.
COMMENT:
(1) Successional Rights
“The decisive fact which gives origin to the right of the heirs, devisees, and
legatees is the DEATH of the decedent.
Arts. 2264-2266
This is the basis of the foregoing rule. No heir, devisee, or legatee has
any vested right until the moment of such death.’’ (Report of the Code
(2) Proofs of Filiation

Proofs of fi liation allowed under the new Code are useless in the case of
natural child claiming recognition in order to inherit from an alleged
natural father who died BEFORE the new Civil Code became effective.
(Vidaurrazaga v. Court of Appeals, et al., 91 Phil. 492). (See, however,
the Family Code).
138
Art. 2264. The status and rights of natural children by legal fi ction
referred to in Article 89 and illegitimate children mentioned in Article 287,
shall also be acquired by children born before the effectivity of this Code.
COMMENT:
See the Family Code.
Art. 2265. The right; of retention of real or personal property arising

after this Code becomes effective, includes those takings which came into
the creditor’s possession before said date.
COMMENT:
Right of Retention of Real or Personal Property The Article explains
itself.
Art. 2266. The following shall have not only prospective but also
retroactive effect:
(1) Article 315, whereby a descendant cannot be compelled, in a
criminal case, to testify against his parents and ascendants;
(2) Articles 101 and 88, providing against collusion in cases of legal
separation and annulment of marriage;
Arts. 2267-2268
(3) Articles 283, 284, and 289, concerning the proof of illegitimate fi
liation;
(4) Article 838, authorizing the probate of a will on petition of the
testator himself;
(5) Articles 1359 to 1369, relative to the reformation of instruments;
(6) Articles 476 to 481, regulating actions to quiet
139
title;
(7) Articles 2029 to 2031, which are designed to promote
compromises.
COMMENT:
Provisions Which Have Both Prospective and Retroactive Effect
Reason — These are “remedial” in character and do not affect substantive
rights already acquired. (Report of the Code Commission, p. 172).
Art. 2267. The following provisions shall apply not only to future
cases but also to those pending on the date this Code becomes effective:
(1) Article 29, relative to criminal prosecutions wherein the accused
is acquitted on the ground that his guilt has not been proved beyond
reasonable doubt;
(2) Article 33, concerning cases of defamation, fraud and physical
injuries.
COMMENT:
Provisions Appertaining to Procedure The Article
explains itself.
Art. 2268. Suits between members of the same family which are
pending at the time this Code goes into effect shall be suspended, under
such terms as the court may determine, in order that a compromise may
be earnestly
Art. 2269
sought, or, in case of legal separation proceedings, for the purpose or

effecting, if possible, a reconciliation.
COMMENT:
See the Family Code.
140
Art. 2269. The principles upon which the preceding transitional
provisions are based shall, by analogy, be applied to cases not specifi cally
regulated by them.
COMMENT:
(1) Application by Analogy of the Transitional Principles
“The Article is calculated to cover cases other than those specifi cally
regulated by the transitional provisions. The Court will be able by
analogy, to decide every question that may come up as regards the
applicability of the old laws or of the new Code.” (Report of the Code
(2) Rule in Case of Confl ict

In case of confl ict between this chapter, and specifi c transitional provisions
elsewhere in the Civil Code, the specifi c provisions will naturally apply.
(Art. 2252, par. 2).
141
REPEALING CLAUSE
Art. 2270. The following laws and regulations are

hereby repealed:
(1) Those parts and provisions of the Civil Code of
1889 which are in force on the date when this new Civil
Code becomes effective;
(2) The provisions of the Code of Commerce
governing sales, partnership, agency, loan, deposits and
guaranty;
(3) The provisions of the Code of Civil Procedure on
prescription as far as inconsistent with this Code; and
(4) All laws, Acts, parts of Acts, rules of court,
executive orders, and administrative regulations which are
inconsistent with this Code.
Approved, June 18, 1949.
COMMENT:
(1) When Spanish Civil Code Was Repealed
The Spanish Civil Code of 1889 was repealed on August 30,
1950, the date of effectivity of the new Civil Code. (See
Lara v. Del Rosario, 50 O.G. 1957 and Daney & Aznar
v. Garcia & Comporendondo, L-11483, Feb. 14, 1958).
(2) What the New Civil Code Does Not Repeal

The new Civil Code has not “superseded the Administrative
Code of Mindanao and Sulu, or the Public Land Law,
since these statutes are, in this regard, SPECIAL ACTS,
and implied repeals are not favored.” Therefore, a deed
of sale of real property executed by a non-Christian
inhabitant of Mindanao or Sulu, without the approval of
cxlii
the provincial governor, or his representative duly
authorized in writing for
Art. 2270
the purpose as required by Sec. 145(b) of the

Administrative Code of Mindanao and Sulu, is null and void
ab initio — unless of course there should be a special law
repealing such provision. (See Mangayco, et al. v. Lasud, et
al., L-19252, May 29, 1964).
(3) Complete Repeal of the Civil Code of 1889

Note that the Spanish Civil Code of 1889 is completely
repealed with respect to the provision of said Code still
in force on the effective date of this new Code. Those
provisions of said Spanish Civil Code no longer in force
were either repealed previously or had never been
enforced here.
(4) The Family Code

Executive Order 209, as amended by EO 227, is otherwise
known as “The Family Code of the Philippines.” Said
Code has practically amended about 80% of the Civil
Code’s provisions on family relations (marriage, legal
separation, rights and obligations between husband and
wife, the family, paternity and fi liation, adoption,
support, parental authority, emancipation and age of
majority). Added were Titles XI and XII, respectively,
dealing with Summary Judicial Proceedings in the
Family Law and Final Provisions.
cxliii
CIVIL CODE
of the
PHILIPPINES
ANNOTATED
By
EDGARDO L. PARAS,† Litt. B., LL.B., LL.M., LL.D.

