docketed x-------------------------------------------x

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Fj(epublicof the PhilippinesENERGr REGULATORY COMMISSION

San Miguel Avenue, Pasig City!

ELENITA C. FLO~ESCA andELEODORO T. FLO~ESCA

Complainants,

-versus-

MANILA ELECTRIC COMPANY(MERALCO),

Respondent.x-------------------------------------------x

ERC CASE NO. 2010-196CC

DOCKETED0.1.: ~4ti.2"JL~By:, ~.._...JdC-----

DECISION

Before the Commission for resolution is the verified complaintfiled on 2 August 2010 by Spouses Elenita C. Floresca (Elenita) andEleodoro T. Floresca (Eleodoro) against the Manila Electric Company(MERALCO) for imposing a differential billing against thecomplainants due to an alleged tampered meter.

As can be gleaned from the records of the case, the instantComplaint stemmed from the following relevant antecedents:

Complainants are residents of No. 412 N.S. De Guia St.,Ermita, Manila. MERALCO provides electricity service to complainantElenita's service address at Unit 1211, Kaimito Street, Valle Verde IISubdivision, Ugong, Pasig City under Service Identification Number(SIN) 477469901.'

Pursuant to the "Meter Reader Report" that the meter's dialpointers of the aforesaid electric service appears to be out ofalignment and that its ERC seal was cut, MERALCO issued FieldOrder No. 8159836 directing the inspection and replacement of thesaid subject meter with alphanumeric characters 33XZN71594 and98771594.2

1 Complainants' Position Paper dated November 11, 2011, p. 1; Complainants' Verified Complain"tdated July 29, 2010; Respondent's Position Paper dated June 28,2011, p. 22 Respondent's Position Paper dated June 28, 2011, p. 2

,.. "

ERC Case No. 2010-196CCDecision/3 January 2017 of 14

On 28 April 2008. MERALCO dispatched its Service Inspectors,headed by Jose Shandel A Azares, to Elenita's service address forthe implementation of the Field Order. Upon arrival thereat, theService Inspectors were met by the complainants' allegedrepresentative, Mr. A Wisco. The Service Inspectors thereaftersought Mr. Wisco's permission and proceeded with the inspectionand removal of the subject meter. In the course of the inspection,MERALCO's Service Inspectors found out that the subject meter hasa broken terminal and cover seals and its 10th dial pointer was out ofalignment. Consequently, the Service Inspectors removed the meterand placed it inside a plastic bag sealed with Meter Bag Seal numberB07SC0053046. Mr. Wisco was informed of the said findings. Hewas likewise informed that a meter verification and laboratory testingwill be conducted at the MERALCO's office within five (5) workingdays and complainants shall have the right to witness suchverification and testing. Afterwards, the Service Inspectors executedthe Metering Facilities Inspection Report with number C007780-08and furnished Mr. Wisco with a copy thereof. On the same date, theService Inspectors brought the subject meter to MERALCO's Officeat Ortigas, Pasig City. The meter was subsequently turned over to theMetering Services and Assets Management Office of MERALCO.3

As MERALCO never heard from the complainants,' the meterverification and laboratory testing of the subject meter wereconducted on 14 May 2008. The verification and testing yielded thefollowing findings:

1. Lead cover seals 23-1 (2000) weretampered by cutting the sealing wire;

2. The 1000'h, 100lh and 10lh dialpointers of the register were found out ofalignment indicating they had beenmanipulated and set to the desiredreadings.5

Respondent's billing analyst, Ofelia O. Diaz, reviewed the billinghistory of the above-mentioned service address and computed theamount of the unregistered electricity consumption. The computeddifferential billing amounted to ONE HUNDRED FIFTY-NINETHOUSAND EIGHT HUNDRED THIRTY-EIGHT PESOS ANDNINETY-FIVE CENTAVOS (PhP159,838.95). The said amount wascomputed based on the highest consumption of 793 kWh, whichcame from the affected period of 03 September 2005 to 28 April

3 Complainants' Draft Decision, p, 1; Respondent's Position Paper dated June 28, 2011, pp. 3-54 Complainants' Draft Decision, p. 1; Respondent's Position Paper dated June 28, 2011, p. 55 Annex "8", Respondent's Position Paper dated June 28, 2011~- . - --

','

"


2008. In addition, respondent also billed Elenita the surchargeamount of TWO HUNDRED FIFTY-SEVEN PESOS AND FIFTYCENTAVOS (PhP257.50)'"

Demands for payment were made against Elenita, Instead ofpaying the said differential billing and surcharges, Complainants fileda verified Complaint before this Commission against the respondent.Respondent, on the other hand, filed its verified Answer to theComplaint.

