Manila Electric Company vs. T.E.A.M. Electronics

12/12/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 540
62 SUPREME COURT REPORTS ANNOTATED

Manila Electric Company vs. T.E.A.M. Electronics
Corporation
*
G.R. No. 131723. December 13, 2007.
MANILA ELECTRIC COMPANY, petitioners, vs. T.E.A.M.

ELECTRONICS CORPORATION, TECHNOLOGY
ELECTRONICS ASSEMBLY and MANAGEMENT
PACIFIC CORPORATION; and ULTRA ELECTRONICS
INSTRUMENTS, INC., respondents.
Appeals; Well-established is the doctrine that under Rule 45 of

the Rules of Court, only questions of law, not of fact, may be raised
before the Court; Factual findings of the trial court, especially
those affirmed by the Court of Appeals, are binding on the
Supreme Court.—It is obvious that petitioner wants this Court to
revisit the factual findings of the lower courts. Well-established is
the doctrine that under Rule 45 of the Rules of Court, only
questions of law, not of fact, may be raised before the Court. We
would like to stress that this Court is not a trier of facts and may
not re-examine and weigh anew the respective evidence of the
parties. Factual findings of the
_______________
* THIRD DIVISION.
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VOL. 540, DECEMBER 13, 2007 63
Manila Electric Company vs. T.E.A.M. Electronics Corporation
trial court, especially those affirmed by the Court of Appeals, are

binding on this Court.
http://www.central.com.ph/sfsreader/session/00000160486750cf0746f163003600fb002c009e/t/?o=False 1/22
Public Utilities; Electric Power Industry; Negligence; A public

utility 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.—Petitioner likewise claimed that when the subject
meters were again inspected on June 7, 1988, they were found to
have been tampered anew. The Court notes that prior to the
inspection, TEC was informed about it; and months before the
inspection, there was an unsettled controversy between TEC and
petitioner, brought about by the disconnection of electric power
and the non-payment of differential billing. We are more disposed
to accept the trial court’s conclusion that it is hard to believe that
a customer previously apprehended for tampered meters and
assessed P7 million would further jeopardize itself in the eyes of
petitioner. If it is true that there was evidence of tampering found
on September 28, 1987 and again on June 7, 1988, the better view
would be that the defective meters were not actually corrected
after the first inspection. If so, then Manila Electric Company v.
Macro Textile Mills Corporation, 374 SCRA 69 (2002),would
apply, where we said that we cannot sanction a situation wherein
the defects in the electric meter are allowed to continue
indefinitely until suddenly, the public utilities demand payment
for the unrecorded electricity utilized when they could have
remedied the situation immediately. Petitioner’s failure to do so
may encourage neglect of public utilities to the detriment of the
consuming public. Corollarily, it must be underscored that
petitioner 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 said negligence, public utilities run the
risk of forfeiting amounts originally due from their customers.
Same; Presidential Decree (P.D.) No. 401; Presidential Decree

No. 401 granted the electric companies the right to conduct
inspections of electric meters and the criminal prosecution of
erring consumers who were found to have tampered with their
electric meters but did not expressly provide for more expedient
remedies such as the charging of differential billing and
immediate disconnection against
64

erring consumers.—The law in force at the time material to this

controversy was Presidential Decree (P.D.) No. 401 issued on
March 1, 1974. The decree penalized unauthorized installation of
water, electrical or telephone connections and such acts as the use
of tampered electrical meters. It was issued in answer to the
urgent need to put an end to illegal activities that prejudice the
economic well-being of both the companies concerned and the
consuming public. P.D. 401 granted the electric companies the
right to conduct inspections of electric meters and the criminal
prosecution of erring consumers who were found to have
tampered with their electric meters. It did not expressly provide
for more expedient remedies such as the charging of differential
billing and immediate disconnection against erring consumers.
Thus, electric companies found a creative way of availing
themselves of such remedies by inserting into their service
contracts (or agreements for the sale of electric energy) a
provision for differential billing with the option of disconnection
upon non-payment by the erring consumer. The Court has
recognized the validity of such stipulations. However, recourse to
differential billing with disconnection was subject to the prior
requirement of a 48-hour written notice of disconnection.
Petitioner, in the instant case, resorted to the remedy of
disconnection without prior notice. While it is true that petitioner
sent a demand letter to TEC for the payment of differential
billing, it did not include any notice that the electric supply would
be disconnected. In fine, petitioner abused the remedies granted
to it under P.D. 401 and Revised General Order No. 1 by
outrightly depriving TEC of electrical services without first
notifying it of the impending disconnection. Accordingly, the CA
did not err in affirming the RTC decision.
Damages; Actual Damages; Actual damages are compensation

for an injury that will put the injured party in the position where
it was before the injury; Basic is the rule that to recover actual
damages, not only must the amount of loss be capable of proof; it
must also be actually proven with a reasonable degree of certainty,
premised upon competent proof or the best evidence obtainable.—
As to the damages awarded by the CA, we deem it proper to
modify the same. Actual damages are compensation for an injury
that will put the injured party in the position where it was before
the injury. They pertain to such injuries or losses that are
actually sustained and susceptible of measurement. Except as
provided by law or by stipulation, a party is entitled to adequate
compensation only for such
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VOL. 540, DECEMBER 13, 2007 65
pecuniary loss as is duly proven. Basic is the rule that to recover

