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READINGS & CASES IN TORTS AND DAMAGES

(12/3/14)
Chapter 15

Business Torts

Art. 1314. Any third person who induces another to violate his contract shall be liable for damages to the
other contracting party.
Interference with contractual relations Lagon vs. CA, G.R. No. 119107, March 18, 2005; brief
discussion of Lumley vs. Gye and Gilchrist vs. Cuddy
Tayag vs. Lacson, G.R. No. 134971, March 25, 2004
Philip Yu vs. CA, G.R. No. 86683, January 21, 1993
Legal justification
if the defendant acts to promote the interest of others or himself
and if the interest which he seeks to advance is superior to the interest invaded in social importance.
Daywalt vs. La Corporatcion de los Padres Agustinos, 39 Phil 587
So Ping Bun vs. CA, G.R. 120554, Sept. 21, 1999
not legal justification
Extent of liability Allan C. Go vs. Cordero, G.R. No. 164703 and 164704, May 4, 2010
Unfair competition

- Art. 186 of RPC

Art. 186. Monopolies and combinations in restraint of trade. The penalty of prision correccional in its
minimum period or a fine ranging from 200 to 6,000 pesos, or both, shall be imposed upon:
1. Any person who shall enter into any contract or agreement or shall take part in any
conspiracy or combination in the form of a trust or otherwise, in restraint of trade or commerce or
to prevent by artificial means free competition in the market; 2. Any person who shall
monopolize any merchandise or object of trade or commerce, or shall combine with any other
person or persons to monopolize and merchandise or object in order to alter the price thereof by
spreading false rumors or making use of any other article to restrain free competition in the
market; 3. Any person who, being a manufacturer, producer, or processor of any merchandise
or object of commerce or an importer of any merchandise or object of commerce from any
foreign country, either as principal or agent, wholesaler or retailer, shall combine, conspire or
agree in any manner with any person likewise engaged in the manufacture, production,
processing, assembling or importation of such merchandise or object of commerce or with any
other persons not so similarly engaged for the purpose of making transactions prejudicial to
lawful commerce, or of increasing the market price in any part of the Philippines, of any such
merchandise or object of commerce manufactured, produced, processed, assembled in or
imported into the Philippines, or of any article in the manufacture of which such manufactured,
produced, or imported merchandise or object of commerce is used.
If the offense mentioned in this article affects any food substance, motor fuel or lubricants, or other
articles of prime necessity, the penalty shall be that of prision mayor in its maximum and medium periods
it being sufficient for the imposition thereof that the initial steps have been taken toward carrying out the
purposes of the combination.
Any property possessed under any contract or by any combination mentioned in the preceding
paragraphs, and being the subject thereof, shall be forfeited to the Government of the Philippines.
Whenever any of the offenses described above is committed by a corporation or association, the president
and each one of its agents or representatives in the Philippines in case of a foreign corporation or
association, who shall have knowingly permitted or failed to prevent the commission of such offense,
shall be held liable as principals thereof.

