Manila Electric Co. v. Nordec Philippines, 861 SCRA 515 (2018)

3/5/2021 SUPREME COURT REPORTS ANNOTATED 861

G.R. No. 196020. April 18, 2018.*

MANILA ELECTRIC COMPANY, VICENTE MONTERO,
MR. BONDOC, and MR. BAYONA,
petitioners, vs. NORDEC PHILIPPINES and/or MARVEX
INDUSTRIAL CORP. represented by its President, DR.
POTENCIANO R. MALVAR, respondent.

G.R. No. 196116. April 18, 2018.*

NORDEC PHILIPPINES represented by its President, DR.
POTENCIANO R. MALVAR, petitioner, vs. MANILA
ELECTRIC COMPANY, VICENTE MONTERO, MR.
BONDOC, and MR. BAYONA, respondents.
Remedial Law; Civil Procedure; Appeals; Findings of Fact;

Meralco is mistaken in arguing that the Supreme Court (SC) is
duty-bound to review the factual findings in this case due to the
contrary findings of the Regional Trial Court (RTC) and of the
Court of Appeals (CA).—Meralco is mistaken in arguing that this
Court is duty-bound to review the factual findings in this case due
to the contrary findings of the Regional Trial Court and of the
Court of Appeals. The Court of Appeals has the jurisdiction to
review, and even reverse, the factual findings of the trial court.
For the Court of Appeals’ factual findings to be reviewed by this
Court, it must be shown that it gravely abused its discretion in
appreciating the parties’ respective evidence.
Same; Same; Real Party-in-Interest; The beneficial users of an
electric service have a cause of action against this distribution utility.—A
cause of action “is the act or omission by which a party violates a right of
another.” For a cause of action to exist, there must be, first, a plaintiff’s
legal right; second, defendant’s correlative obligation; and third, an
injury to the plaintiff as a result of the defendant’s violation of plaintiff’s
right. Here, the Regional Trial Court found that Nordec had no cause of
action against Meralco since they
_______________
* THIRD DIVISION.

516
516 SUPREME COURT REPORTS ANNOTATED

Manila Electric Company vs. Nordec Philippines
www.central.com.ph/sfsreader/session/0000017802356ff7960e57a9003600fb002c009e/t/?o=False 1/30
had no contractual relationship, as Meralco’s service contract

was with Marvex. The beneficial users of an electric service have
a cause of action against this distribution utility. In Manila
Electric Company v. Spouses Chua, 623 SCRA 81 (2010), it was
the beneficial users who were awarded damages due to the unjust
disconnection of the electric supply, even though the service
contract with Meralco was registered in the name of another
person.
Civil Law; Obligations; Electric Power Industry; It is well-
settled that electricity distribution utilities, which rely on
mechanical devices and equipment for the orderly undertaking of
their business, are duty-bound to make reasonable and proper
periodic inspections of their equipment.—It is well-settled that
electricity distribution utilities, which rely on mechanical devices
and equipment for the orderly undertaking of their business, are
duty-bound to make reasonable and proper periodic inspections of
their equipment. If they are remiss in carrying out this duty due
to their own negligence, they risk forfeiting the amounts owed by
the customers affected.
Same; Same; Same; The duty of inspecting for defects is not
limited to inherent mechanical defects of the distribution utilities’
devices, but extends to intentional and unintentional ones, such as
those, which are due to tampering and mistakes in computation.—
The duty of inspecting for defects is not limited to inherent
mechanical defects of the distribution utilities’ devices, but
extends to intentional and unintentional ones, such as those,
which are due to tampering and mistakes in computation. In
Manila Electric Co. v. Wilcon Builders Supply, Inc., 556 SCRA
742 (2008): The Ridjo doctrine simply states that the public utility
has the imperative duty to make a reasonable and proper
inspection of its apparatus and equipment to ensure that they do
not malfunction. Its failure to discover the defect, if any,
considering the length of time, amounts to inexcusable negligence;
its failure to make the necessary repairs and replace the defective
electric meter installed within the consumer’s premises limits the
latter’s liability. The use of the words “defect” and “defective” in
the above cited case does not restrict the application of the
doctrine to cases of “mechanical defects” in the installed electric
meters. A more plausible interpretation is to apply the rule on
negligence whether the defect is inherent, intentional or
unintentional, which therefore covers tampering, mechanical
defects and mistakes in the computation of the consumers’ billing.

517
VOL. 861, APRIL 18, 201 517

Same; Same; Same; Public Utilities; Should a distribution

utility not exercise the standard of care required of it due to its
negligence in the inspection and repair of its apparatus, then it can

no longer recover the amounts of allegedly used but uncharged
electricity.—Contrary to Meralco’s claim, the duty imposed upon it
pursuant to Ridjo is not beyond the standard of care imposed by
law. Distribution utilities are public utilities vested with public
interest, and thus, are held to a higher degree of diligence. In
Ridjo: The rationale behind this ruling is that public utilities
should be put on notice, as a deterrent, that if they completely
disregard their duty of keeping their electric meters in serviceable
condition, they run the risk of forfeiting, by reason of their
negligence, amounts originally due from their customers.
Certainly, we cannot sanction a situation wherein the defects in
the electric meter are allowed to continue indefinitely until
suddenly the public utilities concerned demand payment for the
unrecorded electricity utilized when, in the first place, they
should have remedied the situation immediately. If we turn a
blind eye on MERALCO’s omission, it may encourage negligence
on the part of public utilities, to the detriment of the consuming
public. . . . . To summarize, it is worth emphasizing that it is not
our intention to impede or diminish the business viability of
MERALCO, or any public utility company for that matter. On the
contrary, we would like to stress that, being a public utility vested
with vital public interest, MERALCO is impressed with certain
obligations towards its customers and any omission on its part to
perform such duties would be prejudicial to its interest. For in the
final analysis, the bottom line is that those who do not exercise
such prudence in the discharge of their duties shall be made to
bear the consequences of such oversight. Should a distribution
utility not exercise the standard of care required of it due to its
negligence in the inspection and repair of its apparatus, then it
can no longer recover the amounts of allegedly used but
uncharged electricity.
Same; Same; Same; Same; Meralco is also duty-bound to
explain the basis for its billings, especially when these are for
unregistered consumption, to prevent consumers from being solely
at its mercy.—Here, as observed by the Court of Appeals, Meralco
itself claimed that the irregularities in the electricity consumption
recorded in Nordec’s metering devices started on January 18,
1985, as evidenced by their August 7, 1985 demand letter,
covering January 18, 1985 to May 29, 1985. However, the alleged
tampering was only

518

discovered during the May 29, 1985 inspection. Considering

that Nordec’s meters were read monthly, Meralco’s belated
discovery of the cause of the alleged irregularities, or four (4)
months after they purportedly started, can only lead to a
conclusion of negligence. Notice of a defect may be constructive
when it has conspicuously existed for a considerable length of

time. It is also worth noting that during a third inspection on
November 23, 1987, further irregularities in Nordec’s metering
devices were observed, showing electricity consumption even
when Nordec’s entire power supply equipment was switched off.
Clearly, Meralco had been remiss in its duty as required by law
and jurisprudence of a public utility. Meralco is also duty-bound
to explain the basis for its billings, especially when these are for
unregistered consumption, to prevent consumers from being
solely at its mercy. Here, the Power Field Orders given to Nordec
following the inspections did not mention the alleged defects that
were discovered. Nordec’s request for recomputation of the alleged
unregistered electric bill was still pending when its electric supply
was disconnected on December 18, 1986.
Electric Power Industry; Public Utilities; Electricity is “a basic
necessity whose generation and distribution is imbued with public
interest, and its provider is a public utility subject to strict
regulation by the State in the exercise of police power.”—As found
by the Court of Appeals, Meralco failed to comply with the 48-
hour disconnection notice rule. Meralco claims that the
statements in its demand letters, that failure to pay would result
in disconnection, were sufficient notice. However, pursuant to
Section 97 of Revised General Order No. 1, the governing rule
when the disconnection occurred, disconnection due to
nonpayment of bills requires that a 48-hour written notice be
given to the customer. It must be emphasized that electricity is “a
basic necessity whose generation and distribution is imbued with
public interest, and its provider is a public utility subject to strict
regulation by the State in the exercise of police power.” The
serious consequences on a consumer, whose electric supply has
been cut off, behoove a distribution utility to strictly comply with
the legal requisites before disconnection may be done. This is all
the more true considering Meralco’s dominant position in the
market compared to its customers’ weak bargaining position.

