Actual/Compensatory Damages
and prayed for.
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.
- Statutory meaning of actual or
compensatory damages.
DE LEON:
 Compensatory damages (CD) – damages
awarded to a person as compensation or
indemnity for, or in satisfaction of, such
pecuniary loss suffered by him as he has
duly proved.
o Pecuniary loss – loss of money or
something by which money or
something of money value may
be acquired.
o Indemnity – compensation for
everything then on, about, or
belonging to the person, as well
as for all bodily injuries which
are proved to be the result of the
accident.
 Actual damages (AD) – puts the claimant
in the position in which he had been
before he suffered the loss or injury
complained of.
 CD makes good or replace the loss
caused by the wrong. They proceed
from a sense of natural justice, and are
designed to repair that of which one has
been deprived by the wrong of another.
 CD is to compensate the injured party
for the injury caused by the wrong, just
and fair compensation, and only due
when the wrong is established.
 GEN: CD requires satisfactory proof of
the damages alleged to have been
suffered.
 No damages can be awarded if the proof
is flimsy and unsubstantial or they are
remote or highly speculative. Hence,
receipts are needed.
 Amount of actual damages suffered
must be proven with reasonable degree
of certainty, premised on competent
proof and on the best evidence
obtainable by the injured party which
usually means official or valid receipts.
 The burden is on the claimant to
establish his case by preponderance of
evidence.
 XPN: damages may be implied by law.
(i.e, libel cases).
 Some rulings:
o AD must be specifically pleaded
o CD may be executed pending
appeal.
o Sentimental value is not a proper
element of damage.
o Appellate court cannot award the
plaintiff who did not appeal more
than the amount of actual
damages granted by the lower
court although the actual
damages suffered by him
exceeded such amount.
o Insurance will not affect the
award of actual damages.
Art. 2200. Indemnification for damages shall
comprehend not only the value of the loss
suffered, but also that of the profits which the
oblige failed to obtain.
- Entitles the complainant to recover as
compensatory damages not only the
value of the loss suffered but also
prospective profits.
DE LEON:
 2 Kinds of Damages in 2200:
o Daño emergente or damnun
emergens is the loss suffered or
actual loss, or loss for what a
person already possesses.
o Lucro cessante or lucrum cessans is
the unrealized profits or the
profits which the complainant
failed to obtain or the failure to
receive as a benefit that which
would have pertained to him, by
reason of breach of contract or as
a result of the commission of
quasi-delict, frequently known as
ganacias frustades. Absolute
certainty is not necessary to
establish the amount. Best
evidence of which his case is
susceptible.
 Some rulings:
o Measure of damages should be
the difference between the
stipulated price under the
contract and the market price on
the date agreed upon for
delivery.
o Action must be for both present
and future salaries, otherwise a
subsequent suit for the salaries
for the remaining portion of the
term of employment will be
barred.
 o Quarterly ITR may be used as
basis for computing the average
profits earned by an enterprise.
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.
- Entitles the complainant to recover all
damages which may be attributed to the
non-performance of the obligation.
- Applies only to contracts and quasi-
contracts.
DE LEON:
 Obligor in GF – liable for damages that
are natural and probable consequences
of the breach of obligation, and which
the parties have foreseen or could have
reasonably foreseen at the time the
obligation was constituted.
 Obligor in BF – responsible for all
damages which may be reasonably
attributed to the non-performance of the
obligation
o Fraud, BF or wanton attitude –
sufficient that they may be
reasonably attributed to the non-
performance of the obligation.
There exists a clear relation of
cause and effect between such
non-performance and the
damages sustained.
 2 Kinds of Damages in 2201:
o General damages are the natural
and necessary result of the
wrongful act or omission asserted
as the foundation of the liability.
They are damages which are
traceable to, and the probable
and necessary result of, the
injury, or which are presumed
by, or implied in, law to have
resulted therefrom.
o Special damages actually, but not
necessarily, result from the
injury, and thus, are not implied
by law. They are damages as, by
competent evidence, are directly
traceable to a defendant’s failure
to discharge his contract
obligation or such duties as are
imposed upon him by law.