Associate Justice, Supreme Court (1986-1992)
2008
cxliv
ARTS. 2176-2270
TORTS AND DAMAGES
CHAPTER 2 — QUASI DELICTS ......................................................... 1173

ARTICLE 2176 ................................................................................. 1173
COMMENT: (1) Requisites for a Quasi-Delict (Culpa Aquiliana), 1173;
LRT v. Navidad, GR 145804, Feb. 6, 2003, 1173; Phoenix Construction,
Inc. v. IAC, GR 65295, Mar. 10, 1987, 1174; Teague v. Fernandez, 51
SCRA 181, 1175; People’s Bank and Trust Co. v. Dahican Lumber Co.,
L-17500, May 16, 1967, 1175; Penullar v. Philippine National Bank, GR
32762, Jan. 27, 1983, 1176; Prima Malipol v. Lily Lim Tan, et al., L-
27730, Jan. 21, 1974, 1176; People v. Capillas, L-38756, Nov. 13, 1984,
1176; Phoenix Construction, Inc. v. IAC, GR 65295, Mar. 10, 1987, 1176;
Valenzuela v. CA, 68 SCAD 113 (1996), 1176; (2) ‘Culpa Aquiliana’
Distinguished from ‘Culpa Contractual’ and ‘Culpa Criminal’, 1177;
Syquia, et al. v. CA & Manila Memorial Park Cemetery, Inc., GR 98695,
Jan. 27, 1993, 1179; (3) Necessity of Proving Negligence, 1179; Bernabe
Africa, et al. v. Caltex, et al., L-12986, Mar. 31, 1966, 1179; Republic v.
Luzon Stevedoring Corporation, L-21749, Sep. 29, 1967, 1180; NIA, et
al. v. IAC, et al., GR 73919, Sep. 18, 1992, 1180; Leah Alesna Reyes, et
al. v. Sisters of Mercy Hospital, et al., GR 130547, Oct. 3, 2000, 1181; (4)
Damnum Absque Injuria, 1182; Farolan v. Solmac Marketing Corp., GR
83589, Mar. 13, 1991, 1182; (5) Last Clear Chance, 1184; Ong v.
Metropolitan Water District, 104 Phil. 398, 1185; Picart v. Smith, 37 Phil.
809, 1185; Phoenix Construction, Inc. v. IAC, GR 65295, Mar. 10, 1987,
1186; (6)
Tort Liability May Still Exist Despite Presence of Contractual Relations,
1187; Air France v. Carrascoso, L-21438, Sep. 28, 1966, 1187; Julian C.
Singson and Ramona del Castillo v. Bank of the Philippine Islands and
Santiago Freixas, L-24837, Jun. 27, 1968, 1187; (7) Non-liability, 1188;
Ng v. Republic, L-31935, Jan. 24, 1980, 1188; (8) An Unregistered Deed
of Sale, 1188; Equitable Leasing Corp. v. Lucita Suyom, et al., GR
143360, Sep. 5, 2002, 1188.
ARTICLE 2177 .................................................................................. 1189

COMMENT: (1) Culpa Aquiliana Distinguish From Civil Liability
Arising From a Crime, 1189; (2) Effect of Acquittal in a Criminal Case,
1189; Marcia v. Court of Appeals, GR 34529, Jan. 27, 1983, 1189; (3)
Query, 1190; Batangas, Laguna, Tayabas, Bus Co., Inc. v. Court of
cxlv
Appeals, et al., L-33138-39, Jun. 27, 1975, 1190; (4) Rule under the 1985
Rules of Court, As Amended in 1988, 1191; Garcia v. Florido, L-35095,
Aug. 31, 1973, 1191; Crispin Abellana and Francisco Abellana v. Hon.
Geronimo R. Maraue and Geronimo Companer, et al., L-27760, May 29,
1974, 1192; Escueta v. Fandialan, L-39675, Nov. 29, 1974, 1193; (5) No
Double Recovery, 1193; Padua, et al. v.
Robles, et al., L-40486, Aug. 29, 1975, 1193; (6) Dec. 1, 2000 Amended
Rules, 1194; Avelino Casupanan & Roberto Capitulo v. Maria Llavore
Laroya, GR 145391, Aug. 26, 2002, 1194.
cxlvi
..................................................................................
ARTICLE 2178 1196
COMMENT: (1) Applicability of Some Provisions on Negligence, 1196;
(2) Cases, 1197; Ronquillo, et al. v. Singson, (C.A.) L22612 R, Apr. 22,
1959, 1197; Vda. de Imperial, et al. v. Herald Lumber Co., L-14088-89,
L-14112, Sep. 30, 1961, 1198.
ARTICLE 2179 ................................................................................. 1198
COMMENT: (1) Effect of Sole Cause of Injury is a Person’s own
Negligence, 1198; (2) Effect of Contributory Negligence of Plaintiff,
1198; (3) Proximate Cause, 1199; Saturnino Bayasen v. Court of Appeals,
L-25785, Feb. 28, 1981, 1199; Phoenix Construction, Inc. v. IAC, GR
65295, Mar. 10, 1987, 1199; Phoenix Construction, Inc. v. IAC, GR
65295, Mar. 10, 1987, 1200; (4) Examples of Proximate Cause, 1202; (5)
Case, 1203; MMTC & Apolinario Ajoc v. CA, etc., GR 141089, Aug. 1,
2002, 1203.
ARTICLE 2180 .................................................................................. 1204
COMMENT: (1) Liability for the Acts and Omissions of Another, 1205;
(2) Reason for the Liability, 1205; (3) Solidary Liability, 1205; Maria
Teresa Cuadra v. Alfonso Monfort, L- 24101, Sep. 30, 1970, 1206; Libi,
et al. v. IAC, et al., GR 70890, Sep. 18, 1992, 1206; (4) Owners and
Managers, 1207; Phil. Rabbit Bus Lines Inc., et al. v. Phil. Am.
Forwarders, Inc., et al., L-25142, Mar. 25, 1975, 1207; (5) Employers,
1208; Vinluan v. Court of Appeals, L-21477-81, Apr. 29, 1966, 1209;
Ramos v. Pepsi-Cola, L-22533, Feb. 9, 1967, 1209; Bernardo Jocson and
Maria D. Jocson v. Redencion Glorioso, L-22686, Jan. 30, 1968, 1210;
Malipol v. Tan, L-27730, Jan. 21, 1974, 54 SCRA 202 (1974), 1211; St.
Francis High School v. CA, GR 82465, Feb. 25, 1991, 1211; Figuracion
Vda. de Maglana, et al. v. Judge Francisco Z. Consolacion & Afi sco
Insurance Corp., GR 60506, Aug. 6, 1992, 1214; Go v. IAC, GR 68138,
May 13, 1991, 1214; George Mckee & Ararelo Koh Mckee v. IAC, Jaime
Tayag & Rosalinda Manalo, GR 68102, Jul. 16, 1992, 1217; San Miguel
Corp. v. Heirs of Sabiano Inguito & Julius Ouano, GR 141716, Jul. 4,
2002, 1218; George Mckee, et al. v. IAC, et al., GR 68102, Jul. 16, 1992,
1222; Napocor v. CA, GR 119121, Aug. 14, 1998, 1222; FGU Insurance
Corp. v. CA, Filcar Transport, Inc. & Fortune Insurance Corp., GR
118889, Mar. 23, 1998, 1224; (6) Liability of Teachers and Heads of
Establishments (of Arts and Trades), 1224; Palisoc v. Brillantes, 41
SCRA 548, 1224; Magtibay v. Garcia, GR 28971, Jan. 28, 1983, 1225;
Pasco v. CFI, GR 54357, Apr. 25, 1987, 1225; (7) Liability of the State,
1226; MMTC & Apolinario Ajoc v. CA, Etc., GR 141089, Aug. 1, 2002,
1226; Victor Orquiola & Honorata Orquiola v. CA, Etc., GR 141463,
Aug. 6, 2002, 1227; (8) Special Agent, 1227; Republic v. Palacio, L-
20322, May 29, 1968, 1228; (9) Defense, 1229; (10) Penal Provisions in
Case of Crimes, 1230; (11) Failure of Doctor to Follow Medical
Procedure is a clear Indicia of Negligence, 1230; Erlina Ramos v. Court
of Appeals, GR 124354, Apr. 11, 2002, 1230.
cxlvii
..................................................................................
ARTICLE 2181 1235
COMMENT: Right of Person (Who Pays) to Get Reimbursement, 1235;
Sarkies Tours Phil. v. Intermediate Appellate Court, GR 63723, Sep. 2,
1983, 1235.
ARTICLE 2182 .................................................................................. 1236
COMMENT: When a Minor or an Insane Person Is Answerable With His
Own Property, 1236.
ARTICLE 2183 .................................................................................. 1236
COMMENT: Damages Caused By Animals, 1236.
ARTICLE 2184 .................................................................................. 1236
COMMENT: (1) Liability of Owner of a Motor Vehicle, 1237; (2) Case,
1237; Marcial T. Caedo, et al. v. Yu Khe Thai, et al., L-20392, Dec. 18,
1968, 1237.
ARTICLE 2185 .................................................................................. 1238
COMMENT: Presumption of Driver’s Negligence, 1238; Mikee v. IAC,
GR 68102, Jul. 16, 1992, 1238.
ARTICLE 2186 .................................................................................. 1238
COMMENT: Duty of Owner of Motor Vehicle to File a Bond, 1238.
ARTICLE 2187 .................................................................................. 1239

