MERALCO v. Lucy Yu

 

MERALCO v. Lucy Yu

G.R. No. 255038

August 3, 2023

 

FACTS:

                On January 24, 2000, Yu filed a Complaint for damages with prayer for preliminary and permanent mandatory injunction with the RTC, claiming that she had been deprived of due process when her electricity supply was illegally and abruptly cut. She averred that on December 9, 1999, MERALCO's representatives, headed by Engineer William T. Chan (Chan), along with several armed persons in plain clothing, forcibly entered the premises of NSIC's factory to inspect the electricity meter, which had been installed pursuant to MERALCO' s contract with Yu. After the inspection, and within the same day, Chan and his team issued a Notice of Disconnection and immediately disconnected the electricity supply of NSIC's factory and Yu's residence. Further, Yu averred that the lifeblood of NSIC's business is electricity, and that due to the unjustified disconnection of the electrical services, she suffered actual damages. She alleged in her complaint that MERALCO's acts caused her sleepless nights, serious anxieties, wounded feelings, besmirched reputation, and similar injuries. In an Order dated December 12, 2003, the RTC granted the motion for a writ of preliminary injunction· and ordered MERALCO to restore the electrical services of Yu. Despite this Order, Yu noted that MERALCO only restored electricity services in 2008.

Thereafter, trial ensued. MERALCO, for its part, denied in its Answer that its representatives forcibly entered Yu's business. Its representative, Chan, inspected Yu's electric metering installation in the presence of NSIC employees, Reynaldo G. Sandel (Sandel), Victor E. Magno, Jr., and Dennis Encarnacion. MERALCO's representatives were accompanied by members of the Philippine National Police (PNP), Senior Police Officer 2 Leoncio Dela Cruz (SPO2 Dela Cruz) and Police Officer 2 Noel Ramirez (PO2 Ramirez). During the inspection, Chan found that Yu had been using a reversing current transformer with removable tapping wire. Thus, he issued a Notice of Disconnection, which was signed by Sandel. MERALCO insisted that this was enough to comply with the requirements in RA 7832. Thereafter, MERALCO confiscated the transformer and took photographs.

Unfortunately, a fire gutted the Operations Building of MERALCO where the pieces of evidence were stored. A Certification was issued by the Office of the Fire Chief, Bureau of Fire Protection about the fire that took place. To prove the tampering, MERALCO presented the remaining photographic evidence of the reversing transformer taken during the inspection, the Field Order detailing the inspection, and the testimonies of Chan and PO2 Ramirez. Further, MERALCO determined that they had suffered losses amounting to P33,936,707.1524 from the tampering, based on Yu' s billing records and their own laboratory findings. Thus, MERALCO sent ' a letter dated December 9, 1999 for the payment of the said amount or differential billing, which was duly received and acknowledged· by Yu's representative. Hence, MERALCO prayed that Yu's complaint be dismissed, and as a counterclaim, prayed that Yu be ordered to pay MERALCO P33,936,707.15 representing the value of used but unregistered electric consumption plus interest thereon from date of demand; Pl50,000.00 as attorney's fees and expenses of litigation; PI00,000.00 as exemplary damages; and costs of suit. Regional Trial Court decision ruled in Yu’s favor. Aggrieved, MERALCO appealed to Court of Appeals. The Court of Appeals decision affirmed the Regional Trial Court ruling with modification. Hence this instant Petition.

 

ISSUE:

                Whether or not MERALCO failed to comply with the requirements for disconnection under RA 7832.

                Whether or not MERALCO is liable to Yu for damages.

 

HELD:

                Yes, MERALCO is presumed to be in bad faith for its failure to comply with the strict requirements under RA 7832. Electricity is a basic necessity that is imbued with public interest. Its provider is considered as a public utility subject to the strict regulation by the State in the exercise of its police power. Failure to comply with the regulations laid down by the State gives rise to the presumption of bad faith or abuse of right. Verily, this provision states that the discovery of tampering of an electric meter shall constitute a prima facie evidence of illegal use of electricity by the person who benefits therefrom. However, before an electric service provider can be authorized to disconnect its customer's electric service on the basis of the acts enumerated under Section 4 (a) of RA 7832, the, customer must be given due notice prior to the disconnection.

                Yes. Yu is entitled only to temperate and exemplary damages but MERALCO is not entitles to the alleged differential billings. The courts a quo erroneously based the award of temperate damages in favor of Yu on an estimation of NSIC's loss of earnings. In this regard, it is axiomatic that a corporation has a separate juridical personality from its stockholders or members. Yu and NSIC are separate and distinct persons under the law. Even if Yu, as a stockholder of NSIC, may be affected by any loss of earnings of the latter, the same does not give her the right to file a suit for damages to seek redress for the wrong done to NSIC. NSIC is an entity separate and distinct from Yu. It is, therefore, NSIC who should have itself sued MERALCO for the wrong done resulting in the corporation's loss of earnings. Here, Yu sued MERALCO in her individual capacity and not in representation of NSIC. Considering their separate and distinct juridical personalities, shareholders cannot individually enforce obligations owed to a corporation and vice-versa. Thus, Yu cannot claim damages on the basis of NSIC's loss of earnings.

As to MERALCO' s counterclaim, the Court agrees with the Courts a quo that MERALCO is not entitled to differential billings. Section 6 of RA 7832 defines "differential billings" as "the amount to be charged to the person concerned for the unbilled electricity illegally consumed by him." Case law expounds on this definition stating: "the law provides that the person who actually consumed the electricity illegally shall be liable for the differential billing. It does not ipso facto make liable for payment of the differential billing the registered customer whose electrical facilities had been tampered with and utilized for the illegal use of electricity."