SECOND DIVISION

[G.R. No. 195145. February 10, 2016.]

MANILA ELECTRIC COMPANY , petitioner, vs. SPOUSES

SULPICIO and PATRICIA RAMOS, respondents.

DECISION

BRION, J :
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We resolve the petition for review on certiorari 1 assailing the July 30,
2010 decision 2 of the Court of Appeals (CA) in CA-G.R. CV No. 87843 entitled
"Spouses Sulpicio and Patricia Ramos v. Manila Electric Company," that
affirmed the Regional Trial Court's (RTC) August 22, 2006 decision 3 in Civil
Case No. 99-95975.
The August 22, 2006 RTC decision ordered the Manila Electric Company
(MERALCO) to restore the electric power connection of Spouses Sulpicio and
Patricia Ramos (respondents) and awarded them P2,000,000.00, with legal
interest, in total damages.
The Factual Antecedents
MERALCO is a private corporation engaged in the business of selling
and distributing electricity to its customers in Metro Manila and other
franchise areas. The respondents are registered customers of MERALCO
under Service Identification Number (SIN) 409076401.
MERALCO entered into a contract of service with the respondents
agreeing to supply the latter with electric power in their residence at 2760-B
Molave St., Manuguit, Tondo, Manila. To measure the respondents' electric
consumption, it installed the electric meter with serial number 33OZN43953
outside the front wall of the property occupied by Patricia's brother, Isidoro
Sales, and his wife, Nieves Sales (Nieves), located beside the respondents'
house.
On November 5, 1999, MERALCO's service inspector inspected the
respondents' electrical facilities and found an outside connection attached to
their electric meter. The service inspector traced the connection, an illegal
one, to the residence and appliances of Nieves. Nieves was the only one
present during the inspection and she was the one who signed the Metering
Facilities Inspection Report.
Due to the discovery of the illegal connection, the service inspector
disconnected the respondents' electric services on the same day. The
inspection and disconnection were done without the knowledge of the
respondents as they were not at home and their house was closed at the
time.
The respondents denied that they had been using an illegal electrical
connection and they requested MERALCO to immediately reconnect their
electric services. Despite the respondents' request, MERALCO instead
demanded from them the payment of P179,231.70 as differential billing.
On December 20, 1999, the respondents filed a complaint for breach
of contract with preliminary mandatory injunction and damages
against MERALCO before the RTC, Branch 40, City of Manila. They prayed for
the immediate reconnection of their electric service and the award of actual,
moral, and exemplary damages, attorney's fees, and litigation expenses.
In a decision dated August 22, 2006, the RTC ordered MERALCO to
reconnect the respondents' electric service and awarded damages as
follows:
WHEREFORE, Judgment is rendered directing defendant
MERALCO to permanently reconnect immediately the plaintiff's
electric services, and for said defendant to pay the following:
1. Â P100,000.00 as actual or compensatory damages;
2. Â P1,500,000.00 as moral damages;
3. Â P300,000.00 as exemplary damages;
4. Â P100,000.00 as attorney's fees; and,
5. Â Costs of suit;
with legal interest on the total damages of P2,000,000.00 from
the date of this Judgment until fully paid.
SO ORDERED. 4

MERALCO appealed the RTC's decision to the CA.

In its assailed July 30, 2010 decision, 5 the CA denied the appeal for
lack of merit and affirmed the RTC's order of reconnection and award for
payment of damages. The appellate court held that MERALCO failed to
comply not only with its own contract of service, but also with the
requirements under Sections 4 and 6 of Republic Act No. 7832, or the Anti-
Electricity Electricity and Electric Transmission Lines/Materials Pilferage Act
of 1994 (R.A. 7832) , when it resorted to the immediate disconnection of the
respondents' electric service without due notice. It also ruled that the
respondents were not liable for the differential billing as it had not been
established that they knew or consented to the illegal connection or even
benefited from it.CAIHTE