actual damages, not only must the amount of loss be capable of
proof; it must also be actually proven with a reasonable degree of
certainty, premised upon competent proof or the best evidence
obtainable. Respondent TEC sufficiently established, and
petitioner in fact admitted, that the former paid P1,000,000.00
and P280,813.72 under protest, the amounts representing a
portion of the latter’s claim of differential billing. With the finding
that no tampering was committed and, thus, no differential billing
due, the aforesaid amounts should be returned by petitioner, with
interest, as ordered by the Court of Appeals and pursuant to the
guidelines set forth by the Court.
Same; Exemplary Damages; Exemplary damages are imposed

by way of example or correction for the public good in addition to
moral, temperate, liquidated, or compensatory damages; In this
case, to serve as an example—that before a disconnection of
electrical supply can be effected by a public utility, the requisites of
law must be complied with—the Court affirms the award of
P200,000.00 as exemplary damages.—As to the payment of
exemplary damages and attorney’s fees, we find no cogent reason
to disturb the same. Exemplary damages are imposed by way of
example or correction for the public good in addition to moral,
temperate, liquidated, or compensatory damages. In this case, to
serve as an example—that before a disconnection of electrical
supply can be effected by a public utility, the requisites of law
must be complied with—we affirm the award of P200,000.00 as
exemplary damages. With the award of exemplary damages, the
award of attorney’s fees is likewise proper, pursuant to Article
2208 of the Civil Code. It is obvious that TEC needed the services
of a lawyer to argue its cause through three levels of the judicial
hierarchy. Thus, the award of P200,000.00 is in order.
Same; Corporation Law; As a rule, 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 to this rule is when the corporation has a reputation
that is debased, resulting in its humiliation in the business realm.
—We, however, deem it proper to delete the award of moral
damages. TEC’s claim was premised allegedly on the damage to
its goodwill and reputation. As a rule, a corporation is not entitled
to moral damages because, not being a natural person, it cannot
experience physical
66
suffering or sentiments like wounded feelings, serious anxiety,

mental anguish and moral shock. The only exception to this rule
is when the corporation has a reputation that is debased,
resulting in its humiliation in the business realm. But in such a
case, it is imperative for the claimant to present proof to justify
the award. It is essential to prove the existence of the factual
basis of the damage and its causal relation to petitioner’s acts. In
the present case, the records are bereft of any evidence that the
name or reputation of TEC/TPC has been debased as a result of
petitioner’s acts. Besides, the trial court simply awarded moral
damages in the dispositive portion of its decision without stating
the basis thereof.
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.

Florentino & Esmaquel Law Office for petitioner.
Antonio R. Bautista & Partners for respondents.
Bienvenido D. Comia for Ultra Electronics
Instrument.
NACHURA, J.:
This is a petition for review on certiorari under Rule 451 of

the Rules of Court seeking the reversal of the Decision of
the Court 2 of Appeals (CA) dated June 18, 1997 and its
Resolution dated December 3, 1997 in CA-G.R. CV No.
40282 denying the appeal filed by petitioner Manila
Electric Company.
The facts of the case, as culled from the records, are as
follows:
Respondent T.E.A.M. Electronics Corporation (TEC) was
formerly known as NS Electronics (Philippines), Inc. before
1982 and National Semi-Conductors (Phils.) before 1988.
TEC is wholly owned by respondent Technology Electronics
As-
_______________
1 Penned by Associate Justice Maximiano C. Asuncion, with Associate

Justices Jesus M. Elbinias and Ramon A. Barcelona, concurring; Rollo, pp.
86-102.
2 Rollo, pp. 104-105.
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Corporation
sembly and Management Pacific Corporation (TPC). On the

other hand, petitioner Manila Electric Company (Meralco)
is a utility company supplying electricity in the Metro
Manila area.
Petitioner and NS Electronics (Philippines), Inc., the
predecessor-in-interest of respondent TEC, were parties to
two separate contracts denominated as Agreements for the
Sale of Electric Energy 3
under the following
4
account
numbers: 09341-1322-16 and 09341-1812-13. Under the
aforesaid agreements, petitioner undertook to supply TEC’s
building known as Dyna Craft International Manila
(DCIM) located at Electronics Avenue, Food Terminal
Complex, Taguig, Metro Manila, with electric power.
Another contract was entered into for the supply of electric
power to TEC’s NS Building under Account No. 19389-
0900-10.
In September 1986, TEC, under its former name
National5 Semi-Conductors (Phils.) entered into a Contract
of Lease with respondent Ultra Electronics Industries, Inc.
(Ultra) for the use of the former’s DCIM building for a
period of five years or until September 1991. Ultra was,
however, ejected from the premises on February 12, 1988
by virtue of a court order, for repeated violation of the
terms and conditions of the lease contract.
On September 28, 1987, a team of petitioner’s inspectors
conducted a surprise inspection of the electric meters6
installed at the DCIM building, witnessed by Ultra’s
representative, Mr. Willie Abangan. The two meters
covered by account numbers 09341-1322-16 and 09341-
1812-13, were found to be allegedly tampered with and did
not register the actual power consumption in the building.
The results of the inspec-
_______________
3 Records, pp. 73-76.