COMMENT: Liability of Manufacturers, 1239.
ARTICLE 2188 .................................................................................. 1239
COMMENT: Presumption of Negligence Because of the Possession of
Dangerous Weapons or Substances, 1239.
ARTICLE 2189 .................................................................................. 1239
COMMENT: Liability of Municipal Subdivisions Because of Defective
Roads, Bridges, Etc., 1240; Guilatco v. City of Dagupan and CA, GR
61516, Mar. 21, 1989, 1240.
ARTICLE 2190 .................................................................................. 1240
COMMENT: Liability of Proprietor if a Building or Structure Collapses,
1240.
ARTICLE 2191 .................................................................................. 1241
COMMENT: Other Liabilities of Proprietors of Buildings or Structures,
1241; Austin Hardware Co., Inc. and All Steel Products, Inc. v. The Court
of Appeals, et al., L-41754, Feb. 27, 1976, 1241.
ARTICLE 2192 .................................................................................. 1242

COMMENT: Rule if the Cause Is a Construction Defect, 1242.
cxlviii
..................................................................................
ARTICLE 2193 1242
COMMENT: Responsibility for Thrown or Fallen Things, 1242.
ARTICLE 2194 .................................................................................. 1242

COMMENT: (1) Solidary Liability of Tort-Feasors, 1242; (2) Cases,
1243; Metro Manila Transit Corp. v. CA, 42 SCAD 538 (1993), 1243;
LRTA & Rodolfo Roman v. Marjorie Navidad, Heirs of the Late Nicanor
Navidad & Prudent Security Agency, GR 145804, Feb. 6, 2003, 1243.
Title XVIII. DAMAGES ........................................................................... 1244

INTRODUCTORY COMMENT: Zulueta v. Pan American World
Airways, Inc., 43 SCRA 397, 1244; Air France v. CA and Morales, GR
76093, Mar. 21, 1989, 1245; Tiu v. CA, 46 SCAD 408, 228 SCRA 51
(1993), 1245.
CHAPTER 1 — GENERAL PROVISIONS ......................................... 1246
ARTICLE 2195 ................................................................................. 1246
COMMENT: Applicability to All Kinds of Legal Obligations, 1246.
ARTICLE 2196 .................................................................................. 1246

COMMENT: (1) Special Provisions and Laws, 1246; (2) Indemnity in
Workmen’s Compensation Cases, 1247; Milagros F. Vda. de Forteza v.
Workmen’s Compensation Commission and the Philippine Charity
Sweepstakes Offi ce, L-21718, Jun. 29, 1968, 1247; Ysmael Maritime
Corp. v. Avelino, GR 43674, Jun. 30, 1987, 1247; (3) Dismissal of Action,
1249; Enrique A. Defante v. Hon. Antonio E. Rodriguez, et al., L-28380,
Feb. 27, 1976, 1249.
ARTICLE 2197 .................................................................................. 1249

COMMENT: (1) Damages Distinguished from Injury, 1249; (2) Damage
Without Injury, 1250; (3) Some Rules on Waiver, 1250; (4) Liability of
Fiscal (now Prosecutor), 1250; Lim v. De Leon, L-22554, Aug. 29, 1975,
1250; (5) Damages in Voidable Contracts, 1251; Development Bank of
the Phil. v. Court of Appeals, L-28774, Feb. 28, 1980, 96 SCRA 342,
1251.
ARTICLE 2198 .................................................................................. 1251
COMMENT: Adoption of the Principles of the General Law on Damages,
1251.
CHAPTER 2 — ACTUAL OR COMPENSATORY DAMAGES ........ 1252
ARTICLE 2199 .................................................................................. 1252

