G.R. No. 158911 - Manila Electric Co. vs. Macabagdal

Case Summary (G.R. No. 158911)

Factual Background

The records showed that in 1987 the National Power Corporation (NPC) commenced an ejectment action in the MTC, Quezon City, against persons alleged to be illegally occupying NPC property in Baesa, Quezon City, and that on April 28, 1989 the MTC rendered judgment identifying among the occupants one Leoncio Ramoy. On June 20, 1990 NPC wrote MERALCO requesting the immediate disconnection of electric service to establishments beneath NPC transmission lines and furnished a list that included the respondents. MERALCO issued notices of disconnection and, after a joint survey with NPC personnel, disconnected the electric service of the affected customers. Leoncio Ramoy protested, pointed to boundary monuments and claimed his land was outside NPC property, but MERALCO disconnected service while accompanied by armed men. An ocular inspection ordered by the trial court later disclosed that the Ramoy residence was outside NPC property, a fact that a MERALCO witness conceded on cross-examination.

Procedural History

Respondents filed suit in the RTC of Quezon City. The trial court dismissed respondents' claims for moral and exemplary damages and attorney's fees but ordered MERALCO to restore electric service. The respondents appealed. The Court of Appeals reversed in part by ordering MERALCO to pay moral and exemplary damages and attorney's fees. MERALCO's motion for reconsideration before the CA was denied. MERALCO then filed the present petition for review on certiorari under Rule 45.

Issues Presented

MERALCO principally contended that the CA erred in holding it negligent when it disconnected the respondents' electric service and erred in awarding moral and exemplary damages and attorney's fees because MERALCO acted in good faith in complying with NPC's request.

Parties' Contentions

MERALCO argued that the MTC decision identifying respondents as illegal occupants justified discontinuance of service and that MERALCO acted in good faith and in compliance with NPC. Respondents grounded their cause of action on culpa contractual or breach of contract pursuant to Article 1170 of the Civil Code, alleging that MERALCO improperly discontinued service despite the existence of a service contract obligating MERALCO to supply electricity.

Trial Court Findings

The RTC found that MERALCO had disconnected service but ordered restoration, dismissed respondents' claims for moral and exemplary damages and attorney's fees, and accepted evidence showing that the Ramoy residence was outside NPC property. The trial court noted that MERALCO reconnected several customers at NPC's request, none of whom were the plaintiffs.

Court of Appeals Ruling

The CA faulted MERALCO for acting on NPC's request without obtaining a writ of execution or coordinating with the court sheriff or other proper officer before effectuating disconnection. The CA concluded that MERALCO failed to exercise the required prudence and thus was liable, and it awarded moral and exemplary damages and attorney's fees in favor of respondents.

Supreme Court Ruling and Disposition

The Supreme Court partly granted MERALCO's petition. The Court affirmed the CA's finding of liability under Article 1170 but modified the relief by deleting the award of exemplary damages and attorney's fees. The Court ordered that MERALCO remain liable for moral damages to Leoncio Ramoy in the amount awarded by the CA, but it removed the CA's awards for exemplary damages and attorney's fees. The Court ordered no costs.

Legal Basis for Liability

The Court treated the respondents' claim as one for culpa contractual under Article 1170, holding that the mere existence of the contract and the failure of its compliance gave rise prima facie to a right of relief. The Court emphasized that MERALCO, as a public utility, owed an obligation to perform with the utmost care and diligence and that the fault of the obligor under Article 1173 consists in omission of the diligence required by the nature of the obligation and the circumstances. The Court found that MERALCO erred in relying on the MTC decision without proving its finality and in failing to coordinate with proper court officials to determine which structures the court order covered, thereby failing to exercise the requisite degree of prudence and diligence.

Moral Damages: Proof and Award

Invoking Article 2220, the Court held that MERALCO wilfully caused injury to Leoncio Ramoy by withholding electricity to which he was entitled under the service contract and that this injury was contrary to public policy for a public utility. The Court further held that moral damages require pleading and proof, and because only Leoncio testified regarding his wounded feelings and the loss of tenants resulting from the disconnection, only he qualified for moral damages. The Court therefore sustained the CA's award of moral damages to Leoncio in the amount the CA had fixed.