4 Id., at pp. 77-78.
5 Id., at pp. 175-189.
6 Ultra was then in possession of the subject building by virtue of a

contract of lease.
68

Corporation
7
tion were reflected in the Service Inspection Reports
prepared by the team.
In a letter dated November 25, 1987, petitioner informed
TEC of the results of the inspection and demanded from
the latter the payment of P7,040,401.01 representing its
unregistered consumption from February 10, 1986 until
September 28,8
1987, as a result of the alleged tampering of
the meters. TEC received the letters on January 7, 1988.
Since Ultra was in possession of the subject building during
the covered period, TEC’s Managing Director, 9
Mr. Bobby
Tan, referred the demand letter to Ultra which, in turn,
informed TEC that its Executive Vice-President had met
with petitioner’s representative. Ultra further intimated
that assuming that there was tampering 10
of the meters,
petitioner’s assessment was exces-sive. For failure of TEC
to pay the differential billing, petitioner disconnected the
electricity supply to the DCIM building on April 29, 1988.
TEC demanded from petitioner the reconnection of
electrical service, claiming that it had nothing to do with
the alleged tampering but the latter refused to heed the
demand. Hence, TEC filed a complaint on May 27, 1988
before the Energy Regulatory Board (ERB) praying 11
that
electric power be restored to the DCIM building. The ERB
immediately ordered the reconnection of the service but
petitioner complied with it only on October 12, 1988 after
TEC paid P1,000,000.00, under protest. The complaint
before the ERB was later withdrawn as the parties deemed
it best to have the issues threshed out in the regular
courts. Prior to the reconnection, or on June 7,
_______________
7 Records, pp. 79-82.

8 Id., at pp. 20-21.
9 The referral was embodied in a letter dated January 8, 1988 (Records,
p. 196).
10 Records, p. 197.
11 The complaint before the ERB was later withdrawn by TEC on the
ground that the issues should be ventilated before the regular courts.
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Corporation
1988, petitioner conducted a scheduled inspection of the

questioned
12
meters and found them to have been tampered
anew.
Meanwhile, on April 25, 1988, petitioner conducted
another inspection, this time, in TEC’s NS Building. The
inspection allegedly revealed that the electric meters were
not registering the correct power consumption. Petitioner,
thus, sent a letter dated June 18, 1988 demanding payment13
of P280,813.72 representing the differential billing. TEC
denied petitioner’s
14
allegations and claim in a letter dated
June 29, 1988. Petitioner, thus, sent TEC another letter
demanding payment of the aforesaid amount, with a
warning that the electric service would be disconnected 15
in
case of continued refusal to pay the differential billing. To
avert the impending disconnection of electrical16
service,
TEC paid the above amount, under pro-test.
On January 13, 1989, TEC and TPC17 filed a complaint for
damages against petitioner and Ultra before the Regional
Trial Court (RTC) of Pasig. The case was raffled18 to Branch
162 and was docketed as Civil Case No. 56851. Upon the
filing of the parties’ answer to the complaint, pre-trial was
scheduled.
At the pre-trial, the parties agreed to limit the issues, as
follows:
1. Whether or not the defendant Meralco is liable for the

plaintiffs’ disconnection of electric service at DCIM
Building.
_______________
12 Rollo, p. 89.
13 Records, p. 246.
14 Id., at pp. 247-248.
15 Id., at p. 250.
16 Id., at pp. 251-252.
17 Ultra was impleaded as a defendant being the lessee of the DCIM
Building and was in possession thereof during the covered period.
18 Id., at pp. 1-12.
70

Corporation
2. Whether or not the plaintiff is liable for (sic) the defendant

for the differential billings in the amount of
P7,040,401.01.
3. Whether or not the19 plaintiff is liable to defendant for
exemplary damages.
For failure of the parties to reach an amicable settlement,

trial on the merits ensued. On June 17, 1992, the trial
court rendered a Decision in favor of respondents TEC and
TPC, and against respondent Ultra and petitioner. The
pertinent portion of the decision reads:
“WHEREFORE, judgment is hereby rendered in this case in favor

of the plaintiffs and against the defendants as follows:
(1) Ordering both defendants Meralco and ULTRA

Electronics Instruments, Inc. to jointly and severally
reimburse plaintiff TEC actual damages in the amount of
ONE MILLION PESOS with legal rate of interest from
the date of the filing of this case on January 19, 1989 until
the said amount shall have been fully paid;
(2) Ordering defendant Meralco to pay to plaintiff TEC the
amount of P280,813.72 as actual damages with legal rate
of interest also from January 19, 1989;
(3) Ordering defendant Meralco to pay to plaintiff TPC the
amount of P150,000.00 as actual damages with interest at
legal rate from January 19, 1989;
(4) Condemning defendant Meralco to pay both plaintiffs
moral damages in the amount pf P500,000.00;
(5) Condemning defendant Meralco to pay both plaintiffs
corrective and/or exemplary damages in the amount of
P200,000.00;
(6) Ordering defendant Meralco to pay attorney’s fees in the
amount of P200,000.00
Costs against defendant