COMMENT: (1) ‘Actual or Compensatory Damages’ Defi ned,
cxlix
..................................................................................
1252; Bert Osmeña and Associates v. Court of Appeals, GR
cl
56545, Jan. 28, 1983, 1253; Radio Communications of the
Philippines v. Court of Appeals, L-55194, Feb. 26, 1981, 1253;
Ramos v. CA, GR 124354, Apr. 11, 2002, 1253; (2) Necessity of
Pleading, 1254; (3) Necessity of Proof, 1254; Inhelder Corporation v.
Court of Appeals, GR 52358, May 30, 1983, 1254; Radio
Communications of the Philippines, Inc. (RCPI) v. Lantin, L59311, Jan.
31, 1985, 1257.
ARTICLE 2200 ................................................................................. 1257
COMMENT: (1) Two Kinds of Actual Damages, 1257; St. Louis Realty
Corporation v. Court of Appeals, L-46061, Nov. 14, 1984, 1257; BA
Finance Corp. v. CA, GR 61464, May 28, 1988, 1258; Batong Buhay
Gold Mines, Inc. v. CA, GR 45048, Jan. 7, 1987, 1258; Aguilar v. Chan,
GR 28688, Oct. 9, 1986, 1258; (2) Examples of Daño Emergente, 1258;
(3) Examples of Lucro Cesante, 1259.
ARTICLE 2201 .................................................................................. 1259

COMMENT: (1) Liability of Debtor in Contracts and QuasiContracts,
1260; (2) Examples of Reasonably Foreseen or Foreseeable Damages in
Contracts, 1260.
ARTICLE 2202 .................................................................................. 1262
COMMENT: (1) Damages in Crimes and Quasi-Delicts, 1262; Maranan
v. Perez, L-22272, Jun. 26, 1967, 1262; People v. Salig, L-53568, Oct. 31,
1984, 1263; (2) What Victim Must Prove in a Tort or Quasi-Delict Suit,
1263; (3) Unfair Competition, 1263; (4) Concealment of an Existing
Marriage, 1263; Budiong v. Judge Apalisok, GR 60151, Jun. 24, 1983,
1264; Brinas v. People, GR 50309, Nov. 25, 1983, 1264; People v.
Castaneda, GR 49781, Jun. 24, 1983, 1264.
ARTICLE 2203 .................................................................................. 1264

COMMENT: (1) Victim Must Minimize the Damage, 1265; (2) Burden
of Proof, 1265; (3) Plastic Surgery which Could Have Been Performed in
the Philippines, 1265; (4) Case, 1265; Abelardo Lim & Esmadito
Gumalan v. CA & Donato H. Gonzales, GR 125817, Jan. 16, 2002, 1265.
ARTICLE 2204 .................................................................................. 1266

COMMENT: Effect of Aggravating or Mitigating Circumstances, 1266.
ARTICLE 2205 .................................................................................. 1266

COMMENT: Damages to Earning Capacity and to Business, 1266;
Consolidated Plywood Industries, Inc. & Henry Lee v. CA, Willie Kho,
& Alfred C.H. Kho, GR 101706, Sep. 23, 1992, 1266; Francisco, et al. v.
Ferrer, Jr., et al., GR 142029, Feb.
28, 2001, 1267.
cli
ARTICLE 2206 .................................................................................. 1268
COMMENT: (1) Damages for Death — Reason for Awarding Damages,
1268; Mckee, et al. v. IAC, et al., GR 68102, Jul. 16, 1992, 1269; (2)
Factors Which May Be Considered in Determining the Amount, 1270;
Monzon, et al. v. IAC and Theo H. Davies and Co., Far East Ltd., GR
72828, Jan. 31, 1989, 1270; Smith Bell Dodwell Shipping Agency Corp.
v. Catalino Borja and International Towage & Transport Corp., GR
143008, Jun. 10, 2002, 1270; Villa-Rey Transit v. Bello, L-18957, Apr.
23, 1963, 1272; Davila v. Phil. Air Lines, 49 SCRA 497, 1272; Budiong
v. Judge Apalisok, GR 60161, Jun. 24, 1983, 1273; Dangwa
Transportation v. CA, GR 95582, Oct. 7, 1991, 1273; MMTC, et al. v. CA
& Sps. Rodolfo V. Rosales and Lily R. Rosales, GR 116617, Nov. 16,
1998, 1274; (3) Moral Damages, 1275; (4) Right of Recovery Not
Affected By Testimony, 1276; People v. Santiago Manos, L-27791, Dec.
24, 1970, 1276; (5) Liability for Reckless Imprudence, 1277; People v.
Eutiquia Carmen, et al., GR 137268, Mar. 26, 2001, 1277.
ARTICLE 2207 .................................................................................. 1277
COMMENT: (1) Effect if Property Was Insured, 1278; (2) Meaning of
“Authorized Driver” in Car Insurance, 1278; CCC Insurance Corp. v.
Court of Appeals and Carlos F. Robes, L25920, Jan. 30, 1970, 1278; (3)
Subrogation of Insurer, 1279; Fireman’s Fund Insurance Co., et al. v.
Jamila and Co., Inc., L-27427, Apr. 7, 1976, 1279.
ARTICLE 2208 .................................................................................. 1279

