G.R. No. 218378, June 14, 2021
National Power Corporation, Petitioner, vs. Benguet Electric Cooperative, Inc., Respondent.

FACTS

The National Power Corporation (NPC) and Benguet Electric Cooperative, Inc. (BENECO) entered into a Transition Contract for the Supply of Electricity. NPC installed the metering system at the Irisan Substation in 1999, setting the Current Transformer Ratio (CTR) at 75/5, which fixed the billing multiplier at 5,196.31. From May 2000 to February 2004, NPC billed BENECO using this multiplier. In February 2004, a BENECO employee discovered unusually low systems losses, prompting an investigation by the National Transmission Corporation (TRANSCO), which found that the CTR should have been set at 150/5. This error meant NPC had been billing BENECO at half the correct amount for nearly four years. NPC demanded payment for the underbilling amounting to P157,743,314.43, revoked BENECO’s Prompt Payment Discount (PPD) privilege, and threatened disconnection. BENECO filed a complaint before the Regional Trial Court (RTC), arguing that under Section 25 of the Transition Contract, NPC waived claims for billing errors not corrected within 90 days of receipt, and that NPC’s failure to discover its own mistake constituted gross negligence. The RTC ruled in favor of BENECO, declaring the underbilling illegal and unenforceable, ordering NPC to reinstate the PPD, and awarding attorney’s fees. The Court of Appeals (CA) affirmed the RTC’s decision but deleted the award of attorney’s fees. NPC elevated the case to the Supreme Court via a Petition for Review on Certiorari.

ISSUE

1. Whether BENECO’s non-payment of the underbilling constitutes unjust enrichment.
2. Whether the jurisprudence cited (Panay Electric Co., Inc. v. Court of Appeals, Ridjo Tape & Chemical Corp. v. Court of Appeals, and Manila Electric Company v. Spouses Chua) is applicable.
3. Whether BENECO is entitled to a 3% Prompt Payment Discount.

RULING

1. On unjust enrichment: The Supreme Court held that the principle of unjust enrichment under Article 22 of the Civil Code does not apply because there is a contract governing the parties’ relations. Unjust enrichment requires that (a) a person is benefited without valid basis, and (b) the benefit is derived at another’s expense. However, accion in rem verso (action for unjust enrichment) is only an auxiliary remedy available when no other action based on contract, quasi-contract, crime, or quasi-delict exists. Here, the parties’ rights and obligations are governed by the Transition Contract, specifically Section 25, which allows correction of billing errors within 90 days from receipt. Thus, BENECO’s liability, if any, must be determined under the contract, not under the principle of unjust enrichment.
2. On applicability of cited jurisprudence: The Court found that the cases of Panay Electric, Ridjo Tape, and Meralco are not squarely applicable. Those cases involved end-users who lacked technical expertise to detect meter errors, whereas BENECO is a distribution utility with technical capability. However, the Court noted that the lower courts correctly found NPC solely responsible for the error, as NPC had exclusive control over determining the multiplier, conducting tests, and monthly readings. BENECO had no access to the billing meter system and could not have easily detected the error based solely on its overall systems losses. Thus, while the cited cases are distinguishable, the finding of NPC’s negligence stands.
3. On the Prompt Payment Discount: The Court ruled that BENECO is entitled to the PPD for current monthly bills paid within the discount period, provided it has no unpaid accounts. The underbilling is a separate issue from current billings. Since BENECO had been paying its current bills promptly and the underbilling was not yet adjudicated as a valid obligation, NPC’s revocation of the PPD was premature. The PPD should be reinstated for current billings, subject to the outcome of the underbilling dispute.
DISPOSITIVE PORTION:
The Supreme Court partly granted the petition. It held that BENECO is not liable for the underbilling based on unjust enrichment but remanded the case to the RTC to determine BENECO’s liability under Section 25 of the Transition Contract for billings corrected within the 90-day period. The Court affirmed the CA’s deletion of attorney’s fees and directed the RTC to reinstate the PPD for current billings. The RTC was ordered to conduct proceedings with dispatch.