### Facts:
MERALCO, a corporation engaged in distributing electricity, contracted to supply power to the Ramoses’ residence in Manila. An outside illegal connection was discovered at the respondents’ meter, leading to disconnection without their presence or notification. The Ramoses denied using illegal connections and sought reconnection and damages.
After MERALCO demanded a hefty differential billing and refused reconnection, the Ramoses filed a breach of contract with damages case. The RTC ruled in their favor, ordering MERALCO to reconnect and awarded P2 million in total damages. On appeal, the CA affirmed this decision, emphasizing MERALCO’s non-compliance with R.A. 7832. MERALCO, insisting on its compliance and right to disconnect for illegal use, appealed to the Supreme Court.
### Issues:
1. Did MERALCO have the right to immediately disconnect electricity service based on an illegal connection?
2. Is MERALCO’s disconnection in compliance with R.A. 7832?
3. Are the Ramoses liable for the differential billing, despite not being proven as the illegal electricity consumers?
4. Is MERALCO’s action to disconnect without notice justified under its terms of service?
### Court’s Decision:
The Supreme Court denied MERALCO’s petition, affirming the decisions of the RTC and CA with modifications in the amounts awarded. The court found:
1. MERALCO acted in bad faith by immediately disconnecting service without compliance with R.A. 7832’s requirements: presence of an ERB officer during inspection and prior notice to the customer.
2. MERALCO’s own service terms did not authorize disconnection without first notifying customers and providing them an opportunity to settle alleged differential billing.
3. Proof was lacking that the Ramoses were responsible for the illegal electricity consumption to hold them liable for differential billing.
The court modified the damages awarded in light of the incurred losses and moral damages, deciding on a total award of P1,110,000 in damages and attorney’s fees.
### Doctrine:
This case reiterates the importance of compliance with R.A. 7832’s procedures for electric service providers in cases of alleged illegal electricity use. It underscores the necessity of due process, including the presence of an ERB representative during inspections and provision of notice before disconnection. It also affirms that differential billing liability requires proof of actual use or benefit from illegal connections.
### Class Notes:
– **R.A. 7832 Compliance**: Before disconnection for electricity pilferage, two requirements must be met: the presence of an ERB officer during meter inspection and prior written notice to the consumer.
– **Differential Billing**: Liability for the unbilled consumed electricity falls on those who directly benefit from or cause the illegal connection, not automatically on the account holder unless proven otherwise.
– **Contractual Obligations and Due Process**: Utility service providers must adhere to their contractual terms of service, especially concerning disconnection procedures, ensuring customers’ right to due process.
### Historical Background:
This case is situated within the broader regulatory context of efforts to curb electricity pilferage in the Philippines, highlighting the balance between protecting utility providers from losses due to illegal connections and safeguarding consumer rights against arbitrary service disconnections.
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