Exemplary Damages and Attorney's Fees: Disallowance

The Court examined Article 2232 and Article 2233 and concluded that exemplary damages were not warranted because MERAL

Case Syllabus (G.R. No. 158911)

Parties and Procedural Posture

MANILA ELECTRIC COMPANY filed a Petition for Review on Certiorari under Rule 45, Rules of Court challenging the Decision of the Court of Appeals dated December 16, 2002 and the Resolution dated July 1, 2003 denying its motion for reconsideration.
MATILDE MACABAGDAL RAMOY, BIENVENIDO RAMOY, ROMANA RAMOY-RAMOS, ROSEMARIE RAMOY, OFELIA DURIAN, and CYRENE PANADO were the respondents in the petition and original plaintiffs in the action below.
The case arose from an ejectment action initiated by the National Power Corporation (NPC) against alleged illegal occupants of its right of way at Baesa, Quezon City, which resulted in an MTC decision dated April 28, 1989 identifying among the occupants one Leoncio Ramoy.
The Regional Trial Court of Quezon City, Branch 81 rendered a Decision on September 24, 1996 dismissing respondents' claims for moral and exemplary damages and attorney's fees but ordering reconnection of electric service.
The Court of Appeals reversed in part on December 16, 2002 and awarded moral and exemplary damages and attorney's fees to respondents, and its July 1, 2003 Resolution denied Meralco's motion for reconsideration.
The petition reached the Supreme Court as G.R. No. 158911, and the Supreme Court rendered the present Decision partly granting the petition and modifying the Court of Appeals' award.

Key Factual Allegations

In 1987 NPC filed an ejectment case before the MTC, and the MTC rendered judgment on April 28, 1989 ordering demolition or removal of structures on NPC property; a location map in the decision identified Leoncio Ramoy’s apartments as No. 7.
On June 20, 1990 NPC requested MERALCO to disconnect electric service to residential and commercial establishments beneath NPC transmission lines along Baesa, and the request included the Ramoys.
MERALCO issued notices of disconnection to the listed customers and, after a joint survey with NPC, disconnected electric service to the affected premises.
Plaintiff Leoncio Ramoy owned a parcel covered by TCT No. 326346, part of which he alleged was occupied by lessees, and he objected during the disconnection by pointing out boundary monuments that showed his residence outside NPC property.
Armed men accompanied the Meralco employees during the disconnection, and Leoncio Ramoy testified that he was threatened and told not to interfere.
An ocular inspection ordered by the trial court found that the residence of spouses Leoncio and Matilde Ramoy was outside NPC property, and Meralco witness R.P. Monsale III admitted on cross-examination that he observed this fact but did not inform his supervisor nor recommend reconnection.
MERALCO later reconnected four customers at NPC’s request, but none of those reconnected were the respondents in the present action.

Issues

Whether MERALCO was negligent or in breach of its service contract when it disconnected electricity to respondents upon NPC's request.
Whether respondents were entitled to recover moral damages, exemplary damages, and attorney's fees from MERALCO under the circumstances.
Whether MERALCO acted in bad faith or with such wantonness, recklessness, or oppression as to warrant exemplary damages and the award of attorney's fees under Article 2208, Civil Code.

Contentions of the Parties

MERALCO contended that it acted in good faith and was justified in disconnecting service because the MTC decision identified respondents as illegal occupants of NPC property and MERALCO was responding to NPC's request.
Respondents contended that MERALCO breached the service contract and acted negligently and in bad faith in disconnecting service, causing moral injury and loss of tenants, thereby entitling them to moral and exemplary damages and attorney's fees.
MERALCO further contended that it complied with NPC by conducting a joint survey and by re-connecting certain customers at NPC's request.

Statutory Framework

Rule 45, Rules of Court provided the procedural vehicle for the p