Manila Electric Co. v. TEAM Corporation

Doctrines: 

- Actual damages are compensation for an injury that will put the injured party in the position where it was before the injury; Basic is the rule that to recover actual damages, not only must the amount of loss be capable of proof; it must also be actually proven with a reasonable degree of certainty, premised upon competent proof or the best evidence obtainable.

- Exemplary damages are imposed by way of example or correction for the public good in addition to moral, temperate, liquidated, or compensatory damages; In this case, to serve as an example—that before a disconnection of electrical supply can be effected by a public utility, the requisites of law must be complied with—the Court affirms the award of P200,000.00 as exemplary damages.
- As a rule, a corporation is not entitled to moral damages because, not being a natural person, it cannot experience physical suffering or sentiments like wounded feelings, serious anxiety, mental anguish and moral shock, the only exception to this rule is when the corporation has a reputation that is debased, resulting in its humiliation in the business realm.

Facts: Petitioner and NS Electronics (Philippines), Inc., the predecessor-in-interest of respondent TEC, were parties to two separate contracts denominated as Agreements for the Sale of Electric Energy. Under the aforesaid agreements, petitioner undertook to supply TEC’s building known as Dyna Craft International Manila (DCIM) located at Electronics Avenue, Food Terminal Complex, Taguig, Metro Manila, with electric power. Another contract was entered into for the supply of electric power to TEC’s NS Building. A team of petitioner’s inspectors conducted a surprise inspection of the electric meters installed at the DCIM building, witnessed by Ultra’s representative, Mr. Willie Abangan. The two meters were found to be allegedly tampered with and did not register the actual power consumption in the building. Petitioner informed TEC of the results of the inspection and demanded from the latter the payment of P7,040,401.01 representing its unregistered consumption from February 10, 1986 until September 28, 1987, as a result of the alleged tampering of the meters. For failure of TEC to pay the differential billing, petitioner disconnected the electricity supply to the DCIM building on April 29, 1988.TEC demanded for reconnection, claiming it had nothing to do with the alleged tampering but the latter refused to heed the demand. TEC and TPC filed a complaint for damages against petitioner and Ultra before RTC Pasig. The court ruled in favor of TEC and TPC. Ultra and petitioner appealed to the CA which affirmed the RTC decision, with a modification of the amount of actual damages and interest thereon. 

Issue: Whether or not the CA committed grievous errors.

Held: No. As to the damages awarded by the CA, we deem it proper to modify the same. Actual damages are compensation for an injury that will put the injured party in the position where it was before the injury. They pertain to such injuries or losses that are actually sustained and susceptible of measurement. Except as provided by law or by stipulation, a party is entitled to adequate compensation only for such pecuniary loss as is duly proven. Basic is the rule that to recover actual damages, not only must the amount of loss be capable of proof; it must also be actually proven with a reasonable degree of certainty, premised upon competent proof or the best evidence obtainable. Respondent TEC sufficiently established, and petitioner in fact admitted, that the former paid P1,000,000.00 and P280,813.72 under protest, the amounts representing a portion of the latter’s claim of differential billing. With the finding that no tampering was committed and, thus, no differential billing due, the aforesaid amounts should be returned by petitioner, with interest, as ordered by the Court of Appeals and pursuant to the guidelines set forth by the Court.

As to the payment of exemplary damages and attorney’s fees, we find no cogent reason to disturb the same. Exemplary damages are imposed by way of example or correction for the public good in addition to moral, temperate, liquidated, or compensatory damages. In this case, to serve as an example— that before a disconnection of electrical supply can be effected by a public utility, the requisites of law must be complied with—we affirm the award of P200,000.00 as exemplary damages. With the award of exemplary damages, the award of attorney’s fees is likewise proper, pursuant to Article 2208 of the Civil Code. It is obvious that TEC needed the services of a lawyer to argue its cause through three levels of the judicial hierarchy. Thus, the award of P200,000.00 is in order.

We, however, deem it proper to delete the award of moral damages. TEC’s claim was premised allegedly on the damage to its goodwill and reputation. As a rule, a corporation is not entitled to moral damages because, not being a natural person, it cannot experience physical suffering or sentiments like wounded feelings, serious anxiety, mental anguish and moral shock. The only exception to this rule is when the corporation has a reputation that is debased, resulting in its humiliation in the business realm. But in such a case, it is imperative for the claimant to present proof to justify the award. It is essential to prove the existence of the factual basis of the damage and its causal relation to petitioner’s acts. In the present case, the records are bereft of any evidence that the name or reputation of TEC/TPC has been debased as a result of petitioner’s acts. Besides, the trial court simply awarded moral damages in the dispositive portion of its decision without stating the basis thereof.