G.R. No. 126243 ; January 18, 2002
MANILA ELECTRIC COMPANY, petitioner, vs. MACRO TEXTILE MILLS CORPORATION, respondent.

FACTS

Respondent Macro Textile Mills Corporation (MACRO) is a customer of petitioner Manila Electric Company (MERALCO). In 1986, MERALCO demanded payment from MACRO for alleged unregistered electricity consumption due to meter tampering, threatening disconnection. MACRO filed a complaint for injunction, asserting it had no knowledge of any tampering. MACRO argued its operations had significantly reduced after a 1982 fire and during a business slump, explaining its lower consumption. It repeatedly requested MERALCO to inspect its premises and clarify the basis for the differential billings, but MERALCO refused and insisted on payment.
The trial court found no credible evidence that MACRO tampered with the meter. It noted MERALCO failed to produce the allegedly tampered meter switch, claiming it was lost, and conducted simulated tests without MACRO’s representative. The court held MERALCO’s actions constituted a wrongful invasion of MACRO’s rights. The Court of Appeals affirmed the trial court’s decision, which dismissed MERALCO’s claim and awarded damages to MACRO.

ISSUE

Whether MERALCO is entitled to collect differential billings from MACRO for alleged unregistered consumption of electricity due to meter tampering.

RULING

The Supreme Court denied MERALCO’s petition and affirmed the appellate court’s decision, with modification. The Court upheld the factual findings of the lower courts that MERALCO failed to prove by substantial evidence that MACRO tampered with the electric meter. The legal logic centers on the burden of proof and MERALCO’s duties as a public utility. In cases of alleged tampering, the utility company bears the burden to prove the customer’s deliberate intent to reduce consumption fraudulently. MERALCO’s evidence was deemed insufficient; it could not produce the physical evidence (the meter) and relied on computations from simulated tests conducted ex parte.
Furthermore, the Court emphasized MERALCO’s obligations to its consumers. As a public utility vested with public interest, MERALCO has a duty to explain clearly the basis for its billings, especially for adjusted or differential charges. Its failure to provide MACRO with a proper explanation and its refusal to conduct a joint inspection, despite repeated requests, constituted a neglect of its duty. The loss must therefore be borne by MERALCO, as public service companies must exercise prudence and are liable for the consequences of their oversight. The award of exemplary damages was deleted for lack of sufficient basis.