Intellectual Property Code, Sec. 168


Sec. 168. Unfair Competition, Rights, Regulation and Remedies. 168.1. A person who has identified in the mind of the public the goods he manufactures or deals in, his
business or services from those of others, whether or not a registered mark is employed, has a property
right in the goodwill of the said goods, business or services so identified, which will be protected in the
same manner as other property rights.
168.2. Any person who shall employ deception or any other means contrary to good faith by which he
shall pass off the goods manufactured by him or in which he deals, or his business, or services for those
of the one having established such goodwill, or who shall commit any acts calculated to produce said
result, shall be guilty of unfair competition, and shall be subject to an action therefor.
168.3. In particular, and without in any way limiting the scope of protection against unfair competition,
the following shall be deemed guilty of unfair competition:
(a) Any person, who is selling his goods and gives them the general appearance of goods of another
manufacturer or dealer, either as to the goods themselves or in the wrapping of the packages in which
they are contained, or the devices or words thereon, or in any other feature of their appearance, which
would be likely to influence purchasers to believe that the goods offered are those of a manufacturer or
dealer, other than the actual manufacturer or dealer, or who otherwise clothes the goods with such
appearance as shall deceive the public and defraud another of his legitimate trade, or any subsequent
vendor of such goods or any agent of any vendor engaged in selling such goods with a like purpose;
(b) Any person who by any artifice, or device, or who employs any other means calculated to induce the
false belief that such person is offering the services of another who has identified such services in the
mind of the public; or
(c) Any person who shall make any false statement in the course of trade or who shall commit any other
act contrary to good faith of a nature calculated to discredit the goods, business or services of another.
168.4. The remedies provided by Sections 156, 157 and 161 shall apply mutatis mutandis.
Monopolies and predatory pricing Gokongwei vs. SEC, G.R. No. L-45911, April 11, 1979;
Garcia vs. Corona, 321 SCRA 218
Securities related fraud Securities Regulation Code, Sec 28; Sec. 57 civil liability in
connection with prospectuses, communications and reports
SEC. 28. Registration of Brokers, Dealers, Salesmen and Associated Persons.
28.1. No person shall engage in the business of buying or selling securities in the Philippines as a broker
or dealer, or act as a salesman, or an associated person of any broker or dealer unless registered as such
with the Commission.
28.2. No registered broker or dealer shall employ any salesman or any associated person, and no issuer
shall employ any salesman, who is not registered as such with the Commission.
28.3. The Commission, by rule or order, may conditionally or unconditionally exempt from Subsections
28.1 and 28.2 any broker, dealer, salesman, associated person of any broker or dealer, or any class of the
foregoing, as it deems consistent with the public interest and the protection of investors.
28.4. The Commission shall promulgate rules and regulations prescribing the qualifications for
registration of each category of applicant, which shall, among other things, require as a condition for
registration that:
a)
If a natural person, the applicant satisfactorily pass a written examination as to his proficiency and
knowledge in the area of activity for which registration is sought;
b)
In the case of a broker or dealer, the applicant satisfy a minimum net capital as prescribed by the
Commission, and provide a bond or other security as the Commission may prescribe to secure compliance
with the provisions of this Code; and
c)
If located outside of the Philippines, the applicant files a written consent to service of process

upon the Commission pursuant to Section 65 hereof.


28.5. A broker or dealer may apply for registration by filing with the Commission a written application
in such form and containing such information and documents concerning such broker or dealer as the
Commission by rule shall prescribe.
28.6. Registration of a salesman or of an associated person of a registered broker or dealer may be made
upon written application filed with the Commission by such salesman or associated person. The
application shall be separately signed and certified by the registered broker or dealer to which such
salesman or associated person is to become affiliated, or by the issuer in the case of a salesman employed,
appointed or authorized solely by such issuer. The application shall be in such form and contain such
information and documents concerning the salesman or associated person as the Commission by rule shall
prescribe. For purposes of this Section, a salesman shall not include any employee of an issuer whose
compensation is not determined directly or indirectly on sales of securities of the issuer.
28.7. Applications filed pursuant to Subsections 28.5 and 28.6 shall be accompanied by a registration fee
in such reasonable amount prescribed by the Commission.
28.8. Within thirty (30) days after the filing of any application under this Section, the Commission shall
by order: (a) Grant registration if it determines that the requirements of this Section and the qualifications
for registration set forth in its rules and regulations have been satisfied; or (b) Deny said registration.
28.9. The names and addresses of all persons approved for registration as brokers, dealers, associated
persons or salesmen and all orders of the Commission with respect thereto shall be recorded in a Register
of Securities Market Professionals kept in the office of the Commission which shall be open to public
inspection.
28.10. Every person registered pursuant to this Section shall file with the Commission, in such form as
the Commission shall prescribe, information necessary to keep the application for registration current and
accurate, including in the case of a broker or dealer changes in salesmen, associated persons and owners
thereof.
28.11. Every person registered pursuant to this Section shall pay to the Commission an annual fee at such
time and in such reasonable amount as the Commission shall prescribe. Upon notice by the Commission
that such annual fee has not been paid as required, the registration of such person shall be suspended until
payment has been made.
28.12. The registration of a salesman or associated person shall be automatically terminated upon the
cessation of his affiliation with said registered broker or dealer, or with an issuer in the case of a salesman
employed, appointed or authorized by such issuer. Promptly following any such cessation of affiliation,
the registered broker or dealer, or issuer, as the case may be, shall file with the Commission a notice of
separation of such salesman or associated person.
SEC. 57.Civil Liabilities Arising in Connection With Prospectus, Communications and Reports.
57.1. Any person who:
a)
Offers to sell or sells a security in violation of Chapter III, or
b)
Offers to sell or sells a security, whether or not exempted by the provisions of this Code, by the
use of any means or instruments of transportation or communication, by means of a prospectus or other
written or oral communication, which includes an untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements, in the light of the circumstances under which they
were made, not misleading (the purchaser not knowing of such untruth or omission), and who shall fail in
the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of
such untruth or omission, shall be liable to the person purchasing such security from him, who may sue to
recover the consideration paid for such security with interest thereon, less the amount of any income
received thereon, upon the tender of such security, or for damages if he no longer owns the security.
57.2. Any person who shall make or cause to be made any statement in any report, or document filed
pursuant to this Code or any rule or regulation thereunder, which statement was at the time and in the
light of the circumstances under which it was made false or misleading with respect to any material fact,
shall be liable to any person who, not knowing that such statement was false or misleading, and relying

