SC to power distribution firms: Observe legal process on disconnection

The Court pointed out that electricity is “a basic necessity whose generation and distribution is imbued with public interest, and its provider is subject to strict regulation by the State in the exercise of its police power.” (Photo by John Christian Fjellestad/Flickr, CC BY 2.0)

MANILA — Power distribution utilities should strictly comply with the legal requirements before disconnecting electricity supply due to alleged tampering of metering devices.

In a 22-page decision on the Manila Electric Company (Meralco) versus Nordec Philippines case dated June 28, the Supreme Court’s Third Division declared distribution utilities can no longer recover the amounts of allegedly used but uncharged electricity if it would be proven that they failed to observe the standard of care required due to negligence in their inspection and repair of their apparatus.

“It is well-settled that electricity distribution utilities, which rely on mechanical devices and equipment for the orderly undertaking of their business, are duty-bound to make reasonable and proper periodic inspections of their equipment. If they are remiss in carrying out this duty due to their own negligence, they risk forfeiting the amounts owed by the customers affected,” read the Court decision penned by Associate Justice Marvic Leonen.

The Court pointed out that electricity is “a basic necessity whose generation and distribution is imbued with public interest, and its provider is subject to strict regulation by the State in the exercise of its police power.”

“The serious consequences on a consumer, whose electric supply has been cut off, behoove a distribution utility to strictly comply with the legal requisites before disconnection may be done. This is all the more true considering Meralco’s dominant position in the market compared to its customers’ weak bargaining position,” it added.

The Court noted that distribution utilities are required to discover tampered and defective meters during the prescribed inspections within a four-month period; issue a 48-hour notice prior to disconnection; and an explanation as to the basis for its billings of supposed unregistered consumption.

In the said case, the Court ruled that Meralco failed to comply with these legal requirements.

Thus, it affirmed with modifications the decision of the Court of Appeals (CA) issued on Jan. 21, 2011 ordering Meralco to pay Nordec the amounts of PHP5,625, representing overbilling for Nov. 23, 1987 and PHP300,000 as exemplary damages and attorney’s fees.

Instead, the Court directed Meralco to pay Nordec PHP5,625, representing overbilling for No. 23, 1987; PHP30,000 in nominal damages; and costs of suit.

The awards for exemplary damages and attorney’s fees were deleted.

The SC noted that Meralco itself claimed that the irregularities in the electricity consumption recorded in Nordec’s metering devices started on Jan. 18, 1985, as evidenced by their Aug. 7, 1985 demand letter, covering Jan. 18, 1985 to May 29, 1985.

However, the SC said the alleged tampering was only discovered during the May 29, 1985 inspection.

In the case of Nordec, the Court said the “Power Field Orders” given to the company following the inspections did not mention the alleged defects that were discovered.

The SC also noted that the Meralco failed to comply with the 48-hour disconnection notice rule.

It did not give weight to Meralco claims that the statements in its demand letters, that failure to pay would result in disconnection, were sufficient notice.

“However, pursuant to Section 97 of Revised General Order No. 1, the governing rule when the disconnection occurred, disconnection due to non-payment of bills requires that a 48-hour written notice be given to the customer,” the Court explained.