Exemplary or Corrective Damages | Kinds | DAMAGES

CIVIL LAW: EXEMPLARY OR CORRECTIVE DAMAGES

Article 2229 to Article 2235 of the Civil Code of the Philippines

Exemplary or corrective damages, under Philippine law, are awarded as a form of punishment or deterrence to set an example for the public and to curb socially undesirable behavior. These damages are not awarded as compensation for the injury suffered but are additional damages on top of actual, moral, or nominal damages. Below is an exhaustive discussion:

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I. Definition and Purpose

1. Definition
   Article 2229 of the Civil Code defines exemplary damages as:

   "Imposed by way of example or correction for the public good."

2. Purpose

   • To serve as a deterrent against malicious, oppressive, or wanton acts.
   • To encourage socially responsible behavior and penalize harmful conduct.
   • To uphold public policy by correcting or discouraging misconduct.

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II. Basis for Award

1. General Principle
   Exemplary damages are awarded only when the claimant has also been awarded another type of damage—whether actual, moral, or nominal damages.

2. Conditions for Award
   Exemplary damages may be awarded if the following are present:

   • Criminal Actions: When the crime was committed with one or more aggravating circumstances (Article 2230).
   • Civil Actions: When the defendant acted in a wanton, fraudulent, oppressive, or malevolent manner (Article 2232).
   • Quasi-Delicts: When the defendant acted in a manner that is grossly negligent or exhibits bad faith.

3. Public Good
   The award must be for the purpose of promoting the public good and setting a moral example.

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III. Types of Cases Where Exemplary Damages May Be Awarded

1. Criminal Cases

   • Exemplary damages may be awarded when the offense includes one or more aggravating circumstances.
   • Proof of aggravating circumstances must be established beyond a reasonable doubt.
   • Example: In cases of heinous crimes such as murder or rape, the aggravating circumstances of treachery, abuse of superior strength, or premeditation may justify the award.

2. Civil Cases

   • The defendant must have acted in a wanton, fraudulent, oppressive, or malevolent manner.
   • Common scenarios:
     • Fraudulent breach of contract
     • Cases involving bad faith, such as harassment or abuse of right
     • Willful and oppressive conduct against a creditor or party.

3. Quasi-Delicts (Torts)

   • Exemplary damages may be awarded if the defendant's negligence is gross or reckless, or if there is an evident intent to harm.
   • Example: In cases of gross negligence causing death or severe injury.

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IV. Amount of Exemplary Damages

1. No Fixed Rule

   • The law does not provide a specific formula for the computation of exemplary damages.
   • Courts determine the amount based on the circumstances of the case, ensuring it is reasonable, proportionate, and appropriate to serve the purpose of deterrence.

2. Factors Considered

   • Degree of malice, fraud, or bad faith.
   • Wealth of the defendant (to ensure deterrence).
   • Social impact of the conduct.

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V. Exemplary Damages in Specific Contexts

1. In Contractual Breaches

   • Article 2232 specifies that exemplary damages may be awarded when there is bad faith or fraud in contractual relations.
   • Example: A landlord locking out a tenant maliciously and illegally.

2. Family Law

   • Exemplary damages may apply in cases involving gross neglect of parental duties or abusive relationships, such as child abuse or abandonment.

3. Property Disputes

   • Exemplary damages may be awarded in cases of bad faith in property-related actions, such as malicious squatting or fraudulent conveyance of land.

4. Defamation

   • Awarded in libel or slander cases if the defamatory act was committed with malice and wanton disregard for the truth.

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VI. Limitations on Award

1. Not Awarded Independently

   • Article 2234 emphasizes that exemplary damages cannot be awarded without the claimant being awarded actual, moral, or nominal damages.

2. Proof Required

   • There must be sufficient proof of the malice, fraud, or bad faith that justifies the award of exemplary damages.

3. No Award in Ordinary Negligence

   • Exemplary damages cannot be awarded in cases of simple negligence unless accompanied by gross misconduct or bad faith.

4. Mitigating Circumstances in Criminal Cases

   • If mitigating circumstances are present, they may reduce or negate the award of exemplary damages.

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VII. Procedural Considerations

1. Pleadings

   • A claim for exemplary damages must be specifically pleaded in the complaint or counterclaim.

2. Evidence

   • Clear and convincing evidence of wanton, fraudulent, or oppressive behavior is required.

3. Finality of Conviction in Criminal Cases

   • In criminal cases, exemplary damages are awarded only after a final conviction.

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VIII. Relevant Jurisprudence

1. Cases Supporting Award

   • BPI vs. Casa Montessori International (G.R. No. 171145): Fraudulent breach of contract justifies exemplary damages.
   • People v. Jugueta (G.R. No. 202124): Award of exemplary damages in a criminal case with aggravating circumstances.

2. Cases Limiting Award

   • People v. Catubig (G.R. No. 137842): Mitigating circumstances can negate the award of exemplary damages.
   • PNB v. Cheah (G.R. No. 170865): Absence of bad faith or malice invalidates the claim for exemplary damages.

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IX. Conclusion

Exemplary or corrective damages, though ancillary in nature, play a vital role in the Philippine legal system by deterring socially destructive conduct. Their award hinges on the presence of aggravating circumstances in criminal cases or wanton, fraudulent, and oppressive behavior in civil and quasi-delictual cases. Courts wield this remedy carefully to balance deterrence with fairness and justice.