20
Meralco.
SO ORDERED.”
_______________
19 Id., at p. 128.
20 Rollo, pp. 213-214.
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Corporation
The trial court found the evidence of petitioner insufficient

to prove that TEC was guilty of tampering the meter
installations. The deformed condition of the meter seal and
the existence of an opening in the wire duct leading to the
transformer vault did not, in themselves, prove the alleged
tampering, especially since access to21 the transformer was
given only to petitioner’s employees. The sudden drop in
TEC’s (or Ul-tra’s) electric consumption did not, per se,
show meter tampering. The delay in the sending of notice
of the results of the inspection was likewise viewed by the
court as evidence of inefficiency and arbitrariness on the
part of petitioner. More importantly, petitioner’s act of
disconnecting the DCIM build-ing’s electric supply
constituted
22
bad faith and thus makes it liable for
damages. The court further denied petitioner’s claim of
differential23 billing primarily on the ground of equitable
negligence. Considering that TEC and TPC paid
P1,000,000.00 to avert the disconnection of electric power;
and because Ultra manifested to settle the claims of
petitioner, the court imposed solidary liability on both
Ultra and petitioner for the payment of the P1,000,000.00.
Ultra and petitioner appealed to the CA which affirmed
the RTC decision, with a modification of the amount of
actual damages and interest thereon. The dispositive
portion of the CA decision dated June 18, 1997, states:
“WHEREFORE, this Court renders judgment affirming in toto the

Decision rendered by the trial court with the slight modification
that the interest at legal rate shall be computed from January 13,
1989 and that Meralco shall pay plaintiff T.E.A.M. Electronics
Corporation and Technology Electronics Assembly and
Management Pacific Corporation the sum of P150,000.00 per
month for five (5) months for actual damages incurred when it
was compelled to lease a generator set with interest at the legal
rate from the above-stated date.
_______________
21 Id., at p. 208.
22 Id., at p. 210.
23 Id., at p. 211.
72

Corporation
24
SO ORDERED.”
The appellate court agreed with the RTC’s conclusion. In

addition, it considered petitioner negligent for failing to
discover the alleged defects in the electric meters; in
belatedly notifying TEC and TPC of the results of the
inspection; and in disconnecting the electric power without
prior notice.
Petitioner now comes before this Court in this petition
for review on certiorari contending that:
“The Court of Appeals committed grievous errors and decided

matters of substance contrary to law and the rulings of this
Honorable Court:
1. In finding that the issue in the case is whether there was

deliberate tampering of the metering installations at the
building owned by TEC.
2. In not finding that the issue is: whether or not, based on
the tampered meters, whether or not petitioner is entitled
to differential billing, and if so, how much.
3. In declaring that petitioner MERALCO had the burden of
proof to show by clear and convincing evidence that with
respect to the tampered meters that TEC and/or TPC
authored their tampering.
4. In finding that petitioner Meralco should not have held
TEC and/or TPC responsible for the acts of Ultra.
5. In finding that TEC should not be held liable for the
tampering of this electric meter in its DCIM Building.
6. In finding that there was no notice of disconnection.
7. In finding that petitioner MERALCO was negligent in
informing TEC of the alleged tampering.
8. In making the finding that it is difficult to believe that
when petitioner MERALCO inspected on June 7, 1988 the
meter installations, they were found to be tampered.
9. In declaring that petitioner MERALCO estopped from
claiming any tampering of the meters.
_______________
24 Id., at p. 101.
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VOL. 540, DECEMBER 13, 2007 73

Corporation
10. In finding that “the method employed by MERALCO to as

certain (sic) the ‘correct’ amount of electricity consumed is
question-able”;
11. In declaring that MERALCO all throughout its dealings
with TEC took on an “attitude” which is oppressive,
wanton and reckless.
12. In declaring that MERALCO acted arbitrarily in
inspecting TEC’s DCIM building and the NS building.
13. In declaring that respondents TEC and TPC are entitled
to the damages which it awarded.
14. In not declaring that petitioner is entitled to the
differential bill.
15. In not declaring that respondents are liable to petitioner
for exemplary
25
damages, attorney’s fee and expenses for
litigation.”
The petition must fail.