upon such statements shall have purchased or sold a security at a price which was affected by such
statement, for damages caused by such reliance, unless the person sued shall prove that he acted in good
faith and had no knowledge that such statement was false or misleading.
Chapter 16 - Damages
Indemnity proportionate to fault Simona Manzanares vs. Rafael Moreta , G.R. 1230, Oct. 22,
1918
Damnum Absque Injuria there is no liability even if there is damage because there is no injury
Custodio vs. CA, 253 SCRA 483; Farolan vs. Salmac Marketing Corp., G.R. No. 83589, March 13, 1991
Damages Art. 2197 of the Civil Code
Art. 2197. Damages may be:
(1) Actual or compensatory;
(2) Moral;
(3) Nominal;
(4) Temperate or moderate;
(5) Liquidated; or
(6) Exemplary or corrective.
Kinds of actual damages
:
Loss of what a person already possesses dao emgrente
Failure to receive as a benefit what would have pertained to him Lucro cesante PNOC Shipping vs. CA, 297 SCRA 402
Extent of liability Art. 2202 crimes and quasi-delict
Art. 2202. In crimes and quasi-delicts, the defendant shall be liable for all damages which are the natural
and probable consequences of the act or omission complained of. It is not necessary that such damages
have been foreseen or could have reasonably been foreseen by the defendant.
Damages for breach of contract Art. 2201
Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is
liable shall be those that are the natural and probable consequences of the breach of the obligation, and
which the parties have foreseen or could have reasonably foreseen at the time the obligation was
constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages
which may be reasonably attributed to the non-performance of the obligation.
FGU Insurance vs. G. P. Sarmiento Trucking, 435 Phil. 333
Damage to property Optimum Motor Center vs. Tan, G. R. No. 170202, July 14, 2008
Personal injury Gatchalian vs. Delim, 203 SCRA 126

Death Art. 2206 People vs. Tolentino, 546 SCRA 671


Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least
three thousand pesos, even though there may have been mitigating circumstances. In addition:
(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the
indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and
awarded by the court, unless the deceased on account of permanent physical disability not caused by the
defendant, had no earning capacity at the time of his death;
(2) If the deceased was obliged to give support according to the provisions of Article 291, the
recipient who is not an heir called to the decedent's inheritance by the law of testate or intestate
succession, may demand support from the person causing the death, for a period not exceeding five years,
the exact duration to be fixed by the court;
(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may
demand moral damages for mental anguish by reason of the death of the deceased.
Loss of earning capacity formula for computation of award
Net earning capacity = life expectancy x gross annual income less necessary
Necessary living expenses Tamayo et al. vs. Senora, G.R. No. 176946, Nov. 15, 2010
Reduction in life expectancy multiplier Rodriguez-Luna vs. IAC, 135
135 SCRA 242
Pp. vs. Gonzalez, Jr., G.R. No. 139542, June 21, 2001
Pp vs. Mayor Antonio l. Sanchez, G.R. Nos. 121039-45, Oct. 18, 2001
Loss of profits Consolidated Dairy Products vs. CA, 212 SCRA 810; G.A. Machineries, Inc. vs.
Yaptinchay, 126 SCRA 78
Attorneys fees Art. 2208
Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than
judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons
or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's
plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;
(8) In actions for indemnity under workmen's compensation and employer's liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorney's fees and
expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be reasonable.
Award is for the party and not his counsel Quirante vs. IAC, G.R. No. 73886, Jan. 31, 1989
When compelled to litigate Benedicto vs. Villaflores, G.R. No. 185020, Oct. 6, 2010