 GEN: Unilateral act, without any legal
basis or justification, of one party in
terminating a contract makes him liable
for damages.
 XPN: Termination is in accordance with
the stipulations.
 XPN to the XPN: Abuse of rights.
 Some rulings:
o Difference between the value of
the goods sold at the stipulated
date of delivery and the date of
actual delivery. Reasonable
expenses caused by delay of the
carrier may be added.
o Seller must prove any special
damages that he might suffered.
Art. 2202. In crimes and quasi-delicts, the
defendants shall be liable for all damages
which are 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 foreseen
by the defendant.
- Accused or defendant shall be
responsible in the same manner as a
contractual debtor in bad faith.
- Applies only to crimes and quasi-delicts.
DE LEON:
 Defendant cannot be held liable for
more than the actual loss which he has
inflicted and that a plaintiff is entitled to
no more than the just and adequate
compensation for the injury suffered.
 Some rulings:
o Damages due to death resulting
from a crime (civil indemnity ex
delicto), the heirs of the deceased
are entitled to be indemnified,
without need of any proof other
than the commission of the crime
and that the accused was
responsible therefor.
o “Could have been earned had he
become a doctor” is within the
category of natural and probable
consequences of the accident.
o If based on a crime or delict,
common carrier’s alleged
diligence in the selection and
supervision of its employees is
not a defense. If based on quasi-
delict, it is a defense.
Art. 2203. The party suffering loss or injury
must exercise diligence of a good father of a
family to minimize the damages resulting
from the act or omission in question.
- Doctrine of Avoidable Consequences.
DE LEON:
 It is an obligation imposed to the injured
party
 No liability for damages which would
have been avoided with ordinary care
and reasonable expense can be enforced
or such liability may be reduced, when
the claimant, being in a position to do
so, did nothing to avoid or minimize his
loss.
 The injured party may recover expenses
or for time lost in reasonable efforts to
prevent or minimize his damages.
 Doctrine of Avoidable Consequences:
the injured victims have the
responsibility to act reasonably to limit
or mitigate losses incurred.
 Some rulings:
o A discharged employee is under
a continuous obligation to use
reasonable diligence to obtain
other suitable employment.
o A victim cannot recover the cost
of medical treatment abroad if
the same could have been
satisfactorily performed by local
practitioners.
Art. 2204. In crimes, the damages to be
adjudicated may have respectively increased
or lessened according to aggravating or
mitigating circumstances.
- Liability for damages may be
respectively increased or lessened
depending on the presence of mitigating
or aggravating circumstances.
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.
- Principle of single recovery
DE LEON:
 Advantages:
o Once trial and appeals have
concluded, there is legal closure.
o Once that recovery is obtained,
the legal incentive for the plaintiff
to stay sick or injured disappears.
o Avoidance of multiplicity of
suits.
 Disadvantages:
o Less accuracy in estimating
future damages.
o Plaintiff must be a good investor
or he will not have the award
when he needs it in the future.
 Principle of single recovery requires the
courts to “discount to present value”.
Rationale: “time” value of money that is
invested today for future needs. The
amount of future loss must, therefore,
be discounted to present value.
 Loss or impairment of earning capacity
must be shown with reasonable
certainty, and not merely speculative.
o The amount recoverable is not
the loss of the victim’s entire
earnings. It covers only the loss
sustained by the dependents or
the heirs of the deceased
consisting of the support they
would have received from him
had he not died or become
incapacitated.
o GEN: documentary evidence
needed to establish with certainty
the damages sustained.
o XPN: (1) self-employed earning
less than minimum wage and no
documentary evidence is
available; and (2) employed as a
daily wage worker earning less
than the minimum wage under
current labor laws.
o Process:
 Determine the extent of
such capacity has been
diminished;
 Determine the
permanency of the
decrease in earning
capacity; and
 The fixing of the amount
of money which will
compensate for the
determined extent and
length of the impairment,
including a reduction of
the award to its present
worth.
o Life expectancy formula: 2/3 x
(80 – age of the deceased)
Art. 2206. The amount of damages for death
caused by a crime or quasi-delict shall be at
least P3,000, even though there may have
been mitigating circumstances. In addition:
(1) The defendant shall be liable for the
loss of 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
Art. 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 5
years, the exact duration to be fixed 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.
