Republic of the Philippines








ATTY. P. M. CASTILLO, doing business under the trade name and style of PERMANENT LIGHT MANUFACTURING ENTERPRISES, and GUIA S. CASTILLO,




- versus -






CA-G.R. CV NO. 80572













May 21, 2008









At the quintessence of this Appeal is the Decision1 dated 9 July 2003 of the Regional Trial Court of Pasig City, Branch 168, ordering appellant to refund to appellees the amount of P 1,138,898.86 representing overpaid electric bills, and to pay damages and attorney’s fees.


The records reflect that appellee-spouses P. M. and Guia Castillo (“spouses Castillo”) are the owners and operators of Permanent Light Manufacturing Enterprises (“Permanent Light”), a business establishment engaged in the manufacture and sale of fluorescent fixtures, office steel cabinets and other metal fabrications since 1978.


On 2 March 1994, Permanent Light contracted with the Government Service Insurance System (“GSIS”) for the supply and installation of 1,200 units of lateral steel filing cabinets worth P 7,636,800.00.2  Permanent Light rushed the production of these steel cabinets to comply with its obligation with GSIS and to obtain the award of 500 additional units.  At the height of Permanent Light’s operation, on 19 April 1994, at around 2:00 o’clock in the afternoon, a group of roving linemen from appellant Manila Electric Company (“Meralco”), headed by Joselito Ignacio (“Ignacio”), asked permission to inspect the company’s electric meter.  A certain Mike Malikay, employee of Permanent Light, witnessed the inspection.


Meralco’s routine inspection disclosed that the terminal seal of Permanent Light’s meter was deformed; its meter seal was covered with a fake lead; and, the meter dials were misaligned.3  Ignacio concluded that the meter was tampered with and immediately disconnected electric supply to Permanent Light.4  The disputed meter was then confiscated and brought to Meralco’s laboratory for verification and confirmation of initial findings.5  On account of the allegedly tampered meter, Meralco estimated its losses at P 126,319.92.6


As could well be expected, spouses Castillo were enraged with the result of the inspection.  But they needed to restore electric supply to Permanent Light so that spouses Castillo were constrained to pay P 50,000.007 as initial downpayment of the differential billing that would soon be sent by Meralco.8


Meanwhile, Meralco conducted a Polyphase Meter Test9 on the subject meter which unveiled the following results:


“1.  The ST-5 seal #A217447 padlock type was tampered by forcibly pulling out the sealing hasp while the lead cover seals (ERB#1 (1989) and Meralco#21) were found fake.


“2.  The meshing adjustment between the 1st driven gear and the rotating disc was found altered causing the said gear to disengaged (sic) totally from the driving gear of the same disc.  Under this condition, the meter failed to register, hence, had not been registering the energy (Khwrs) and kw demand used by the customer.


“3.  The 100th dial pointer of the register was found out of alignment which indicates that the meter had been opened to manipulate said dial pointer and set manually to the desired reading”


Thereafter, Meralco informed spouses Castillo that the unregistered electric consumption of Permanent Light from September 1993 to March 1994 amounted to P 61,709.11.  Deducting therefrom the initial payment of P 50,000.00, spouses Castillo were supposed to pay P 11,709.11; yet, Meralco accepted their tender of P 5,538.20 as full payment of their obligation.10


A few months following reconnection of electric supply, spouses Castillo claimed that their new electric meter was moving at a speed faster than the old meter.  Meralco, however, refused to heed their request for inspection until spouses Castillo reported that the glass cover of the new electric meter was broken, leaving Meralco with no other choice but to install another meter for Permanent Light.11


At around this time, spouses Castillo received another billing statement for P 192,009.04 which was supposedly computed after Meralco realized that payment from March to April 1994 was not yet made.  Spouses Castillo protested the new assessment made against them.  After re-evaluating its records, Meralco corrected its previous assessment and billed spouses Castillo with the amount of P 38,693.53 explaining that portions of the corrected billing overlapped with the differential billing.12


Spouses Castillo refused to pay until Meralco could explain the staggering increase in their monthly bills.  Meralco remained unfazed and threatened to disconnect electric supply if payment would not be made.  This prompted spouses Castillo to seek legal relief via a Complaint for Preliminary Injunction, Recovery of Sum of Money and Damages.13


