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MANILA ELECTRIC COMPANY v. MATILDE MACABAGDAL RAMOY

FACTS:

The case involves a petition for review on certiorari filed by Manila Electric Company (MERALCO) seeking the reversal of the Court of Appeals (CA) decision ordering MERALCO to pay Leoncio Ramoy moral and exemplary damages and attorney's fees. In 1987, the National Power Corporation (NPC) filed an ejectment case against several individuals, including Leoncio Ramoy, for allegedly illegally occupying its properties in Baesa, Quezon City. The MTC Branch 36 rendered a judgment ordering the defendants to demolish their structures and vacate the premises. On June 20, 1990, NPC requested MERALCO to disconnect the electric power supply to all establishments affected by the NPC transmission lines. A joint survey was conducted to determine the establishments considered under NPC property. The electric service connection of the respondents was subsequently disconnected. During the ocular inspection ordered by the court, it was confirmed that the residence of the respondents was outside the NPC property. The record shows that at the request of NPC, MERALCO reconnected the electric service of four customers previously disconnected, none of whom were the respondents. The CA held MERALCO liable for damages and attorney's fees due to its negligence in not requiring a writ of execution or demolition from NPC and not coordinating with the court sheriff before disconnecting the electric service. MERALCO argued that it acted in good faith in disconnecting the respondents' power supply. The Court notes that the respondents' cause of action against MERALCO is based on breach of contract or culpa contractual. The breach of a contract gives the injured party a valid cause for recovering what has been lost or suffered.

ISSUES:

  1. Whether or not MERALCO failed to exercise the utmost degree of care and diligence required of it.

  2. Whether or not respondents are entitled to moral and exemplary damages and attorney's fees.

RULING:

  1. The Court agrees with the CA that MERALCO failed to exercise the utmost degree of care and diligence required of it. MERALCO relied on a decision of the MTC without verifying if it had become final and executory. Moreover, MERALCO did not coordinate with the proper court officials to determine which structures were covered by the court order. The lack of diligence on MERALCO's part makes it at fault and negligent in the performance of its obligation. MERALCO is liable for damages under Article 1170 of the Civil Code.

  2. Respondents are entitled to moral damages. MERALCO willfully caused injury to Leoncio Ramoy by withholding the supply of electricity to which he and his tenants were entitled. MERALCO's failure to exercise utmost care and diligence is tantamount to bad faith. Leoncio Ramoy testified that he suffered wounded feelings and his lessees left the premises due to the lack of power supply. Therefore, Leoncio Ramoy is entitled to moral damages.

PRINCIPLES:

  • The remedy for breach of contract is to preserve the interests of the promissee, which may include his expectation interest, reliance interest, or restitution interest.

  • The fault or negligence of the obligor in a contract consists of the omission of the diligence required by the nature of the obligation and the circumstances.

  • Public utilities, like MERALCO, have the obligation to discharge their functions with utmost care and diligence.

  • Electricity is a basic necessity imbued with public interest, and its provider is a public utility subject to strict regulation by the State.

  • Willful injury to property may be a ground for awarding moral damages if the defendant acted fraudulently or in bad faith.

  • Damages may be awarded only if proven.

  • No proof of pecuniary loss is necessary for the award of moral damages, but the claimant must satisfactorily show the existence of the factual basis of damages and its causal connection to the defendant's acts.

  • Moral damages are awarded to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer.

  • To be awarded moral damages, clear testimony on the anguish and other forms of mental suffering is necessary.

  • Additional facts must be pleaded and proven to warrant the grant of moral damages under the Civil Code, such as social humiliation, wounded feelings, grave anxiety, etc.

  • The award of moral damages must be anchored to a clear showing that the claimant actually experienced mental anguish, besmirched reputation, sleepless nights, wounded feelings, or similar injury.

  • Exemplary damages may be awarded if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.

  • Exemplary damages cannot be recovered as a matter of right and the adjudication of the same is within the discretion of the court.

  • Attorney's fees cannot be recovered except in cases provided for in Article 2208 of the Civil Code.

  • Attorney's fees and expenses of litigation must be reasonable.