519
VOL. 861, APRIL 18, 201 519

Civil Law; Damages; Exemplary Damages; Exemplary

damages, which cannot be recovered as a matter of right, may not
be awarded if no moral, temperate, or compensatory damages have
been granted.—Exemplary damages, which cannot be recovered as
a matter of right, may not be awarded if no moral, temperate, or
compensatory damages have been granted. Since exemplary
damages cannot be awarded, the award of attorney’s fees should
likewise be deleted.
Same; Same; Moral Damages; Corporations; 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.—Moral damages are also not proper, in line
with Manila Electric Company v. T.E.A.M. Electronics
Corporation, 540 SCRA 62 (2007): We, however, deem it proper to
delete the award of moral damages. [T.E.A.M. Electronics
Corporation] 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 [T.E.A.M. Electronics
Corporation/Technology Electronics Assembly and Management
Pacific Corporation] 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.
Same; Same; Temperate Damages; Under Article 2224,
temperate or moderate damages may be recovered when the court
finds that some pecuniary loss has been suffered but its amount
cannot, from the nature of the case, be provided with certainty.—
Contrary to Nordec’s claim, it cannot be awarded temperate or
moderate damages. Under Article 2224 of the Civil Code: Article
2224. Temperate or moderate damages, which are more than
nominal but less than compensatory damages, may be recovered
when the court finds that

520

some pecuniary loss has been suffered but its amount cannot,
from the nature of the case, be proved with certainty. When the
court finds that a party fails to prove the fact of pecuniary loss,
and not just the amount of this loss, then Article 2224 does not
apply. In Seven Brothers Shipping Corporation v. DMC-
Construction Resources, Inc., 743 SCRA 33 (2014): In contrast,
under Article 2224, temperate or moderate damages may be
recovered when the court finds that some pecuniary loss has been
suffered but its amount cannot, from the nature of the case, be
provided with certainty.
Same; Same; Nominal Damages; Nominal damages are
awarded to vindicate the violation of a right suffered by a party, in
an amount considered by the courts reasonable under the
circumstances.—Nominal damages are awarded to vindicate the
violation of a right suffered by a party, in an amount considered

by the courts reasonable under the circumstances. Meralco’s
negligence in not providing Nordec sufficient notice of
disconnection of its electric supply, especially when there was an
ongoing dispute between them concerning the recomputation of
the electricity bill to be paid, violated Nordec’s rights. Because of
this, Nordec is entitled to nominal damages in the amount of
P30,000.00.
PETITIONS for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Raul G. Coralde, Edito E. Cedro and Marlon J. Moises
for Manila Electric Company, et al.
Romeo B. Igot Law Office for Nordec Philippines.
LEONEN, J.:

A distribution utility is mandated to strictly comply with
the legal requisites before disconnecting an electric supply
due to the serious consequences this disconnection may
have on the consumer.

521
VOL. 861, APRIL 18, 201 521

These are two (2) Petitions for Review on Certiorari1

under Rule 45 of the Rules of Court, both assailing the
January 21, 2011 Decision2 and March 9, 2011 Resolution3
of Court of Appeals in C.A.-G.R. CV No. 85564. The Court
of Appeals reversed and set aside the June 15, 2005
Decision4 of Branch 85, Regional Trial Court, Quezon City
in Civil Case No. Q-49651. It ordered Manila Electric
Company (Meralco) to pay Nordec Philippines (Nordec) the
amounts of P5,625.00, representing overbilling for
November 23, 1987; P200,000.00 as exemplary damages;
P100,000.00 as attorney’s fees; and costs of suit.
Meralco was contracted to supply electricity to Marvex
Industrial Corporation (Marvex) under an Agreement for
Sale of Electric Energy, with Service Account No. 9396-
3422-15.5 It installed metering devices at Marvex’s
premises on January 18, 1985. Marvex was billed according
to the monthly electric consumption recorded in its meter.6
On May 29, 1985, Meralco service inspectors inspected
Marvex’s electric metering facilities and found that the
main meter terminal and cover seals had been tampered
with. During a second inspection on September 18, 1985,
Meralco found that the metering devices were tampered
with again.
_______________
1 Rollo (G.R. No. 196020), pp. 30-82; Rollo (G.R. No. 196116), pp. 30-
60.
2 Rollo (G.R. No. 196116), pp. 62-76. The Decision was penned by
Associate Justice Amy C. Lazaro-Javier, and concurred in by Associate
Justices Sesinando E. Villon and Stephen C. Cruz of the Special Fifth
Division, Court of Appeals, Manila.
3 Rollo (G.R. No. 196020), p. 108. The Resolution was penned by
Associate Justice Amy C. Lazaro-Javier, and concurred in by Associate
Justices Sesinando E. Villon and Stephen C. Cruz of the Special Fifth
Division, Court of Appeals, Manila.
4 Id., at pp. 109-117. The Decision was penned by Judge Marlene B.
Gonzales-Sison.
5 Id., at p. 93.
6 Id., at p. 111.

522

Subsequently, Meralco assessed Marvex a differential

billing of P371,919.58 for January 18, 1985 to May 29,
1985, and P124,466.71 for June 17, 1985 to September 18,
1985, in the total amount of P496,386.29. Meralco sent
demand letters dated August 7, 1985 and November 29,
1985, and disconnected Marvex’s electric service when it
did not pay.7
On December 23, 1986, Nordec, the new owner of
Marvex,8 sued Meralco for damages with prayer for
preliminary mandatory injunction with Branch 85,
Regional Trial Court, Quezon City.9 Likewise, impleaded as
defendants were Meralco’s legal officer, Vicente Montero,
and two (2) Meralco employees, Mr. Bondoc and Mr.
Bayona.10 It alleged that Meralco’s service inspectors
conducted the 1985 inspections without its consent or
approval. Following the inspections, Meralco’s inspectors
gave an unnamed Nordec employee a Power Field Order
that did not mention the alleged defects in the metering
devices. Nordec further claimed that the parties exchanged
letters on the alleged unregistered electric bill, and that it
requested a recomputation, which Meralco denied in its
April 25, 1986 letter. However, in May 1986, Meralco asked
Nordec to show the basis for its recomputation request, to
which Nordec complied in its June 10, 1986 letter. On
August 14, 1986, Meralco required Nordec to pay
P371,919.58 for the unregistered electricity bill. Nordec
then informed Meralco of the pending resolution of the
recomputation. Nordec claimed that Meralco then
disconnected its service without prior notice on December
18, 1986, resulting to loss of income and cancellation of
other business opportunities.11
In its defense, Meralco claimed that the 1985 inspections

had been conducted in the presence of Nordec’s
representatives. Further, Meralco had repeatedly warned
Nordec of
_______________
7 Id., at p. 93.
8 Id., at p. 98.
9 Id.
10 Id., at p. 110.
11 Id., at pp. 93-95.