Spouses Castillo denied tampering the electric meter espousing that the defects in the meter must have been deliberately caused by their neighbors who harbored ill feelings against them.  Through the years, they have been involved in bitter litigation for the right to possess and occupy the land where Permanent Light was constructed.  Spouses Castillo related that they have been subjected to harassment, vandalism and other acts of reprisals, and it was not improbable that their neighbors tampered with their electric meter.14


Evidence for spouses Castillo consisted of pictures15 showing that Permanent Light’s electric meter was located outside the company’s premises in full view of the public; Meralco bills16 for the years 1985 to 1995, indicating the marked increase in their monthly charges supposedly due to the malfunctioning electric meter which Meralco installed after the disconnection; cash vouchers17 covering payment of Permanent Light’s Meralco bills which were all paid under protest; and, Meralco bills of Asiatic Steel Mfg. Co. and Eureka Steel, neighbor-companies engaged in the same business as that of Permanent Light, establishing that the monthly electrical charges of the latter were at par with these two companies before the installation of the new meter.18


Spouses Castillo prayed, among others, for reimbursement of the amounts paid to Meralco and reinstatement of the old meter which was accurately recording Permanent Light’s electric consumption.


The court a quo issued a temporary restraining order to enjoin Meralco from disconnecting electric supply to Permanent Light.19  The injunction was later made permanent upon the filing of a bond amounting to P 95,000.00.20


Meralco, for its part, stood firm on its stance that the electric meter of Permanent Light was tampered with.  In this light, disconnection of electric service was justified and was done with prior knowledge and consent of spouses Castillo.


Meralco explained that prior to September 1993, Permanent Light’s average electrical consumption was 3,300 kilowatts every month. Spouses Castillo were thus made to pay a differential billing of P 61,359.1121 from September 1993 to March 1994 because its electric consumption registered at zero kilowatt beginning September 1993.22


In the course of trial, spouses Castillo reiterated their request for replacement of their electric meter insisting that the same was moving at a faster speed compared to the meter which was confiscated following the disconnection.  The request was finally granted on 28 November 2001 when Meralco installed the third electric meter at Permanent Light’s premises.23


Subsequently, on 29 January 2002, spouses Castillo filed an Urgent Motion to Proffer and Mark the Latest Meralco Bill of P 9,318.65 which was Reflected in the 3rd Meralco Electric Meter Recently Installed.24  This latest assessment was allegedly the usual electric charges paid by Permanent Light which only confirmed that the meter installed by Meralco after the disconnection was running at an abnormally fast speed.  Spouses Castillo thereby demanded reimbursement of the amount of P 1,138,898.86 representing overpayment of Meralco charges from May 1994 to November 2001.


On 9 July 2003, the court a quo rendered the assailed Decision25 ruling thus:


“WHEREFORE, premises considered, judgment is hereby rendered in favor of the petitioners (spouses Castillo) and against the respondent (Meralco) ordering the latter to pay the former the following:


1.               P 1,138,898.86 representing overpayments made by the petitioners from May 1994 to November 2001;


2.               P 200,000.00 as and for moral damages;


3.               P 100,000.00 as and for exemplary damages;


4.               P 100,000.00 as and for attorney’s fees; and


5.               the costs of this suit.


On the other hand, petitioners (spouses Castillo) are hereby ordered to pay to the respondent (Meralco) the amount of P 38,693.53 representing the billing differential.


The Preliminary Injunction issued by the Court is hereby made PERMANENT.




Disgruntled, Meralco interposes this Appeal casting the following errors upon the court a quo:














The Appeal is partly meritorious.


Appellant faults the court a quo for resolving the controversy based on Republic Act No. 783226 ruling that the alleged tampering of the subject electric meter may constitute prima facie evidence of illegal use of electricity only if personally witnessed and attested by an officer of the law or a duly authorized representative of the Energy Regulatory Board.27


Albeit appellant’s argument upon this point is accurate, still, this would not detract Us from declaring that the disconnection of electric supply to Permanent Light was done in utter abuse of right and bad faith.


