THIRD DIVISION
[G.R. No. 178570. April 4, 2018.]
PANAY ELECTRIC, CO., INC., petitioner,vs. ILOILO SEAL ICE-MAKING AND COLD STORAGE, INC., and JUAN SALVADOR, JR., substituted by his heirs, namely: DORIS LEDESMA SALVADOR; MARK LAWRENCE L. SALVADOR; CHRISTINE LOURDES SALVADOR-CARPIO; GERALDINE EVELYN SALVADOR-CORDERO; JUAN JOSE MATIAS L. SALVADOR; and JUAN CARLOS DANIEL ROBERTO L. SALVADOR, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution datedApril 4, 2018, which reads as follows:
"G.R. No. 178570 (PANAY ELECTRIC, CO., INC., Petitioner, v. ILOILO SEAL ICE-MAKING AND COLD STORAGE, INC., and JUAN SALVADOR, JR., substituted by his heirs, namely: DORIS LEDESMA SALVADOR; MARK LAWRENCE L. SALVADOR; CHRISTINE LOURDES SALVADOR-CARPIO; GERALDINE EVELYN SALVADOR-CORDERO; JUAN JOSE MATIAS L. SALVADOR; and JUAN CARLOS DANIEL ROBERTO L. SALVADOR, Respondents.) — The petitioner appeals the adverse decision promulgated on June 14, 2007, 1 whereby the Court of Appeals (CA) disposed as follows:
WHEREFORE, the Decision dated February 28, 2000, is hereby vacated and a new one entered, as follows:
On the main complaint, the same is hereby reinstated and defendants-appellees are ordered to severally pay PECO the amount of P349,851.00 for services rendered, plus interest thereon at the rate of 12% yearly from date of demand, December 14, 1984, until fully paid.
On the counterclaim, PECO is ordered to pay defendants-appellees the amount of P425,000.00 as and for consequential damages, plus interest thereon at the rate of 12% yearly from date of finality of this decision until fully paid.
The twin prayers for the award of attorney's fees on the main complaint and counterclaim are denied for lack of legal bases. No pronouncement as to costs.
SO ORDERED. 2
Antecedents
By virtue of Republic Act No. 5360, 3 the petitioner was granted the franchise to operate as a public utility for the purpose of generating electricity and distributing electricity to its consumers in Iloilo City, and in the Municipalities of Santa Barbara and Pavia in the Province of Iloilo. 4
Respondent Iloilo Seal Ice-Making and Cold Storage, Inc. (Iloilo Seal) manufactured ice in commercial quantity, and operated as a cold storage plant in Iloilo City. 5 The other respondents are the heirs of the late Atty. Juan Salvador, Jr., the former President of Iloilo Seal.
On April 28, 1979, the petitioner and Iloilo Seal, the latter being then represented by Atty. Salvador, Jr., entered into a contract for electric current service whereby the former undertook to supply electricity to the latter. 6
On April 24, 1985, the petitioner sued Iloilo Seal in the Regional Trial Court (RTC) in Iloilo City for the collection of its unpaid accounts in the period from July to October 1984 as follows: 7
|
Date |
Amount |
|
July, 1984 |
P15,099.02 |
|
August, 1984 |
P146,839.49 |
|
September, 1984 |
P142,833.58 |
|
October, 1984 |
P71,079.46 |
The petitioner also claimed interest of 2% per month based on Board of Energy (BOE) Order dated May 16, 1984. 8
Iloilo Seal filed its answer with counterclaim, 9 wherein it claimed that the petitioner had breached its contractual obligation in view of the fact that Iloilo Seal suffered around 360 brownouts of varying durations, and occasional voltage fluctuations in the period from February 7, 1983 to September 25, 1984; that since November 1979, the petitioner had overcharged Iloilo Seal by including the so-called "fuel cost adjustment," that the 2% monthly interest was improper and without legal basis; that the power outages had resulted in a higher electricity consumption and billing at a minimum average of P1,000.00/brownout; that due to the power failures, Iloilo Seal could not meet the orders of its customers, and suffered besmirched reputation and damages valued at no less than P500,000.00; that the intermittent brownouts had caused damage to some of its sensitive equipment, which entailed repairs and/or replacements worth no less than P250,000.00; that the petitioner's negligent handling and condemning as unserviceable of a newly-rewound transformer had rendered it unable to operate for 10 days resulting in damages estimated at P150,000.00; and that the petitioner's disconnection of the power supply had further hurt its business, standing and reputation, for which it must be compensated at no less than P500,000.00. 10
Ruling of the RTC
On February 28, 2000, the RTC, through Branch 34, rendered judgment dismissing the complaint, and ruling thusly: 11
WHEREFORE, in view of the foregoing, judgment is hereby rendered DISMISSING the complaint of the plaintiff for lack of merit.
