G.R. No. 171102 ; November 24, 2006
ATP TECHNOLOGIES INTERNATIONAL, INC., Petitioner, vs. MICRON PRECISION PHILS., INC., Respondent.

FACTS

Petitioner ATP Technologies sublet a portion of its leased factory building to respondent Micron Precision. The sublease contract required a security deposit, refundable within thirty days after the contract’s expiration and respondent’s vacation of the premises, less any amounts owed for damages or other liabilities. In June 2000, the principal lessor, Ecozone Properties, pre-terminated its lease with petitioner for non-payment of rent. Consequently, respondent was directed to pay rent directly to Ecozone. The sublease was pre-terminated on June 1, 2001, and respondent vacated in August 2001. Respondent then demanded a refund of its security deposit, but petitioner refused, prompting respondent to file a complaint for sum of money.
Petitioner justified withholding the deposit by alleging respondent tampered with its electric sub-meter, causing billing underpayments totaling P1,147,500.00 for previous years and for the months of June to August 2001 after the sublease’s pre-termination. Petitioner relied on an inspection report from the power utility, SFELPCO, which noted the meter was unsuitable for the connection type and highlighted vulnerabilities to pilferage. The Regional Trial Court ruled for petitioner, ordering respondent to pay actual and exemplary damages plus attorney’s fees. The Court of Appeals reversed, ordering petitioner to refund the security deposit with interest and attorney’s fees.

ISSUE

Whether the Court of Appeals erred in ordering the refund of the security deposit and awarding damages to respondent, despite petitioner’s claim of unpaid electrical consumption liabilities.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The legal logic centered on the insufficiency of petitioner’s evidence to substantiate its claim for offsetting liabilities against the security deposit. For the alleged meter tampering and underpayments for periods prior to pre-termination, the Court found the SFELPCO inspection report inadequate. The report merely indicated a possibility of pilferage due to the meter’s technical specifications and lack of security, but it did not constitute conclusive proof that respondent actually tampered with the meter or engaged in electricity theft. Possibility is not equivalent to preponderance of evidence. Petitioner’s computation of alleged underpayments was also deemed speculative, as it was based on an unverified assumption of respondent’s average consumption without sufficient factual basis.
Regarding the claimed unpaid consumption for June to August 2001, the Court ruled petitioner lost its right to collect. The sublease was pre-terminated on June 1, 2001, and control of the premises reverted to the principal lessor, Ecozone Properties, to whom respondent was then directly paying rent. Ecozone, not petitioner, was the real party-in-interest for any charges accruing after that date. Consequently, petitioner had no valid counterclaim to justify withholding the security deposit. The award of legal interest was proper due to petitioner’s unjustified failure to refund the deposit within the contractually stipulated period. Attorney’s fees were also correctly awarded, as respondent was compelled to litigate to enforce its clear right to the refund.