Exemplary or Corrective Damages

WHAT ARE EXEMPLARY DAMAGES?

Exemplary damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages. (Art. 2229, Civil Code)

PURPOSE

Exemplary or corrective damages are intended to serve as a deterrent to serious wrongdoings. (People v. Orilla, 422 SCRA 620)

WHEN MAY EXEMPLARY DAMAGES BE AWARDED?

Exemplary damages may be awarded in the following cases:

1. In  criminal  actions,  when  the  crime  was  committed  with  one  or more aggravating circumstances
2.  In quasi-delicts, if the defendant acted with gross negligence
3. In  contracts  and  quasi-contracts,  if  the  defendant  acted  in  a wanton, fraudulent, reckless, oppressive, or malevolent manner. (Art. 2230-2232, Civil Code)

However, before the court may award the damages, plaintiff must show that he is entitled as a matter of right to either moral, temperate or compensatory damages. In case liquidated damages have been agreed upon, he must show that he would be entitled s a matter of right to moral, temperate or compensatory damages were it not for the stipulation for liquidated damages. (Art. 2234, Civil Code)

Such damages cannot be recovered as a matter of right; the court will decide whether or not they should be adjudicated. (Art. 2233, Civil Code)

CRIMINAL CASES

Being corrective in nature, exemplary damages, therefore, can be awarded, not only in the presence of an aggravating circumstance, but also where the circumstances of the case show the highly reprehensible or outrageous conduct of the offender. In much the same way as Article 2230 prescribes an instance when exemplary damages may be awarded, Article 2229, the main provision, lays down the very basis of the award. Thus, in People v. Matrimonio, the Court imposed exemplary damages to deter other fathers with perverse tendencies or aberrant sexual behavior from sexually abusing their own daughters. Also, in People v. Cristobal, the Court awarded exemplary damages on account of the moral corruption, perversity and wickedness of the accused in sexually assaulting a pregnant married woman. Recently, in People of the Philippines v. Cristino Cañada, People of the Philippines v. Pepito Neverio and The People of the Philippines v. Lorenzo Layco, Sr., the Court awarded exemplary damages to set a public example, to serve as deterrent to elders who abuse and corrupt the youth, and to protect the latter from sexual abuse.(People vs Combate, G.R. No. 189301, December 15, 2010)

QUASI-DELICT

Our jurisprudence sets certain conditions when exemplary damages may be awarded: First, they may be imposed by way of example or correction only in addition, among others, to compensatory damages, and cannot be recovered as a matter of right, their determination depending upon the amount of compensatory damages that may be awarded to the claimant. Second, the claimant must first establish his right to moral, temperate, liquidated or compensatory damages. Third, the wrongful act must be accompanied by bad faith, and the award would be allowed only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.

In motor vehicle accident cases, exemplary damages may be awarded where the defendant’s misconduct is so flagrant as to transcend simple negligence and be tantamount to positive or affirmative misconduct rather than passive or negative misconduct. In characterizing the requisite positive misconduct which will support a claim for punitive damages, the courts have used such descriptive terms as willful, wanton, grossly negligent, reckless, or malicious, either alone or in combination.

Gross negligence is the absence of care or diligence as to amount to a reckless disregard of the safety of persons or property. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them.

In the case at bar, having established respondents’ right to compensatory damages, exemplary damages are also in order, given the fact that Mendoza was grossly negligent in driving the Mayamy bus. His act of intruding or encroaching on the lane rightfully occupied by the Isuzu truck shows his reckless disregard for safety.

In Baño v. Bachelor Express, Inc., et al., where an erring bus, in the process of overtaking a jeepney, also encroached on the opposite lane, and consequently collided with a dump truck, the Court held the driver of the bus grossly negligent and affirmed the award of exemplary damages. (Mendoza vs Sps. Gomez, G.R. No. 160110, June 18, 2014)

CONTRACTS AND QUASI-CONTRACTS

■ The prerequisite for the award of exemplary damages in cases of contract or quasi-contract is that the defendant acted in wanton, fraudulent, reckless, oppressive, or malevolent manner. (PAL vs. Miano, G.R. No. 106664 March 8, 1995)

■ To warrant the award of exemplary damages, [t]he wrongful act must be accompanied by bad faith, and an award of damages would be allowed only if the guilty party acted in a wanton, fraudulent, reckless or malevolent manner.