On the counterclaim, plaintiff is ordered to pay defendants the amount of P250,000.00 by way of consequential damages; P50,000 as attorneys' fees; P26,000.00 as refund of defendant's deposit with plaintiff plus 12% annual interest thereon from the date of the decision until the same have been fully liquidated and to pay the costs of suit.
SO ORDERED. 12
The RTC found that contrary to its undertaking under the contract, the petitioner did not use reasonable diligence in the performance of its obligations; that the petitioner did not justify the 427 power outages experienced by Iloilo Seal that had resulted in the latter's heavy business losses; and that because of the petitioner's contractual breach, Iloilo Seal was absolved from any liability under the contract, holding as follows:
From the voluminous documentary evidence presented by the plaintiff, there is no showing that it used reasonable diligence in the performance of its obligations. The 427 power outages experienced by the defendant Company which resulted in heavy business losses were never justified by the plaintiff PECO to be within the circumstances mentioned in the contract whereby the plaintiff may not be held liable for damages. The evidence of the plaintiff is bereft of any explanation why the overhauling of units are done almost daily. There is also no offer of explanation why the servicing and maintenance was done almost everyday during the period of February to September 1983 where it was not the practice before.
What appears in the subject report of the plaintiff is the fact that the common cause of brown-outs was the insufficient power caused by the overhauling of PECO units. Since the over-hauling was done very frequently, it can no longer be considered extra-ordinary repairs. The plaintiff having failed to observe reasonable diligence in the maintenance of its units resulting in its failure to generate the appropriate supply of electricity to its customers, it consequently failed to comply with its contractual obligation.
Unlike the ordinary customers of PECO, defendant Company is engaged in the manufacture of ice for commercial purposes. The business is entirely dependent on a steady, regular and uninterrupted supply of electric power, the very reason why defendants entered into a contract with PECO. The evidence presented shows that the brown-outs caused considerable damage on the business of the defendants. Each power outage returns ice which were already formed to room temperature necessitating a repeat of the freezing process when the power supply resumes. This increases the defendant's electric bills by an average of P1,000.00 per brown-out. Another result of the brown-out is that stored ice melts, thus rendering the defendant Company unable to fulfill its own obligations to its customers.
Plaintiff PECO claims that although there were recurrent power outages, it is not liable to the defendants because they have stand-by generators to continue with their ice production. This is tantamount to saying that since the defendant have stand-by generators, PECO may cut-off the electric consumption of the defendants at any time. It should be noted, however, that PECO's obligation to the defendants is contractual in nature. It has bound itself to perform and comply with the terms embodied in the contract.
Accordingly, by reason of the contractual breach committed by the plaintiff, particularly in furnishing defendant a regular and uninterrupted supply of electric current, justice and equity demands that defendants should be absolved from any further liability upon said contract. 13
In due course, the petitioner appealed to the CA.
Decision of the CA
On June 14, 2007, the CA promulgated its assailed decision 14 setting aside the judgment of the RTC, and ordering the respondents to pay to the petitioner the unpaid electric bills of P349,851.00 plus interest of 12% per annum from December 14, 1984 until full satisfaction. It found and declared, however, that the petitioner did not exercise reasonable diligence when it carried out frequent repairs and overhaul of its generators and equipment that resulted to the frequent power failures suffered by Iloilo Seal; and that the petitioner also failed to prove that a power crisis had occurred in the period from 1983 to 1984 that justified its failure to provide continuous power supply to Iloilo Seal.
