They also argue that when respondent allowed them to deliver the finished products to Eric Sy, the original obligation was novated.30, A rejoinder was submitted by respondent, but it was noted without action in view of A.M. No. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Actual or Compensatory Damages ARTICLE 2199. x x x x. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable. Art. In Tankeh v. Development Bank of the Philippines,49 we stated that: 2219. They have been ordered to pay 200,000 Philippine pesos (£3,170) in moral damages and another 200,000 pesos in exemplary damages. It also does not state that Eric Sy somehow substituted petitioner Arco Pulp and Paper as respondent’s debtor. 58 G.R. The court ruled that moral damages may be recovered "only if the existence of the factual and legal bases for the claim and their causal connection to the acts complained of are satisfactorily proven". Art. ARTICLE 33. 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. In view, however, of the promulgation by this court of the decision dated August 13, 2013 in Nacar v. Gallery Frames,59 the rate of interest due on the obligation must be modified from 12% per annum to 6% per annum from the time of demand. 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. Article 20 and 21 of the Civil Code are as follows: Article 20. Property Relations Between Husband & Wife, Book 2: Property. C. VITUG(Retired Supreme Court Associate Justice), COMMERCIAL LAW AND JURISPRUDENCE, II, 9 (2006); Lim v. Court of Appeals, 380 Phil. 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; (5) Illegal or arbitrary detention or arrest; (7) Libel, slander or any other form of defamation; (10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. Villamor, En Banc]. 1704 dated June 17, 2014, vice Associate Justice Presbitero J. Velasco, Jr., in view of the latter's official trip to Nairobi, Kenya on June 22 to 25, 2014 and to South Africa on June 26 to 29, 2014. When petitioner Arco Pulp and Paper opted instead to deliver the finished products to a third person, it did not novate the original obligation between the parties. When the obligation became due and demandable, petitioner Arco Pulp and Paper not only issued an unfunded check but also entered into a contract with a third person in an effort to evade its liability. (1107a). And exemplary damages should be more than 100,000 to send the message that the State will not tolerate the killing of journalists," Roque said. 2209. 2220. 2225. The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged. Pursuant to Section 13, Article VIII of the Constitution and the Division Acting Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. Novation which consists in substituting a new debtor in the place of the original one, may be made even without the knowledge or against the will of the latter, but not without the consent of the creditor. These terms are generally, but not always, used interchangeably. Moreover, the conflicting intention and acts of the parties underscore the absence of any express disclosure or circumstances with which to deduce a clear and unequivocal intent by the parties to novate the old agreement.40 (Emphasis supplied). 2206. 7610 [Victim is a child under 12 years old or is demented] ₱50,000.00 ₱50,000.00 ₱50,000.00 We are sharing the legal research part of a recent appeal memorandum we filed in a labor case, where our client won in the decision issued by the Arbiter but the same did not award moral and exemplary damages in favor of our client. Petitioner Arco Pulp and Paper, therefore, must still pay respondent the full amount of ₱7,220,968.31. 1026, 1032 (2000) [Per J. Pardo, First Division]; Ford Philippines, Inc. v. Court of Appeals, 335 Phil. 799, as follows: I. Art. MANILA, Philippines — Senate Minority Leader Franklin Drilon is seeking to increase the minimum amount of damages granted by the court for the … Obligations may be modified by: (1) Changing their object or principal conditions; (2) Substituting the person of the debtor; (3) Subrogating a third person in the rights of the creditor. 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. As such, it logically requires the consent of the third person and the creditor. 