MERALCO moved for the reconsideration of the decision, but the CA

denied its motion in a resolution 6 dated January 3, 2011. The present
petition for review on certiorari 7 was filed with this Court on March 4, 2011,
as a consequence.
The Petition
MERALCO argues that under R.A. 7832, it had the right and authority to
immediately disconnect the electric service of the respondents after they
were caught in flagrante delicto using a tampered electrical installation.
MERALCO also claims that by virtue of their contract of service, the
respondents are liable to pay the differential billing regardless of whether
the latter benefited from the illegal electric service or not. It adds that this is
true even if the respondents did not personally tamper with the electrical
facilities.
Finally, MERALCO contends that there is no basis for the award of
damages as the disconnection of the respondents' electric service was done
in good faith and in the lawful exercise of its rights as a public utility
company.
The Respondents' Comment
In their comment 8 of June 29, 2011, the respondents pray for the
denial of the present petition for lack of merit. They argue that the discovery
of an outside connection attached to their electric meter does not give
MERALCO the right to automatically disconnect their electric service as the
law provides certain mandatory requirements that should be observed
before a disconnection could be effected. They claim that MERALCO failed to
comply with these statutory requirements.
Also, the respondents contend that MERALCO breached its contractual
obligations when its service inspector immediately disconnected their
electric service without notice. They claim that this breach of contract,
coupled with MERALCO's failure to observe the requirements under R.A.
7832, entitled them to damages which were sufficiently established with
evidence and were rightfully awarded by the RTC and affirmed by the CA.
Lastly, the respondents argue that they are not liable to MERALCO for
the differential billing as they were not the ones who illegally consumed the
unbilled electricity through the illegal connection.
The Court's Ruling
We DENY the petition for review on certiorari as we find no
reversible error committed by the CA in issuing its assailed
decision.
The core issue in this case is whether MERALCO had the right to
immediately disconnect the electric service of the respondents upon
discovery of an outside connection attached to their electric meter.
The distribution of 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 these regulations gives rise to the presumption of bad
faith or abuse of right. 9
Nevertheless, the State also recognizes that electricity is the property
of the service provider. R.A. 7832 was enacted by Congress to afford electric
service providers multiple remedies to protect themselves from electricity
pilferage. These remedies include the immediate disconnection of the
electric service of an erring customer, criminal prosecution, and the
imposition of surcharges. 10 However, the service provider must avail of any
or all of these remedies within legal bounds, in strict compliance with the
requirements and/or conditions set forth by law.
Section 4 (a) of R.A. 7832 provides that the discovery of an outside
connection attached on the electric meter shall constitute as prima facie
evidence of illegal use of electricity by the person who benefits from the
illegal use if the discovery is personally witnessed and attested to by
an officer of the law or a duly authorized representative of the
Energy Regulatory Board (ERB). With the presence of such prima facie
evidence, the electric service provider is within its rights to immediately
disconnect the electric service of the consumer after due notice.
This Court has repeatedly stressed the significance of the presence of
an authorized government representative during an inspection of electric
facilities, viz.:
The presence of government agents who may authorize
immediate disconnections go into the essence of due process.
Indeed, we cannot allow respondent to act virtually as
prosecutor and judge in imposing the penalty of
disconnection due to alleged meter tampering. That would not
sit well in a democratic country. After all, Meralco is a monopoly that
derives its power from the government. Clothing it with unilateral
authority to disconnect would be equivalent to giving it a license to
tyrannize its hapless customers. 11 (emphasis supplied) DETACa