- Imposition of civil indemnity
- In addition to the indemnity for death
caused by a crime or quasi-delict, the
defendant shall be liable for the loss of
the earning capacity of the deceased,
and the indemnity shall be paid to the
heirs of the latter.
DE LEON:
 The SC has increased the minimum
amount for civil indemnity to P75,000,
independent of the financial capacity of
the defendant.
 Other damages are still recoverable
besides the civil indemnity damages
 Victim unemployed – compensation for
loss of earning capacity is allowed.
Evidence must be presented with
reasonable certainty to complete
training for a specific profession.
 Victim a minor – compensation allowed
for loss of earning capacity. Sufficient
evidence must be presented to establish
the amount thereof.
 Formula: Net earning capacity = Life
Expectancy x [Gross Annual Income –
Reasonable and Necessary Living
Expenses]
 Life expectancy formula: 2/3 x (80 – age
of the deceased)
 Some rulings:
o When death occurs as a result of
the commission of a crime, the ff
may be recoverable: (a) civil
indemnity ex delicto; (b)
indemnity for loss of earning
capacity; (c) AD or CD; (d) Moral
Damages; (e) Exemplary
Damages; (f) temperate damages;
(g) attorney’s fees and expenses
of litigation; and (h) interest.
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 of the person who has
violated the contract. If the amount paid by
the insurance company does not fully cover
the injury of the loss, the aggrieved party
shall be entitled to recover the deficiency
from the person causing the loss or injury.
- Doctrine of subrogation
- Applies only to property insurance
DE LEON:
 Doctrine of subrogation – insurer, after
paying the amount covered, steps into
the shoes of the insured.
 Prevents the insured from obtaining
more than the amount of his loss. The
right exists after indemnity has been
paid by the insurer to the insured who
can no longer go after the third party.
He can only recover once.
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;
(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 of the plaintiff;
(4) In cases 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 plaintiff’s valid, just and
demandable claim;
(6) In actions for legal support;
 (7) In actions for the recovery of wages of
household helpers, laborers, and
skilled workers;
(8) In actions for indemnity under the
workmen’s compensation and
employers liability laws;
(9) In 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 fee and expenses of
litigation should be recovered.
In all cases, the attorney’s fees and expenses
of litigation must be reasonable.
- GEN: Attorney’s fees and expenses of
litigation can be recovered in these
instances
- XPN: Express stipulation
DE LEON:
 2 Concepts of Attorney’s Fees:
o Ordinary sense – represent the
reasonable compensation paid to
a lawyer by his client for the legal
services he has rendered to the
latter.
o Extraordinary concept – awarded
by the court as indemnity for
damages to be paid by the losing
party in litigation to the
prevailing party, and not his
counsel, unless there is an
agreement that the award shall
pertain to the lawyer as
additional compensation or as
part thereof.
 The grant of attorney’s fees, as part of
damages, is the exception rather than the
rule as they are not awarded every time
a party prevails in a suit. Rationale: no
premium should be placed on the right
to litigate.
 Some rulings:
o Decision of the court should state
why attorney’s fees are being
allowed.
o It is necessary for the trial court
to make findings of fact and law
that would bring the case within
the ambit of the enumerated
circumstances to justify the grant
of the award and in all cases must
be reasonable.
o Reason or grounds for the award
must be set forth in the decision
itself.
o Even with stipulation, the Court
may limit the amount agreed
upon by the parties.
o Agreement between the lawyer
and the client cannot bind 3 rd
persons.
o AF can be recovered when the
defendant’s act or omission
compelled the plaintiff to litigate
and incur expenses.
o Discretionary upon the trial
court.
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 6% per annum.