523
VOL. 861, APRIL 18, 201 523

service disconnection in case of failure to pay the

differential bill. Finally, it averred that there was no
contractual relation between Nordec and Marvex, and that
Nordec and its president, Dr. Potenciano Malvar (Dr.
Malvar), failed to show proof that they were authorized to
sue on Marvex’s behalf.12
On January 22, 1987, the Regional Trial Court issued a
writ of preliminary injunction directing Meralco to restore
Nordec’s electric supply.13
On November 23, 1987, Meralco conducted another
inspection of Nordec’s premises in the presence of Nordec’s
president, Dr. Malvar. The inspecting group observed that
there were irregularities in Nordec’s metering devices, as
they continued to register power consumption even though
its entire power supply equipment was turned off. Meralco
offered to reimburse Nordec’s excess bill of P5,625.10, but
Nordec rejected this offer.14
Nordec filed a second supplemental complaint on
January 4, 1991, praying that Meralco be declared guilty of
tampering, and be made to refund its excess bill of not less
than P5,625.10.15
In its June 15, 2005 Decision,16 the Regional Trial Court
dismissed Nordec’s original complaint and second
supplemental complaint. The trial court found that there
was sufficient evidence to prove that the electric meter and
metering installation at Marvex premises had been
tampered with.17 It found that Nordec did not dispute that
the inspections of its premises were conducted with the
consent and in the presence of its representatives.
Moreover, Nordec failed to prove that
_______________
12 Id., at p. 95.
13 Id. While the CA’s Decision mentioned January 22, 1987, Nordec’s
Petition stated January 5, 1987. See Rollo (G.R. No. 196116), p. 39.
14 Id., at pp. 95-96.
15 Id., at p. 96.
16 Id., at pp. 109-117.
17 Id., at p. 113.

524

Meralco’s inspectors had ill motives to falsify their findings

regarding the tampered meter, or that the inspectors were
responsible for the tampering.18
The trial court further found that Ridjo Tape &
Chemical Corporation v. Court of Appeals was inapplicable
to this case, since that case did not involve tampering of
meters. It held Nordec liable for violating its Terms and
Conditions of Service with Meralco, such that Meralco was
justified in disconnecting its electric service.19 Because it
was Nordec which committed the tampering, it was not
entitled to the reliefs prayed for because it did not come to
court with clean hands.20
There was also no contractual relationship between
Nordec and Meralco, since the service contract was
between Meralco and Marvex. Thus, Nordec had no cause
of action against Meralco.21
The dispositive portion of the Regional Trial Court’s
June 15, 2005 Decision stated:
WHEREFORE, the original complaint as well as the

second supplemental complaint are hereby DISMISSED.
Anent the second supplemental complaint, the same is
found to be without merit, for failure of plaintiff to
substantiate with clear and convincing evidence.
And, finding defendant’s counterclaim to be with merit,
the same is GRANTED. Accordingly, plaintiffs are hereby
ordered to pay, jointly and severally, defendants the total
amount of FOUR HUNDRED NINETY[-]SIX THOUSAND
THREE HUNDRED EIGHTY-SIX PESOS & 29/100
(Php496,386.29), representing the value of used but
unregistered electric current; the sum of TEN THOUSAND
PESOS (Php10,000.00) as exemplary damages;
_______________
18 Id., at p. 114.
19 Id., at pp. 114-116.
20 Id., at p. 116.
21 Id.

525
VOL. 861, APRIL 18, 201 525

and the sum of TWENTY THOUSAND PESOS (Php20,000.00) as

and for attorney’s fees plus costs.
SO ORDERED.22
Nordec appealed to the Court of Appeals, which

docketed the case as C.A.-G.R. CV No. 85564. On January
21, 2011, the Court of Appeals issued its
23
Decision, reversing and setting aside the Regional Trial
Court’s June 15, 2005 Decision.
First, it held that there was a contractual relationship between
Nordec and Meralco. It found that after the service contract
between Meralco and Marvex, Nordec bought Marvex from the
Development Bank of the Philippines. Thus, Nordec stepped into
Marvex’s shoes and assumed its rights and obligations as its
assignee or successor-in-interest. As Marvex’s right to receive
electricity is not intransmissible, it was deemed to have been
transmitted to Nordec. Moreover, Meralco’s continued supply of
electricity to Nordec and Nordec’s payment for this supply
indicate that there was an implied contract existing between
these two (2) parties.24
Second, the Court of Appeals found that Meralco was
negligent in discovering the alleged tampering only on May
29, 1985, or four (4) months after it first found
irregularities in the metering devices, despite the monthly
meter readings. There was no evidence that Nordec was
responsible for tampering with its own metering devices.
The Court of Appeals found that it was unlikely that a
company previously charged with tampering and had been
demanded payment for differential billing would again
tamper with a newly installed meter. On the other hand,
there was proof that the new metering devices were
defective, since they continued to run despite a
_______________
22 Id.
23 Id., at pp. 92-106.
24 Id., at pp. 98-99.

526

complete power shutdown. Meralco even offered to refund

P5,625.10 due to the defect in the new meter.25
Third, Meralco did not deny that there was a pending
communication on Nordec’s request for recomputation.
Citing Spouses Quisumbing v. Manila Electric Company,
the Court of Appeals found that Meralco failed to give the
required 48-hour written notice of disconnection before
disconnecting Nordec’s power supply.26
Finally, the Court of Appeals awarded Nordec
exemplary damages and attorney’s fees, but not actual
damages. As to actual damages, Nordec failed to prove that
it actually sustained pecuniary losses due to Meralco’s
disconnection. But Nordec was entitled to exemplary
damages as an example or correction for the public good,
and to attorney’s fees since Nordec was forced to litigate to
protect its rights.27 The Court of Appeals granted only the
P5,625.00 refund since there was no proof presented
beyond this amount.28
The dispositive portion of the Court of Appeals’ January
21, 2011 Decision stated:

Accordingly, the appeal is GRANTED. The
Decision dated June 15, 2005 of the Regional Trial
Court (RTC), Quezon City, Branch 85 is REVERSED
and SET ASIDE and a new one rendered ordering
[Meralco] to pay [Nordec]:
1.) P5,625.00, representing overbilling for
November 23, 1987[;]
2.) P200,000.00 as exemplary damages;
3.) P100,000.00 as attorney’s fees; and
4.) Costs of suit.
_______________
25 Id., at pp. 102-103.