The issues for resolution can be summarized as follows:
1) whether or not TEC tampered with the electric meters
installed at its DCIM and NS buildings; 2) If so, whether or
not it is liable for the differential billing as computed by
petitioner; and 3) whether or not petitioner was justified in
disconnecting the electric power supply in TEC’s DCIM
building.
Petitioner insists that the tampering of the electric
meters installed at the DCIM and NS buildings owned by
respondent TEC has been established by overwhelming
evidence, as specifically shown by the shorting devices
found during the inspection. Thus, says petitioner,
tampering of the meter is no longer an issue.
It is obvious that petitioner wants this Court to revisit
the factual findings of the lower courts. Well-established is
the doctrine that under Rule 45 of the Rules of Court, only
questions of law, not of fact, may be raised before the
Court. We would like to stress that this Court is not a trier
of facts and may not re-examine and weigh anew the
respective evidence
_______________
25 Rollo, pp. 32-34.
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Corporation
of the parties. Factual findings of the trial court, especially

those affirmed
26
by the Court of Appeals, are binding on this
Court.
Looking at the record, we note that petitioner claims to
have discovered three incidences of meter-tampering; twice
in the DCIM building on September 28, 1987 and June 7,
1988; and once in the NS building on April 24, 1988.
The first instance was supposedly discovered on
September 28, 1987. The inspector allegedly found the
presence of a short circuiting device and saw that the meter
seal was deformed. In addition, petitioner, through the
Supervising 27Engineer of its Special Billing Analysis
Department, claimed that there was a sudden and
unexplainable drop in TEC’s electrical consumption
starting February 10, 1986. On the basis of the foregoing,
petitioner concluded that the electric meters were
tampered with.
However, contrary to petitioner’s claim that there was a
drastic and unexplainable drop in TEC’s electric
consumption during the affected 28
period, the Pattern of
TEC’s Electrical Consumption shows that the sudden drop
is not peculiar to the said period. Noteworthy is the
observation of the RTC in this wise:
“In fact, in Account No. 09341-1812-13 (heretofore referred as

Account/Meter No. 2), as evidenced by Exhibits “35” and “35-A,”
there was likewise a sudden drop of electrical consumption from
the year 1984 which recorded an average 141,300 kwh/month to
1985 which recorded an average kwh/month at 87,600 or a
difference-drop of 53,700 kwh/month; from 1985’s 87,600 recorded
consumption, the same dropped to 18,600 kwh/month or a
difference-drop of 69,000 kwh/month. Surely, a drop of 53,700
could be equally categorized as
_______________
26 Manila Electric Company v. South Pacific Plastic Manufacturing

Corporation, G.R. No. 144215, June 27, 2006, 493 SCRA 114, 120; Manila
Electric Company v. Court of Appeals, 413 Phil. 338, 354; 361 SCRA 35, 49
(2001).
27 Rollo, p. 198.
28 Records, pp. 446-449.
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Corporation
a sudden drop amounting to 69,000 which, 29

incidentally, the
Meralco claimed as “unexplainable. x x x.”
The witnesses for petitioner who testified on the alleged

tampering of the electric meters, declared that tampering
is committed by consumers to prevent the meter from
registering the correct amount of electric consumption, and
result in a reduced monthly electric bill, while continuing
to enjoy the same power supply. Only the registration of
actual electric energy consumption, not the supply 30
of
electricity, is affected when a meter is tampered with. The
witnesses claimed that after the inspection, the tampered
electric meters were corrected, so that they would register
the correct consumption of TEC. Logically, then, after the
correction of the allegedly tampered meters, the customer’s
registered consumption would go up.
In this case, the period claimed to have been affected by
the tampered electric meters is from February 1986 31until
September 1987. Based on petitioner’s Billing Record (for
the DCIM building), TEC’s monthly electric consumption
on Account 32No. 9341-1322-16 was between 4,500 and
27,000 kWh. Account No. 9341-1812-13 showed a monthly
33
consumption between 9,600 and 34,200 kWh. It is
interesting to note that,
_______________
29 Rollo, p. 207.
30 See Manila Electric Company v. Imperial Textile Mills, Inc., G.R. No.
146747, July 29, 2005, 465 SCRA 151, 165.
31 Exhibits “32” to “32-G” and “33” to 33-F.”
32 To illustrate: TEC’s Billing Record (Account No. 9341-1322-16) shows
the following details:
May 8, 1987 11,100 kWh

June 8, 1987 9,300 kWh
July 8, 1987 16,800 kWh
August 7, 1987 9,900 kWh
September 8, 1987 9,300 kWh (Exh. “32-D”)
33 To illustrate: TEC’s Billing Record (Account No. 9341-1812-13) shows

the following details:
May 8, 1987 9,600 kWh
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Corporation
after correction of the allegedly tampered meters, TEC’s

monthly electric consumption from October 1987 to
February 1988 (the last month that Ultra occupied the
DCIM building) was between 8,700 and 24,300 kWh in its
first account, and 16,200 to 46,800 kWh on the second
account.
Even more revealing is the fact that TEC’s meters
registered 9,300 kWh and 19,200 kWh consumption on the
first and second accounts, respectively, a month prior to the
inspection. On the first month after the meters were
corrected, TEC’s electric consumption registered at 9,300
kWh and 22,200 kWh on the respective accounts. These
figures clearly show that there was no palpably drastic
difference between the consumption before and after the
inspection, casting a cloud of doubt over petitioner’s claim
of meter-tampering. Indeed, Ultra’s explanation that the
corporation was losing; thus, it had lesser consumption of
electric power appear to be the more plausible reason for
the drop in electric consumption.
Petitioner likewise claimed that when the subject
meters were again inspected on June 7, 1988, they were
found to have been tampered anew. The Court notes that
prior to the inspection, TEC was informed about it; and
months before the inspection, there was an unsettled
controversy between TEC and petitioner, brought about by
the disconnection of electric power and the non-payment of
differential billing. We are more disposed to accept the trial
court’s conclusion that it is hard to believe that a customer
previously apprehended for tampered meters and assessed
P7 million34 would further jeopardize itself in the eyes of
petitioner. If it is true that there was evidence of
tampering found on September 28, 1987 and again on June
7, 1988, the better view would be that the defective meters
were not actually corrected after the first in-
_______________
June 8, 1987 13,200 kWh