Anent damages, the CA opined that the award to the respondents was unwarranted and baseless, except the refund of P26,000.00; that the claim of the respondents for P1,000.00 increase in electric bills per outage was warranted; and that the petitioners should pay the respondents P425,000.00 by way of consequential damages based on 425 outages at P1,000.00/outage.
Issues
In its appeal, the petitioner ascribes the following errors, namely:
I
THE COURT OF APPEALS ERRED IN RULING THAT PECO VIOLATED PARAGRAPH I OF THE CONTRACT AND THAT THE POWER OUTAGES EXPERIENCED DURING THE RECKONED PERIOD WERE NOT CAUSED BY EXEMPTING CIRCUMSTANCES ENUMERATED UNDER PARAGRAPH 9 OF THE CONTRACT
II
THE COURT OF APPEALS ERRED IN AWARDING RESPONDENTS WITH CONSEQUENTIAL DAMAGES IN THE AMOUNT OF P425,000.00 PLUS 12% INTEREST THEREON15
The petitioner insists that it could not be held responsible for not tapping additional resources to augment its power supply because only the National Power Corporation (NAPOCOR) was allowed under Presidential Decree No. 40 16 to construct additional power plants, and private utilities like it were limited to the distribution of electric power; 17 that it had presented sufficient proof to show that there was a power supply crisis occurring in the country, most especially during the period of 1983-1984; 18 that despite the exercise of due diligence, it could not have prevented the frequent power interruptions in order to cause repairs to its power units that could be considered as "extraordinary repairs" in view of the prevailing power crisis; 19 that paragraph 9 of its contract with Iloilo Seal rendered it free and harmless from liability for damages arising or resulting from breakdown of or damage to its distribution lines; 20 and that there was no evidence showing that the respondents had suffered damages of P1,000.00 per power failure, 21 or that they had incurred losses and damages from the power interruptions. 22
In their comment, 23 the respondents aver that the petition was premature because of the pending motion for reconsideration and supplemental motion for reconsideration they (respondents) had filed in the CA; that the issues being raised in this appeal involved questions of fact; and that the petitioner falsely stated in its certification of non-forum shopping that there was no similar action pending in other courts, when the truth was otherwise.
Did the CA err in finding the petitioner to have failed to exercise reasonable diligence and thereby liable for consequential damages?
Ruling of the Court
The appeal is partly meritorious.
I
The respondents contend that the appeal was prematurely filed because of the pendency of their motion for reconsideration in the CA. For this reason, the petitioner further issued a false certification of non-forum shopping.
The contention of the respondents is unfounded.
The petitioner could not be taken to task for immediately appealing the judgment of the CA despite the pendency of the respondents' motion for reconsideration. It is well to point out that the prior filing of a motion for reconsideration is not required in order that a petition for review on certiorari may be filed under Rule 45 of the Rules of Court. 24 As such, the petitioner need not await the resolution by the CA of the respondents' motion for reconsideration.
Anent the certification of non-forum shopping, the petitioner did not commit any falsehood. The relevant rule is Section 5, Rule 7 of the Rules of Court, which states:
Sec. 5. Certification against forum shopping. — The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed. (Bold scoring supplied for emphasis)
xxx xxx xxx
As the rule indicates, the requirement for the certification of non-forum shopping is imposed on the plaintiff or other principal party, like a petitioner, who files a complaint or other initiatory pleading. It is intended to prevent or deter forum shopping, which is the act of a litigant who repetitively avails himself of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues, either pending in or already resolved adversely by some other court, to increase his chances of obtaining a favorable decision if not in one court, then in another. 25 The petitioner complied with the requirement despite the pendency of the motion for reconsideration in the CA because it was not the party that had filed the motion for reconsideration but the respondents.
II
The respondents argue that the petition for review on certiorari raises factual matters that the Court could not take cognizance of under Section 1, Rule 45 of the Rules of Court, which only allows questions of law to be raised and dealt with.