42 Philippine Savings Bank v. Spouses Castillo, G.R. 175540, April 7, 2014 [Per J. Peralta, Third Division]. SECTION 5. This means he could walk free and return to … The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged. opportunity to express his consent, or to impugn the election made by the debtor, and only after said notice shall the election take legal effect when consented by the creditor, or if impugned by the latter, when declared proper by a competent court.34, According to the factual findings of the trial court and the appellate court, the original contract between the parties was for respondent to deliver scrap papers worth ₱7,220,968.31 to petitioner Arco Pulp and Paper. In an action for damages against a hospital, the negligence of its nurses can be imputed to the 170966, 22 June 2016) Exemplary or Corrective Damages Article 2229 of the Civil Code provides that exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages. Temperate damages must be reasonable under the circumstances. at 525–527, citing Garcia v. Social Security Commission Legal and Collection,565 Phil. Rules governing damages laid down in other laws shall be observed insofar as they are not in conflict with this Code. In all cases, the attorney’s fees and expenses of litigation must be reasonable. They are recoverable only if the party from whom it is claimed acted fraudulently or in bad faith or in wanton disregard of his contractual obligations. The Lawphil Project - Arellano Law Foundation. 2198. 39 Reyes v. Court of Appeals, 332 Phil. It cannot be presumed and may be implied only if the old and new contracts are incompatible on every point. 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. Article 21, on the other hand, concerns injuries that may be caused by acts which are not necessarily proscribed by law. 2. 741, 750 (2001) [Per J. Pardo, First Division], citing National Steel Corporation v. Regional Trial Court of Lanao del Norte, Br. Before a director or officer of a corporation can be held personally liable for corporate obligations, however, the following requisites must concur: (1) the complainant must allege in the complaint that the director or officer assented to patently unlawful acts of the corporation, or that the officer was guilty of gross negligence or bad faith; and (2) the complainant must clearly and convincingly prove such unlawful acts, negligence or bad faith. Exemplary or corrective damages are intended to serve as a deterrent to serious wrongdoings. According to the Court of Appeals, petitioner Santos was solidarily liable with petitioner Arco Pulp and Paper, stating that: In the present case, We find bad faith on the part of the [petitioners] when they unjustifiably refused to honor their undertaking in favor of the [respondent]. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows: 1. Petitioner Arco Pulp and Paper’s actions clearly show "a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty through some motive or interest or ill will that partakes of the nature of fraud. Article 19, however, cannot be its sole basis: Article 19 is the general rule which governs the conduct of human relations. 206806               June 25, 2014. AN ACT TO ORDAIN AND INSTITUTE THE CIVIL CODE OF THE PHILIPPINES PRELIMINARY TITLE CHAPTER 1 Effect and Application of Laws Article 1. Such compensation is referred to as actual or compensatory damages. By itself, it is not the basis of an actionable tort. Under the doctrine, the corporate existence may be disregarded where the entity is formed or used for non-legitimate purposes, such as to evade a just and due obligation, or to justify a wrong, to shield or perpetrate fraud or to carry out similar or inequitable considerations, other unjustifiable aims or intentions, in which case, the fiction will be disregarded and the individuals composing it and the two corporations will be treated as identical.56 (Emphasis supplied). Considering the attendance of aggravating circumstances, we sustain the award of exemplary damages of P30,000.00, per victim, in accordance with Article 2230 of the Civil Code. On one hand, petitioners argue that the execution of the memorandum of agreement constituted a novation of the original obligation since Eric Sy became the new debtor of respondent. Art. Philippines, including sale of investments by foreign governments and financing institutions wholly-owned, controlled, ... exemplary damages, attorney’s fees, and the cost of the suit are excluded from gross income. Art. (Art. 1691 dated May 22, 2014, in view of the vacancy in the Third Division. Award of damages. 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. Moral damages, however, are not recoverable on the mere breach of the contract. (1203), Article 1292. The appellate court, therefore, correctly identified the obligation between the parties as an alternative obligation, whereby petitioner Arco Pulp and Paper, after receiving the raw materials from respondent, would either pay him the price of the raw materials or, in the alternative, deliver to him the finished products of equivalent value. 40 Land Bank of the Philippines v. Ong, G.R. "48 Moral damages may, therefore, be awarded. Art. 644, 655 (2000) [Per J. Quisumbing, Second Division]; De Cortes v. Venturanza, 170 Phil. Ownership. 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. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. 2228. 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 the court may consider the question of whether or not exemplary damages should be awarded. No. According to these guidelines, the interest due on the obligation of ₱7,220,968.31 should now be at 6% per annum, computed from May 5, 2007, when respondent sent his letter of demand to petitioners. 