July 8, 1987 30,600 kWh
August 7, 1987 24,600 kWh
September 8, 1987 19,200 kWh (Exh. “33-C”)
34 Rollo, p. 203.
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spection. If so, then Manila 35

Electric Company v. Macro
Textile Mills Corporation would apply, where we said
that we cannot sanction a situation wherein the defects in
the electric meter are allowed to continue indefinitely until
suddenly, the public utilities demand payment for the
unrecorded electricity utilized when they could have
remedied the situation immediately. Petitioner’s failure to
do so may encourage neglect of public utilities to the
detriment of the consuming public. Corollarily, it must be
underscored that petitioner 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. 36
Failure to perform such duties constitutes negligence. By
reason of said negligence, public utilities run the risk37 of
forfeiting amounts originally due from their cus-tomers.
As to the alleged tampering of the electric meter in
TEC’s NS building, suffice it to state that the allegation
was not proven, considering that the meters therein were
enclosed in a metal cabinet the metal seal of which was
unbroken,38
with petitioner having sole access to the said
meters.
In view of the negative finding on the alleged tampering
of electric meters on TEC’s DCIM and NS buildings,
petitioner’s claim of differential billing was correctly denied
by the trial and appellate courts. With greater reason,
therefore, could petitioner not exercise the right of
immediate disconnection.
The law in force at the time material 39
to this controversy
was Presidential Decree (P.D.) No. 401 issued on March 1,
_______________
35 424 Phil. 811, 828; 374 SCRA 69, 85 (2002).

36 Ridjo Tape and Chemical Corp. v. Court of Appeals, G.R. No. 126074,
February 24, 1998, 286 SCRA 544, 552.
37 Manila Electric Company v. Macro Textile Mills, supra note 35.
38 Rollo, p. 194.
39 “Penalizing the Unauthorized Installation of Water, Electrical or
Telephone Connections, the Use of Tampered Water or Electrical Meters
and Other Acts”; as amended by P.D. 401-A.
78

Corporation
40
1974. The decree penalized unauthorized installation of
water, electrical or telephone connections and such acts as
the use of tampered electrical meters. It was issued in
answer to the urgent need to put an end to illegal activities
that prejudice the economic well-being of 41both the
companies concerned and the consuming public. P.D. 401
granted the electric companies the right to conduct 42
inspections of electric meters and the criminal prosecution
of erring consumers who were found to have tampered with
their electric meters. It did not expressly provide for more
expedient remedies such as the charging of differential
billing and immediate disconnection against erring
consumers. Thus, electric companies found a creative way
of availing themselves of such remedies by inserting into
their service contracts (or agreements for the sale of
electric energy) a provision for differential billing with the
option of disconnection upon non-payment by the erring
consumer. The Court has recognized the validity of such
stipula-
_______________
40 Repealed by Republic Act No. 7832, otherwise known as the “Anti-

Electricity and Electric Transmission Lines/Materials Pilferage Act of
1994.”
41 Manila Electric Company v. Macro Textile Mills Corporation, supra
note 35, at p. 819; p. 77.
42 Section 1 thereof provides:
Any person who installs any water, electrical, telephone or piped gas connection
without previous authority from the Metropolitan Waterworks and Sewerage
System, the Manila Electric Company, the Philippine Long Distance Telephone
Company, or the Manila Gas Corporation, as the case may be, tampers and/or uses
tampered water, electrical or gas meters, jumpers or other devices whereby water,
electricity or piped gas is stolen; steals or pilfers water, electric or piped gas
meters, or water, electric and/or telephone wires, or piped gas pipes or conduits;
knowingly possesses stolen or pilfered water, electrical and/or telephone wires, or
piped gas pipes or conduits, shall upon conviction be punished with prision
correccional in its minimum period or a fine ranging from two thousand to six
thousand pesos, or both.
79
VOL. 540, DECEMBER 13, 2007 79

Corporation
43
tions. However, recourse to differential billing with
disconnection was subject to the prior 44
requirement of a 48-
hour written notice of disconnection.
Petitioner, in the instant case, resorted to the remedy of
disconnection without prior notice. While it is true that
petitioner sent a demand letter to TEC for the payment of
differential billing, it did not include any notice that the
electric supply would be disconnected. In fine, petitioner
abused the remedies granted to it under P.D. 401 and
Revised General Order No. 1 by outrightly depriving TEC
of electrical services without first notifying it of the
impending disconnection. Accordingly, the CA did not err
in affirming the RTC decision.
As to the damages awarded by the CA, we deem it
proper to modify the same. Actual damages are
compensation for an injury that will put the injured party
in the position where it was before the injury. They pertain
to such injuries or losses that are actually sustained and
susceptible of measurement. Except as provided by law or
by stipulation, a party is entitled to adequate compensation
only for such pecuniary loss as is duly proven. Basic is the
rule that to recover actual damages, not only must the
amount of loss be capable of proof; it must also be actually
proven with a reasonable degree of certainty, premised 45
upon competent proof or the best evidence obtainable.
_______________
43 Samar II Electric Cooperative, Inc. and Baltazar Dacula v. Quijano,