26 Id., at pp. 103-104.
27 Id., at p. 104.
28 Id., at p. 105.

527
VOL. 861, APRIL 18, 201 527

SO ORDERED.29

The Court of Appeals denied Meralco’s Motion for
Reconsideration30 and Nordec’s Motion for Partial
Reconsideration31 in its March 9, 2011 Resolution.32
On March 29, 2011, Meralco filed a motion for extension
of time, praying for additional 30 days within which to file
its petition for review.33 This was docketed as G.R. No.
196020. On April 4, 2011, Nordec filed its motion for

extension of time, likewise praying for additional 30 days
within which to file its petition for review, which was
docketed as G.R. No. 196116.34
This Court consolidated G.R. Nos. 196020 and 196116 in
its April 11, 2011 Resolution.35
On May 3, 2011, Meralco filed its Petition for Review in
G.R. No. 196020, assailing the Court of Appeals’ January
21, 2011 Decision and March 9, 2011 Resolution.36
Meralco argues that the Court of Appeals erred in
making its findings, which were contrary to the findings of
the Regional Trial Court. It claims that the Court of
Appeals relied on Nordec’s unsubstantiated
arguments; first, in finding that Nordec was Marvex’s
assignee or successor-in-interest, and second, that Meralco
was inexcusably negligent in the late discovery of the
tampered metering devices.37
Meralco claims that at the time of the inspections, the
applicable law was Commonwealth Act No. 349, which
provided
_______________
29 Id., at pp. 105-106. The CA’s Decision awarded P5,625.00 only but it
consistently mentioned P5,625.10 in its discussion. See also p. 36.
30 Id., at pp. 118-139.
31 Id., at pp. 140-150.
32 Id., at p. 108.
33 Id., at pp. 3-10.
34 Rollo (G.R. No. 196116), pp. 3-8.
35 Rollo (G.R. No. 196020), p. 27.
36 Id., at pp. 30-82.
37 Id., at pp. 48-49.

528

that distribution utilities were required to discover

tampered meters during the prescribed inspections, which
were only once every two (2) years. In contrast, the four (4)-
month period as found by the Court of Appeals was
unreasonable, and even contrary to the rules laid down by
the Energy Regulatory Commission on the conduct of meter
testing.38 Meralco argues that distribution utilities’ meter
readers are not required to discover any defect or
tampering in the meters installed in their customers’
premises, and are only required to test their customers’
meters only once every two (2) years, unless the customer
requests otherwise. It avers that cases of meter tampering
should not be equated with cases involving defective
meters, since the former prejudices public utilities like

Meralco, due to consumers’ unlawful acts.39
Further, Meralco claims that the inspections conducted
on Marvex’s metering facilities were valid and in
accordance with Presidential Decree No. 401, as
amended.40 It argues that this law did not require the
presence of the customer during inspections. Nonetheless,
the two (2) inspections in 1985 were conducted with the
consent and in the presence of Nordec’s representatives.41
Meralco also claims that it exercised due diligence in
maintaining its electric meters, which was the standard set
by law. By applying Ridjo Tape v. Court of Appeals,42 the
Court of Appeals imposed a degree of diligence beyond
what Commonwealth Act No. 349 provided.43 Meralco
asserts that the imposition of a degree of diligence beyond
what the law provides its judicial legislation.44
_______________
38 Id., at pp. 52-53.

39 Id., at pp. 54-55.
40 Id., at p. 56.
41 Id., at pp. 57-58.
42 350 Phil. 184; 286 SCRA 544 (1998) [Per J. Romero, Third
Division].
43 Rollo (G.R. No. 196020), pp. 60-61.
44 Id., at p. 62.

529
VOL. 861, APRIL 18, 201 529

Moreover, Meralco holds that the demand letter on the

assessed value of the differential billing contained a notice
that Marvex’s electric service would be disconnected if the
billing was not paid, and that this was sufficient notice.
Thus, Marvex, as the registered customer, was aware that
the nonpayment of the differential billing would result in
the disconnection of the electric service.45
Meralco argues that Nordec was not Marvex’s assignee
or successor-in-interest. It maintains that the service
contract was never transferred in Nordec’s name. As such,
at the time Nordec filed its complaint against Meralco, it
had no authority to act on Marvex’s behalf. Meralco pointed
out that the Deed of Absolute Sale between Nordec and the
Development Bank of the Philippines was executed only
three (3) years after the 1985 inspections, or on August 16,
1988. There was also no implied contract between Meralco
and Nordec, since there was no act or conduct on Meralco’s
part to be bound to this contract.46
Finally, Meralco contests the awards of refund,

exemplary damages, and attorney’s fees to Nordec. It
claims that Nordec was not entitled to the refund since it
already refused without just cause to accept it, and thus,
had waived its right to accept the payment.47 It argues that
since the Court of Appeals itself found that Nordec was not
entitled to actual damages, it could not award exemplary
damages or attorney’s fees to Nordec.48
In its Comment,49 Nordec argues that Meralco’s reliance
on Commonwealth Act No. 349 was misplaced, since the
two (2)-year period stated in it referred to testing
conducted by the Standardizing Meter Laboratory, and not
by the distribution
_______________
45 Id., at pp. 67-68.

46 Id., at pp. 68-71.
47 Id., at p. 74.
48 Id., at pp. 74-76.
49 Id., at pp. 201-223.

530

utilities themselves.50 Further, Nordec claims that what

Meralco failed to comply with was the 48-hour written
notice of disconnection rule, and its previous demand
letters did not constitute this notice.51
In its Reply,52 Meralco reiterated its claims that Ridjo
Tape v. Court of Appeals was inapplicable53 and that it
gave Nordec due notice of the disconnection.54
On May 5, 2011, Nordec filed its Petition for Review in
G.R. No. 196116, assailing the Court of Appeals’ March 9,
2011 Resolution, denying its Motion for Partial
Reconsideration and praying for the modification of the
Court of Appeals’ January 21, 2011 Decision.55
Nordec claims that it should be awarded at least
P500,000.00 in temperate damages, P150,000.00 in moral
damages, and legal interest by the Court of Appeals. It
argues that temperate damages are warranted since
Meralco’s unceremonious and unreasonable disconnection
led to Nordec’s inability to fulfill its contractual obligations
and was even forced to cancel its clients’ purchase orders.56
Further, Nordec claims that the Court of Appeals erred
in finding that it was entitled to only P5,625.00 as a
refund. It argues that it proved overbilling in excess of
P5,625.00, through a letter showing that Nordec had been
charged P103,412.48 by Meralco, when a past billing was
only for P78,860.58, which Meralco did not refute. While
Nordec admits that it failed to adduce proof of the accurate

amount of damages that it sustained, it holds that it
estimates Meralco’s acts to cause at least P1,000,000.00
worth of damage due to
_______________
50 Id., at pp. 208-209.

51 Id., at pp. 215-216.
52 Id., at pp. 237-264.
53 Id., at pp. 252-253.
54 Id., at pp. 256-257.
55 Rollo (G.R. No. 196116), pp. 30-60.
56 Id., at pp. 48-55.

531
VOL. 861, APRIL 18, 201 531

Meralco’s electricity disconnection, fraud in

downgrading the overbilling, and installation of defective
meters.57
It its Comment,58 Meralco argues that Nordec’s petition
should be denied outright for failing to raise questions of
law, but merely prayed for a modification of the Court of
Appeals’ January 21, 2011 Decision.59 It claims that the
Court of Appeals correctly denied the award of actual and
temperate or moderate damages.60 Further, it asserts that
Nordec, as a corporation, was not entitled to moral
damages.61 Finally, it reiterates that Nordec was not
entitled to any award, since Meralco acted in accordance
with the standard set by law.62
In its Reply,63 Nordec claims that this Court may take
cognizance of its petition since there was no longer any
need to examine the probative value of the evidence
presented.64 It argues that corporations may be entitled to
damages if their reputations have been besmirched, such
as in this case.65 Nordec reiterates its entitlement to the
damages it prayed for.66
The issues for this Court’s resolution are:
First, whether or not the Court of Appeals erred in
making findings of fact contrary to those of the Regional
Trial Court;
Second, whether or not Nordec Philippines has a cause
of action against Manila Electric Company;
_______________
57 Id., at pp. 51-52.