Interest on damages Arts. 2209 to 2013


Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in
delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment
of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six per
cent per annum.
Art. 2210. Interest may, in the discretion of the court, be allowed upon damages awarded for
breach of contract.
Art. 2211. In crimes and quasi-delicts, interest as a part of the damages may, in a proper case, be
adjudicated in the discretion of the court.
Art. 2212. Interest due shall earn legal interest from the time it is judicially demanded, although
the obligation may be silent upon this point.
Art. 2213. Interest cannot be recovered upon unliquidated claims or damages, except when the
demand can be established with reasonably certainty.
Mitigation of Liability Arts. 2203 to 2204; 2214-2215
Art. 2203. The party suffering loss or injury must exercise the diligence of a good father of a
family to minimize the damages resulting from the act or omission in question.
Art. 2204. In crimes, the damages to be adjudicated may be respectively increased or lessened
according to the aggravating or mitigating circumstances.
Art. 2214. In quasi-delicts, the contributory negligence of the plaintiff shall reduce the damages
that he may recover.
Art. 2215. In contracts, quasi-contracts, and quasi-delicts, the court may equitably mitigate the
damages under circumstances other than the case referred to in the preceding article, as in the
following instances:
(1) That the plaintiff himself has contravened the terms of the contract;
(2) That the plaintiff has derived some benefit as a result of the contract;
(3) In cases where exemplary damages are to be awarded, that the defendant acted upon the
advice of counsel;
(4) That the loss would have resulted in any event;
(5) That since the filing of the action, the defendant has done his best to lessen the plaintiff's loss
or injury.
Collateral source rule Art. 2207 Pedro J. Velasco vs. MERALCO, 40 SCRA 342;
Art. 2207. If the plaintiff's property has been insured, and he has received indemnity from the
insurance company for the injury or loss arising out of the wrong or breach of contract
complained of, the insurance company shall be subrogated to the rights of the insured against the
wrongdoer or the person who has violated the contract. If the amount paid by the insurance
company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover
the deficiency from the person causing the loss or injury.

Moral damages Art. 2217 2220


Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.
Though incapable of pecuniary computation, moral damages may be recovered if they are the
proximate result of the defendant's wrongful act for omission.
Art. 2218. In the adjudication of moral damages, the sentimental value of property, real or
personal, may be considered.
Art. 2219. Moral damages may be recovered in the following and analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in Article 309;
(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article,
may also recover moral damages.
The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in
No. 9 of this article, in the order named.
Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the
court should find that, under the circumstances, such damages are justly due. The same rule
applies to breaches of contract where the defendant acted fraudulently or in bad faith.
Keirluf vs. CA, 269SCRA 443
Expert Ravel and Tours, Inc., vs. Ricardo Lo, G.R. No. 130030, June 25, 1999
In labor cases damages is recoverable when dismissal of employee was attended by bad faith or
fraud SMC vs. Teodosio, 602 SCRA 197
Other kinds of damages:
Nominal Art. 2221 to 2223
Art. 2221. 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. 2222. The court may award nominal damages in every obligation arising from any source
enumerated in Article 1157, or in every case where any property right has been invaded.
Art. 2223. The adjudication of nominal damages shall preclude further contest upon the right
involved and all accessory questions, as between the parties to the suit, or their respective heirs
and assigns.

Pleno vs. CA, G.R. No. 565o5, May 9, 1988


Termperate Art. 2224
Art. 2224. 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 can not, from the nature of the case, be provided with certainty.
Araneta vs. Bank of America, 40 SCRA 144
Liquidated Art. 2226
Art. 2226. Liquidated damages are those agreed upon by the parties to a contract, to be paid in
case of breach thereof.
Tiu vs. Platinum Plans, Inc., G.R. No. 163512, Feb. 28, 2007
Exemplary or punitive Cheng vs. Donini, 590 SCRA 406
Requisites for award of exemplary PNB VS. CA, 256 SCRA 44
Art. 2230 to 2235
Art. 2230. In criminal offenses, exemplary damages as a part of the civil liability may be imposed
when the crime was committed with one or more aggravating circumstances. Such damages are
separate and distinct from fines and shall be paid to the offended party.
Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant acted with gross
negligence.
Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.
Art. 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide
whether or not they should be adjudicated.
Art. 2234. While the amount of the exemplary damages need not be proved, the plaintiff must
show that he is entitled to moral, temperate or compensatory damages before the court may
consider the question of whether or not exemplary damages should be awarded. In case liquidated
damages have been agreed upon, although no proof of loss is necessary in order that such
liquidated damages may be recovered, nevertheless, before the court may consider the question of
granting exemplary in addition to the liquidated damages, the plaintiff must show that he would
be entitled to moral, temperate or compensatory damages were it not for the stipulation for
liquidated damages.
Art. 2235. A stipulation whereby exemplary damages are renounced in advance shall be null and
void.

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