G.R. No. 144474, April 27, 2007, 522 SCRA 364.
44 The requirement of 48-hour notice was provided for in Section 97 of
Revised General Order No. 1. The provision reads:
Section 97. Payment of bills.—A public service may require that bills for service be
paid within a specified time after rendition. When the billing period covers a
month or more, the minimum time allowed will be ten days and upon expiration of
the specified time, service may be discontinued for the non-payment of bills,
provided that a 48-hours’ written notice of such disconnection has been
given the customer; x x x.
45 Quisumbing v. Manila Electric Company, 429 Phil. 727, 747; 380

SCRA 195, 210 (2002).
80


Corporation
Respondent TEC sufficiently established, and petitioner in

fact admitted, that the former paid P1,000,000.00 and
P280,813.72 under protest, the amounts representing a
portion of the latter’s claim of differential billing. With the
finding that no tampering was committed and, thus, no
differential billing due, the aforesaid amounts should be
returned by petitioner, with interest, as ordered by the
Court of Appeals
46
and pursuant to the guidelines set forth
by the Court.
However, despite the appellate court’s conclusion that
no tampering was committed, it held Ultra solidarily liable
with petitioner for P1,000,000.00, only because the former,
as occupant of the building, promised to settle the claims of
the latter. This ruling is erroneous. Ultra’s promise was
conditioned upon the finding of defect or tampering of the
meters. It did not acknowledge any culpability and liability,
and absent any tampered meter, it is absurd to make the
lawful occupant liable. It was petitioner who received the
P1 million; thus, it alone should be held liable for the
return of the amount.
TEC also sufficiently established its claim for the
reimbursement of the amount paid as rentals for the
generator set it was constrained to rent by reason of the
illegal disconnection of electrical service. The official
receipts and purchase orders submitted by TEC as evidence
sufficiently show that such rentals were indeed made.
However, the amount of P150,000.00 per month for five
months, awarded by the CA, is excessive. Instead, a total
sum of P150,000.00, as found by the RTC, is proper.
As to the payment of exemplary damages and attorney’s
fees, we find no cogent reason to disturb the same.
Exemplary damages are imposed by way of example or
correction for the public good in addition to moral,
temperate, liquidated, or
_______________
46 Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412,

July 12, 1994, 234 SCRA 78, 95-97.
81
VOL. 540, DECEMBER 13, 2007 81

Corporation
47
47
compensatory damages. In this case, to serve as an
example—that before a disconnection of electrical supply
can be effected by a public utility, the requisites of law
must be complied with—we affirm the award of
P200,000.00 as exemplary damages. With the award of
exemplary damages, the award of 48attorney’s fees is likewise
proper, pursuant to Article 2208 of the Civil Code. It is
obvious that TEC needed the services of a lawyer to argue
its cause through three levels of the judicial
49
hierarchy.
Thus, the award of P200,000.00 is in order.
We, however, deem it proper to delete the award of
moral damages. TEC’s claim was premised50allegedly on the
damage to its goodwill and reputation. As a rule, 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 to this rule is when the corporation has a
reputation that is debased,
51
resulting in its humiliation in
the business realm. But in such a case, it is imperative for
the claimant to present proof to justify the award. It is
essential to prove the existence of the factual basis of the
damage
_______________
47 Quisumbing v. Manila Electric Company, supra note 45, at p. 752; p.

215.
48 Article 2208 states:
In the absence of stipulation, attorney’s fees and expenses of litigation, other than
judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
x x x.
49 Quisumbing v. Manila Electric Company, supra note 45, at p. 752; p.

215.
50 Records, p. 11.
51 Coastal Pacific Trading, Inc. v. Southern Rolling Mills, Co., Inc., G.R.
No. 118692, July 28, 2006, 497 SCRA 11, 41; ABS-CBN Broadcasting
Corp. v. Court of Appeals, 361 Phil. 499, 516; 301 SCRA 572, 603 (1999).
82

Corporation
52
52
and its causal relation to petitioner’s acts. In the present
case, the records are bereft of any evidence that the name
or reputation of TEC/TPC has been debased as a result of
petitioner’s acts. Besides, the trial court simply awarded
moral damages in the dispositive portion of its decision
without stating the basis thereof.
WHEREFORE, the petition is DENIED. The Decision of
the Court of Appeals in CA-G.R. CV No. 40282 dated June
18, 1997 and its Resolution dated December 3, 1997 are
AFFIRMED with the following MODIFICATIONS: (1) the
award of P150,000.00 per month for five months as
reimbursement for the rentals of the generator set is
REDUCED to P150,000.00; and (2) the award of
P500,000.00 as moral damages is hereby DELETED.
SO ORDERED.
Ynares-Santiago (Chairperson), Austria-Martinez,

