Short answer. Yes. Article 2201 of the Civil Code draws a clear line between good-faith breach and fraud. In cases of fraud, bad faith, malice, or wanton conduct, the obligor is responsible for all damages that may reasonably be attributed to the non-performance — foreseeability at the time of the contract is no longer the limit.
What the law says
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.
Civil Code, Article 2201 — Damages in Contracts and Quasi-Contracts. Read the full provision →
Two different standards depending on how the breach happened
Article 2201 creates two separate liability rules. For an obligor who acted in good faith, damages are limited to the natural and probable consequences that the parties foresaw or could reasonably have foreseen when the obligation was made. This is the normal rule: you pay for the predictable harm, not every ripple. For an obligor who acted in fraud, bad faith, malice, or with wanton attitude, that foreseeability filter disappears: the obligor is responsible for all damages reasonably attributed to the non-performance. The word "all" is deliberate and significant.
What fraud and bad faith mean in this context
Fraud in civil law means the deliberate use of insidious words or machinations to induce another party to enter a contract, or the willful, deliberate assertion of something known to be false. Bad faith is broader: it includes any conduct that is dishonest, not innocent, or done with a design to mislead. Malice implies ill will; wanton attitude implies reckless disregard of another's rights. You do not need all four — any one of these kinds of conduct will shift liability to the broader Article 2201 standard. The question is whether the breach was a genuine mistake or a deliberate act.
What "reasonably attributed" still requires
Even in the fraud scenario, Article 2201 does not open liability to absolutely every downstream consequence. The damages must be reasonably attributed to the non-performance. There is still a causal link requirement. If a remote and bizarre chain of events produced some loss that cannot plausibly be traced to the defendant's fraud, that loss is likely not recoverable. What Article 2201 removes is the foreseeability filter at the time of contracting — not the basic requirement that the harm flowed causally from the breach.
Why this matters for your case
If you were defrauded in a contract, the practical importance of Article 2201 is that you can claim consequential damages that a good-faith breach would not have generated. Suppose the fraud caused you to enter a deal on false premises, and those false premises led to a chain of business losses that no one at the contract's signing could have predicted. Under the fraud standard, all those losses are in play — provided you can trace them to the non-performance and they are not too remote. Document the deception, the reliance, and every loss that flowed from it: the broader the chain you can prove, the broader the recovery available.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- International Exchange Bank vs. Rudy S. Labos And Associates, Inc., Sps. Rodolfo S. Labos And Consuelo R. Labos, And Rockwell Land Corporation, G.R. No. 206327, July 6, 2022 — read the decision on LawPhil →
- Voltaire Hans N. Bongcaya, doing business under the name and style of VHB Biopro, G.R. No. 225438, January 20, 2021 — read the decision on LawPhil →
- Santiago Lighterage Corporation vs. Court of Appeals, et al, G.R. No. 139629, June 21, 2004 — read the decision on LawPhil →
- Spouses Enrique Llonillo and Marites Llonillo vs. People of the Phillippines, G.R. No. 246787, January 30, 2024 — read the decision on LawPhil →