Since the parties failed to reach a compromise agreement, thehearings were thus conducted under Summary Procedure set forthunder Section 2, Rule 17 of the ERC Rules of Practice andProcedure, Both parties were directed to submit their respectivePosition Papers, after which, the case was submitted for resolution.Moreover, the parties were also directed to submit their respectivedrafts of the decision, stating clearly and distinctly therein the factsand the law upon which it is based pursuant to Section 2.3 ofExecutive Order No. 26, Series of 1992.

Taking the parties' respective position papers, affidavits,evidence and arguments altogether, the issues which thisCommission is called to resolve are as follows:

ISSUES

I.

WHETHER OR NOT COMPLAINANTSVIOLATED REPUBLIC ACT NO, 7832 (R.A.7832), OTHERWISE KNOWN AS THE "ANTI-ELECTRICITY AND ELECTRICTRANSMISSION LINES/MATERIALSPILFERAGE ACT OF 1994",

II.

WHETHER OR NOT COMPLAINANTS ARELIABLE TO PAY THE DIFFERENTIALBILLING IN THE AMOUNT OF ONEHUNDRED FIFTY-NINE THOUSAND EIGHTHUNDRED THIRTY-EIGHT PESOS ANDNINETY-FIVE CENTAVOS (PhP159,838,95)AND SURCHARGES IN THE AMOUNT OF

6 Respondent's Position Paper dated June 28, 2011, p. 7


TWO HUNDRED FIFTY-SEVEN PESOS ANDFIFTY CENTAVOS (PhP257.50)

DISCUSSION

Since the two Issues are closely intertwined, they shall bediscussed together.

Complainants insist that they did not violate RA. 7832 becausethe process of inspection of the electric meter was tainted withillegality. First, the inspection of the electric meter was conductedwithout the presence of an authorized government representative.Second, the laboratory testing and examination of the questionedelectric meter at MERALCO's office on 14 May 2008 was notwitnessed by an ERC representative. Third, the figures provided byMs. Diaz, MERALCO'S Billing Support Staff, did not even provide afactual or legal basis for the differential billing. Lastly, MERALCO didnot present any evidence that complainants or their representativewere caught in flagrante delicto tampering the electric meter.7

Respondent, on the other hand, insists that there is a violationof RA. 7832 as evidenced by the tampered meter and that theinspection was conducted in accordance with law. Respondentpresented several pieces of evidence such as the Field Order,8

Metering Facilities Inspection Report,9 Single Phase VerificationTesting Checklist,lO Meter Verification Report,11 Report of ElectricWalthour Meter Tests,12 S. I. Computation Worksheet,13 andSupporting Affidavits, 14to prove the existence of a tampered meter.

In cases where the complainants are contesting the validity ofthe findings of MERALCO personnel, it is the burden of respondentMERALCO to prove the existence of a tampered meter and that theconduct of the inspection was done in accordance with law.

The Commission finds the allegations of MERALCOmeritorious.

Section 4 of RA. 7832 provides:

7 Complainants' Position Paper dated November 11, 20118 Annex "2", Respondent's Position Paper dated June 28, 20119 Annex "3", Respondent's Position Paper dated June 28, 201110 Annex "5", Respondent's Position Paper dated June 28, 201111 Annex "6", Respondent's Position Paper dated June 28, 201112 Annex "7", Respondent's Position Paper dated June 28, 201113 Annex "9-A" and "9-8", Respondent's Position Paper dated June 28, 201114 Annexes "4" "8" and "9" Respondent's Position Paper dated June 28 2011t, , ,


"Section 4. Prima Facie Evidence - (a) the presenceof any of the following circumstances shall constituteprima facie evidence of illegal use of electricity as definedin this Act, by the person benefited thereby, and shall bethe basis for: (1) the immediate disconnection by theelectric utility to such person after due notice, xxx:

x x x

(iv) The presence of a tampered, broken, or faceseal on the meter, or mutilated, altered or tampered meterrecording chart or graph or computerized charges, graph,or log.

