AT A GLANCE:
Exemplary damages or corrective damages are imposed, by way of example or correction for the public good. These are mere additions which may or may not be granted at all depending upon the necessity of setting an example for public good as a form of deterrent to the repetition of the same act by anyone. It cannot be recovered as a matter of right.
What Are Exemplary or Corrective Damages?
Under Article 2229 of the Civil Code, 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.
They are also known as “punitive” or “vindictive” damages.
The Supreme Court, in Kierulf v. Court of Appeals, G.R. Nos. 99301 & 99343, March 13, 1997, has explained that exemplary damages are designed to permit the courts to mould behavior that has socially deleterious consequences, and that their imposition is required by public policy to suppress the wanton acts of an offender.
When May Exemplary Damages Be Awarded?
The Civil Code provides different grounds for the award of exemplary damages depending on the nature of the action.
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. (Article 2230)
In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence. (Article 2231)
In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. (Article 2232)
Thus, the applicable ground for exemplary damages depends on the source of the liability. The statutory requirements under Articles 2230, 2231, and 2232 must be considered together with the general rule under Article 2229.
Are Exemplary Damages Recovered as a Matter of Right?
No. Under Article 2233 of the Civil Code, Exemplary damages cannot be recovered as a matter of right. The court will decide whether or not they should be adjudicated.
In Kierulf v. Court of Appeals, the Supreme Court likewise held that exemplary damages cannot be recovered as a matter of right and that their award is left to the discretion of the court. The Court further identified jurisprudential requirements for their award, to wit:
Jurisprudence sets certain requirements before exemplary damages may be awarded, to wit:
(1) (T)hey 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;
(2) the claimant must first establish his right to moral, temperate, liquidated or compensatory damages; and
(3) 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.
Must Exemplary Damages Be Proved?
Article 2234 of the Civil Code states that 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.
The Supreme Court applied this rule in Scott Consultants & Resource Development Corporation, Inc. v. Court of Appeals, G.R. No. 112916, March 16, 1995. The Court held that there was no legal basis for the award of exemplary damages because the claimant was not entitled to moral, temperate, or compensatory damages and there was no agreement on stipulated damages.
Accordingly, the fact that a party has suffered a wrongful act does not, by itself, automatically entitle that party to exemplary damages.
Can Exemplary Damages Be Waived in Advance?
No. Article 2235 of the Civil Code provides that a stipulation whereby exemplary damages are renounced in advance shall be null and void.
Read also: What are Actual or Compensatory Damages?
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