The respondents may be correct in their argument, but there are recognized exceptions to the rule, one of which is when the findings of fact are premised on the absence of evidence and the same is contradicted by the evidence on record. 26 We find this exception applicable herein in relation to the award of compensatory damages in favor of the respondents.
The CA correctly concluded that the petitioner had not observed reasonable diligence in conducting constant repairs of its facilities and equipment, contrary to its undertaking under the contract. It is also notable that the CA affirmed the findings of the RTC which appeared to be sound and supported by the evidence on record, thus:
Briefly, the phrase "reasonable diligence" is defined as "a fair, proper and due degree of care and activity, measured with reference to the particular circumstances; such diligence, care, or attention as might be expected from a man of ordinary prudence and expectancy;" while the phrase "extraordinary diligence" is defined as "that extreme measure of care and caution which persons of unusual prudence and circumspection use for securing and preserving their own property and rights[.]"
With the foregoing as parameters, the Court finds and so rules that PECO merely used the required "reasonable diligence" in the mentioned repairs and overhaul of its equipment during the reckoned period. Stated differently and as correctly found by the trial court, due to the frequent repairs and overhaul of PECO's generators and equipment during the reckoned period, it can not be considered "extraordinary." Thus, PECO's conclusion — that it undertook said repairs and overhaul under an extreme situation such as the perceived 1980's power crisis eventually categorizing it as "extraordinary repairs" well within the ambit of the above-cited exception — does not persuade. PECO has not shown (and there exists no evidence on record) that there was indeed a power crisis pervading the country at the period spoke of, that is, from 1983 to 1984.
Parenthetically, there was a power crisis going about the country in the early 1990's and the courts have taken judicial notice of it. x x x
xxx xxx xxx
[T]here was no nation-wide power crisis (officially or otherwise) that pervaded the country in the early 1980's. There was merely an anticipated increase in power demand that PECO could not cope with when it agreed to supply defendants-appellants the uninterrupted supply of power during the reckoned period.
Evidently, PECO, with eyes wide open, entered into the subject service contract with defendants-appellants for the supply of uninterrupted power fully aware that it had to, sooner or later, tap other sources of power in order to address and meet the increasing demand of its consumers in the franchise area. Again, as correctly found by the trial court in its questioned decision, PECO had a misplaced footing about an envisaged power crisis occurring in the early 1980's, when it (PECO) argued:
"(x x x) that the usual causes of the said brown-outs are the maintenance of units of the National Power Corporation (NPC) which is necessary to prevent worst disasters, accidents or accidental breakdowns. The plaintiff claims that NPC had become the sole generator of electricity since 1972 and it had failed to catch up with the ever-increasing demand. The [power] situation worsened in 1983 and continued sporadically in 1984."
As discussed, PECO can not deny liability and raise the excuse of a power crisis — a cause beyond its control — in order to escape its obligation under the subject contract.
xxx xxx xxx
PECO would want to impress upon Us that the "1980's power crisis" was the main reason why it failed to furnish defendants-appellees the required uninterrupted power for the period February 7, 1983, to September 25, 1984. Again, for reasons stated by Us elsewhere, PECO's "1980's power crises" argument must necessarily fail. To repeat, there was no power crisis in the early 1980's. PECO's failure to provide defendants-appellees the regular and uninterrupted supply of power pursuant to their mentioned agreement was due to its own fault and it occurred during normal situations. Correspondingly, the Court finds and so rules that PECO failed to use that degree of reasonable diligence to maintain and upkeep its equipment and generators in order to keep up with its obligations under the subject service contract. As correctly pointed out by the court a quo, the frequency of said repairs and overhaul negates PECO's perceived position of extreme urgency. It may be argued that the frequency of repairs and over-haul of PECO's equipment was caused by the existence of a prolonged extreme measure, like the imagined power crisis, that would require the use of frequent extraordinary diligence for the needed extraordinary repairs and overhaul; therefore, frequency does not necessarily connote regularity. The argument begs the question. Precisely, as discussed above, there was no existing extreme urgency like a power crisis in the early 1980's. 27
