Exemplary Damages

In order to set an example for the public good, exemplary or corrective damages are awarded in addition to moral, temperate, liquidated or compensatory damages.[1]

Lopez v. Pan American World Airways
G.R. No. L-22415, 30 March 1966

Plaintiffs were entitled to exemplary damages. “The rationale behind exemplary or corrective damages is, as the name implies, to provide an example or correction for public good. Defendant having breached its contracts in bad faith, the court, as stated earlier, may award exemplary damages in addition to moral damages (Articles 2229, 2232, New Civil Code).

“In view of its nature, it should be imposed in such an amount as to sufficiently and effectively deter similar breach of contracts in the future by defendant or other airlines. In this light, we find it just to award P75,000.00 as exemplary or corrective damages.”

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Liquidated Damages

In a contract, parties may agree to liquidated damages as indemnity or penalty for non-performance of any or all of the obligations in their agreement.[1]

Best Legal Practices:

Stipulate liquidated damages – The party who has interest to protect in a transaction should ask for liquidated damages to be stipulated in the contract. The amount for the penalty depends on the value of transaction involved to the said party.

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Temperate Damages

Temperate or moderate damages are awarded when there is a finding of pecuniary loss but the amount cannot be determined with certainty due to the nature of the circumstances.[1] Temperate damages are more than nominal but less than compensatory damages.[2]Despite the fact that the amount cannot be determined, the courts are required to impose reasonable amounts as may be derived from the circumstances of the case.[3]

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Actual damages

Actual or compensatory damages is award to aperson who is entitled “to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved” except as otherwise provided by law or by stipulation.[1] Actual or compensatory damages include the value of the loss suffered and the profits which the injured party failed to obtain.[2]

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Damage and Damages

What constitute damages

Damages are the “pecuniary compensation, recompense or satisfaction for an injury sustained or, as otherwise expressed, the pecuniary consequences, which the law imposes for the breach of some duty or the violation of some right.”[1] To be entitled to damages, these two requisites must be present: (a) a right of action for a legal wrong inflicted, and (b) damage resulting to plaintiff as a result thereof.[2] Under the Civil Code, these are the various forms of damage: moral, actual or compensatory, nominal, temperate, liquidated, exemplary.

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