The operative law in force at the time material to this case was Presidential Decree No. 401,28 the import of which has been explicated in the recent case of Manila Electric Company v. T.E.A.M. Electronics Corporation29


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.”30


The right of a public utility to disconnect its service to a customer is recognized but is conditioned by a 48-hour notice before disconnection,31 as mandated by Section 97 of the Revised Order No. 1 of the Public Service Commission


“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:  Provided, however, That disconnections of service shall not be made on Sundays and official holidays and never after 2 p.m. of any working day:  Provided, further, That if at the moment the disconnection is to be made the customer tenders payment of the unpaid bill to the agent or employee of the operator who is to effect the disconnection, the said agent or employee shall be obliged to accept tender of payment and issue a temporary receipt for the amount and shall desist from disconnecting the service.”


It is beyond cavil that appellant disconnected electric supply to Permanent Light without complying with the requisite 48-hour prior notice.  Appellant cannot take refuge on the fact that inspection of the electric meter was witnessed by an employee of Permanent Light.  Neither can We allow it to obtusely argue that appellee Guia received and signed the Power Metering Field Order issued after the inspection of the tampered meter.32  These will not lend regularity to the illegal and unjust disconnection of appellees’ electric supply.


The hard truth is that disconnection was effected when appellees were working at full speed to finish the production of 1,200 units of steel cabinets ordered by the GSIS.  They wanted to deliver these cabinets according to schedule hoping that the GSIS would order 500 additional units. Their operation, however, abruptly halted with the sudden loss of electric power.  Appellees thought that a brown-out had affected their area so they had to use their generators to keep their operation on track.33


Evidently, appellant abused the remedies available under P.D. No. 401 and Revised General Order No. 1 by outrightly depriving appellees of electrical services, without first notifying the latter of any differential billing or informing them that their electrical services would be disconnected should they fail to settle their account.34  Accordingly, whatever evidence pertaining to the alleged tampered meter is rendered dubious35 because of appellant’s bad faith in capriciously disconnecting electric service to Permanent Light.


Electricity is a basic necessity the generation and distribution of which is imbued with public interest36 so that the premature disconnection of supply thereof is indicative of an intent to cause mental and moral suffering to appellees.37


Upon the strength of the foregoing disquisitions, We hold that the court a quo did not transgress reasonable bounds in awarding moral and exemplary damages to appellees.  We give Our imprimatur to the wise ratiocinations of the court a quo


“Although the electric service of the petitioners (appellees) was restored the following day, April 20, 1984, this came after petitioners (appellees) were compelled to make a deposit of P 50,000.00 by respondent (appellant).  The inconvenience and anxiety suffered by the petitioners (appellees) as a result of the disconnection was corrected alright, but only after being forced to make a deposit.  For this, the Court grants the petitioners (appellees) P 200,000.00 as and for moral damages.  To serve as an example – that before a disconnection of electrical supply can be effected by a public utility like Meralco, the requisites of law must be faithfully complied with – the Court hereby awards the amount of P 100,000.00 to petitioners (appellees). . .”38


Another well-debated issue in this case is the question of appellant’s liability for the alleged overpayment of electric charges amounting to P 1,138,898.86.  Appellees prepared and offered in evidence the Comparative Monthly Meralco Bills of Permanent Light Mfg. Enterprises from 1985-200139 to show the tremendous increase in their electric consumption as the meter installed after the disconnection was running at an unusually high speed, and its consequent decrease when appellant finally replaced it with the third meter on 28 November 2001.


In Our considered opinion, appellees convincingly established the dramatic increase in their electric bills with the installation of the second meter.  We are simply confounded as to why appellant did not bother to present an iota of proof to refute the claim that this second meter was running at an unusually high speed.  Appellant should have listened to the complaints of its clients and immediately replaced the highly contested second meter when appellees aired out their concerns about it.  Appellant remained deaf to appellees’ grievances for almost seven years.  That appellant is the sole electric provider in the country makes matters even worse as it is the only entity which could possibly address appellees’ woes.