We have no reason to disturb the well-founded conclusions of the RTC and the CA. Indeed, the findings of fact of the RTC, when affirmed by the CA, are binding and conclusive upon this Court. 28
However, the CA also awarded the petitioner consequential damages, explaining itself thusly:
Considering that PECO breached the subject service contract; and considering, further, that defendants-appellees presented preponderant evidence that it suffered an increase in electric bills at P1,000.00 per outage; and considering, finally, that there were 425 outages within the reckoned period, (over and above the fact that PECO had, in turn, delivered power to defendants-appellees, albeit intermittently, during said period equivalent to the total amount of P415,851.55) and using simple arithmetical computations, the award of consequential damages should be pegged at P425,000.00 as the amount suffered as a result of PECO's breach of contract computed at the rate of 425 power outages, multiplied by P1,000.00 per power outage. 29
The award is overturned because it is bereft of factual and legal bases. To recover actual damages, the loss must not only be capable of proof but its amount must actually be proved with a reasonable degree of certainty, premised upon competent proof or the best evidence obtainable. 30 Yet, the records contained no support for the award. Iloilo Seal attempted to establish its having suffered actual damages during the period from 1983 to 1984 due to incessant power failures, but did not submit any competent evidence to prove that its electric bills had incurred a substantial increase at each occurrence of a power failure. In our view, therefore, the award of compensatory damages was erroneously made, and should be deleted.
The lack of sufficient proof to establish actual damages notwithstanding, the respondents could still be entitled to temperate damages. Under the law, temperate or moderate damages, which are more than nominal but less than compensatory damages, could be recovered when some pecuniary loss was suffered but its amount could not, from the nature of the case, be proved with certainty. 31 The amount of temperate damages, although usually left to the discretion of the courts, should be reasonable, bearing in mind that temperate damages should be more than nominal but less than compensatory. 32
The Court recognizes the hard situation that the business of the respondents suffered from the petitioner's inability to ensure the regular and continued supply of electricity. As such, an award of P150,000.00 as temperate damages would be reasonable and justified under the circumstances.
It is relevant to point out in this connection that the interest imposed on the amounts respectively imposed on the parties shall conform to prevailing Jurisprudence. 33 The interest on the amount of P349,851.00 due and owing to the petitioner for services rendered is 12% per annum from the time of demand on December 14, 1984 to June 30, 2013, and 6% per annum from July 1, 2013 until its full satisfaction. The differentiation derives from the fact that 12% per annum was the rate of legal interest until June 30, 2013, and became 6% per annum only thereafter. On the other hand, the interest due on the P150,000.00 granted as temperate damages to the respondents is 6% per annum to be reckoned from the finality of this decision until full satisfaction, considering that such award became determinate only through this decision.
WHEREFORE, the Court PARTLY GRANTS the petition for review on certiorari; AFFIRMS the decision promulgated on June 14, 2007 by the Court of Appeals subject to the MODIFICATION that: (1) the award of compensatory damages of P425,000.00 is DELETED; (2) the petitioner is ORDERED to pay the respondents temperate damages of P150,000.00 plus interest of 6% per annum from finality of this decision until full satisfaction; and (3) the respondents are DIRECTED to pay to the petitioner the amount of P349,851.00 for services rendered plus interest of 12% per annum from the time of demand on December 14, 1984 until June 30, 2013, and 6% per annum from July 1, 2013 until its full satisfaction.
No pronouncement on costs of suit.
SO ORDERED."
Very truly yours,
(SGD.) WILFREDO V. LAPITAN
Division Clerk of Court
Footnotes
1.Rollo, pp. 39-64; penned by Associate Justice Stephen C. Cruz, with Associate Justice Isaias P. Dicdican and Associate Justice Antonio L. Villamor concurring.
2.Id. at 63-64.
3. Entitled An Act Granting a Franchise for an Electric Light, Heat and Power System to Panay Electric Company, Inc. in the City of Iloilo, and the Municipalities of Santa Barbara and Pavia, Both in the Province of Iloilo.
4.Rollo, p. 12.
5.Id. at 76.
6.Id. at 88-89.