Additionally, Section 6 of R.A. 7832 affords a private electric utility the

right and authority to immediately disconnect the electric service of a
consumer who has been caught in flagrante delicto doing any of the acts
covered by Section 4 (a). However, the law clearly states that the
disconnection may only be done after serving a written notice or warning to
the consumer.
To reiterate, R.A. 7832 has two requisites for an electric service
provider to be authorized to disconnect its customer's electric service on the
basis of alleged electricity pilferage: first, an officer of the law or an
authorized ERB representative must be present during the inspection of the
electric facilities; and second, even if there is prima facie evidence of illegal
use of electricity and the customer is caught in fagrante delicto committing
the acts under Section 4 (a), the customer must still be given due notice
prior to the disconnection. 12
In its defense, MERALCO insists that it observed due process when its
service inspector disconnected the respondents' electric service, viz.:
Under the present situation, there is no doubt that due process,
as required by R.A. 7832, was observed [when] the petitioner
discontinued the electric supply of respondent: there was an
inspection conducted in the premises of respondent with the consent
of their authorized representative; it was discovered during the said
inspection that private respondents were using outside connection;
the nature of the violation was explained to private respondents'
representative; the inspection and discovery was personally
witnessed and attested to by private respondents' representative;
private respondents failed and refused to pay the differential
 billing amounting to P179,231.70 before their electric service
was disconnected. 13 (emphasis supplied)
After a thorough examination of the records of the case, we find no
proof that MERALCO complied with these two requirements under R.A. 7832.
MERALCO never even alleged in its submissions that an ERB representative
or an officer of the law was present during the inspection of the respondents'
electric meter. Also, it did not claim that the respondents were ever notified
beforehand of the impending disconnection of their electric service.
In view of MERALCO's failure to comply with the strict requirements
under Sections 4 and 6 of R.A. No. 7832, we hold that MERALCO had no
authority to immediately disconnect the respondents' electric
service. As a result, the immediate disconnection of the respondents'
electric service is presumed to be in bad faith.
We point out, too, that MERALCO's allegation that the respondents
refused to pay the differential billing before the disconnection of their
electric service is an obvious falsity. MERALCO never disputed the fact that
the respondents' electric service was disconnected on November 5, 1999 —
the same day as when the electric meter was inspected. Also, MERALCO's
demand letter for payment of the differential billing is dated December 4,
1999. Thus, there is no truth to the statement that the respondents first
failed to pay the differential billing and only then was their electric service
disconnected.
The disconnection of respondents'
electric service is not supported by
MERALCO's own Terms and
Conditions of Service.
In addition, we observe that MERALCO also failed to follow its own
procedure for the discontinuance of service under its contract of service with
the respondents. We quote in this regard the relevant terms of service:
DISCONTINUANCE OF SERVICE:
The Company reserves the right to discontinue service in case
the customer is in arrears in the payment of bills in those cases
where the meter stopped or failed to register the correct amount of
energy consumed, or failure to comply with any of these terms and
conditions or in case of or to prevent fraud upon the Company.
Before disconnection is made in case of or to prevent fraud,
the Company may adjust the bill of said customer accordingly
and if the adjusted bill is not paid, the Company may
disconnect the same. In case of disconnection, the provisions of
Revised Order No. 1 of the former Public Service Commission (now
ERC) shall be observed. Any such suspension of service shall not
terminate the contract between the Company and the customer. 14
(emphasis supplied)
There is nothing in its contract of service that gives MERALCO the
authority to immediately disconnect a customer's electric connection.
MERALCO's contractual right to disconnect electric service arises only after
the customer has been notified of his adjusted bill and has been afforded the
opportunity to pay the differential billing.
In this case, the disconnection of the respondents' electric service
happened on November 5, 1999, while the demand for the payment of
differential billing was made through a letter dated December 4, 1999.
Thus, we hold that MERALCO breached its contract of service with
the respondents as it disconnected the latter's electric service
before they were ever notified of the differential billing.
Differential billing
Section 6 of R.A. 7832 defines differential billing as "the amount to be
charged to the person concerned for the unbilled electricity illegally
consumed by him." Clearly, 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.
In this case, as the prima facie presumption afforded by Section 4 of
R.A. 7832 does not apply, it falls upon MERALCO to first prove that the
respondents had actually installed the outside connection attached on their
electric meter and that they had benefited from the electricity consumed
through the outside connection before it could hold them liable for the
differential billing.
aDSIHc