COMMENT: (1) Concept of Attorney’s Fees As Damages, 1280;
Luz G. Cristobal v. Employees’ Compensation Commission, L49280,
Feb. 26, 1981, 1281; Borcena, et al. v. IAC, GR 70099, Jan. 7, 1987,
1281; Sun Insurance Offi ce, Ltd. v. CA & Nerissa Lim, GR 92383, Jul.
17, 1992, 1281; (2) Generally Not Part of Damages, 1282; Salao v. Salao,
L-26699, Mar. 16, 1976, 1283; Public Estates Authority v. Elpidio S. Uy,
GR 147933-34, Dec. 12, 2001, 1283; (3) Given to Party, Not to Counsel,
1284; Tiu Po v. Bautista, L-55514, Mar. 17, 1981, 1284; Quirante and
Cruz v. IAC, et al., GR 73886, Jan. 31, 1989, 1284; (4) Express
Stipulation, 1284; Kapol v. Masa, L-50473, Jan. 21, 1985, 1285; (5)
Paragraph 2 (Defendant’s Act or Omission), 1286; Bert Osmeña and
Associates v. Court of Appeals, GR 56545, Jan. 28, 1983, 1286; Sarming
v. Dy, GR 133643, Jun. 6, 2002, 1286; (6) Paragraph 3 (Malicious
Prosecution), 1286; (7) Paragraph 4 (Unfounded Civil Action), 1287;
Hermosa, Jr. v. Zobel y Roxas, L-11836, Oct. 1958, 1287; Roque
Enervida v. Lauro de la Torre and Rosa de la Torre, L-38037, Jan. 28,
1974, 1287; Metropolitan Bank v. Tan Chuan Leong, et al., GR 46539,
Jun. 25, 1986, 1288; Phoenix Publishing House v. Ramos, GR 32339,
Mar. 29,
1988, 1289; (8) Paragraph 5 (Bad Faith of Defendant), 1290;
(9) Paragraph 8 (Workmen’s Compensation and Employer’s Liability),
1291; (10) Paragraph 9 (Civil Liability Arising from a Crime), 1291;
Ebajan v. CA, GR 77930-31, Feb. 9, 1989, 1291; (11) Paragraph 11 (Any
Other Case), 1292; (12) Instance When the Insurance Code Grants
clii
Damages, 1293; Prudential Guarantee and Assurance, Inc. v. Trans-Asia
Shipping, Lines, Inc., 491 SCRA 411 (2006), 1293.
ARTICLE 2209 .................................................................................. 1293
COMMENT: (1) Monetary Obligations, 1293; (2) Rules, 1293; State
Investment House, Inc. v. CA, GR 90676, Jun. 19, 1991, 1294; Tio Khe
Chio v. CA, GR 76101-02, Sep. 30, 1991, 1295; (3) Absence of
Stipulation, 1297; (4) From What Moment Interest Runs, 1297; Consuelo
Piczon, et al. v. Esteban Piczon, et al., L-29139, Nov. 15, 1974, 1297;
Arwood Industries, Inc. v. D.M. Consunji, Inc., GR 142277, Dec. 11,
2002, 1298; (5) Query, 1300; (6) Recovery of Interest in Case of Usury,
1300; Angel Jose Warehousing Co., Inc. v. Chelda Enterprises and David
Syjuico, L-25704, Apr. 24, 1968, 1300; GSIS v. CA, et al., GR 52478,
Oct. 30, 1986, 1302; Florendo v. Hon. Ruiz, et al., GR 64571, Feb. 21,
1989, 1303.
ARTICLE 2210 .................................................................................. 1303
COMMENT: Interest on Damages for Breach of Contract, 1303; Pleno v.
Court of Appeals and Manila Gas Corp., GR 56919, Oct. 23, 1981, 1303.
ARTICLE 2211 .................................................................................. 1304

COMMENT: Interest on Damages Because of Crimes and Quasi-Delicts,
1304.
ARTICLE 2212 .................................................................................. 1304
COMMENT: Interest on Interest Due, 1304.
ARTICLE 2213 .................................................................................. 1305
COMMENT: (1) Interest on Unliquidated Claims or Damages, 1305;
Bareng v. Court of Appeals, et al., L-12973, Apr. 25, 1960, 1305; (2) No
Liquidated Obligation, 1306; Abelardo Lim & Esmadito Gumabon v. CA
& Ronato H. Gonzales, GR 125817, Jan. 16, 2002, 1306.
ARTICLE 2214 .................................................................................. 1307

COMMENT: Contributory Negligence of Plaintiff in QuasiDelicts, 1307.
ARTICLE 2215 .................................................................................. 1307

COMMENT: Mitigation of Damages in Contracts, Quasi-Contracts, and
Quasi-Delicts, 1307.
CHAPTER 3 — OTHER KINDS OF DAMAGES ................................ 1308
ARTICLE 2216 .................................................................................. 1308
COMMENT: (1) When No Proof of Pecuniary Loss Is Necessary, 1308;
(2) Necessity of Proving the Factual Basis, 1308; (3) In Civil Case to
Recover or for Restitution, Reparation of Damages or Indemnifi cation
for Consequential and Other Damages or Any Other Civil Actions Under
the New Civil Code or Other Existing Laws Filed with Sandiganbayan
cliii
Against Ferdinand E. Marcos, et al., the Sandiganbayan is not to Look
for Proof Beyond Reasonable Doubt, but to Determine, based on the
Evidence Presented, in Light of Common Human Experience, which of
the Theories Proferred by the Parties is mere Worthy of Credence, 1309;
Yuchengco v. Sandiganbayan, 479 SCRA 1 (2006), 1309.
Section 1 — MORAL DAMAGES .......................................................... 1309

ARTICLE 2217 .................................................................................. 1309
COMMENT: (1) Requisites for the Recovery of Moral Damages, 1310;
St. Mary’s Academy v. William Carpitanos & Lucia S. Carpitanos, Guada
Daniel, James Daniel II, James Daniel, Sr. & Vivencio Villanueva, GR
143363, Feb. 6, 2002, 1311; People v. Manero, 218 SCRA 85 (1993),
1312; Carlota P. Valenzuela, et al. v. CA, et al., GR 56168, Dec. 22, 1988,
1312; Danao v. CA, GR 48276, Sep. 30, 1987, 1313; Boysaw, et al. v.
Interphil Promotions, Inc., GR 22590, Mar. 20, 1987, 1313; (2) Social and
Financial Standing, 1313; (3) Need for Certain Steps, 1313; (4) Necessity
of Personal Injury, 1314; (5) Rule Under the Old Law, 1314; (6) Mental
Anguish, 1315; Ramos v. Ramos, L-19872, Dec. 3, 1974, 1315; American
Express International, Inc. v. IAC and Jose M. Alejandrino, Nov. 9, 1988,
1315; Pan American World Airways, Inc. v. IAC, GR 44442, Aug. 31,
1987, 1316; Danao v. CA, GR 48276, Sep. 30, 1987, 1316; (7) Courts
Given Discretion to Award Moral Damages, 1317; Prudenciado v.
Alliance Transport System, Inc., GR 33836, Mar. 16, 1987, 1317;
Isabelita Vital-Gozon v. CA & Alejandro dela Fuente, GR 129132, Jul. 8,
1998, 1317; DBP v. CA & Emerald Resort Hotel Corp., GR 125838, Jun.
10, 2003, 1318.
ARTICLE 2218 .................................................................................. 1319

