G.R. No. 231679 , April 28, 2021
National Power Corporation, Petitioner, vs. Bohol I Electric Cooperative, Inc. (BOHECO I), represented by General Manager, Engr. Carlos B. Itable, and National Electrification Administration (NEA), Respondents.

FACTS

The case originated from a complaint for recovery of possession and payment of back rentals filed by Bohol I Electric Cooperative (BOHECO) against the National Power Corporation (NAPOCOR). NAPOCOR filed a third-party complaint against the National Electrification Administration (NEA).
BOHECO alleged that on September 13, 1979, it received a radio message from an NEA Director stating that NAPOCOR requested to borrow a 5MVA substation transformer. Subsequently, NAPOCOR’s engineer prepared a requisition voucher for the transformer, which BOHECO’s Acting General Manager approved with a handwritten note stating it was “subject to NEA, NPC & BOHECO I negotiations.” Material charge tickets were issued, and the transformer was pulled out by NAPOCOR’s engineer on September 18, 1979, and shipped to its Tongonan plant in Ormoc City. BOHECO later demanded rental payments and the return of the transformer, but NAPOCOR did not comply.
NAPOCOR claimed its possession was legitimate as the transformer was a replacement from NEA for a transformer NEA withdrew from NAPOCOR’s plant, asserting there was an internal agreement to swap a 3MVA transformer for BOHECO’s 5MVA transformer. NAPOCOR argued BOHECO’s action had prescribed and that it failed to comply with administrative requirements.
NEA, in its answer, asserted that the cause of action had prescribed and was barred by laches, and that NAPOCOR failed to exhaust administrative remedies under Presidential Decree No. 242.
The Regional Trial Court (RTC) ruled in favor of BOHECO, declaring it the true owner of the transformer, ordering its return, and directing NAPOCOR and NEA to pay back rentals jointly and severally. The Court of Appeals (CA) affirmed the RTC decision with modification, deleting the award of back rentals. NAPOCOR elevated the case to the Supreme Court via a Petition for Review.

ISSUE

The core issue is whether BOHECO is the rightful owner of the 5MVA substation transformer and is entitled to its recovery from NAPOCOR.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Decision of the Court of Appeals. The Court held that BOHECO is the true and legal owner of the transformer and is entitled to its possession.
The Court found that the evidence, particularly the radio message and the requisition vouchers with the notation “subject to NEA, NPC & BOHECO I negotiations,” established that the transaction was merely a loan or commodatum. NAPOCOR failed to present any written agreement, such as a deed of sale or swap, to substantiate its claim of ownership transfer or replacement. The testimony of NAPOCOR’s witnesses about a “swap” based on verbal instructions from “higher-ups” was deemed insufficient to overcome the documentary evidence.
The Court rejected NAPOCOR’s defenses of prescription and laches. It ruled that an action for replevin based on ownership is imprescriptible. Furthermore, BOHECO’s repeated demands for return and rental payments, through letters and board resolutions from 1985 onwards, negated any finding of laches.
The Court also upheld the CA’s deletion of the award for back rentals. It agreed that BOHECO failed to sufficiently prove the amount of rentals due, as the claim was based on a board resolution setting a rate without supporting evidence of the transformer’s fair rental value.
Finally, the Court found no merit in NAPOCOR’s argument regarding non-compliance with Presidential Decree No. 242 (on administrative settlement of government disputes), as the issue was not raised in the lower courts and, regardless, the doctrine of primary jurisdiction did not apply as the case involved a judicial question of ownership and possession.