G.R. No. L-72182 November 25, 1986
DEE HUA LIONG ELECTRICAL EQUIPMENT CORPORATION, petitioner, vs. ROMEO REYES, ET AL., respondents.

FACTS

Private respondent Romeo Reyes operated the Excelite Electronic Center. He began receiving numerous customer complaints about defective repairs on television and stereo units, causing significant business losses. Upon investigation, he discovered that electronic filter capacitors purchased from petitioner Dee Hua Liong Electrical Equipment Corporation were mislabeled; a capacitor with an actual capacity of 22 micro farad had a fake label superimposed to indicate 2200 micro farad. He had been paying a higher price for the purported higher-capacity item. Reyes subsequently purchased three more capacitors on September 14, 1981, which were similarly mislabeled according to the invoice.
The Trial Court declared petitioner in default for failure of its counsel to appear at the pre-trial despite notice. Judgment by default was rendered, ordering petitioner to pay substantial damages. Petitioner moved for a new trial, alleging a meritorious defense including a “Component Test Report” and a certification from the Japanese manufacturer suggesting a mere “misprint.” The motion was denied. The Intermediate Appellate Court affirmed liability but reduced the moral and exemplary damages, sustaining the denial of the new trial due to a false reason given for the pre-trial postponement.

ISSUE

Whether the awards for actual, moral, and exemplary damages, as well as attorney’s fees, are supported by sufficient evidence.

RULING

The Supreme Court modified the decision, limiting petitioner’s liability to the payment of nominal damages only. The factual findings of the Intermediate Appellate Court, including the default declaration, are conclusive. However, the adjudged damages were excessive and lacked adequate evidentiary foundation.
Actual damages must be proved with reasonable certainty and cannot be presumed. The award of P50,000 as actual damages rested solely on the declarations of Reyes and his wife regarding one capacitor used in a repair and three subsequently purchased capacitors. There was no proof that defective capacitors were used in other repair jobs, that those repairs required capacitors, or of the precise financial loss incurred. Moral damages require proof of suffering, such as wounded feelings or anxiety, which was not substantiated in the testimony. Furthermore, there was no evidence of deliberate fraudulent intent on petitioner’s part to justify exemplary damages; indications pointed only to a possible “misprint.” Absent proof of gross and evident bad faith in refusing the claim, attorney’s fees were also unwarranted.
Consequently, the awards for actual, moral, exemplary damages, and attorney’s fees were struck down. The Court deemed an award of P5,000 as nominal damages sufficient to recognize a violation of respondent’s rights without the requisite proof of actual loss.