Torts and Damages Lecture

1. Torts and DamagesLecture 9 October 2009 11:30-2:30 P.M. Sta. Ana Room

2. Part I: Review

3. 2003 Bar, Question 17 As a result of a collision between a taxicab owned by A and another taxicab owned by B, X, passenger of the first taxicab was seriously injured. X later filed a criminal complaint against both drivers. Is it necessary for X to reserve the right to institute a civil action for damages against both taxicab owners before he can file a civil action for damages against them? Why?

4. Answer: As a rule, reservation is not necessary save for civil action to recover damages arising from the criminal act. If the civil action contemplated is based on contract (culpa contractual) or on quasi-delict, there is no need for reservation. [Under Section 1 of Rule 111, what is deemed impliedly instituted with the criminal action is only the action to recover civil liability arising from crime (ex delicto). All other civil actions under Articles 32, 33, 34 and 2176 of the Civil Code are no longer deemed instituted, and may be filed separately, and prosecuted independently without any reservation in the criminal action.

5. 1976 Bar, Question 1 During a brawl in a basketball game, A attacks B with a bottle and causes physical injuries. If B files a civil case against A for damages and during its pendency a criminal case is filed against A, should the civil case be suspended meanwhile? Explain.

6. Answer: No, it should not be suspended. The applicable rule states that the civil action for damages arising from physical injuries is an independent civil action. As an independent civil action, it is separate and distinct from the criminal action. In this case, since B filed a civil case against A for damages for the physical injuries sustained, he has a cause of action which is independent in nature.

7. 1976 Bar, Question 1b If a criminal case is filed first, may the civil case be filed during the pendency of the criminal case or later, even without reservation? What do you think? In responding to this question, do you still need to emphasize the substantive character or nature of right provided under Article 33? Why or why not? What if the criminal case is no longer pending?

8. In the same 1976 Bar, the examiner asks a subsequent question – “Does Article 33 of the Civil Code on separate civil action for damages arising from injuries require that there be a reservation in the criminal case to file a separate civil action? Explain.”

9. Part II: Damages

10. Why a Title on Damages? Is this entirely new? • What is meant by damages? We know that the term is not interchangeable with damage? (Custodio v. CA) • Are damages pecuniary in nature? (People v. Ballesteros) • What are the kinds of recoverable damages? • Is it possible for damages to be awarded outside of the Civil Code? Injury is the illegal invasion o f a legal right. Damage is the loss, hurt or harm which results from the injury. Damages are the recompense or compensation awarded for the damage suffered. There can be damage without injury; the loss or harm was not the result of violation of legal duty.

11. General principles • How (what) to allege • How to prove (what needs proof)

12. Actual or Compensatory In a recent mishap, which some of you picked up for your submission of newspaper articles, bus driver A hit a young mother and her 3-year old child as they were crossing EDSA. They were about to step on to the curb at the Crame side, when they were hit by the bus. The child died and the young mother lost her arm. Let us say that the young mother files a civil suit against the driver and/or the bus company. She claims actual or compensatory damages. How should her lawyer plead this claim? On the radio the other day, a reporter mentioned having spoken to the driver who was asked if he wished to apologize to the bereaved mother. He replied, “[E], hindikonamanpotalaganakita, bakitakomagso-sorry.” Should his lack of remorse be taken into consideration in determining the amount of actual or compensatory damages to be awarded?

13. Actual or Compensatory • What is the purpose of awarding actual or compensatory damages? • Having said that, is it possible then to include a claim for profits which are yet to be earned?

14. Actual or Compensatory Damages

15. Actual or Compensatory Kinds – • Danoemergente • Lucrumcessans • General damages • Special damages

16. Actual or Compensatory • Extent • Governed by Articles 2201 and 2202 • Proof • Must be certain (reasonable certainty, not absolute or mathematically certain) • Amount • Property • Person (Injury or Death) • For injury – medical and reasonable related expenses, loss of earning capacity

17. Actual or Compensatory • Death • Funeral Expenses (does this include 9th day, 40th day?) • Compensatory (indemnification) now pegged at P50,000 • Loss of earning capacity • Support • Moral damages

18. Actual or Compensatory Damages • G.A. Machineries v. Yaptinchay • What may be presented – • Document or written instrument to support claim ( to show orders really made and indicate volume) • Average actual profits realized in previous years (instead of baseless projections) • Average actual profits at industry level or comparable business – but must be actual income to help court arrive at amount of actual damages with reasonable certainty (see Seavan Carrier, Inc. v. GTI Sportswear)