58 Id., at pp. 172-203.
59 Id., at pp. 174-175.
60 Id., at pp. 177-178.

61 Id., at p. 184.
62 Id., at p. 190.
63 Id., at pp. 214-226.
64 Id., at p. 214.
65 Id., at pp. 221-222.
66 Id., at p. 223.

532

Third, whether or not Manila Electric Company was

inexcusably negligent when it disconnected Nordec
Philippines’ electric supply; and
Finally, whether or not Nordec Philippines is entitled to
actual, temperate, moral or exemplary damages, attorney’s
fees, and legal interest.

I

In its petition for review, Meralco faults the Court of
Appeals for making findings of fact contrary to those of the
Regional Trial Court. It claims that the trial court’s
findings of fact should be accorded the highest degree of
respect and that the Court of Appeals failed to find that the
trial court’s findings were based on mere conjecture, and
not evidence. Thus, Meralco claims that this Court must
review the facts and evidence of this case.
Meralco is mistaken in arguing that this Court is duty-
bound to review the factual findings in this case due to the
contrary findings of the Regional Trial Court and of the
Court of Appeals. The Court of Appeals has the jurisdiction
to review, and even reverse, the factual findings of the trial
court. For the Court of Appeals’ factual findings to be
reviewed by this Court, it must be shown that it gravely
abused its discretion in appreciating the parties’ respective
evidence. In Pascual v. Burgos:67
The Court of Appeals must have gravely abused its

discretion in its appreciation of the evidence presented by
the parties and in its factual findings to warrant a review of
factual issues by this court. Grave abuse of discretion is
defined, thus:
By grave abuse of discretion is meant such
capricious and whimsical exercise of
_______________
67 Pascual v. Burgos, G.R. No. 171722, January 11, 2016, 778 SCRA
189 [Per J. Leonen, Second Division].

533
VOL. 861, APRIL 18, 201 533

judgment as is equivalent to lack of jurisdiction. The abuse

of discretion must be grave as where the power is exercised
in an arbitrary or despotic manner by reason of passion or
personal hostility and must be so patent and gross as to
amount to an evasion of positive duty or to a virtual refusal
to perform the duty enjoined by or to act at all in
contemplation of law.
Grave abuse of discretion refers not merely to
palpable errors of jurisdiction; or to violations of the
Constitution, the law and jurisprudence. It refers also
to cases which, for various reasons, there has been a
gross misapprehension of facts. (Citations omitted)

This exception was first laid down in Buyco v.
People, et al.:
In the case at bar, the Tenth Amnesty Commission,

the court of first instance and the Court of Appeals
found, in effect, that the evidence did not suffice to
show that appellant had acted in the manner
contemplated in the amnesty proclamation. Moreover,
unlike the Barrioquinto cases, which were appealed
directly to this Court, which, accordingly, had
authority to pass upon the validity of the findings of
fact of the court of first instance and of its conclusions
on the veracity of the witnesses, the case at bar is
before us on appeal by certiorari from a decision of the
Court of Appeals, the findings and conclusions of
which, on the aforementioned subjects, are not subject
to our review, except in cases of grave abuse of
discretion, which has not been shown to exist.68
(Citations omitted)
_______________
68 Id., at pp. 12-13; pp. 208-209.

534

Meralco has failed to show how the Court of Appeals

acted with grave abuse of discretion in arriving at its
factual findings and conclusions, or how it grossly
misapprehended the evidence presented as to warrant a
finding that its review and reversal of the trial court’s
findings of fact had been in error.

II

A cause of action “is the act or omission by which a party
violates a right of another.”69 For a cause of action to exist,
there must be, first, a plaintiff’s legal right; second,
defendant’s correlative obligation; and third, an injury to
the plaintiff as a result of the defendant’s violation of
plaintiff’s right.70 Here, the Regional Trial Court found
that Nordec had no cause of action against Meralco since
they had no contractual relationship, as Meralco’s service
contract was with Marvex.
The beneficial users of an electric service have a cause of
action against this distribution utility. In Manila Electric
Company v. Spouses Chua,71 it was the beneficial users
who were awarded damages due to the unjust
disconnection of the electric supply, even though the
service contract with Meralco was registered in the name of
another person.
Further, Meralco is deemed to have knowledge of the
fact that Nordec was the beneficial user of Marvex’s service
contract with Meralco. It admits that the inspections of the
metering devices were conducted in the presence of
Nordec’s maintenance personnel and with the consent of its
manager.72 It further admits that it corresponded with
Nordec regarding the differential billing, and entertained
Nordec’s demand for an explanation on the finding of
tampering and the recompu-
_______________
69 RULES OF COURT, Rule 2, Sec. 2.

70 See Zuñiga-Santos v. Santos-Gran, 745 Phil. 171; 738 SCRA 33
(2014) [Per J. Perlas-Bernabe, First Division].
71 637 Phil. 80; 623 SCRA 81 (2010) [Per J. Brion, Third Division].
72 Rollo (G.R. No. 196020), p. 41.

535
VOL. 861, APRIL 18, 201 535

tation of the amount to be paid by Nordec.73 Clearly,

Meralco knew that it was dealing with Nordec as the
beneficial user of the electricity supply.

III

It is well-settled that electricity distribution utilities,
which rely on mechanical devices and equipment for the
orderly undertaking of their business, are duty-bound to
make reasonable and proper periodic inspections of their
equipment. If they are remiss in carrying out this duty due
to their own negligence, they risk forfeiting the amounts
owed by the customers affected.
In Ridjo Tape & Chemical Corporation v. Court of
Appeals:74
At this juncture, we hasten to point out that the

production and distribution of electricity is a highly
technical business undertaking, and in conducting its
operation, it is only logical for public utilities, such as
MERALCO, to employ mechanical devices and equipment
for the orderly pursuit of its business.
It is to be expected that the parties were consciously
aware that these devices or equipment are susceptible to
defects and mechanical failure. Hence, we are not prepared
to believe that petitioners were ignorant of the fact that
stoppages in electric meters can also result from inherent
defects or flaws and not only from tampering or intentional
mishandling.
. . . .
Corollarily, it must be underscored that MERALCO has
the imperative duty to make a reasonable and proper
inspection of its apparatus and equipment to ensure that
they do not malfunction, and the due diligence to dis-
_______________
73 Id., at pp. 43-44.