However, We cannot abide by the computation advanced by appellees as they arrived at the amount of P 1,138,898.86.  To conclude that the 28 November 2001 electric bill ought to be the basis for computing overpayment would be speculating that this is the average monthly charge paid by appellees.  So too, it must be borne in mind that the electric rates imposed and collected by appellant increased through the years.  Unmistakably then, appellees’ computation was merely an estimate of their overpaid electric bills.  But considering that appellees suffered pecuniary loss although its amount could not be determined with certainty, the award of temperate damages in the amount of P 500,000.00 is sufficient and reasonable under the circumstances.40


In epitome, We reverberate the emphatic declaration in Ridjo Tape & Chemical Corp. v. Court of Appeals41


“... (I)t is worth emphasizing that it is not our intention to impede or diminish the business viability of MERALCO, or any public utility company for that matter.  On the contrary, we would like to stress that, being a public utility vested with vital public interest, MERALCO is impressed with certain obligations towards its customers and any omission on its part to perform such duties would be prejudicial to its interest.  For in the final analysis, the bottom line is that those who do not exercise such prudence in the discharge of their duties shall be made to bear the consequences of such oversight.”


WHEREFORE, the Decision dated 9 July 2003 of the Regional Trial Court of Pasig City, Branch 168, is hereby AFFIRMED with MODIFICATION in that the award of P 1,138,898.86 representing overpaid electric bills is DELETED.  In lieu thereof, Manila Electric Company is ORDERED to pay temperate damages amounting to P 500,000.00.








Associate Justice










Associate Justice


Associate Justice








Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.






Associate Justice

Chairman, Fifteenth Division







1Original Records, Vol. II, pp. 252-276.


2Notice of Award and Notice to Proceed; Original Record, Vol. I, pp. 11-12. Paragraph 6 of the Petition for Injunction; Original Records, Vol. I, p. 3.


3Special Investigation Report; Original Records, Vol. II, p. 107.




5Original Records, Vol. II. p. 106.


6Appellant’s Brief; Rollo, p. 140.


7Original Records, Vol. I, p. 14.


8Undertaking; Original Records, Vol. II, p. 113.


9Original Records, Vol. II, p. 108.


10Original Records, Vol. I, p. 14; Vol. II, p. 114.


11Original Records, Vol. II, p. 116.


12Appellant’s Brief; Rollo, pp. 141-142.


13Original Records, Vol. I, pp. 1-10.


14Id., p. 2.


15Original Records, Vol. II, p. 397.


16Id., pp. 305-356.




18Original Records, Vol. II, pp. 357-382.


19Order dated 29 August 1995; Original Records, Vol. I, p. 18.


20Order dated 8 September 1995; Original Records, Vol. I, p. 24.


21TSN, Enrique Katipunan, 11 May 1999, p. 30.


22Id., p. 23; Original Records, Vol. II, pp. 109-112.


23Original Records, Vol. II, p. 202.


24Id., pp. 198-200.


25Id., pp. 252-276.


26An Act Penalizing the Pilferage of Electricity and Theft of Electric Power Transmission Lines/Materials, Rationalizing System Losses by Phasing Out Pilferage Losses as a Component Thereof, and for other Purposes;” issued on 8 December 1994.


27Pages 20-22 of the Decision; Original Records, Vol. II, pp. 271-273.


28Penalizing the Unauthorized Installation of Water, Electrical or Telephone Connections, the Use of Tampered Water or Electrical Meters, and Other Acts;” issued on 1 March 1974.


29540 SCRA 62 (2007).


30Id., 64 (2007).


31Ceniza v. Court of Appeals, 218 SCRA 390, 399 (1993).


32Pages 5-6 of the Appellant’s brief; Rollo, pp. 139-140.


33TSN, Atty. P. M. Castillo, 15 September 1997, p. 17.


34See Samar II Electric Cooperative, Inc. v. Quijano, 522 SCRA 364, 381 (2007).


35Id. at 375.


36See Samar II Electric Cooperative, Inc. v. Quijano, 522 SCRA 364, 375-376 (2007).


37See Meralco v. Court of Appeals, 157 SCRA 243, 248 (1988).


38Page 24 of the Decision; Original Records, Vol. II, p. 275.


39Original Records, Vol. II, pp. 201-203.


40See Public Estates Authority v. Chu, 470 SCRA 495, 506 (2005).


41286 SCRA 544, 554 (1998).


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