(v) The presence in any part of the building or itspremises which is subject to the control of the consumeror on the electric meter, of a current reversingtransformer, jumper, shoring and/or shunting wire, and/orloop connection or any other similar device;

x x x

(viii) x x x; Provided, however, That the discoveryof any of the foregoing circumstances, in order toconstitute prima facie evidence, must be personallywitnessed and attested to by any officer of the law ora duly authorized representative of the EnergyRegulatory Board (ERB)." (Underscoring supplied)

Under the law, the presumption that there is prima facie15 caseof illegal use of electricity stands when the discovery of any of thecircumstances (i.e. tampered meter) was witnessed by an officer ofthe law or a duly authorized representative of the ERG.

When a prima facie'6 case exists, the distribution utility isdischarged from the burden of proving the existence of pilferageunder RA No. 7832. A prima facie case of illegal use of electricityshall be the basis for: (a) immediate disconnection by the electricutility or cooperative to any such person after due notice; (b) the

15 Prima facie evidence is defined as:

16 Evidence good and sufficient on its face, Such evidence as, in the judgment of the law, issufficient to establish a given fact, or the group or chain of facts constituting the party's claimor defense, and which if not rebutted or contradicted, will remain sufficient. Evidence which, ifunexplained or uncontradicted, is sufficient to sustain a judgment in favor of the issue itsupports, but which may be contradicted by other evidence. H. Black, et aI., BLACKS LAWOICTIONARY 1190 (6th ed., 1990).


holding of preliminary investigation by the prosecutor and thesubsequent filing in court of the pertinent information; and (c) thelifting of any temporary restraining order or injunction which may havebeen issued against a utility or cooperative. 17

In MERALCO vs. Spouses Chua and Paqueo,18 theHonorable Supreme Court enunciated the importance of having anauthorized government representative present during inspection asthis goes into the essence of due process, thus:

"To reiterate, the discovery of a tampered, broken, or fakeseal on the meter shall only constitute prima facieevidence of illegal use of electricity by the person whobenefits from the illegal use if such discovery ispersonally witnessed and attested to by an officer ofthe law or a duly authorized representative of theEnergy Regulatory Board (ERB). With such prima facieevidence, MERALCO is within its rights to immediatelydisconnect the electric service of the consumer after duenotice.

Section 1, Rule III of the Rules and RegulationsImplementing RA 7832 (IRR) defines an officer of the lawas one who, by direct supervision of law or by election orby appointment by competent authority, is charged withthe maintenance of public order and the protection andsecurity of life and property, such as barangay captain,barangay chairman, barangay councilman, barangayleader, officer or member of Barangay CommunityBrigades, barangay policeman, PNP policeman,municipal councilor, municipal mayor and provincial fiscal.

The importance of having an authorizedgovernment representative present during an inspectionwas highlighted during the Senate deliberations on RA7832 when Senator John H. Osmea, the law's author,explained:

Mr. President, if a utility like MERALCOfinds certain circumstances or situations whichare listed in Section 2 of this bill to be primafacie evidence, I think they should beprudent enough to bring in competentauthority, either the police or the NBI, toverify or substantiate their finding. If theywere to summarily proceed to disconnect on

17 Section 1, Rule III, RULES AND REGULATIONS IMPLEMENTING REPUBLIC ACT NO. 7832,as amended

18 G.R. NO. 160422, July 5, 2010


the basis of their findings and later on therewould be a court case and the customer or theuser would deny the existence of what is listedin Section 2, then they could be in a lot oftrouble.