19. Actual or Compensatory • Loss of Earning Capacity Net Earning Capacity = Life Expectancy x [Gross Income Less Living Expenses] • Formula for Life Expectancy Villa Rey > 2/3 x [80-age at death] J. Feliciano > Σ (Lx+1, Lx+2, …Lx+n), where n = 100-x x = age upon death L = number of people surviving after number of years

20. Are moral damages entirely new in the present Civil Code? • What are the elements of moral damages? • Does Article 2219 provide an exclusive and exhaustive listing of cases which may form basis of claim for moral damages? Moral Damages There must be injury whether physical, mental or psychological, clearly sustained by the claimant. There must be culpable act or omission factual established. The wrongful act or omission of the defendant is proximate cause of the injury sustained by the claimaint. Award of damages predicated on any of cases under Article 2219.

21. Moral Damages • Tropical Palace Hotel for a Reycard Duet Show in 1976. What went wrong? Tray of drinks overturned and fell on Mrs. Sena, drenching her, compelling her to remove her clothes in the ladies room without being given a towel. • Mrs. Sena sued Bagumbayan Corp. as employer of waiter for quasi-delict, asking for actual damages, attorney’s fees, and moral and exemplary damages as may be awarded by court. She testified, however, claiming P100,000 in moral damages for herself and her husband due to embarrassment suffered and lack of apology from management. She asked for exemplary damages to teach management a lesson. Are moral and exemplary damages recoverable here? SC said instant case not specifically mentioned in Article 2219. Is SC correct? How about the reference to “analogous cases.” How about “mental anguish”? “Emotional distress”? Mrs. Sena did testify to the “embarrassment” she suffered. What do you think?

22. 2006 Bar, Question 16 Under Article 2219 of the Civil Code, moral damages may be recovered in the cases specified therein, several of which are enumerated below. Choose the case wherein you cannot recover moral damages. Explain. a. A criminal offense resulting in physical injuries b. Quasi-delicts causing physical injuries c. Immorality or dishonesty d. Illegal search e. Malicious prosecution

23. Answer: Moral damages may not be recovered in (c) for immorality or dishonesty as these grounds are not included in the enumeration in Article 2219 of the Civil Code. [Another answer that ought to be given full credit is that moral damages may be recovered in ALL instances enumerated in the problem. Why?]

24. 2002 Bar, Question 16 Ortillo contracts Fabricato, Inc. to supply and install materials in a building he is donating to his province. Ortillo pays 50% of the contract price as per agreement. It is also agreed that the balance would be payable periodically after every 10% performance until completed. After performing about 93% of the contract, for which it has been paid an additional 40% as per agreement, Fabricato, Inc. did not complete the project due to its sudden cessation of operations. Instead, Fabricato, Inc. demanded payment of the last 10% of the contract despite its non-completion of the project. Ortillo refuses to pay, invoking the stipulation that payment of the last amount of 10% shall be upon completion. Fabricato brings suit for the entire 10%, plus damages. Ortillo counters with claims for (a) moral damages for Fabricato’s unfounded suit which has damages his reputation as a philanthropist and respected businessman in his community, and (b) attorney’s fees. a. Does Ortillo have a legal basis for his claim for moral damages? b. How about his claim for attorney’s fees, having hired a lawyer to defend him?

25. Answer: • There is no legal basis for Ortillo’s claim for moral damages. It does not fall under the coverage of Article 2219 of the Civil Code. • Ortillo is entitled to attorney’s fees because Fabricato’s complaint is a case of malicious prosecution, or a clearly unfounded civil action. Do you agree?

26. Moral Damages • May a corporation be awarded moral damages? • A juridical person is generally not entitled to moral damages because unlike a natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish or moral shock. • How about for besmirched reputation? Recall the Tribune raid? Could the Tribune in a related suit ask for moral damages?

27. Nominal Damages True or False – • Nominal damages are awarded to indemnify plaintiff for a loss which eludes pecuniary estimation. • Nominal damages can be awarded only for violation of Article 32 of the Civil Code, and not for any obligation regardless of source. • Nominal damages may be awarded along with moral and exemplary damages.

28. Nominal Damages • Injury + Damage > Sufficient for award? • What if Injury + Damage + Claim for Actual Damages, but no proof presented on extent/amount of actual damages? (This is what happened in Robes-Francisco v. CFI.)