COMMENT: Sentimental Value, 1319.
ARTICLE 2219 .................................................................................. 1319
COMMENT: (1) Instances (Not Exclusive) When Moral Damages May
Be Recovered, 1320; Mayo y Agpaoa v. People, GR 91201, Dec. 5, 1991,
1320; Equitable Leasing Corp. v. Lucita Suyom, Marissa Enano, Myrna
Tamayo & Felix Oledan, GR 143360, Sep. 5, 2002, 1320; Garciano v.
CA, et al., GR 96126, Aug. 10, 1992, 1321; Bert Osmeña and Associates
v. Court of Appeals, GR 56545, Jan. 28, 1983, 1322; Darang v. Ty
Belizar, L-19487, Jan. 31, 1967, 1322; Imperial v. Ziga, L-19726, Apr.
13, 1967, 1322; Gatchalian v. Delim, GR 56487, Oct. 21, 1991, 1323;
Mayo y Agpaoa v. People, GR 91201, Dec. 5, 1991, 1323; Sps.
Quisumbing v. Manila Electric Co., GR 142943, Apr. 3, 2002, 1325; (2)
Rule With Respect to Contracts, 1326; Filinvest Credit Corp. v. Mendez,
GR 66419, Jul. 31, 1987, 1326; (3) Re Par. 1 (Physical Injuries Because
of a Crime), 1327; (4) Re Par. 3 (Seduction, etc.), 1328; People of the
Philippines v. Mariano Fontanilla, L-25354, Jun. 28, 1968, 1328; People
v. Manalo, GR 49810, Oct. 13, 1986, 1329; People v. Bondoy, 41 SCAD
432 (1993), 1329; People v. Eric Baid y Ominta, GR 129667, Jul. 31,
2000, 1329; (5) Re Par. 7 (Libel, Slander, Defamation), 1330; (6) Re Par.
8 (Malicious Prosecution), 1330; Alejo Madera, et al. v. Heirs of Salvador
cliv
Lopez, L-37105, Feb. 10, 1981, 1331; PCIB v. IAC, GR 73610, Apr. 19,
1991, 1331; Albenson Enterprises Corp., et al. v. CA & Eugenio S.
Baltao, GR 88694, Jan. 11, 1993, 1331; (7) Re Par. 10 (Articles on
Human Relations), 1332; Arturo de Guzman v. NLRC, et al., GR 90856,
Jul. 23, 1992, 1333; (8) Moral and Exemplary Damages Were NOT
Given in the Following Cases, 1334; Philippine National Railways v. CA,
GR 55347, Oct. 4, 1985, 1336; (9) Liability of the State Governmental &
Proprietary Functions, 1336; Fontanilla v. Maliaman, GR 55913, Feb. 27,
1991, 1336; (10) Closure of Bank Account Due to “Kiting,” 1337; Reyes
v. Court of Appeals, GR 95535, Jan. 21, 1991, 1337; (11) No Hard and
Fast Rule, 1338; Ayala Integrated Steel Manufacturing Co., Inc. v. CA,
GR 94359, Aug. 2, 1991, 1338.
ARTICLE 2220 .................................................................................. 1338
COMMENT: (1) Willful Injury to Property and Breaches of Contracts,
1338; (2) Case, 1339; Vicente & Michael Lim v. CA, GR 118347, Oct.
24, 1996, 75 SCAD 574, 1339.
Section 2 — NOMINAL DAMAGES ..................................................... 1339
ARTICLE 2221 .................................................................................. 1339
COMMENT: (1) The Grant of Nominal Damages — Reason Therefor,
1339; LRT v. Navidad, GR 145804, Feb. 6. 2003, 1340; (2) Effect of
Granting Compensatory and Exemplary Damages, 1340; Sumalpong v
CA, GR 123404, Feb. 26, 1997, 79 SCAD 969, 1340; PT & T & Louie
Cabalit v. CA & Lolita Sipe Escoro, GR 139268, Sep. 3, 2002, 1341; (3)
Liability of a Negligent Lawyer, 1341.
ARTICLE 2222 .................................................................................. 1342

COMMENT: When Nominal Damages May Be Awarded, 1342; Dee
Hua Liong Electrical Equipment Corp. v. Reyes, GR 72182, Nov. 25,
1986, 1342.
ARTICLE 2223 .................................................................................. 1342
COMMENT: Effect of Granting Nominal Damages, 1342.
Section 3 — TEMPERATE OR MODERATE DAMAGES ................ 1342
ARTICLE 2224 .................................................................................. 1342
COMMENT: (1) Reason for Allowing Temperate or Moderate Damages,
1343; (2) Suffering of Some Pecuniary Loss, 1343;
(3) Cases, 1343; Consolidated Plywood Industries, Inc., et al. v. CA, et
al., GR 101706, Sep. 23, 1992, 1343; Ramos v. CA, GR 124354, Apr. 11,
2002, 1344.
ARTICLE 2225 .................................................................................. 1344
COMMENT: Reasonable Temperate Damages, 1344.
Section 4 — LIQUIDATED DAMAGES ............................................... 1344
clv
ARTICLE 2226 .................................................................................. 1344
COMMENT: Nature of Liquidated Damages, 1345.
ARTICLE 2227 .................................................................................. 1345
COMMENT: (1) Equitable Reduction of Liquidated Damages, 1345; (2)
Effect of Partial or Irregular Performance, 1345.
ARTICLE 2228 .................................................................................. 1345
COMMENT: Rule if Breach Was Not Contemplated in the Agreement on
Liquidated Damages, 1346.
Section 5 — EXEMPLARY OR CORRECTIVE DAMAGES ............ 1346
ARTICLE 2229 .................................................................................. 1346

COMMENT: (1) Reason for Imposing Exemplary or Corrective
Damages, 1346; Guilatco v. City of Dagupan and CA, GR 61516, Mar.
21, 1989, 1346; Prudenciado v. Alliance Transport System, Inc., GR
33836, Mar. 16, 1987, 1347; (2) Examples of Exemplary Damages, 1347;
People v. Erlindo Talo, GR 125542, Oct. 25, 2000, 1348; Phoenix
Construction, Inc. v. IAC, GR 65295, Mar. 10, 1987, 1349; (3) Proper
Court, 1350; (4) Effect of Granting Exemplary Damages on a Claim for
Nominal Damages, 1350; (5) Cases, 1350; Pan American World Airways,
Inc.
v. IAC, et al., L-74442, Aug. 31, 1987, 1350; Arturo de Guzman
v. NLRC, GR 90856, Jul. 23, 1992, 1351; Sociedad Europea de
Financiacion, S.A., et al. v. Court of Appeals, GR 75787, Jan. 21, 1991,
1351; Northwest Airlines v. Dr. Jaime F. Laya, GR 145956, May 29,
2002, 1353.
ARTICLE 2230 .................................................................................. 1356
COMMENT: Exemplary Damages in Criminal Offenses, 1356.
ARTICLE 2231 .................................................................................. 1356