The records show that MERALCO presented no proof that it ever caught
the respondents, or anyone acting in the respondents' behalf, in the act of
tampering with their electric meter. As the CA correctly held, the
respondents could not have been caught in flagrante delicto committing the
tampering since they were not present during the inspection of the electric
meter, nor were any of their representatives at hand. 15 Moreover, the
presence of an outside connection attached to the electric meter operates
only as a prima facie evidence of electricity pilferage under R.A. 7832; it is
not enough to declare the respondents in flagrante delicto tampering with
the electric meter. 16 In fact, MERALCO itself admitted in its submissions that
Nieves was the illegal user of the outside connection attached to the
respondents' electric meter. 17
On this point, MERALCO argues that Nieves was an authorized
representative of the respondents. However, the records are bereft of any
sufficient proof to support this claim. The fact that she is an occupant of the
premises where the electric meter was installed does not make her the
respondents' representative considering that the unit occupied by the
respondents is separate and distinct from the one occupied by Nieves and
her family. Similarly, the fact that Nieves was able to show the respondents'
latest electric bill does not make her the latter's authorized representative.
While this Court recognizes the right of MERALCO as a public utility to
collect system losses, the courts cannot and will not blindly grant a public
utility's claim for differential billing if there is no sufficient evidence to prove
entitlement. 18 As MERALCO failed to sufficiently prove its claim for
payment of the differential billing, we rule that the respondents
cannot be held liable for the billed amount.
On the issue of damages
With MERALCO in bad faith for its failure to follow the strict
requirements under R.A. 7832 in the disconnection of the respondents'
electric service, we agree with the CA that the award of damages is in order.
However, we deem it proper to modify the award in accordance with
prevailing jurisprudence.
First, actual damages pertain to such injuries or losses that are actually
sustained and are susceptible of measurement. They are intended not to
enrich the injured party but to put him in the position in which he was in
before he was injured. 19
I n Viron Transportation Co., Inc. v. Delos Santos, 20 we explained that
in order to recover actual damages, there must be pleading and proof of the
damages suffered, viz.:
Actual damages, to be recoverable, must not only be capable of
proof, but must actually be proved with a reasonable degree of
certainty. Courts cannot simply rely on speculation, conjecture or
guesswork in determining the fact and amount of damages. To
justify an award of actual damages, there must be competent
proof of the actual amount of loss, credence can be given
only to claims which are duly supported by receipts. (emphasis
supplied)
In this case, Patricia stated that her family's food expenses doubled
after MERALCO disconnected their electric services as they could no longer
cook at home. We note, however, that there is no sufficient proof presented
to show the actual food expenses that the respondents incurred.
Nevertheless, Patricia also testified that they were forced to move to a new
residence after living without electricity for eight (8) months at their home in
Tondo, Manila. They proved this allegation through the presentation of a
contract of lease and receipts for payment of monthly rentals for 42 months
amounting to P210,000.00. Thus, we find it proper to increase the
award of actual damages from P100,000.00 to P210,000.00.
Second, moral damages are designed to compensate and alleviate the
physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar
harm unjustly caused to a person. 21 They may be properly awarded to
persons who have been unjustly deprived of property without due process of
law. 22
I n Regala v. Carin , 23 we discussed the requisites for the award of
moral damages, viz.:
In fine, an award of moral damages calls for the presentation of
1) evidence of besmirched reputation or physical, mental or
psychological suffering sustained by the claimant; 2) a culpable act or
omission factually established; 3) proof that the wrongful act or
omission of the defendant is the proximate cause of the damages
sustained by the claimant; and 4) the proof that the act is predicated
 on any of the instances expressed or envisioned by Article 2219 and
Article 2220 of the Civil Code.
Applied to this case, after due consideration of the manner of
disconnection of the respondents' electric service and the length of time that
the respondents had to endure without electricity, we find the award of
moral damages proper. Aside from having to spend eight (8) months in the
dark at their own residence, Patricia testified that they suffered extreme
social humiliation, embarrassment, and serious anxiety as they were
subjected to gossip in their neighborhood of stealing electricity through the
use of an illegal connection. The damage to the respondents' reputation and
social standing was aggravated by their decision to move to a new residence
following the absolute refusal of MERALCO to restore their electric services.
ETHIDa