29. Nominal Damages What happens when the dream three-layered wedding cake arrives at 10:00 p.m. for a 6:00 p.m. reception (and with one layer missing)? • RTC-Cebu City said Francisco must pay cost of wedding cake, moral damages (P30,000) and attorney’s fees (P10,000). • The CA increased the award of moral damages and awarded exemplary damages. • Supreme Court moral and exemplary damages not warranted. Why not? Francisco lied about delay in delivery (citing traffic) and later admitted that the order slip got lost. • SC awarded nominal damages – for the prevarication, insensitivity, inadvertence or inattention to customer’s anxiety.

30. Nominal Damages • In MCC v. Ssangyong, the SC said that courts cannot rely upon speculation, conjecture or guesswork as to the fact and amount of damages (US$93,493.87), but must depend on competent proof that the claimant suffered, and one evidence of actual amount thereof. What made SC say this? What proof of actual damages presented and why were these found to be inadequate? • SC went on to award nominal damages (P200,000.00), for petitioner had knowingly breached its contractual obligation and obstinately refused to pay despite repeated demands – inattention and insensitivity. • “Nominal damages are recoverable where a legal right is technically violated and must be vindicated against such invasion that has produced no actual present loss of any kind or where there has been a breach of contract and no substantial injury or actual damages whatsoever have been or can be shown.”

31. 2005 Bar, Question 16 Dr. and Mrs. Almeda are prominent citizens of the country and are frequent travelers abroad. In 1996, they booked round-trip business class tickets for the Manila-Hongkong-Manila route of the Pinoy Airlines, where they are holders of Gold Mabalos Class Frequent Flier cards. On their return flight, Pinoy Airlines upgraded their tickets to first class without their consent and, in spite of their protestations to be allowed to remain in the business class so that they could be with their friends, they were told that the business class was already fully booked, and that they were given priority in upgrading because they are elite members of the frequent flier card. Since they were embarrassed at the discussions with the flight attendants, they were forced to take the flight at the first class section apart from their friends. Upon their return to Manila, they demanded a written apology from Pinoy Airlines. When their demand went unheeded, the couple sued Pinoy Airlines for breach of contract claiming moral and exemplary damages as well as attorney’s fees. Will the action prosper?

32. Answer: Yes, the action will prosper but only to the extent of obtaining ___________ damages. The Spouses Almeda are not entitled to moral and exemplary damages. Moral damages predicated upon a breach of contract of carriage may only be recoverable in instances where the carrier is guilty of fraud or bad faith, or where the mishap resulted in the death of a passenger. Where breach of contract of carriage is not attended by fraud or bad faith, liability for damages is limited to the natural and probable consequences of the breach of obligation which the parties had foreseen or could have reasonably foreseen. In such a case the liability does not include moral and exemplary damages. [Continued….]

33. Moreover, it is requisite in the grant of exemplary damages that the act of the offender be accompanied by bad faith or done in wanton, fraudulent or malevolent manner. Such requisite is absent in this case. To be entitled to exemplary damages, the claimant must first establish his right to moral, temperate or compensatory damages. Since the Almedas are not entitled to any of these damages, the award for exemplary damages has no legal basis. Where moral and exemplary damages are deleted, so must award for attorney’s fees.

34. If the Spouses Almeda are said to have been disturbed in their desire to be with their friends in Business Class, are they entitled to some form of damages?

35. Temperate Damages • Nominal < Temperate < Compensatory • Reasonable under the circumstances • Loss established, but definite proof of pecuniary loss cannot be offered

36. Liquidated Damages • “Contracted damages” • Why would you suggest to contracting parties to stipulate on liquidated damages? • If there is a breach of contract triggering the LD stipulation, does this mean that the injured party no longer needs to prove breach? What does LD dispense with? • What kind of LD stipulation then do you think is effective? Fixed amount? Capped amount? LD only for certain type of breach ? LD on for certain type of injury?

37. Other terms – “corrective,” “punitive,” “vindictive” • May this be awarded even if not alleged? Not included as one of the reliefs (under the prayer)? • What is parties provided for LD, would this preclude claim for exemplary damages? • How is this commonly pleaded? • What is the focal point of proof? Exemplary Damages May be imposed by way of example in addition to compensatory damages, and only after claimant’s right to them has been established. Cannot be recovered as a matter of right; determination is dependent on amount of compensatory damages awarded to claimant. Act must be accompanied by bad faith or done in wanton, fraudulent, oppressive or malevolent manner. (one or more aggravating circumstances; gross negligence)