3 of this article, may also recover moral damages. When petitioner Arco Pulp and Paper issued a check in partial payment of its obligation to respondent, it was presumably with the knowledge that it was being drawn against a closed account. Pemberton could slash as much as 4.5 years from his jail time if he could avail Good Conduct Time Allowance (GCTA) benefits. ARTICLE 2218. The creditor cannot be compelled to receive part of one and part of the other undertaking. 97412, July 12, 1994, 234 SCRA 78 [Per J. Vitug, En Banc]. Other types of damages also exist and these include property damage, lost wages, medical care and many others. – DAMAGES 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. 7. Here, petitioner Santos entered into a contract with respondent in her capacity as the President and Chief Executive Officer of Arco Pulp and Paper. (1108). Tagged as 18. 0009, the anti-graft court ordered the return of millions of pesos in ill-gotten shares of Africa and Nieto, Jr. in Eastern Telecommunications Philippines Inc. as well as the payment of the P1 million exemplary damages. In contracts and quasi-contracts, if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. Following this principle, obligations incurred by the corporation, acting through its directors, officers and employees, are its sole liabilities. 185280, January 18, 2012, 663 SCRA 394, 415 [Per J. Reyes, Second Division]. 3) The old contract must be extinguished. These acts clearly amount to bad faith. This has remained unpaid since 2007. & Its Modifications, Book 3: Different Modes of Acquiring Ownership. In this case, respondent was not privy to the memorandum of agreement, thus, his conformity to the contract need not be secured. The judge ruled that the complainant should receive the equivalent of $8,000 in local currency for moral and exemplary damages. Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they should be adjudicated. No. In the Philippines, a medical malpractice suit is primarily governed by the Civil Law concept of damages. Hence, the person claiming bad faith must prove its existence by clear and convincing evidence for the law always presumes good faith. 63, 76 (2000) [Per J. Pardo, First Division]; Far East Bank & Trust Company v. Court of Appeals, 311 Phil. Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount can not, from the nature of the case, be provided with certainty. Such compensation is referred to as actual or compensatory damages. Art. 2233. In Adriano v. Lasala:46. Damages, Book 4: Obligations & Contracts, 0. 533 (1999) [Per J. Puno, First Division]; Security Bank and Trust Company, Inc. v. Cuenca,396 Phil. CHAPTER 1 > GENERAL PROVISIONS. This Court will now endeavor to end, once and for all, the confusion as to the proper award of damages in criminal cases where the imposable penalty for the crime is reclusion perpetua or death.As a rule, the Court awards three kinds of damages in these types of criminal cases: civil indemnity and moral and exemplary damages. Business owners must always be forthright in their dealings. No. In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. 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. Worse, it attempted to shift their obligations to a third person without the consent of respondent. Title XVIII. The rules under this Title are without prejudice to special provisions on damages formulated elsewhere in this Code. . 2215. 52 G.R. Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they should be adjudicated. In the Philippines, a defendant is notified of the action brought against him or her through the service of summons. 47 Id., citing Erlinda Francisco v. Ferrer, Jr.,405 Phil. In contracts, quasi-contracts, and quasi-delicts, the court may equitably mitigate the damages under circumstances other than the case referred to in the preceding 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 benefit as a result of the contract; (3) In cases where exemplary damages are to be awarded, that the defendant acted upon the advice of counsel; (4) That the loss would have resulted in any event; (5) That since the filing of the action, the defendant has done his best to lessen the plaintiff’s loss or injury. ** Associate Justice Martin S. Villarama, Jr. was designated as Acting Member per Special Order No. Damages, Actual or Compensatory Damages, Book 4: Obligations & Contracts. Petition denied. 197842, October 9, 2013 [Per J. Mendoza, Third Division]. In cases under Article 21, the legal issues revolve around whether such outcome should be considered a legal injury on the part of the plaintiff or whether the commission of the act was done in violation of the standards of care required in Article 19.45. SECTION 3. 2217. If the memorandum of agreement was intended to novate the original agreement between the parties, respondent must have first agreed to the substitution of Eric Sy as his new debtor. 