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Torts and Damages Case Digest: National Power v. Philipp Brothers (2001)

G.R. No. 126204            November 20, 2001

Lessons Applicable: Who may recover (Torts and Damages)
Laws Applicable: 


  • May 14, 1987: National Power Corporation (NAPOCOR) issued invitations to bid for the supply and delivery of 120,000 metric tons of imported coal for its Batangas Coal-Fired Thermal Power Plant of which Philipp Brothers Oceanic, Inc. (PHIBRO) bidded and was accepted.
  • July 10, 1987: PHIBRO told NAPOCOR that disputes might soon plague Australia that will seriously hamper its ability to supply coal 
  • July 23 to July 31, 1987: PHIBRO informed NAPOCOR that unless a "strike-free" clause is incorporated in the charter party or the contract of carriage shipowners are unwilling to load their cargo.  In order to hasten the transfer of coal, they should share the burden of the "strike-free" clause but NAPOCOR refused.
  • November 17, 1987: PHIBRO effected its first shipment which was suppose to be on the 30th dat after receipt of the letter of credit of which it received on August 6, 1987 
  • October 1987: NAPOCOR once more advertised for the delivery of coal to its Calaca thermal plant of which PHIBRO applied but was rejected since it was not able to satisfy the demand for damages on its delay.
  • PHIBRO filed for damages in the RTC alleging that the rejection was tainted with malice and bad faith
  • RTC: favored PHIBRO. Ordering NAPCOR to reinstate PHIBRO as accredited bidder, to pay $864,000 actual damages, $100,000 moral damages, $50,000 exemplary damages, $73,231.91 reimbursement for expenses, cost of litigation and attorney's fees, cost of suit and dismissed counterclaim of NAPOCOR.
  • CA: affirmed in toto. "Strikes" are undoubtedly included in the force majeure clause of the Bidding Terms and Specifications
ISSUE: W/N PHIBRO is entitled to damages.

HELD: NO. Modified actual, moral and exemplary damages, reimbursement for expenses, cost of litigation and attorney's fees, and costs of suit, is DELETED

  • Since there is no evidence to prove bad faith and arbitrariness on the part of the petitioners in evaluating the bids, we rule that the private respondents are not entitled to damages representing lost profits
  • NAPOCOR's act of disapproving PHIBRO's application for pre-qualification to bid was without any intent to injure or a purposive motive to perpetrate damage. Apparently, NAPOCOR acted on the strong conviction that PHIBRO had a "seriously-impaired" track record
  • The circumstances under which NAPOCOR disapproved PHIBRO's pre-qualification to bid do not show an intention to cause damage to the latter. The measure it adopted was one of self-protection. Consequently, we cannot penalize NAPOCOR for the course of action it took. NAPOCOR cannot be made liable for actual, moral and exemplary damages.
  • Corollarily, in awarding to PHIBRO actual damages in the amount of $864,000, the Regional Trial Court computed what could have been the profits of PHIBRO had NAPOCOR allowed it to participate in the subsequent public bidding.  - Erroneous
    • Basic is the rule that to recover actual damages, the amount of loss must not only be capable of proof but must actually be proven with reasonable degree of certainty, premised upon competent proof or best evidence obtainable of the actual amount thereof.
  • Moral damages are granted in recompense for physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. A corporation, being an artificial person and having existence only in legal contemplation, has no feelings, no emotions, no senses; therefore, it cannot experience physical suffering and mental anguish. Mental suffering can be experienced only by one having a nervous system and it flows from real ills, sorrows, and griefs of life
  • a winning party may be awarded attorney's fees only in case plaintiff's action or defendant's stand is so untenable as to amount to gross and evident bad faith - none here