Chico-Nazario and Reyes, JJ., concur.
Petition denied, judgment and resolution affirmed with

modifications.
Notes.—Ordinarily, only questions of law may be raised

in a petition for review on certiorari, except when there are
compelling reasons to justify otherwise, or when the
appealed decision is clearly contradicted by the evidence on
record. (Margolles vs. Court of Appeals, 230 SCRA 97
[1994])
The production and distribution of electricity is a highly
technical business undertaking, and in conducting its
operation, it is only logical for public utilities, such as
MERALCO, to employ mechanical devices and equipment
for the orderly pursuit of its business, devices or equipment
which are susceptible to defects and mechanical failure.
(Ridjo Tape & Chemical Corp. vs. Court of Appeals, 286
SCRA 544 [1998])
_______________
52 Development Bank of the Philippines v. Court of Appeals, 451 Phil.

563, 586-587; 403 SCRA 460, 480 (2003).
83
VOL. 540, DECEMBER 13, 2007 83

Khemani vs. Heirs of Anastacio Trinidad
Public utilities should be put on notice, as a deterrent, that

if they disregard their duty of keeping their electric meters
in serviceable condition, they run the risk of forfeiting, by
reason of their negligence, amounts originally due from
their customers. The Court cannot sanction a situation
wherein the defects in the electric meter are allowed to
continue indefinitely until suddenly the public utilities
demand payment for the unrecorded electricity utilized
when they could have remedied the situation immediately.
Public service companies which do not exercise prudence in
the discharge of their duties shall be made to bear the
consequences of such oversight. (Manila Electric Company
vs. Macro Textile Mills Corporation, 374 SCRA 69 [2002])
——o0o——
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12/12/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 540

62 SUPREME COURT REPORTS ANNOTATED

MANILA ELECTRIC COMPANY, petitioners, vs. T.E.A.M.

Appeals; Well-established is the doctrine that under Rule 45 of

VOL. 540, DECEMBER 13, 2007 63

Manila Electric Company vs. T.E.A.M. Electronics Corporation

trial court, especially those affirmed by the Court of Appeals, are

Public Utilities; Electric Power Industry; Negligence; A public

Same; Presidential Decree (P.D.) No. 401; Presidential Decree

64 SUPREME COURT REPORTS ANNOTATED

Manila Electric Company vs. T.E.A.M. Electronics Corporation

erring consumers.—The law in force at the time material to this

Damages; Actual Damages; Actual damages are compensation

VOL. 540, DECEMBER 13, 2007 65

Manila Electric Company vs. T.E.A.M. Electronics Corporation

pecuniary loss as is duly proven. Basic is the rule that to recover

Same; Exemplary Damages; Exemplary damages are imposed

Same; Corporation Law; As a rule, a corporation is not

66 SUPREME COURT REPORTS ANNOTATED

Manila Electric Company vs. T.E.A.M. Electronics Corporation

suffering or sentiments like wounded feelings, serious anxiety,

PETITION for review on certiorari of the decision and

The facts are stated in the opinion of the Court.

This is a petition for review on certiorari under Rule 451 of

1 Penned by Associate Justice Maximiano C. Asuncion, with Associate

VOL. 540, DECEMBER 13, 2007 67

sembly and Management Pacific Corporation (TPC). On the

3 Records, pp. 73-76.

6 Ultra was then in possession of the subject building by virtue of a

68 SUPREME COURT REPORTS ANNOTATED

7 Records, pp. 79-82.

VOL. 540, DECEMBER 13, 2007 69

1988, petitioner conducted a scheduled inspection of the

1. Whether or not the defendant Meralco is liable for the

70 SUPREME COURT REPORTS ANNOTATED

2. Whether or not the plaintiff is liable for (sic) the defendant

For failure of the parties to reach an amicable settlement,

“WHEREFORE, judgment is hereby rendered in this case in favor

(1) Ordering both defendants Meralco and ULTRA

Costs against defendant

VOL. 540, DECEMBER 13, 2007 71

The trial court found the evidence of petitioner insufficient

“WHEREFORE, this Court renders judgment affirming in toto the

72 SUPREME COURT REPORTS ANNOTATED

The appellate court agreed with the RTC’s conclusion. In

“The Court of Appeals committed grievous errors and decided

1. In finding that the issue in the case is whether there was

VOL. 540, DECEMBER 13, 2007 73

10. In finding that “the method employed by MERALCO to as

The petition must fail.

25 Rollo, pp. 32-34.

74 SUPREME COURT REPORTS ANNOTATED

of the parties. Factual findings of the trial court, especially

“In fact, in Account No. 09341-1812-13 (heretofore referred as

26 Manila Electric Company v. South Pacific Plastic Manufacturing

VOL. 540, DECEMBER 13, 2007 75

a sudden drop amounting to 69,000 which, 29

The witnesses for petitioner who testified on the alleged

May 8, 1987 11,100 kWh

33 To illustrate: TEC’s Billing Record (Account No. 9341-1812-13) shows