Equitable negligence

Can electrical connections of erring consumers be immediately disconnected for non-payment of differential billings for allegedly tampered meters? This is one of the issues raised in this case of an electronics company (TEC).

TEC owns two buildings in the Food Terminal Complex, Taguig City, the DCIM Bldg. and the NS Bldg. For the supply of electricity in its buildings TEC entered into three separate contracts with Meralco denominated as Agreement for the Sale of Electric Energy; two for DCIM and one for NS.

On September 28, 1987, a team of Meralco inspectors conducted a surprise inspection of the two electric meters installed at DCIM building which was then being leased by an electronics company (Ultra) and found them to be allegedly tampered and did not register the actual power consumption in the building. The inspection was witnessed by an Ultra representative and the results were reflected in the Service Inspection Report prepared by the team.

Thus on November 25, 1987 Meralco informed TEC of the results of said inspection and demanded the payment of P7,040,401.01 representing its unregistered consumption from February 10, 1986 until September 28, 1987 as a result of the alleged tampering of the meters. TEC referred the letter to Ultra which intimated that even if there was tampering of the meters, Meralco’s assessment was excessive. For TEC’s failure to pay the differential billing, Meralco disconnected the electricity supply to the DCIM Bldg on April 29, 1988.

When Meralco refused to reconnect upon demand by TEC, the latter filed a complaint with the Energy Regulatory Board (ERB). While ERB ordered the immediate reconnection, Meralco complied with it only on October 12, 1988 after conducting another inspection and finding that the meters have been tampered anew and after TEC paid P1,000,000 under protest. The ERB case was later withdrawn after the parties deemed it best to have the issues threshed out by the regular courts.

The NS Bldg. of TEC was likewise subjected to inspection which also revealed that the electric meters were not registering the correct power consumption. Thus Meralco also sent a letter demanding payment of P280,813.72 representing differential billing. When TEC denied said tampering, Meralco sent another letter demanding payment of said amount with a warning of disconnection. To avert disconnection, TEC was again forced to pay the amount under protest.

Then TEC sued Meralco for damages. After trial, the Regional Trial Court (RTC) ruled in favor of TEC and ordered Meralco to reimburse the amount it has paid under protest, actual damages of P150,000 representing the rental payment of the power generator it rented, P500,000 moral damages, P200,000 exemplary damages and P200,000 attorney’s fees. The RTC found that the sudden and unexplainable drop in electrical consumption, the deformed condition of the meter seal and the existence of an opening in the wire duct leading to the transformer vault do not in themselves prove the alleged tampering especially since access to the transformer was given only to Meralco employees. The RTC also said that Meralco’s act of disconnecting the DCIM building’s electric supply constituted bad faith that makes it liable for damages. It further denied Meralco’s claim for differential billing on the ground of equitable negligence. Was the RTC correct?

Yes. If it is true that there was evidence of tampering found on September 28, 1987 inspection and again on June 7, 1988, then the defective meters were not actually corrected after the first inspection. A situation wherein the defects in the electric meter are allowed to continue indefinitely until suddenly, the public utilities company demand payment for the unrecorded electricity utilized when it could have remedied the situation immediately cannot be sanctioned. Meralco’s failure to do so may encourage neglect of public utilities to the detriment of the consuming public. Meralco has the imperative duty to make a reasonable and proper inspection of its apparatus and equipment to ensure that they do not malfunction, and the due diligence to discover and repair defects therein. Failure to perform such duties constitutes negligence. By reason of such negligence, public utilities run the risk of forfeiting amounts originally due from customers.

Hence Meralco’s claim for differential billing was correctly denied. And with greater reason, Meralco could not exercise the right of immediate disconnection. P.D. 401, the law in force at that time, granted electric companies the right to conduct inspections of electric meters and the criminal prosecution of erring consumers found tampering electric meters. It did not expressly provide for more expedient remedies such as charging of differential billing and immediate disconnection against erring consumers. Recourse to such remedies is subject to the prior requirement of a 48-hour written notice of disconnection. In this case Meralco resorted to the remedy of disconnection of TEC’s DCIM Building without prior notice. It abused the remedies granted to it by P.D. 401.

TEC however, being a corporation, is not entitled to moral damages because, not being a natural person, it cannot experience physical suffering or sentiments like wounded feelings, serious anxiety, mental anguish and moral shock. The only exception is when the corporation has a reputation that is debased resulting in its humiliation in the business realm. There is no such proof in this case that TEC’s reputation has been debased as a result of Meralco’ acts (Manila Electric Company vs. T.E.A.M Electronics Corp. et. al. G.R. 131723, December 13, 2007).

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