Vibram Manufacturing Corp. v. Manila Electric Co.
REITERATIONFacts
The Antecedents: Vibram Manufacturing Corporation (petitioner), engaged in manufacturing shoe parts, uses electricity supplied by Manila Electric Company (respondent). Respondent demanded payment of ₱1,408,268.58 for unregistered electrical consumption from September 18, 1990, to September 17, 1991. Petitioner refused, alleging a defective electric meter and its installation. Respondent threatened to discontinue electric supply. Procedural History: Petitioner filed a complaint for damages with injunction against respondent. The Regional Trial Court (RTC) issued a preliminary prohibitory injunction and later rendered a decision in favor of petitioner, making the injunction permanent and ordering respondent to pay exemplary damages and attorney's fees. The Court of Appeals (CA) affirmed with modification, ordering petitioner to pay respondent ₱352,067.15 (average consumption for three months prior) and deleting the awards for exemplary damages and attorney's fees. The Petition: Petitioner seeks review, contending the CA erred in ordering payment of ₱352,067.15 without factual finding on consumption and in deleting the damages awarded by the RTC. Respondent maintains the CA correctly found petitioner liable for unregistered consumption due to a defective meter.
Issue(s)
Whether the Court of Appeals erred in ordering petitioner to pay ₱352,067.15 for unregistered electrical consumption. Whether the Court of Appeals erred in deleting the awards for exemplary damages and attorney's fees granted by the trial court.
Ruling
The petition is denied. The Decision of the Court of Appeals dated July 6, 2001, is affirmed. Petitioner is ordered to pay respondent ₱352,067.15, representing its average electric consumption three (3) months prior to the period in controversy. The awards for exemplary damages, attorney's fees, and litigation expenses are deleted.
Ratio Decidendi
On the issue of payment for unregistered electrical consumption: The Court affirmed the Court of Appeals' ruling that petitioner should pay for the unrecorded electricity consumed due to a defective meter. The Court reiterated the principle that a public utility like MERALCO has the imperative duty to conduct reasonable and proper inspections of its apparatus and equipment to ensure they do not malfunction and to exercise due diligence in discovering and repairing defects. Failure to perform these duties constitutes negligence. In this case, the undisputed fact was that the unregistered consumption was mainly caused by mechanical failure or defects in the meter. Applying the ruling in Ridjo Tape & Chemical Corp. vs. Court of Appeals, which involved similar facts, the Court found MERALCO negligent for failing to make necessary repairs and replacements of the defective electric meter. To obviate unjust enrichment, the Court applied the equitable solution prescribed in Ridjo, ordering the consumer to pay for the average consumption equivalent to three (3) months prior to the period of the controversy, which amounted to ₱352,067.15. The Court emphasized that factual findings of the Court of Appeals are binding and conclusive upon the Supreme Court, and petitioner failed to show any exception warranting a review of these findings. On the issue of exemplary damages and attorney's fees: The Court affirmed the Court of Appeals' deletion of the awards for exemplary damages, attorney's fees, and litigation expenses. The Court reiterated the established doctrine that an award of exemplary damages is not warranted without a showing that the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. In this case, the Court found no such actuations on the part of MERALCO; the issue stemmed from a defective meter and negligence in its maintenance, not from malicious intent. Similarly, the award for attorney's fees and litigation expenses was deleted because the body of the decision discussed nothing for its basis, and it is well-enshrined that such awards must be stated in the text of the court's decision, not solely in the dispositive portion. The Court of Appeals correctly applied these principles in modifying the trial court's decision.
Main Doctrine
A public utility's negligence in failing to inspect and repair defective electric meters renders it liable for damages, and the consumer may be ordered to pay for average consumption prior to the controversy, not the full assessed unregistered amount. Awards for exemplary damages and attorney's fees require specific factual basis not present in cases of simple negligence.