We emphasized the significance of thisrequirement in Sps. Quisumbing v.MERALCO, when we said:

The presence of government agents whomay authorize immediate disconnectionsgo into the essence of due process.Indeed, we cannot allow respondent to actvirtually as prosecutor and judge in imposingthe penalty of disconnection due to allegedmeter tampering. That would not sit well in ademocratic country. After all, Meralco is amonopoly that derives its power from thegovernment. Clothing it with unilateralauthority to disconnect would be equivalent togiving it a license to tyrannize its haplesscustomers." (Underscoring supplied)

In the case at hand, indeed there was no prima facie caseestablished by MERALCO in view of the absence of an officer of thelaw or a duly authorized representative of the ERC during inspection.However, this does not necessarily mean that MERALCO's right topresent its case is already foreclosed. As a consequence,MERALCO has the burden of proving that indeed complainantcommitted the theft of electricity.

To prove the fact of theft of electricity, MERALCO presentedthe results of laboratory tests conducted on the subject kWh meter byMERALCO and the representative of the Commission. The result ofthese tests confirmed that the subject meter was indeed tampered,due to the following findings: (1) lead cover seals 23-1 (2000) weretampered by cutting the sealing wire; and (2) the 10001h, 100lh and10lh dial pointers of the register were found out of alignment withcircular scratches on the face plate, indicating they had beenmanipulated and set to the desired readings. These test results arereflected in two separate documents entitled Meter VerificationReport prepared by MERALCO and Report of Electric WatthourMeter Test issued by the Commission 1".

To dispel any doubt on the veracity of these test results, it isimportant that they have to be validated. Thus, MERALCO should

19 Annexes "6" and "7" of Respondent's Position Paper


show that it has fully complied with the procedures in handling andcustody of the subject kWh meter. Any deviation on its part in theobservance of such procedure would cast doubt on the probativevalue of the test results. It must establish that what it tested in thelaboratory was the same kWh meter it confiscated from the premisesof the complainant. This led us to the examination of every link in thechain of custody over the kWh meter from its confiscation, handling,and testing by the MERALCO.

Section 2 of Rule V of the Implementing Rules and Regulationsof R.A. 7832, as amended, provides:

"RULE V

INSPECTION RULES AND PROCEDURES

Section 2. Routine Inspections Shall Be ConductedAs Follows:

x x x

c. Routine inspections shall be conducted with or withoutthe presence of the customer, actual user or theirrepresentative, provided that no meter shall be removedwithout their presence, except for reasons of publicpolicy.

d. During routine inspections, meters removed shall beplaced in a suitable container, properly identified andsealed and shall be opened only for testing by an ERCrepresentative. If, after such testing, the subject meter isfound to be tampered, the DU may assess the customeror actual user a differential billing in accordance withthese rules and regulations. Failure to pay thedifferential billing after due notice is a ground fordisconnection of the customer's electric service in thesubject premises.

e. After each routine inspection, the DU's representativeshall prepare a routine inspection report indicating theirfindings if the meter is removed for testing. The DU'srepresentative must issue a notice of meter testing tothe customer, actual user or their representative forthem to witness the testing of the said meter. If suchcustomer, actual user or representative fails to appearduring the designated time, the testing of the metermay proceed in the presence of the ERCrepresentative.


f. Inspections to be undertaken by DUs to establish thepresence of any of the prima facie evidence of illegaluse of electricity, as enumerated in Section 4 of RA7832, must be witnessed by an officer of the law or anERC representative. If such prima face evidence isestablished, the DU may disconnect the customer'selectric service after due notice and non-payment ofthe differential billing."

As discussed earlier, Mr. Jaime s. Leanda in the presence ofthis Commission's representative, Engr. Isidro B. Madrid, proceededto conduct the laboratory test on 14 May 2008. Hence, it wasconfirmed that kWh meter No. 33XZN71594 and with serial no.98771594 was indeed tampered in violation of R.A. No. 7832.

Based on the testimonial and documentary evidences itpresented, MERALCO has sufficiently shown to have complied withthe procedures20 relative to the confiscation, handling, and testing ofthe kWh meter. There was no indication that it deviated from therequired procedures so as to compromise the physical integrity of thekWh meter it tested. As inspected and verified by the Commission'srepresentative, the subject meter was placed in a plastic bag, dulysealed, unaltered and in an uncompromised condition before theconduct of testing.

