Title
Manila Electric Co. vs. Jose
Case
G.R. No. 152769
Decision Date
Feb 14, 2007
MERALCO failed to prove basis for differential billing due to defective meter; gross negligence in maintenance absolved customer of liability. Damages reduced.
differential billing
damages
negligence

Case Summary (G.R. No. 152769)

Factual Background

On July 14, 1995, MERALCO Polyphase Inspector Santiago Inoferio (Inoferio) visited Victoria’s residence to inspect Meter No. 31D551-57. After inspection, Inoferio issued a Service Inspection Report stating that “burned out insulation of BCT” and its non-polarity terminal were found, and he recommended that Victoria’s billing be adjusted and her record updated. On October 3, 1995, MERALCO issued to Victoria a differential adjustment billing for P232,385.20, explaining that billing rendered from January 29, 1993 to July 4, 1995 was affected by metering defects found and corrected on July 14, 1995, and that the defect caused the meter to register only 50% of actual consumption; MERALCO therefore corrected the registration from 50% to 100% and computed the difference collectible from Victoria.

Victoria, through a letter dated October 27, 1995, requested reconsideration, asserting that the defect was a fortuitous event and was due to MERALCO’s negligence in failing to detect and repair it earlier. MERALCO did not accede. It clarified that the differential billing was validly issued because the Polyphase Meter Test Report and Power Metering Field Order furnished on October 18, 1995 showed that the KWH meter registered only 50% of Victoria’s consumption. Victoria refused to pay the differential billing.

On November 21, 1995, Victoria received an Overdue Account Notice reminding her to pay on or before November 24, 1995 to avoid disconnection. Victoria treated MERALCO’s impending collection measures as an invasion of her right to continued electrical service and sought judicial relief.

Trial Court Proceedings

Victoria filed with the RTC, Branch 223, Quezon City, a Complaint for Injunction with Damages and a request for Writ of Preliminary Injunction and/or Temporary Restraining Order. After due hearing, the RTC issued a Temporary Restraining Order and a Writ of Preliminary Injunction on January 22, 1996.

After trial on the merits, the RTC rendered its June 1, 1999 Decision. It ruled in favor of Victoria and ordered MERALCO to permanently desist from collecting P232,385.20 for alleged unbilled consumption and permanently desist from cutting off electricity at Victoria’s residence. The RTC also awarded damages in favor of Victoria: P500,000.00 as moral damages, P500,000.00 as exemplary damages, P100,000.00 as attorneys’ fees, and payment of costs of the suit.

Appeal and the Issues Raised

MERALCO appealed to the CA. The CA, on March 26, 2002, affirmed the RTC Decision. MERALCO then filed the present Petition for Review on Certiorari under Rule 45 without first filing a motion for reconsideration with the CA.

MERALCO raised two principal grounds: first, that the CA committed grave abuse of discretion in holding MERALCO liable for moral damages, exemplary damages, and attorneys’ fees; and second, that the CA committed grave abuse of discretion in ruling that MERALCO was not entitled to recover the unregistered consumption arising from the defect in Victoria’s meter.

The Supreme Court resolved the second issue ahead of the first, because injunctive relief and the right to collect on a differential billing turned on whether MERALCO had established the factual basis for charging the customer.

Parties’ Contentions on Differential Billing and Injunction

MERALCO argued that the first requirement for injunctive relief—Victoria’s clear and unmistakable right—was not satisfied because Victoria lost her right to continued electric service when she refused to pay the differential billing of P232,385.20. MERALCO maintained that under the service contract, Victoria was liable for unregistered or unbilled consumption. It contended that such unbilled consumption amounted to P232,385.20 because defects in Meter No. 31D551-57 caused the meter to register only 50% of the actual consumption.

Victoria countered that she was entitled to uninterrupted electric service because she had been paying her monthly bills on time. She disputed liability for differential billing, arguing that MERALCO had not established that the electric meter was defective or that it had failed to register actual consumption.