108, 122 (2000) [Per J. Panganiban, Third Division]; Reyes v. CA,332 Phil. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. d. litigation expenses amounting to Twenty Thousand Pesos (PhP 20,000.00). In the absence of stipulation, attorney’s fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (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 plaintiff’s plainly valid, just and demandable claim; (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. The Quezon City court also ordered the couple to pay the complainant ₱225,000 for moral and civil indemnity, as well as exemplary damages with … In the adjudication of moral damages, the sentimental value of property, real or personal, may be considered. Bad faith does not simply connote bad judgment or negligence. 2. Philippines, including sale of investments by foreign governments and financing institutions wholly-owned, controlled, or enjoying refinancing from foreign ... exemplary damages, attorney’s fees, and the cost of the suit are excluded from gross income. This is clear on the face of the check bearing the account name, "Arco Pulp & Paper, Co., Inc."54 Any obligation arising from these acts would not, ordinarily, be petitioner Santos’ personal undertaking for which she would be solidarily liable with petitioner Arco Pulp and Paper. (1109a). J. Panganiban, First Division]. The Court of Appeals, they allege, also erred in awarding moral and exemplary damages and attorney’s fees to respondent who did not show proof that he was entitled to damages.27, Respondent, on the other hand, argues that the Court of Appeals was correct in ruling that there was no proper novation in this case. 60, 76 (2000) [Per J. Buena, Second Division]; Philippine National Bank v. Ritratto Group, Inc., 414 Phil. The trial court erroneously ruled that the execution of the memorandum of agreement constituted a novation of the contract between the parties. When a party breaches a contract, he or she goes against Article 19 of the Civil Code, which states: Article 19. They are 'likewise liable to pay respondent exemplary damages amounting to P50,000.00 as it is also shown that her dismissal was carried out in such a malicious and oppressive manner. 741, 749–750 (2001) [Per J. Pardo, First Division]. No. When petitioner Arco Pulp and Paper tendered a check to respondent in partial payment for the scrap papers, they exercised their option to pay the price. 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. Before us is a petition for review on certiorari1 assailing the Court of Appeals’ decision2 in CA-G.R. 197842, October 9, 2013 [Per J. Mendoza, Third Division]. ... Actual, Temperate, Exemplary, and Moral Damages Gonzales, et al. n. often called punitive damages, these are damages requested and/or awarded in a lawsuit when the defendant's willful acts were malicious, violent, oppressive, fraudulent, wanton or grossly reckless. Schedule of deliveries are as follows: It has been agreed further that the Local OCC materials to be used for the production of the above Test Liners will be supplied by Quality Paper & Plastic Products Ent., total of 600 Metric Tons at ₱6.50 per kg. Nevertheless, this legal fiction may be disregarded if it is used as a means to perpetrate fraud or an illegal act, or as a vehicle for the evasion of an existing obligation, the circumvention of statutes, or to confuse legitimate issues. Novation must be stated in clear and unequivocal terms to extinguish an obligation. 193178, May 30, 2011, 649 SCRA 527, 538 [Per J. Nachura, Second Division], citing Philippine National Bank v. Rocamora, 616 Phil. 157632, December 6, 2006). 19 By agreement, petitioner Arco Pulp and Paper, as the debtor, had the option to either (1) pay the price or(2) deliver the finished products of equivalent value to respondent.35. 437, 441 (1958) [Per J. Felix, En Banc]; A. M.TOLENTINO, CIVIL CODE OF THE PHILIPPINES, IV, 390 (1991); Garcia v. Khu Yek Chiong, 65 Phil. See also CIVIL CODE, art. “I think that government, especially the CHR should help the victims of the Ampatuan massace, their living conditions, housing, and on top of that there should be what the law calls ‘exemplary damages,’ which is a penalty for inaction, incompetence for failure to arrest people who are suspects.” As a general rule, directors, officers, or employees of a corporation cannot be held personally liable for obligations incurred by the corporation. Interest due shall earn legal interest from the time it is judicially demanded, although the obligation may be silent upon this point. 33 Borbon II v. Service wide Specialists, 328 Phil. Whether the obligation may be considered, injury or illness is regulated by Special laws, 703 439! J. Pardo, First Division ], however, that the execution of the check in partial payment petitioner! 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