The result of the laboratory test conducted by the Commissiondispels the claim of complainant that the meter may have beenmanipulated by MERALCO. Its faithful compliance with theprocedures of handling and testing the kWh meter belies any doubton the veracity of the test results of the tampered kWh meter. Withthe pieces of evidence presented by MERALCO and the test report ofthe representative of the Commission, MERALCO was able to provethat the subject meter was tampered in violation of Section 2 of RA7832, to wit:

"Section 2. Illegal Use of Electricity. - It isunlawful for any person, whether natural or juridical,public or private, to:

x x x

(c) Tamper, install or use a tampered electricalmeter, jumper, current reversing transformer, shorting orshunting wire, loop connection or any other device which

20 Sections 2 and 3 of Rule V of this Commission'sResolution No.6, Series of 2011 (AResolution Adopting the Amendments to the Rules and Regulations Implementing RepublicAct No. 7832) issued on January 31, 2011


interferes with the proper or accurate registry ormetering of electric current or otherwise results in itsdiversion in a manner whereby electricity is stolen orwasted;

x x x"

With MERALCO having justified that indeed the electric meterwas tampered, a disputable presumption exist that complainantbenefitted from the illegal use of electricity. Thus, the burden ofproving otherwise or the non-existence of the tampered meter nowrests with the complainant. Complainants should presentcontradicting evidence to refute the presumption that they benefitedfrom the illegal use of electricity.

Complainants, however, failed to present any evidence tosupport their denial that they are not responsible on the existence ofa tampered meter. A defense of denial which is unsupported andunsubstantiated by clear and convincing evidence becomes negativeand self-serving, deserving no weight in law, and cannot be givengreater evidentiary value over convincin~, straightforward andprobable testimony on affirmative matters" Indeed, denial is anintrinsically weak defense which must be buttressed with strongevidence of non-culpability to merit credibility.22

Thus, the Commission finds basis on the imposition andassessment of differential bill against complainants in accordancewith Section 6 of RA No. 7832, the Terms and Conditions of Serviceapproved by the Board of Energy (now ERC) in its Decision in BOECase No 85-121 and Article 35 of the MREC. The pertinentprovisions of which are as follows:

A. R.A. 7832

"Section 6. Disconnection of Electric Service.

x x x

For purposes of this Act, "differential billing" shall refer tothe amount to be charged to the person concerned forthe unbilled electricity illegally consumed by him asdetermined through the use of methodologies whichutilize, among others, as basis for determining theamount of monthly electric consumption in kilowatt-hoursto be billed, either: (a) the highest recorded monthlyconsumption within the five-year billing period preceding

21 People of the Philippines VS. Carlita Mateo; G.R. No. 179036, July 28, 200822 People of the Philippines vs. Agustino Tamolon; G.R. No. 180169, February 27, 2009

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ERC Case No, 2010-196CCDecision/3 January 2017 of 14

the time of the discovery, (b) the estimated monthlyconsumption as per the report of load inspectionconducted during the time of discover, (c) the higherconsumption between the average consumptions beforeor after the highest drastic drop in consumption withinthe five-year billing period preceding the discovery, (d)the highest recovered monthly consumption within four(4) months after the time of discovery, or (e) the result ofthe ERB test during the time of discovery and, as basisfor determining the period to be recovered by thedifferential billing either: (1) the time when the electricservice of the person concerned recorded an abrupt orabnormal drop in consumption, or (2) when there was achange in his service connection such as a change ofmeter, change of seal or reconnection, or in the absencethereof, a maximum of sixty (60) billing months up to thetime of discovery: Provided, however, That such periodshall in no case, be less than one (1) year preceding thedate of discovery of the illegal use of electricity."

B. BOE Case NO.85-21

"CUSTOMER'S LIABILITY

x x x

Customers will be held responsible for tampering,interfering with, or breaking of seals of meters or otherequipment of the company installed on the Customer'spremises, and shall be held liable for the sameaccording to the law. Xxx

The employees and/or representatives of theCompany are hereby given permission by the Customerto enter its premises without being liable to trespass todwelling for the purpose of inspecting, installing, reading,removing, testing, replacing, or otherwise disposing of itsapparatus and properly, and/or removing the Company'sentire property in the event of termination of the contractfor any cause.

