G.R. No. 255038 . June 26, 2023.
MANILA ELECTRIC COMPANY (MERALCO), PETITIONER, VS. LUCY YU, REPRESENTED BY HER ATTORNEY-IN-FACT, DENNIS ENCARNACION, RESPONDENT.

FACTS

Respondent Lucy Yu, a registered customer of petitioner Manila Electric Company (MERALCO), filed a complaint for damages with prayer for preliminary and permanent mandatory injunction. She alleged that on December 9, 1999, MERALCO representatives, accompanied by armed persons, forcibly entered the premises of New Supersonic Industrial Corporation (NSIC)—a factory owned by her family and located at her residence address—to inspect the electricity meter. After the inspection, MERALCO issued a Notice of Disconnection and immediately disconnected the electricity supply to both the factory and her residence on the same day, without prior notice. Yu claimed this caused her actual damages from business losses, as well as moral damages. MERALCO defended its actions by asserting that during the inspection, it discovered Yu was using a reversing current transformer to tamper with the meter, constituting electricity pilferage caught in flagrante delicto. It issued a Notice of Disconnection signed by an NSIC employee and disconnected the supply immediately. MERALCO also counterclaimed for differential billings representing alleged unregistered consumption. The Regional Trial Court (RTC) ruled in favor of Yu, finding MERALCO violated Republic Act No. 7832 by disconnecting without due notice and awarded damages. The Court of Appeals (CA) affirmed the RTC decision but increased the exemplary damages.

ISSUE

Whether MERALCO failed to comply with the requirements for disconnection under R.A. 7832; whether MERALCO is liable to Yu for temperate, moral, and exemplary damages; and whether MERALCO is entitled to its counterclaim for differential billings.

RULING

The Supreme Court denied MERALCO’s petition. It held that MERALCO failed to comply with the strict requirements of R.A. 7832. Under Section 6 of the law, prior written notice is required before disconnection, even if the consumer is caught in flagrante delicto committing acts of electricity pilferage under Section 4(a). MERALCO’s act of issuing a notice and disconnecting on the same day did not constitute the prior notice mandated by law. MERALCO’s failure to comply gave rise to a presumption of bad faith. The Court sustained the award of temperate damages, noting that while Yu’s evidence of actual damages was insufficient, some pecuniary loss was proven, justifying temperate damages. Moral damages were also proper due to the violation of Yu’s right against deprivation of property without due process. Exemplary damages were correctly awarded to set an example for the public good. Regarding the counterclaim, the Court found MERALCO failed to prove the alleged tampering by clear and convincing evidence, as it did not present the confiscated reversing transformer or sufficient proof of its testing, and relied only on photographs and testimonies. Thus, the counterclaim was dismissed.