- Interest imposed may serve as a penalty
of indemnity for damages.
DE LEON:
 Damage dues do not include and are not
included in the computation of
monetary interest.
 Rate of penalty interest payable shall be
that agreed upon, absent any
stipulation, legal interest.
 Obligation consists in the payment of
money – interest stipulated. Legal
interest in the nature of AD or CD for
non-compliance with an obligation to
pay a sum of money is recoverable even
if not expressly stipulated in writing.
 Interest due shall earn legal interest
from the time it is judicially demanded.
 Loan or forbearance of money – 12% per
annum as per CB Circular No. 905
 Other than loan or forbearance of
money – 6% per annum as per CB
Circular No. 416
 Final and executory judgment awarding
a sum of money – 12% per annum
Art. 2210. Interest may, in the discretion of
the court, be allowed upon damages awarded
for breach of contract.
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.
- Interest is discretionary upon the court.
DE LEON:
 The amount thereof cannot be left to
speculation or conjecture but must have
some factual, legal and equitable bases.
Art. 2212. Interest due shall earn legal interest mitigate the damages under circumstances
from the time it is judicially demanded, other than the case referred to in the
although the obligation may be silent upon preceding article, as in the following
this point. instances:
- Compound interest (1) That the plaintiff himself has
contravened the terms of the contract;
DE LEON: (2) That the plaintiff has derived some
 Compound interest is interest earned benefit as a result of the contract;
upon interest due. (3) In cases where exemplary damages are
 It contemplates a situation where the to be awarded, that the defendant acted
interest stipulated by parties had upon the advice of counsel;
accrued which would earn legal interest (4) That the loss would have resulted in
from the time of judicial demand or a any event; and
suit is filed for its recovery. (5) That since the filing of the action, the
 Applicable only to obligations defendant has done his best to lessen
containing a stipulation for the payment the plaintiff’s loss or injury.
of interest. - Court is mandated to reduce damages in
 If no interest stipulated, there would be these instances.
no compounding interest.
DE LEON:
Art. 2213. Interest cannot be recovered upon  Contributory Negligence – negligence of
unliquidated claims or damages, except when the plaintiff which merely contributes to
the demand can be established with his injured. He contributes to the
reasonable certainty. principal occurrence as one of its
- Interest cannot be computed since the determining factors, he cannot recover.
amount is undetermined.  Courts may equitably mitigate damages
in the instances enumerated in 2215. It is
DE LEON: not exclusive. The court may mitigate
 Demand is established with reasonable damages recoverable in other cases
certainty, the interest shall run from the when the circumstances of the case so
time the claim is made judicially or warrant.
extrajudicially.
 Interest shall begin to run only from the Doctrine of Doctrine of
date of judgment of the court is made. Avoidable Contributory
The actual base for the computation of Consequences Negligence
legal interest shall, in any case, be on the Cannot arise until a Based upon the
amount finally adjudged. cause of action has plaintiff’s obligation
 In Eastern Shipping Lines, Inc. vs CA, the accrued which will or duty under the
Court laid down the guidelines: entitle the plaintiff to contract or its
o When an obligation is breached, at least nominal incidents.
the contravenor shall be liable for damages.
damages, which is governed by Failure on the part of He contributes to the
the Civil Code. the plaintiff to use principal occurrence
o Loan or forbearance of money – due care to prevent as one of its
12% per annum as per CB or diminish determining factors
Circular No. 905 consequences which
o Other than loan or forbearance of are avoidable in
money – 6% per annum as per CB whole or in part.
Circular No. 416
o Final and executory judgment  Both defenses can be used since the
awarding a sum of money – 12% Doctrine of Contributory Negligence
per annum happens before or during the
commission of the act, the Doctrine of
Art. 2214. In quasi-delicts, the contributory Avoidable Circumstances reduces the
negligence of the plaintiff shall reduce the amount of recoverable damages. Both
damages that he may recover. defenses serve to mitigate the
recoverable damages.
Art. 2215. In contracts, quasi-contracts, and
quasi-delicts, the court may equitably