Facts:

The case involves ATP Technologies International, Inc. (petitioner) and Micron Precision Philippines, Inc. (respondent). The events leading to the dispute began when ATP Technologies, as the lessee of a factory/office building owned by Ecozone Properties in Cabuyao, Laguna, sublet a portion of the premises to Micron Precision on January 14, 1999, for a one-year term. This sublease was renewed twice in 2000 and 2001, with a provision for a security deposit to be returned to Micron upon expiration of the sublease, provided that the premises were vacated satisfactorily and all dues were settled.

In June 2000, Ecozone Properties pre-terminated its lease with ATP due to non-payment of rent, leading to the attachment of ATP's properties. Consequently, Micron's sublease was also pre-terminated on June 1, 2001. After vacating the premises in August 2001, Micron demanded the return of its security deposit of P642,006.00, but ATP failed to comply despite repeated requests. O...

Facts:

Background and Contractual Arrangement

• ATP Technologies International, Inc. (petitioner) was the lessee of a factory/office building owned by Ecozone Properties located at the Light Industry and Science Park in Cabuyao, Laguna.
• On January 14, 1999, petitioner sublet a portion of the premises to Micron Precision Philippines, Inc. (respondent) for one year, with the sublease subsequently renewed twice in 2000 and 2001.
• The sublease contract provided for a security deposit, which was to be returned to the respondent, without interest, within 30 days after the expiration of the contract upon satisfactory vacation and delivery of the premises; however, deductions could be made for any outstanding obligations including repairs and damages.

Pre-Termination and Subsequent Events

• In June 2000, Ecozone Properties pre-terminated its lease with petitioner for failure to pay rent, leading to the attachment of petitioner’s properties and directing respondent to pay rentals directly to Ecozone Properties.
• The respondent’s sublease contract was pre-terminated on June 1, 2001, and in August 2001, respondent vacated the premises and demanded a refund of its security deposit, which petitioner failed to return despite repeated demands.
• Consequently, respondent filed a complaint on October 24, 2001, seeking recovery of its deposit along with damages.

Allegations Regarding Electrical Consumption and Sub-Meter Tampering

• Petitioner alleged that respondent tampered with its electric sub-meter, resulting in a billing deficiency of P102,827.85 identified in 1999.
• Petitioner initiated an investigation by engaging the San Fernando Electric Light and Power Company, Inc. (SFELPCO), which produced an inspection report stating:
• The installed sub-meter was not fitted for the type of transformer connection (wye) and was improperly secured.
• There was only a possibility of electric pilferage; the report did not definitively conclude that tampering occurred.
• Based on the report and other evidence, petitioner claimed that respondent was liable for an underpayment totaling P911,250.00 (covering two and a half years of alleged electricity under-billings), and additionally for P236,250.00 for alleged consumption during June, July, and August 2001.
• Petitioner computed that even after deducting the security deposit, respondent owed it P505,494.00.

Litigation History and Decisions

• The trial court ruled in favor of petitioner on June 29, 2004, finding that respondent had tampered with the sub-meter and was liable for unpaid electric bills, awarding petitioner damages, exemplary damages, and attorney’s fees.
• Respondent appealed, and on October 24, 2005, the Court of Appeals reversed the trial court’s decision, ordering petitioner to refund respondent’s security deposit of P642,006.00 (with interest), along with attorney’s fees and costs of suit.
• Petitioner’s subsequent motion for reconsideration was denied, prompting the present petition raising questions of error in law.

Issues of Evidence and Chronology

• Petitioner’s initiation of the investigation regarding the alleged second tampering only occurred after respondent demanded the refund of its security deposit.
• There were discrepancies in petitioner’s computation of the electrical bill deficiency, including the inclusion of periods already paid for by respondent and a failure to properly establish consumption usage details from the machinery and equipment purportedly used.
• The record does not conclusively establish that any tampering occurred, as the investigation report and petitioner’s witnesses did not provide clear, substantiated evidence of such misconduct.

Issue:

• Whether the Court of Appeals erred in reversing the Regional Trial Court’s decision by directing petitioner to refund respondent’s security deposit of P642,006.00 despite petitioner’s claims and evidence on the alleged tampering of its sub-meter and ensuing electrical bill underpayments.

• Whether the Court of Appeals committed reversible error in granting respondent’s claim for damages and attorney’s fees, given that the circumstances that might justify such awards were not sufficiently established by petitioner’s evidence.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)