PAYMENTS:

x x x

x x x In the event of the stoppage, or the failure by anymeter to register the full amount of energy consumed,the Customer shall be billed for such period on an

,',.",


estimated consumption based upon his use of energy ina similar period of like use x x x"

C. MREC

"Article 35, Obligation to Pay Differential Billing. - A consumer who isdiscovered to have committed the offense of illegal use of electricityshall, in addition to the imposition of appropriate penal sanction, berequired to pay a differential billing to the electric distribution utility tobe computed in accordance with existing law, rules and regulations."

Based on the billing history" of the complainant, MERALCOcomputed the differential billings of PhP159,838.95 representing thevalue of electricity actually consumed by the registeredconsumers/users but not registered in the meter on account of thetampered condition of the meter.

In support of its claim for differential billing, MERALCOpresented the affidavit of Ms. Ofelia O. Diaz24, its Billing Support Staffwho prepared the computation of the differential billing for thecomplainants covering the period 3 September 2005 to 28 April 2006.

Using the methodologies above, MERALCO computed theamount of PhP159,838.95 based on 793 kWh. This is the highestrecorded monthly consumption of the subject service account ofcomplainant within the five-year billing period preceding the time ofthe discovery of the tampering multiplied by the number of months orallowable period of recovery and at the current rate of electricity atthe time of apprehension. The current rate means the average rateof electricity per kWh as reflected in the current bill. Current billmeans the latest monthly bill served by the distribution utility whichdoes not include any period before the time of apprehension.

As can be gathered from the evidence presented, the electricalconsumptions of complainant for the period 3 September 2005 to 28April 2006 do not show any sudden or drastic drop. Thus, incomputing the differential billing, MERALCO is justified in using thehighest recorded monthly consumption of complainant within the five-year period preceding the time of discovery of the illegal connection.

In the absence of any compelling evidence to the contrary, theCommission is constrained to consider the weight of the evidencepresented by the respondent as against the denial and self-servingstatements of the complainant. The tampered condition ofcomplainant's metering facility resulted in non-registration of hisactual electrical consumption to the prejudice of the respondent.

23 Annex "9-A" of Respondent's Position Paper24 Annex "9" of Respondent's Position Paper

•ERC Case No. 2010-196CCDecision/3 January 2017 of 14

In addition to the unregistered consumption, MERALCO isentitled to collect surcharges from the complainants equivalent totwenty-five percent (25%) of their current bills pursuant to Section 8(a) of RA 7832

WHEREFORE, the foregoing premises considered, thecomplaint filed by Elenita C. Floresca and Eleodoro T. Floresca ishereby DISMISSED for lack of merit.

Accordingly, complainants Elenita C. Floresca and Eleodoro T.Floresca are hereby directed to pay the Manila Electric Company(MERALCO) the differential billing amounting to One Hundred FiftyNine Thousand Eight Hundred Thirty Eight Pesos and 95/100(PhP159,838.95) plus 25% surcharge of their current bills, withinfifteen (15) days from receipt hereof.

SO ORDERED.

Pasig City, 3 January 2017.

FOR AND BY AUTHORITYOF THE COMMISSION

(1 .:rr.~~LGLO~CTORIA c. "AP-TARUC

Commissioner ..;

We Concur:

(On Leave)JOSE VICENTE B. SALAZARChairman

PATRICIA A. MAGPALE-ASIRIT

glOlMtCGl2010-196CcldeCiSion f/oresca vs merafco

,~

• ERC Case No, 2010-196CCDecision/3 January 2017 of 14

Copy Furnished:

1. Atty. Freedom lanfe M. NavidadManila Electric Company (MERALCO)Legal DepartmentOrtigas Avenue, Pasig City

2. Atty. Juan J. De Dios, Jr.Counsel for ComplainantsSuite 3220, Makati Executive Tower 1Sen, Gil Puyat Ave" cor, Dela Rosa StMakati City

3. Spouses Elenita C, Floresca and Eleodoro T. FlorescaComplainantsNo, 412 N,S, De Guia St, Ermita, Manila

docketed x-------------------------------------------x

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