However, we find the award of P1,500,000.00 in moral damages to be

excessive. Moral damages are not intended to enrich the complainant as a
penalty for the defendant. It is awarded as a means to ease the moral
suffering the complainant suffered due to the defendant's culpable action. 24
While prevailing jurisprudence deems it appropriate to award P100,000.00 in
moral damages in cases where MERALCO wrongfully disconnected electric
service, 25 we hold that such amount is not commensurate with the injury
suffered by the respondents. Thus, in view of the specific circumstances
present in this case, we reduce the award of moral damages from
P1,500,000.00 to P300,000.00.
Third, exemplary or corrective damages are imposed by way of
example or correction for the public good, in addition to moral, temperate,
liquidated, or compensatory damages. The award of exemplary damages is
allowed by law as a warning to the public and as a deterrent against the
repetition of socially deleterious actions. 26
In numerous cases, 27 this Court found that MERALCO failed to comply
with the requirements under R.A. 7832 before a disconnection of a
customer's electric service could be effected. In these cases, we aptly
awarded exemplary damages against MERALCO to serve as a warning
against repeating the same actions.
In this case, MERALCO totally failed to comply with the two
requirements under R.A. 7832 before disconnecting the respondents' electric
service. While MERALCO insists that R.A. 7832 gives it the right to disconnect
the respondents' electric service, nothing in the records indicates that it
attempted to comply with the statutory requirements before effecting the
disconnection.
Under these circumstances, we find that the previous awards against
MERALCO have not served their purpose as a means to prevent the
repetition of the same damaging actions that it has committed in the past.
Therefore, we increase the award of exemplary damages from
P300,000.00 to P500,000.00 in the hope that this will persuade MERALCO
to be more prudent and responsible in its observance of the requirements
under the law in disconnecting a customer's electrical supply.
 Lastly, in view of the award of exemplary damages, we find the award
of attorney's fees proper, in accordance with Article 2208 (1) of the Civil
Code. We find the CA's award of attorney's fees in the amount of
P100,000.00 just and reasonable under the circumstances.
WHEREFORE, the petition is DENIED. The decision dated July 30,
2010 and resolution dated January 3, 2011 of the Court of Appeals in CA-G.R.
CV No. 87843 are AFFIRMED with the following modifications: MERALCO is
ordered to pay respondents Spouses Sulpicio and Patricia Ramos
P210,000.00 as actual damages, P300,000.00 as moral damages,
P500,000.00 as exemplary damages, and P100,000.00 as attorneys fees.
Costs against Manila Electric Company.
SO ORDERED.
Carpio, Del Castillo, Mendoza and Leonen, JJ., concur.
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Footnotes

1. Petition for Review on Certiorari, rollo, pp. 8-29.

2. Penned by Associate Justice Mario V. Lopez and concurred in by Associate

Justices Magdangal M. De Leon and Manuel M. Barrios, id. at 36-50.

3. Penned by Presiding Judge Placido C. Marquez, id. at 123-144.

4. Id. at 144.

5. Supra note 2.

6. Rollo , pp. 63-66.

7. Supra note 1.

8. Rollo , pp. 223-240.

9. Samar II Electric Cooperative, Inc. v. Quijano, G.R. No. 144474, April 27, 2007,
522 SCRA 364, 375, 376.

10. Id. at 376-377.

11. Quisumbing v. Manila Electric Company, G.R. No. 142943, April 3, 2002, 380
SCRA 195, 208.

12. Manila Electric Company v. Navarro-Domingo, G.R. No. 161893, June 27,
2006, 493 SCRA 363, 371.

13. See Petition for Review on Certiorari, rollo, p. 22.

14. See Petition for Review on Certiorari, rollo, p. 16.

15. Go v. Leyte II Electric Cooperative, Inc., G.R. No. 176909, February 18, 2008,
546 SCRA 187, 195.

16. Manila Electric Company v. Chua, G.R. No. 160422, July 5, 2010, 623 SCRA 81,
 98.

17. See MERALCO's Answer with Compulsory Counterclaim, rollo, p. 92.

18. Manila Electric Company v. Wilcon Builders Supply, Inc., G.R. No. 171534, June
30, 2008, 556 SCRA 742, 756, 757.

19. Oceaneering Contractors (PHILS), Inc. v. Barretto, G.R. No. 184215, February
9, 2011, 642 SCRA 596, 605, 606.

20. G.R. No. 138296, November 22, 2000, 345 SCRA 509, 519.

21. Regala v. Carin, G.R. No. 188715, April 6, 2011, 647 SCRA 419, 426.

22. CIVIL CODE, Article 32.

23. Supra note 21, at 427-428.

24. Manila Electric Company v. Jose, G.R. No. 152769, February 14, 2007, 515
SCRA 669, 680.

25. Supra note 17.

26. Tan v. OMC Carriers, Inc. , G.R. No. 190521, January 12, 2011, 639 SCRA 471,
485.

27. Quisumbing v. Manila Electric Company, supra note 11; Manila Electric
Company v. Santiago, G.R. No. 170482, September 4, 2009, 598 SCRA 315;
Manila Electric Company v. Castillo, G.R. No. 182976, January 14, 2013, 688
SCRA 455; Manila Electric Company v. Chua, supra note 16; Manila Electric
Company v. Hsing Nan Tannery, G.R. No. 178913, February 12, 2009, 578
SCRA 640; Manila Electric Company v. Navarro-Domingo, supra note 12. Â