COMMENT: Exemplary Damages in Quasi-Delicts, 1356.
ARTICLE 2232 .................................................................................. 1356
COMMENT: (1) Exemplary Damages in Contracts and QuasiContracts,
1357; (2) When Employer Is Also Liable for Exemplary Damages, 1357;
Lourdes Munsayac v. Benedicta de Lara, L-21151, Jun. 26, 1968, 1357;
Silverio Marchan and Philippine Rabbit Bus Co., Inc. v. Arsenio
Mendoza, et al., L-24471, Jan. 31, 1969, 1357; Noda v. Cruz-Arnaldo,
GR 67322, Jun. 22, 1987, 1358.
ARTICLE 2233 .................................................................................. 1358
COMMENT: Exemplary Damages Not a Matter of Right, 1358; Isabelita
Vital-Gozon v. CA, & Alejandro dela Fuente, GR 129132, Jul. 8, 1998,
1358.
clvi
ARTICLE 2234 .................................................................................. 1358
COMMENT: (1) Amount of Exemplary Damages Need Not Be Proved,
1359; (2) Culpa Contractual, 1359; (3) Case, 1359; PNB v. CA, Sps.
Antonio So Hu & Soledad del Rosario and Sps. Mateo Cruz & Carlita
Ronquillo, GR 126908, Jan. 16, 2003, 1359.
ARTICLE 2235 .................................................................................. 1360

COMMENT: The Renouncing in Advance of Exemplary Damages, 1360.
Title XIX. CONCURRENCE AND PREFERENCE
OF CREDITS ..................................................................................... 1361

CHAPTER 1 — GENERAL PROVISIONS .......................................... 1361
INTRODUCTORY COMMENT (Features of the Title) ................... 1361
ARTICLE 2236 .................................................................................. 1361
COMMENT: (1) What Creditor Can Do If Debtor Has NO Money, 1361;
(2) Examples of Properties Exempt from Attachment, 1362; (3) Case,
1362; DBP v. Minister of Labor, GR 75801, Mar. 20, 1991, 1362.
ARTICLE 2237 .................................................................................. 1363

COMMENT: Civil Code Superior To Special Laws on Insolvency, 1364.
ARTICLE 2238 .................................................................................. 1364

COMMENT: Exemption of Properties of the Conjugal Partnership or of the
Absolute Community, 1364.
ARTICLE 2239 .................................................................................. 1364
COMMENT: Rule in Case of Co-Ownership, 1365.
ARTICLE 2240 .................................................................................. 1365
COMMENT: Property Held Because of an Express or Implied Trust, 1365.
CHAPTER 2 — CLASSIFICATION OF CREDITS ............................ 1366
ARTICLE 2241 .................................................................................. 1366

COMMENT: (1) Credits Over Specifi c Personal Properties, 1367; (2)
Example, 1368; (3) Nature of the Claims or Credits, 1368; (4) Par. 1 —
Taxes, etc., 1369; (5) Par. 3 — Unpaid Price of Movables SOLD, 1369;
(6) Par. 4 –– Pledge or Chattel Mortgage, 1369; (7) Par. 6 — Laborers’
Wages, 1369; (8) Last Paragraph — Wrongful Taking, 1370; (9) Case,
1370; Ouano v. CA, et al., GR 95900, Jul. 23, 1992, 1370.
clvii
ARTICLE 2242 .................................................................................. 1370
COMMENT: (1) Credits Over Specifi c Real Properties, 1371, (2)
Concurrence, Not Preference, 1372; (3) Case, 1372, Carried Lumber Co.
v. ACCFA, L-21836, Apr. 22, 1975, 1372; (4) Refectionary Credit, 1372;
(5) Case, 1372; Atlantic Erectors, Inc. v.
Herbal Cove Realty Corp., GR 146568, Mar. 20, 2003, 1372.
ARTICLE 2243 .................................................................................. 1374
COMMENT: (1) Nature of the Claims or Credits, 1374; (2) Comment of the
Code Commission, 1374.
ARTICLE 2244 ................................................................................. 1375
COMMENT: (1) Order of Preference in Connection With OTHER
Properties, 1376; (2) Example, 1376; (3) Taxes, 1377;
(4) Re Par. 14 (Ordinary Credits and Final Judgments), 1377; (5) Some
Decided Cases, 1377; Jesus Gigante v. Republic Savings Bank and
Rolando Mallari, L-29696, Nov. 29, 1968, 1377; Reyes v. De Leon, L-
22331, Jun. 6, 1967, 1378; Manabat v. Laguna Federation of Facomas, L-
23888, Mar. 18, 1967, 1379; DBP v. Hon. Labor Arbiter Ariel C. Santos,
et al., GR 7826162, Mar. 8, 1989, 1379.
ARTICLE 2245 .................................................................................. 1380

COMMENT: All Other Kinds of Credits, 1380.
CHAPTER 3 — ORDER OF PREFERENCE OF CREDITS ............ 1381
ARTICLE 2246 .................................................................................. 1381
COMMENT: Preference of the Credits Over Specifi c Movables, 1381.
ARTICLE 2247 .................................................................................. 1381

COMMENT: Pro Rata Sharing, 1381.
ARTICLE 2248 .................................................................................. 1381
COMMENT: Preference of the Credits Over Specifi c Immovables, 1381.
ARTICIE 2249 ................................................................................... 1382