Supreme Court Reasoning on MERALCO’s Burden of Proof

The Court emphasized that an injunctive writ issues only upon showing: (a) the applicant possesses a clear and unmistakable right; (b) there is a material and substantial invasion of such right; and (c) there is urgent and permanent necessity for the writ to prevent serious damage. The Court then examined whether MERALCO had a factual basis for collecting on the differential billing.

The Court acknowledged the contractual provision invoked by MERALCO, which stated that in the event of stoppage or failure of any meter to register the full amount of energy consumed, the customer shall be billed for that period on estimated consumption based on similar periods or registration of a check meter. Citing prior rulings, the Court held that the provision is valid and binding, and that its rationale is to allow the electric company a measure of self-preservation when technical machinery fails to register correct consumption and prevent proper billing. Still, the Court held that the company’s right to collect on differential billings is not unqualified. Before it may exercise such right, MERALCO must establish the factual basis for differential billing. Specifically, it must prove: (a) that the meter was defective; (b) that the defective meter failed to register the customer’s actual consumption; and (c) that MERALCO was not negligent in the inspection and repair of the meter.

As to the defectiveness of the meter, the Court agreed with the RTC and CA that MERALCO failed to meet the required burden. The Service Inspection Report issued by Inoferio, who inspected the meter and found the defects described in the report, constituted substantial evidence of the meter’s defective condition. The Court noted that Victoria did not impeach Inoferio’s expertise or controvert his technical findings as to the defects.

However, the Court distinguished between evidence proving that the meter was defective and evidence proving that the meter’s defect produced the specific magnitude of under-registration claimed—here, the assertion that the meter registered only 50% of actual consumption. The Court held that the Service Inspection Report was not evidence of the duration of the defect or the extent of its incapacity to record full consumption, because the report did not mention any 50% reduction in the meter’s capacity.

The Court then examined MERALCO’s asserted basis for the 50% computation. It found that MERALCO relied on a claimed company practice, testified to by MERALCO Billing Clerk Roberto M. Salas, stating that MERALCO’s computation of Victoria’s differential billing was based not on any variable but on a policy that the maximum duration of meter defects is two years. The Court declared that policy “highly questionable,” particularly because MERALCO’s own billing records did not reflect the claimed pattern of under-registration that would naturally appear if the meter actually registered only half of actual consumption for the alleged period. The Court reasoned that Victoria’s billing history was relevant evidence and should reflect any marked disparity, fluctuation, or inordinate reduction or increase in consumption due to the alleged defective registration capacity.

Evaluation of the Billing History and Negligence

The Court observed that Victoria’s billing history showed constancy in KWH consumption, with no marked disparity or fluctuations during the period January 29, 1993 to July 4, 1995, and during the periods immediately preceding and succeeding it. The Court held that this constancy ruled out even the slightest possibility that the meter registered only 50% of actual consumption during the alleged defective period. The Court further held that the documented pattern prevailed over MERALCO’s company policy on defect duration and effect.

More importantly, the Court emphasized MERALCO’s acknowledged maintenance precaution: polyphase meter tests twice every year. With respect to Meter No. 31D551-57, MERALCO subjected it to a polyphase meter test for the first time in 1995, seven years after installation in 1987. The Court characterized that delay as gross negligence in maintaining the meter. As a result, MERALCO bore sole liability for losses arising from the defects in the meter, including any unregistered and unbilled consumption attributable to those defects. The Court held that MERALCO could not shift that responsibility to Victoria by issuing a differential billing and, especially, could not threaten disconnection for non-payment.

Consistent with these findings, the Court held that the RTC and CA correctly enjoined MERALCO from collecting on the differential billing against Victoria.

Supreme Court Treatment of Damages

The Court then addressed MERALCO’s liability for damages. The Court found that MERALCO’s gross negligence in maintaining its facilities and its arbitrary issuance of a differential billing brought anxiety and aggravation to Victoria. Accordingly, MERALCO was liable for moral damages. The

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