Nominal Damages

What are nominal damages?

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)

Award of nominal damages in labor cases

Nominal damages "may be awarded to a plaintiff whose right has been violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, and not for indemnifying the plaintiff for any loss suffered by him. Its award is thus not for the purpose of indemnification for a loss but for the recognition and vindication of a right." The amount of nominal damages to be awarded the employee is addressed to the sound discretion of the court, taking into consideration the relevant circumstances.43 Nevertheless, while the amount of damages is left to the discretion of the court, it has been held that –

Again, we stress that though the Court is given the latitude to determine the amount of nominal damages to be awarded to an employee who was validly dismissed but whose due process rights were violated, a distinction should be made between a valid dismissal due to just causes under Article 282 of the Labor Code and those based on authorized causes, under Article 283. The two causes for a valid dismissal were differentiated in the case of Jaka Food Processing Corporation v. Pacot where the Court held that:

A dismissal for just cause under Article 282 implies that the employee concerned has committed, or is guilty of, some violation against the employer, i.e. the employee has committed some serious misconduct, is guilty of some fraud against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be said that the employee himself initiated the dismissal process.

On another breath, a dismissal for an authorized cause under Article 283 does not necessarily imply delinquency or culpability on the part of the employee. Instead, the dismissal process is initiated by the employer’s exercise of his management prerogative, i.e. when the employer opts to install labor saving devices, when he decides to cease business operations or when, as in this case, he undertakes to implement a retrenchment program.

x x x x

Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee; and (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employer’s exercise of his management prerogative.

Since in the case of JAKA, the employee was terminated for authorized causes as the employer was suffering from serious business losses, the Court fixed the indemnity at a higher amount of P50,000.00. In the case at bar, the cause for termination was abandonment, thus it is due to the employee’s fault. It is equitable under these circumstances to order the petitioner company to pay nominal damages in the amount of P30,000.00, similar to the case of Agabon. (LIBCAP Marketing Corp vs. Baquial, G.R. No. 192011, June 30, 2014)

Award of actual, moral, temperate or moderate damages preclude nominal damages

It should be noted that nominal damages cannot co‐exist with actual or compensatory damages because nominal damages are recoverable when the damages suffered cannot be proved with reasonable certainty. The law presumes damage although actual or compensatory damages are not proven. Award of actual, moral, temperate or moderate damages preclude nominal damages. But it may be awarded together with attorney’s fees. (Pineda, pp. 284‐285, 2009 ed)

Nominal damages based on breach of contract

■ No moral or exemplary damages was awarded. Nevertheless, when confronted with their failure to deliver on the wedding day the wedding cake ordered and paid for, petitioners gave the lame excuse that delivery was probably delayed because of the traffic, when in truth, no cake could be delivered because the order slip got lost. For such prevarication, petitioners must be held liable for nominal damages for insensitivity, inadvertence or inattention to their customer's anxiety and need of the hour. (Francisco v. Ferrer)

■ Respondent admitted that three hotel functions coincided with petitioners’ reception. To the Court, the delay in service might have been avoided or minimized if respondent exercised prescience in scheduling events. No less than quality service should be delivered especially in events which possibility of repetition is close to nil. Petitioners are not expected to get married twice in their lifetimes.

In the present petition, under considerations of equity, the Court deems it just to award the amount of P50,000.00 by way of nominal damages to petitioners, for the discomfiture that they were subjected to during to the event. The Court recognizes that every person is entitled to respect of his dignity, personality, privacy and peace of mind. Respondent’s lack of prudence is an affront to this right. (Sps. Guanio vs Makati Shangri-la Hotel and Resort, G.R. No. 190601, February 7, 2011)

Temperate or Moderate Damages

What are temperate of moderate damages?

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 cannot, from the nature of the case, be provided with certainty. (Art. 2224, Civil Code)

Temperate damages in lieu of actual damages 

Despite the failure to submit proof of actual damages, “a party still has the option of claiming temperate damages, which may be allowed in cases where, from the nature of the case, definite proof of pecuniary loss cannot be adduced although the court is convinced that the aggrieved party suffered some pecuniary loss.” In this case, the petitioners submitted photographs as evidence to show “the extent of damage done to the house, the tailoring shop and the petitioners’ appliances and equipment.” The loss thereof or damage to petitioner is directly attributed to the truck ramming her house and tailoring shop, as well as the gross negligence of the driver in handling the truck. However, the photographs alone is not sufficient to establish the amount with certainty. The Supreme Court found the award of P200,000.00 as a fair and sufficient award by way of temperate damages based on “the attendant circumstances and given the property destroyed.” (Tan v. OMC Carriers, Inc., G.R. No. 190521, January 12, 2011)

Temperate damages in lieu of loss of earning capacity 

For loss of earning capacity, temperate damages may be awarded in lieu of actual damages “where earning capacity is plainly established but no evidence was presented to support the allegation of the injured party’s actual income.” Here, the deceased income-earning capacity was never disputed. His five minor children “all relied mainly on the income earned by their father from his tailoring activities for their sustenance and support. Under these facts and taking into account the unrebutted annual earnings of the deceased, [the Court holds] that the petitioners are entitled to temperate damages in the amount of P300,000.00 [or roughly, the gross income for two (2) years] to compensate for damages for loss of the earning capacity of the deceased.” (Tan v. OMC Carriers, Inc.,)

Amount of temperate damages left to the discretion of the courts but should be reasonable

In the absence of competent proof on the amount of actual damages suffered, a party is entitled to temperate damages. 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 cannot, from the nature of the case, be proved with certainty. The amount thereof is usually left to the discretion of the courts but the same should be reasonable, bearing in mind that temperate damages should be more than nominal but less than compensatory. (Meralco vs Castillo, G.R. No. 182976. January 14, 2013)

Even if the pecuniary loss is capable of proof, an award of temperate damages is not precluded

Even if the pecuniary loss suffered by the claimant is capable of proof, an award of temperate damages is not precluded. The grant of temperate damages is drawn from equity to provide relief to those definitely injured. Therefore, it may be allowed so long as the court is convinced that the aggrieved party suffered some pecuniary loss.” (Gonzales vs. CASURECO, et al., G.R. No. 181096, March 6, 2013)

Temperate damages cannot be granted concurrently with nominal damages

Temperate damages are incompatible with nominal damages hence, cannot be granted concurrently. (Citibank vs IAC)

Liquidated Damages

What are liquidated damages?

Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof. (Art. 2226, Civil Code)

When shall liquidated damages be reduced?

Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable. (Art. 2227, Civil Code)

How shall liquidated damages be determined if the breach of contract committed was not the one contemplated by the parties?

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. (Art. 2228, Civil Code)

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)