COMMENT: Pro Rata Sharing, 1382.
ARTICLE 2250 .................................................................................. 1382
COMMENT: What Should Be Done With the Excess, 1382.
ARTICLE 2251 .................................................................................. 1382
COMMENT: Order of Preference, 1382.
TRANSITIONAL PROVISIONS ............................................................ 1383
clviii
ARTICLE 2252 .................................................................................. 1383
COMMENT: (1) Comment of the Code Commission (Re Non
Impairment of Vested Rights), 1383; (2) When Retroactivity is Allowed,
1384; (3) ‘Vested Right’ Defi ned, 1384; (4) Example of the Non-
Impairment of a Vested Right, 1384.
ARTICLE 2253 .................................................................................. 1385
COMMENT: (1) Comment of the Code Commission (When the Old and
the New Codes Apply), 1385; (2) Recovery of Damages, 1385; (3)
Successional Rights, 1385.
ARTICLE 2254 .................................................................................. 1386
COMMENT: (1) Comment of the Code Commission (Acts Contrary to
Law), 1386; (2) Against Whom Prohibition Is Directed, 1386.
ARTICLE 2255 .................................................................................. 1386

COMMENT: Acts and Contracts With a Condition or Period, 1386; Flores
and Gallano v. So, L-28527, Jun. 16, 1988, 1387.
ARTICLE 2256 .................................................................................. 1387
COMMENT: Revocation and Modifi cation of Acts and Contracts, 1387.
ARTICLE 2257 .................................................................................. 1387

COMMENT: (1) Comment of the Code Commission (Re: Civil Sanctions
and Penalties), 1388; (2) Application of the Less Severe Sanction, 1388;
Receiver for North Negros Sugar Co., Inc. v. Ybañez, L-22183, Aug. 30,
1968, 1388; (3) Moral and Exemplary Damages, 1389.
ARTICLE 2258 .................................................................................. 1389

COMMENT: Actions and Rights Under the Old Law, Whether Exercised or
Not, 1390.
ARTICLE 2259 .................................................................................. 1390
COMMENT: Capacity of a Married Woman, 1390.
ARTICLE 2260 .................................................................................. 1390
COMMENT: Voluntary Recognition of a Natural Child, 1390.
ARTICLE 2261 .................................................................................. 1390
COMMENT: Exemption for Support, Pension, or Gratuity, 1391.
ARTICLE 2262 .................................................................................. 1391
COMMENT: Guardians of the Property of Minors, 1391.
clix
ARTICLE 2263 .................................................................................. 1391
COMMENT: (1) Successional Rights, 1391; (2) Proofs of Filiation, 1392.
ARTICLE 2264 .................................................................................. 1392

COMMENT: See the Family Code, 1392.
ARTICLE 2265 .................................................................................. 1392
COMMENT: Right of Retention of Real or Personal Property, 1392.
ARTICLE 2266 .................................................................................. 1392

COMMENT: Provisions Which Have Both Prospective and Retroactive
Effect, 1393.
ARTICLE 2267 .................................................................................. 1393
COMMENT: Provisions Appertaining to Procedure, 1393.
ARTICLE 2268 .................................................................................. 1393
COMMENT: See the Family Code, 1394.
ARTICLE 2269 .................................................................................. 1393
COMMENT: (1) Application by Analogy of the Transitional Principles,
1394; (2) Rule in Case of Confl ict, 1394.
REPEALING CLAUSE ............................................................................ 1395
ARTICLE 2270 ............................................................................ 1395
COMMENT: (1) When Spanish Civil Code Was Repealed, 1395; (2)
What the New Civil Code Does Not Repeal, 1395; (3) Complete Repeal
of the Civil Code of 1889, 1396; (4) The Family Code, 1396.
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Title Xviii Damages: (New, Except Arts. 2200, 2201, 2209, and 2212.)

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Title Xviii Damages: (New, Except Arts. 2200, 2201, 2209, and 2212.)

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TITLE XVIII

Zulueta v. Pan American World Airways, Inc.

Air France v. CA and Morales

Tiu v. Court of Appeals

Art. 2195. The provisions of this Title shall be respectively applicable

(2) Indemnity in Workmen’s Compensation Cases

Milagros F. Vda. de Forteza v. Workmen’s

Ysmael Maritime Corp. v. Avelino

of the causes of said death or injuries. CG admitted that he had previously

(3) Dismissal of Action

Enrique A. Defante v. Hon. Antonio E.

L-28380, Feb. 27, 1976

Art. 2197. Damages may be:

(2) Damage Without Injury

(3) Some Rules on Waiver

(4) Liability of Fiscal (now Prosecutor)

arrest) for actual damages (including attorney’s fees), moral damages,

(5) Damages in Voidable Contracts

Development Bank of the Phil.

ACTUAL OR COMPENSATORY DAMAGES

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

anguish attendant to its loss, and the disappointment of their

Bert Osmeña and Associates v. Court of Appeals

Radio Communications of the Philippines, Inc. v.

These provisions, however, neglect to take into account those

complications directly arising from injury, while certain to occur,

(2) Necessity of Pleading

(3) Necessity of Proof

Inhelder Corporation v. Court of Appeals

[NOTE: If there is NO proof of loss (Sanz v. Lavin

or policy (like a bond for the temporary stay of an alien).

Radio Communications of the Philippines,

St. Louis Realty Corporation v. Court of Appeals

to him, he is entitled to an award of actual and moral damages.

Batong Buhay Gold Mines, Inc. v. CA

(2) Examples of Daño Emergente

speculative, and may not exist at all. (Araneta, et al. v. Arreglado,

(3) Examples of Lucro Cesante

Art. 2201. In contracts and quasi-contracts, the damages for which

(2) Examples of Reasonably Foreseen or Foreseeable Damages in

2) Difference in the value of goods at the time of stipulated

FAITH can be held liable only if he had been previously informed

Art. 2202. In crimes and quasi-delicts, the defendant shall be liable

(2) What Victim Must Prove in a Tort or Quasi-Delict Suit

(3) Unfair Competition

(4) Concealment of an Existing Marriage

Budiong v. Judge Apalisok

(2) Burden of Proof

Abelardo Lim & Esmadito Gumalan v.

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

Art. 2205. Damages may be recovered:

Consolidated Plywood Industries, Inc. & Henry

Art. 2206. The amount of damages for death caused by a crime or

Mckee, et al. v. IAC, et al.

Monzon, et al. v. IAC and Theo H.

by discarding the well-established formula by taking a pessimistic

Smith Bell Dodwell Shipping Agency Corp. v. Catalino

2. inhalation of fumes from burning chemicals;

3. exposure to the elements while fl oating in sea water for about 3

Villa-Rey Transit v. Bello

mutilated and gory condition of the body, the amount of P5,000 is

Davila v. Phil. Air Lines

Budiong v. Judge Apalisok