7.Id. at 66-68.
8.Id. at 10-12.
9.Id. at 69-75.
10.Id. at 71-72.
11.Id. at 76-83; penned by Judge Julio L. Villanueva.
12.Id. at 83.
13.Id. at 81-82.
14.Id. at 39-64.
15.Id. at 17.
16. Entitled Establishing Basic Policies for the Electric Power Industry. The law took effect on November 7, 1972. Its Paragraph 2 reads: "2. The setting up of transmission line grids and the construction of associated generation facilities in Luzon, Mindanao and major islands of the country, including the Visayas, shall be the responsibility of the National Power Corporation (NPC) as the authorized implementing agency of the State.
a) Plant additions necessary to meet the increase in power demand of the area embraced by any grid set up by the NPC shall be constructed and owned by the NPC.
b) In areas not embraced by the NPC grid, the State shall permit cooperatives, private utilities and local government to own and operate isolated grids and generation facilities, subject to State regulation."
17. Rollo, p. 23.
18. Id. at 25-26. The petitioner claims that the Court and other administrative agencies had recognized the existence of a power crisis, such as: (1) in Durabuilt Recapping Plant v. NLRC (G.R. No. 76746, July 27, 1987, 152 SCRA 328), the Court took notice of the "frequent brownouts" occurring in 1983 that had reduced the number of working days; (2) the Department of Labor and Employment had issued Policy Instruction No. 36-78 entitled Effects of Power Interruptions or Brownouts on Productive Man-Hours; (3) the issuance of Policy Instruction No. 1009 that expressly recognized that "the worsening energy crisis necessitates that the government intensifies its energy conservation drive;" and (4) the issuance of Presidential Proclamation No. 2038 to declare Energy Week stating that "the success of the various plans, measures and actions of the government in light of the present energy crisis lies in the cooperation and national awareness of the people."
19. Id. at 28-29.
20. Id. at 29-30.
21. Id. at 30-31.
22. Id. at 31-32.
23. Id. at 137-144.
24. Tuna Processing, Inc. v. Philippine Kingford, Inc., G.R. No. 185582, February 29, 2012, 667 SCRA 287, 307; San Miguel Corporation v. Layoc, Jr., G.R. No. 149640, October 19, 2007, 537 SCRA 77, 91.
25. Ignacio v. The Office of the City Treasurer of Quezon City, G.R. No. 221620, September 11, 2017; Lanao Del Norte Electric Cooperative, Inc. v. Provincial Government of Lanao Del Norte, G.R. No. 185420, August 29, 2017.
26. The Heirs of Peter Donton v. Stier, G.R. No. 216491, August 23, 2017; The recognized exceptions include: (1) when the factual conclusion is a finding grounded entirely on speculations, surmises and conjectures; (2) when the inference is manifestly mistaken, absurd or impossible; (3) when there is a grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the CA went beyond the issues of the case in making its findings, which are further contrary to the admissions of both the appellant and the appellee; (7) when the CA's findings are contrary to those of the trial court; (8) when the conclusions do not cite the specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondents; and (10) when the CA's findings of fact, supposedly premised on the absence of evidence, are contradicted by the evidence on record. (Republic v. Heirs of Santiago, G.R. No. 193828, March 27, 2017; Miano, Jr. v. Manila Electric Company (MERALCO), G.R. No. 205035, November 16, 2016, 809 SCRA 193, 199).
27. Rollo, pp. 51-56.
28. Gatan v. Vinarao, G.R. No. 205912, October 18, 2017.
29. Rollo, pp. 62-63.
30. Kabisig Real Wealth Dev., Inc. v. Young Builders Corp., G.R. No. 212375, January 25, 2017.
31. Kabisig Real Wealth Dev., Inc. v. Young Builders Corp., supra; Geromo v. La Paz Housing and Development Corporation, G.R. No. 211175, January 18, 2017.
32. Geromo v. La Paz Housing and Development Corporation, supra.
33. Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013, 703 SCRA 439, 457-458; also, Bangko Sentral ng Pilipinas Circular No. 799, Series of 2013.