74 Ridjo Tape & Chemical Corp. v. Court of Appeals, supra note 42.

536

cover and repair defects therein. Failure to perform such duties

constitutes negligence.
A review of the records, however, discloses that the
unpaid charges covered the periods from November 7, 1990
to February 13, 1991 for Civil Case No. Q-92-13045 and
from July 15, 1991 to April 13, 1992 for Civil Case No.
13879, approximately three months and nine months,
respectively. On such basis, we take judicial notice that
during those periods, personnel representing MERALCO
inspected and examined the electric meters of petitioners
regularly for the purpose of determining the monthly dues
payable. So, why were these defects not detected and

reported on time?
It has been held that notice of a defect need not be direct
and express; it is enough that the same had existed for such
a length of time that it is reasonable to presume that it had
been detected, and the presence of a conspicuous defect
which has existed for a considerable length of time will
create a presumption of constructive notice thereof. Hence,
MERALCO’s failure to discover the defect, if any,
considering the length of time, amounts to inexcusable
negligence. Furthermore, we need not belabor the point that
as a public utility, MERALCO has the obligation to
discharge its functions with utmost care and diligence.75
(Citations omitted)

Moreover, the duty of inspecting for defects is not
limited to inherent mechanical defects of the distribution
utilities’ devices, but extends to intentional and
unintentional ones, such as those, which are due to
tampering and mistakes in computation.76 In Manila
Electric Co. v. Wilcon Builders Supply, Inc.:77
_______________
75 Id., at pp. 193-194; pp. 551-553.

76 See Manila Electric Company v. Macro Textile Mills Corporation,
424 Phil. 811; 374 SCRA 69 (2002) [Per J. Pardo, First Division]; Manila
Electric Company v. T.E.A.M. Electronics Corporation, 564 Phil. 639; 540
SCRA 62 (2007) [Per J. Nachura, Third Division];

537
VOL. 861, APRIL 18, 201 537

The Ridjo doctrine simply states that the public utility

has the imperative duty to make a reasonable and proper
inspection of its apparatus and equipment to ensure that
they do not malfunction. Its failure to discover the defect, if
any, considering the length of time, amounts to inexcusable
negligence; its failure to make the necessary repairs and
replace the defective electric meter installed within the
consumer’s premises limits the latter’s liability. The use of
the words “defect” and “defective” in the above cited case
does not restrict the application of the doctrine to cases of
“mechanical defects” in the installed electric meters. A more
plausible interpretation is to apply the rule on negligence
whether the defect is inherent, intentional or unintentional,
which therefore covers tampering, mechanical defects and
mistakes in the computation of the consumers’
billing.78 (Citation omitted)

Meralco argues that the degree of diligence imposed
upon it was beyond the prevailing law at the time, namely,
Commonwealth Act No. 349. It claims that under this law,
it is only required to test metering devices once every two
(2) years. Thus, for it to be penalized for taking four (4)
months to rectify and repair the defective meter, was
tantamount to judicial legislation.
However, as pointed out by Nordec, the two (2)-year
period prescribed under Commonwealth Act No. 34979 is for
the testing required of meters and appliances for
measurements used by all public services by a
standardized meter laboratory under the control of the
then Public Service Commission. It
_______________
Davao Light & Power Co., Inc. v. Opeña, 513 Phil. 160; 477 SCRA 58
(2005) [Per J. Chico-Nazario, Second Division].
77 579 Phil. 214; 556 SCRA 742 (2008) [Per J. Nachura, Third
Division].
78 Id., at p. 222; pp. 750-751.
79 AN ACT CREATING A STANDARDIZING METER LABORATORY TO CARRY OUT
THE PROVISIONS OF THE PUBLIC SERVICE ACT ON METER TESTING AND PROVIDING
FUNDS THEREFOR (1938).

538

does not pertain to distribution utilities inspections of the

metering devices installed in their consumers’ premises.
Further, contrary to Meralco’s claim, the duty imposed
upon it pursuant to Ridjo is not beyond the standard of
care imposed by law. Distribution utilities are public
utilities vested with public interest, and thus, are held to a
higher degree of diligence. In Ridjo:
The rationale behind this ruling is that public utilities

should be put on notice, as a deterrent, that if they
completely disregard their duty of keeping their electric
meters in serviceable condition, they run the risk of
forfeiting, by reason of their negligence, amounts originally
due from their customers. Certainly, we cannot sanction a
situation wherein the defects in the electric meter are
allowed to continue indefinitely until suddenly the public
utilities concerned demand payment for the unrecorded
electricity utilized when, in the first place, they should have
remedied the situation immediately. If we turn a blind eye
on MERALCO’s omission, it may encourage negligence on
the part of public utilities, to the detriment of the

consuming public.
. . . .
To summarize, it is worth emphasizing that it is not our
intention to impede or diminish the business viability of
MERALCO, or any public utility company for that matter.
On the contrary, we would like to stress that, being a public
utility vested with vital public interest, MERALCO is
impressed with certain obligations towards its customers
and any omission on its part to perform such duties would
be prejudicial to its interest. For in the final analysis, the
bottom line is that those who do not exercise such prudence
in the discharge of their duties shall be made to bear the
consequences of such oversight.80
_______________
80 Ridjo Tape & Chemical Corp. v. Court of Appeals, supra note 42 at

pp. 195-196; pp. 553-554.

539
VOL. 861, APRIL 18, 201 539

Should a distribution utility not exercise the standard of care

required of it due to its negligence in the inspection and repair of
its apparatus, then it can no longer recover the amounts of
allegedly used but uncharged electricity.
The distribution utility’s negligence is all the more
apparent when it had made prior findings of tampering,
and yet still failed to correct these defects. In Manila
Electric Company v. T.E.A.M. Electronics Corp.,81 Meralco
conducted an inspection on September 28, 1987 and found
that the meters therein were tampered, and then
conducted a second inspection on June 7, 1988, which
yielded similar evidence of tampering. Likewise, the
respondent in that case was in the midst of a differential
billing dispute with Meralco, and had previously been
assessed P7,000,000.00 due to alleged tampering. There,
this Court found that Meralco was negligent for failing to
repair the defects in respondent’s meters after the first
inspection:
Petitioner likewise claimed that when the subject meters

were again inspected on June 7, 1988, they were found to
have been tampered anew. The Court notes that prior to the
inspection, [T.E.A.M. Electronics Corporation] was informed
about it; and months before the inspection, there was an
unsettled controversy between [T.E.A.M. Electronics
Corporation] and petitioner, brought about by the
disconnection of electric power and the nonpayment of
differential billing. We are more disposed to accept the trial

court’s conclusion that it is hard to believe that a customer
previously apprehended for tampered meters and assessed
P7 million would further jeopardize itself in the eyes of
petitioner. If it is true that there was evidence of tampering
found on September 28, 1987 and again on June 7, 1988,
the better view would be that the defective meters were not
actually corrected after the first inspection. If so,
then Manila Electric Com-
_______________
81 Manila Electric Company v. T.E.A.M. Electronics Corporation,

supra note 76.

540

pany v. Macro Textile Mills Corporation would apply, where

we said that we cannot sanction a situation wherein the
defects in the electric meter are allowed to continue
indefinitely until suddenly, the public utilities demand
payment for the unrecorded electricity utilized when they
could have remedied the situation immediately. Petitioner’s
failure to do so may encourage neglect of public utilities to
the detriment of the consuming public. Corollarily, it must
he underscored that petitioner has the imperative duty to
make a reasonable and proper inspection of its apparatus
and equipment to ensure that they do not malfunction, and
the due diligence to discover and repair defects therein.
Failure to perform such duties constitutes negligence. By
reason of said negligence, public utilities run the risk of
forfeiting amounts originally due from their customers.82
(Citations omitted)
Here, as observed by the Court of Appeals, Meralco itself

claimed that the irregularities in the electricity
consumption recorded in Nordec’s metering devices started
on January 18, 1985, as evidenced by their August 7, 1985
demand letter, covering January 18, 1985 to May 29, 1985.
However, the alleged tampering was only discovered
during the May 29, 1985 inspection. Considering that
Nordec’s meters were read monthly, Meralco’s belated
discovery of the cause of the alleged irregularities, or four
(4) months after they purportedly started, can only lead to
a conclusion of negligence. Notice of a defect may be
constructive when it has conspicuously existed for a
considerable length of time.83 It is also worth noting that
during a third inspection on November 23, 1987, further
irregularities in Nordec’s metering devices were observed,
showing electricity consumption even when Nordec’s entire
power supply equipment was switched off. Clearly, Meralco

had been remiss in its duty as required by law and
jurisprudence of a public utility.
_______________
82 Id., at pp. 653-654; pp. 76-77.

