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C. Graduation of damages

1. Duty of injured party

a. DILIGENCE OF A GOOD FATHER OF A FAMILY

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. (Article 2203, Civil Code)

2. Rules

a. In crimes

1) Liability: All damages that are natural and probable consequences of the crime/quasi-delict

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. (Article 2202, Ibid.)

2) Damages from crimes subject to aggravating or mitigating circumstances

In crimes, the damages to be adjudicated may be respectively increased or lessened according to the aggravating or mitigating circumstances. (Article 2204, Ibid.)

b. In quasi-delicts

1) Contributory negligence

In quasi-delicts, the contributory negligence of the plaintiff shall reduce the damages that he may recover. (Article 2214, Ibid.)

2) Equitable reduction by courts

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. (Article 2215, Ibid.)

c. In contracts and quasi-contracts

1) Good faith

a) Liability: All damages that are natural and probable consequences of the breach, and which parties may have foreseen or could have reasonably foreseen

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. (Article 2201, Ibid.)

2) Fraud, bad faith, malice, wanton attitude

a) Liability: All damages which may be reasonably attributed to non-performance

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.(Paragraph 2, Article 2201, Ibid.)

3) Equitable reduction by courts

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. (Article 2215, Ibid.)

d. Liquidated damages

1) Equitable reduction by courts

Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable. (Article 2227, Ibid.)

e. Compromise

1) Definition

A compromise agreement is a contract between the parties, which if not contrary to law, morals or public policy, is valid and enforceable between them. (Sps. Abinujar v. CA, G.R. No. 104133, 18 April 1995)

A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. (Article 2028, Ibid.)

2) Kinds

There are two kinds of compromise agreements, the judicial, which puts an end to a pending litigation, and the extrajudicial, which is to avoid a litigation (Ibid., citing Civil Code of the Philippines, Art. 2028; Caguioa, VI Commentaries and Cases, on Civil Law 292 [1970]).

a) Judicial compromise; a res judicata

A judicial compromise, while binding between the parties upon its execution, is not executory until it is approved by the court and reduced to a judgment. (Ibid.)

A compromise has upon the parties the effect and authority of res judicata; but there shall be no execution except in compliance with a judicial compromise. (Article 2037, Civil Code)

b) Extrajudicial compromise

As a contract, a compromise agreement is perfected by mutual consent. (Ibid.)

3) Courts to promote fair compromise

The court shall endeavor to persuade the litigants in a civil case to agree upon some fair compromise. (Article 2029, Ibid.)

4) Suspension of civil action or proceeding

Every civil action or proceeding shall be suspended:

1) If willingness to discuss a possible compromise is expressed by one or both parties; or

2) If it appears that one of the parties, before the commencement of the action or proceeding, offered to discuss a possible compromise but the other party refused the offer.

The duration and terms of the suspension of the civil action or proceeding and similar matters shall be governed by such provisions of the rules of court as the Supreme Court shall promulgate. Said rules of court shall likewise provide for the appointment and duties of amicable compounders. (Article 2030, Ibid.)

5) Sincere desire for a compromise

The courts may mitigate the damages to be paid by the losing party who has shown a sincere desire for a compromise. (Article 2031, Ibid.)

6) When court approval is required

The court’s approval is necessary in compromises entered into by guardians, parents, absentee’s representatives, and administrators or executors of decedent’s estates. (Article 2032, Ibid.)

7) Juridical persons

Juridical persons may compromise only in the form and with the requisites which may be necessary to alienate their property. (Article 2033, Ibid.)

8) Civil liability for an offense

There may be a compromise upon the civil liability arising from an offense; but such compromise shall not extinguish the public action for the imposition of the legal penalty. (Article 2034, Ibid.)

9) When no compromise is allowed

No compromise upon the following questions shall be valid:

1) The civil status of persons;

2) The validity of a marriage or a legal separation;

3) Any ground for legal separation;

4) Future support;

5) The jurisdiction of courts;

6) Future legitime. (Article 2035, Ibid.)

10) Scope of compromise

A compromise comprises only those objects which are definitely stated therein, or which by necessary implication from its terms should be deemed to have been included in the same. (Article 2036, Ibid.)

11) General renunciation

A general renunciation of rights is understood to refer only to those that are connected with the dispute which was the subject of the compromise. (Paragraph 2, Article 2036, Ibid.)

12) When voidable

A compromise in which there is mistake, fraud, violence, intimidation, undue influence, or falsity of documents, is subject to the provisions of Article 1330 of this Code.(Article 2038, Ibid.)

However, one of parties cannot set up a mistake of fact as against the other if the latter, by virtue of the compromise, has withdrawn from a litigation already commenced. (Paragraph 2, Article 2038, Ibid.)

Cross-referenced article/s

A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable. (Article 1330, Ibid.)

13) Newly-discovery of documents

When the parties compromise generally on all differences which they might have with each other, the discovery of documents referring to one or more but not to all of the questions settled shall not itself be a cause for annulment or rescission of the compromise, unless said documents have been concealed by one of the parties.(Article 2039, Ibid.)

But the compromise may be annulled or rescinded if it refers only to one thing to which one of the parties has no right, as shown by the newly-discovered documents. (Paragraph 2, Article 2039, Ibid.)

14) Final judgment

If after a litigation has been decided by a final judgment, a compromise should be agreed upon, either or both parties being unaware of the existence of the final judgment, the compromise may be rescinded. (Article 2040, Ibid.)

Ignorance of a judgment which may be revoked or set aside is not a valid ground for attacking a compromise. (Paragraph 2, Article 2040, Ibid.)

15) Non-compliance of compromise

If one of the parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as rescinded and insist upon his original demand. (Article 2041, Ibid.)

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