The requirements of an award of exemplary damages are: (1) they may be imposed by way of example in addition to compensatory damages, and only after the claimants right to them has been established; (2) that they can not be recovered as a matter of right, their determination depending upon the amount of compensatory damages that may be awarded to the claimant; (3) the act must be accompanied by bad faith or done in a wanton, fraudulent, oppressive or malevolent manner. (Francisco vs. Ferrer, G.R. No. 142029. February 28, 2001)


MANNER OF DETERMINATION

1. The claimant is entitled to moral, temperate or compensatory damages; and

2. The crime was committed with one or more aggravating circumstances, or the quasi-­delict was committed with gross negligence, or in contracts and quasi-contracts the act must be accompanied by bad faith or done in wanton, fraudulent, oppressive or malevolent manner

REDUCTION OF EXEMPLARY DAMAGES PROPER

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. In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence.” The death of the deceased and the destruction of petitioner’s home and tailoring shop “were unquestionably caused by the respondents’ gross negligence. The law allows the grant of exemplary damages in cases such as this to serve as a warning to the pubic and as a deterrent against the repetition of this kind of deleterious actions. The grant, however, should be tempered, as it is not intended to enrich one party or to impoverish another. From this perspective, [the Court finds] the CA’s reduction of the exemplary damages awarded to the petitioners from P500,000.00 to P200,000.00 to be proper.” (Tan v. OMC Carriers, Inc., G.R. No. 190521, 12 January 2011)

NOT AS A MATTER OF RIGHT

A complainant is not entitled to exemplary damages as a matter of right; it is the court that will decide whether the same is proper. In fact, a complainant needs first to prove that he is entitled to moral, temperate or compensatory damages – even in the existence of stipulation for liquidated damages – before the court may consider the question of granting exemplary damages, and, if applicable, on top of liquidated damages. (Tan v. OMC Carriers, Inc., ibid)

PARTIES CANNOT AGREE TO RENOUNCE IN ADVANCE ANY CLAIM TO EXEMPLARY DAMAGES

Parties cannot agree to renounce in advance any claim to exemplary damages as the same is imposed for the public good. (Tan v. OMC Carriers, Inc., ibid)


CAN A PASSENGER OF A JEEPNEY WHO WAS INJURED AS A RESULT OF THE GROSS NEGLIGENCE OF THE DRIVER HOLD THE OPERATOR OF SAID JEEPNEY LIABLE FOR EXEMPLARY DAMAGES?

No. A principal or master can be held liable for exemplary or punitive damages based upon the wrongful act of his agent or servant only where he participated in the doing of such wrongful act or has previously authorized or subsequently ratified it with full knowledge of the facts. Reasons given for this rule are that since damages are penal in character, the motive authorizing their infliction will not be imputed by presumption to the principal when the act is committed by an agent or servant, and that since they are awarded not by way of compensation, but 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 wanton, oppressive or malicious intent on the part of the agent.

If the operator is to be held liable for exemplary damages by reason of the wrongful act of his driver, it must be shown that he had previously authorized or knowingly ratified it thereafter, in effect making him a co-participant. It is not enough to say that an example should be made, or corrective measures employed, for the public good, especially in accident cases where public carriers are involved. For the causative negligence in such cases is personal to the employees actually in charge of the vehicles, and it is they who should be made to pay this kind of damages by way of example or correction, unless by the demonstrated tolerance or approval of the owners they themselves can be held at fault and their fault is of the character described in Article 2232 of the Civil Code. Otherwise there would be practically no difference between their liability for exemplary damages and their liability for compensatory damages. (Munsayac vs. De Lara, G.R. No. L-21151, June 26, 1968)

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Damages, Exemplary Damages