83 Ridjo Tape & Chemical Corp. v. Court of Appeals, supra note 42 at
p. 194; pp. 552-553.

541
VOL. 861, APRIL 18, 201 541

Meralco is also duty-bound to explain the basis for its

billings, especially when these are for unregistered
consumption, to prevent consumers from being solely at its
mercy.84 Here, the Power Field Orders given to Nordec
following the inspections did not mention the alleged
defects that were discovered. Nordec’s request for
recomputation of the alleged unregistered electric bill was
still pending when its electric supply was disconnected on
December 18, 1986.
Finally, as found by the Court of Appeals, Meralco failed
to comply with the 48-hour disconnection notice rule.
Meralco claims that the statements in its demand letters,
that failure to pay would result in disconnection, were
sufficient notice. However, pursuant to Section 97 of
Revised General Order No. 1, the governing rule when the
disconnection occurred, disconnection due to nonpayment
of bills requires that a 48-hour written notice be given to
the customer.85
It must be emphasized that electricity is “a basic
necessity whose generation and distribution is imbued with
public interest, and its provider is a public utility subject to
strict regulation by the State in the exercise of police
power.”86 The serious consequences on a consumer, whose
electric supply has been cut off, behoove a distribution
utility to strictly comply with the legal requisites before
disconnection may be done.87 This is all the more true
considering Meralco’s dominant position in the market
compared to its customers’ weak bargaining position.88
_______________
84 Manila Electric Company v. Macro Textile Mills Corporation, supra

note 76 at p. 828; p. 85.
supra note 76 at p. 656; pp. 77-79.
86 Manila Electric Company (MERALCO) v. Chua, supra note 71 at p.
101; pp. 99-100.
87 Id.
88 Id.

542

IV

At the outset, a party’s entitlement to damages is a
question of fact not generally cognizable in a petition for
review.89 However, in this case, the Court of Appeals’
failure to apply the applicable law and jurisprudence by
awarding damages to Nordec prompts this Court’s review.
The Court of Appeals declined to award actual damages
to Nordec as it failed to prove its pecuniary losses due to
Meralco’s disconnection:
We concede that MERALCO’s service disconnection bore

a domino effect on NORDEC’s business but in the absence
of actual proof of losses, We cannot award actual damages
to NORDEC. For one is only entitled to adequate
compensation for pecuniary loss that he has duly proven.90
The Court of Appeals then proceeded to award

exemplary damages to Nordec by way of example or
correction for the public good. This is contrary to the
requirement in Article 2234 of the Civil Code, which
requires proof of entitlement to moral, temperate or
compensatory damages before exemplary damages may be
awarded:
Article 2234. 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 addi-
_______________
89 See Vda. de Formoso v. Philippine National Bank, 665 Phil. 184;

650 SCRA 35 (2011) [Per J. Mendoza, Second Division].
90 Rollo (G.R. No. 196020), p. 104.

543
VOL. 861, APRIL 18, 201 543

tion 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.

Exemplary damages, which cannot be recovered as a
matter of right, may not be awarded if no moral,
temperate, or compensatory damages have been granted.91
Since exemplary damages cannot be awarded, the award of
attorney’s fees should likewise be deleted.
Moral damages are also not proper, in line with Manila
Electric Company v. T.E.A.M. Electronics Corporation:92
We, however, deem it proper to delete the award of moral

damages. [T.E.A.M. Electronics Corporation] 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 [T.E.A.M. Electronics Corporation/Technology
Electronics Assembly and Management Pacific Corporation] has
been debased as a result of petitioner’s acts. Besides, the trial
court simply awarded moral damages in the dispositive portion
_______________
91 See Francisco v. Government Service Insurance System, 117 Phil.

586; 7 SCRA 577 (1963) [Per J. J.B.L. Reyes, En Banc]; Singson v. Aragon,
92 Phil. 514 (1953) [Per J. Bautista Angelo, En Banc].
supra note 76.

544

of its decision without stating the basis thereof.93 (Citations

omitted)
Here, the records are bereft of evidence that would show

that Nordec’s name or reputation suffered due to the
disconnection of its electric supply.

Moreover, contrary to Nordec’s claim, it cannot be
awarded temperate or moderate damages. Under Article
2224 of the Civil Code:

Article 2224. Temperate or moderate damages, which are more than
nominal but less than compensatory damages, may be recovered when the
court finds that some pecuniary loss has been suffered but its amount
cannot, from the nature of the case, be proved with certainty.

When the court finds that a party fails to prove the fact
of pecuniary loss, and not just the amount of this loss, then
Article 2224 does not apply. In Seven Brothers Shipping
Corporation v. DMC-Construction Resources, Inc.:94
In contrast, under Article 2224, temperate or moderate

damages may be recovered when the court finds that some
pecuniary loss has been suffered but its amount cannot,
from the nature of the case, be provided with certainty. This
principle was thoroughly explained in Araneta v. Bank of
America, which cited the Code Commission, to wit:
The Code Commission, in explaining the concept of
temperate damages under Article 2224, makes the
following comment:
In some States of the American Union,
temperate damages are allowed. There are
cases where
_______________
93 Id., at p. 658; pp. 81-82.

94 748 Phil. 692; 743 SCRA 33 (2014) [Per CJ. Sereno, First Division].

545
VOL. 861, APRIL 18, 201 545

from the nature of the case, definite proof of

pecuniary los cannot be offered, although the
court is convinced that there has been such
loss. For instance, injury to one’s commercial credit
or to the goodwill of a business firm is often hard to
show with certainty in terms of money. Should
damages be denied for that reason? The judge should
be empowered to calculate moderate damages in such
cases, rather than that the plaintiff should suffer,
without redress from the defendant’s wrongful act.
(Emphasis ours)
Thus, in Tan v. OMC Carriers, Inc., temperate damages
were rightly awarded because plaintiff suffered a loss,
although definitive proof of its amount cannot be presented

as the photographs produced as evidence were deemed
insufficient. Established in that case, however, was the fact
that respondent’s truck was responsible for the damage to
petitioner’s property and that petitioner suffered some form
of pecuniary loss. In Canada v. All Commodities Marketing
Corporation, temperate damages were also awarded
wherein respondent’s goods did not reach the Pepsi Cola
Plant at Muntinlupa City as a result of the negligence of
petitioner in conducting its trucking and hauling services,
even if the amount of the pecuniary loss had not been
proven. In Philtranco Services Enterprises, Inc. v. Paras, the
respondent was likewise awarded temperate damages in an
action for breach of contract of carriage, even if his medical
expenses had not been established with certainty. In People
v. Briones, in which the accused was found guilty of murder,
temperate damages were given even if the funeral expenses
for the victim had not been sufficiently proven.
Given these findings, we are of the belief that temperate
and not nominal damages should have been awarded,
considering that it has been established that

546

respondent herein suffered a loss, even if the amount

thereof cannot be proven with certainty.95 (Citations
omitted)
Here, the Court of Appeals found that Meralco’s

disconnection had a “domino effect”96 on Nordec’s business,
but that Nordec did not offer actual proof of its losses.
Nordec even admitted in its petition for review that there
was an “oversight” on its part in “adducing proof of the
accurate amount of damages it sustained” due to Meralco’s
acts.97 No pecuniary loss has been established in this case,
apart from the claim in Nordec’s complaint that the
“serious anxiety” of the disconnection had caused Nordec’s
president to cancel business appointments, purchase
orders, and fail to fulfill contractual obligations, among
others.98
In this instance, nominal damages may be awarded.
In Philippine Telegraph & Telephone Corporation v. Court
of Appeals:99
Temperate or moderate damages may only be given if the

“court finds that some pecuniary loss has been suffered but
that its amount cannot, from the nature of the case, be
proved with certainty.” The factual findings of the appellate
court that respondent has failed to establish such pecuniary
loss or, if proved, cannot from their nature be precisely
quantified precludes the application of the rule on

temperate or moderate damages. The result comes down to
only a possible award of nominal damages. Nominal
damages are adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the
defendant, may be vindicated or recognized and not for the
purpose of indemnifying the plaintiff for
_______________
95 Id., at pp. 701-702; pp. 44-45.

96 Rollo (G.R. No. 196020), p. 104.
97 Rollo (G.R. No. 196116), p. 52.
98 Id., at p. 93.
99 437 Phil. 76; 388 SCRA 270 (2002) [Per J. Vitug, First Division].

547
VOL. 861, APRIL 18, 201 547

any loss suffered by him. The court may award nominal

damages in every obligation arising from any source
enumerated in Article 1157 of the Civil Code or, generally,
in every case where property right is invaded.100 (Citations
omitted)
Nominal damages are awarded to vindicate the violation

of a right suffered by a party, in an amount considered by
the courts reasonable under the
circumstances.101 Meralco’s negligence in not providing
Nordec sufficient notice of disconnection of its electric
supply, especially when there was an ongoing dispute
between them concerning the recomputation of the
electricity bill to be paid, violated Nordec’s rights. Because
of this, Nordec is entitled to nominal damages in the
amount of P30,000.00.
WHEREFORE, the Petitions for Review on Certiorari in G.R.
Nos. 196020 and 196116 are DENIED. The Court of Appeals’
January 21, 2011 Decision and March 9, 2011 Resolution in C.A.-
G.R. CV No. 85564 are AFFIRMED with MODIFICATION.
Manila Electric Company is ordered to pay Nordec Philippines
P5,625.00, representing overbilling for November 23, 1987;
P30,000.00 in nominal damages; and costs of suit. The awards for
exemplary damages and attorney’s fees are deleted.
SO ORDERED.
Velasco, Jr. (Chairperson), Bersamin, Martires and

Gesmundo, JJ., concur.
Petitions denied, judgment and resolution affirmed with

modification.
_______________
100 Id., at p. 86; pp. 278-279.

101 See Pryce Properties Corporation v. Octobre, Jr., G.R. No. 186976,
December 7, 2016, 813 SCRA 90 [Per J. Jardeleza, Third Division];
Fontana Resort and Country Club, Inc. v. Tan, 680 Phil. 395; 664 SCRA
382 (2012) [Per J. Leonardo-De Castro, First Division].

548

Note.—R.A. No. 10531 reiterated Section 57 of the

Electric Power Industry Reform Act of 2001 (EPIRA),
giving the electric cooperative the option either to remain
as a non-stock, nonprofit cooperative or convert into and
register as a stock cooperative under the Cooperative
Development Authority (CDA) or a stock corporation under
the Securities Exchange Commission (SEC) in accordance
with the law’s Implementing Rules and Regulation (IRR).
(Zambales II Electric Cooperative, Inc. [ZAMECO II] Board
of Directors vs. Castillejos Consumers Association, Inc.
[CASCONA], 738 SCRA 521 [2014])

——o0o——

© Copyright 2021 Central Book Supply, Inc. All rights reserved.

Manila Electric Co. v. Nordec Philippines, 861 SCRA 515 (2018)

Uploaded by

Copyright:

Available Formats

Manila Electric Co. v. Nordec Philippines, 861 SCRA 515 (2018)

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Manila Electric Co. v. Nordec Philippines, 861 SCRA 515 (2018)

Uploaded by

Copyright:

Available Formats

3/5/2021 SUPREME COURT REPORTS ANNOTATED 861

G.R. No. 196020. April 18, 2018.*

Remedial Law; Civil Procedure; Appeals; Findings of Fact;

516 SUPREME COURT REPORTS ANNOTATED

had no contractual relationship, as Meralco’s service contract

VOL. 861, APRIL 18, 201 517

Same; Same; Same; Public Utilities; Should a distribution

negligence in the inspection and repair of its apparatus, then it can

518 SUPREME COURT REPORTS ANNOTATED

discovered during the May 29, 1985 inspection. Considering

when it has conspicuously existed for a considerable length of

VOL. 861, APRIL 18, 201 519

Civil Law; Damages; Exemplary Damages; Exemplary

sentiments like wounded feelings, serious anxiety, mental anguish

520 SUPREME COURT REPORTS ANNOTATED

violation of a right suffered by a party, in an amount considered

PETITIONS for review on certiorari of the decision and

VOL. 861, APRIL 18, 201 521

These are two (2) Petitions for Review on Certiorari1

522 SUPREME COURT REPORTS ANNOTATED

Subsequently, Meralco assessed Marvex a differential

In its defense, Meralco claimed that the 1985 inspections

VOL. 861, APRIL 18, 201 523

service disconnection in case of failure to pay the

524 SUPREME COURT REPORTS ANNOTATED

Meralco’s inspectors had ill motives to falsify their findings

WHEREFORE, the original complaint as well as the

VOL. 861, APRIL 18, 201 525

and the sum of TWENTY THOUSAND PESOS (Php20,000.00) as

Nordec appealed to the Court of Appeals, which

526 SUPREME COURT REPORTS ANNOTATED

complete power shutdown. Meralco even offered to refund

25 Id., at pp. 102-103.

VOL. 861, APRIL 18, 201 527

196020. On April 4, 2011, Nordec filed its motion for

528 SUPREME COURT REPORTS ANNOTATED

that distribution utilities were required to discover

meters, since the former prejudices public utilities like

38 Id., at pp. 52-53.

VOL. 861, APRIL 18, 201 529

Moreover, Meralco holds that the demand letter on the

Finally, Meralco contests the awards of refund,

45 Id., at pp. 67-68.

530 SUPREME COURT REPORTS ANNOTATED

utilities themselves.50 Further, Nordec claims that what

Nordec admits that it failed to adduce proof of the accurate

50 Id., at pp. 208-209.

VOL. 861, APRIL 18, 201 531

Meralco’s electricity disconnection, fraud in

57 Id., at pp. 51-52.

60 Id., at pp. 177-178.

532 SUPREME COURT REPORTS ANNOTATED

Third, whether or not Manila Electric Company was

The Court of Appeals must have gravely abused its

VOL. 861, APRIL 18, 201 533

judgment as is equivalent to lack of jurisdiction. The abuse

In the case at bar, the Tenth Amnesty Commission,

68 Id., at pp. 12-13; pp. 208-209.

534 SUPREME COURT REPORTS ANNOTATED