GR 81939; (June, 1989) (Digest)
G.R. No. 81939 June 29, 1989
PANAY ELECTRIC CO., INC., petitioner, vs. COURT OF APPEALS, MANUEL LORING, JR., doing business under the trade name HOTEL DEL RIO and HOTEL DEL RIO, INC., respondents.
FACTS
Petitioner Panay Electric Co., Inc. (PECO), a public utility, supplied electricity to Hotel Del Rio, owned by respondent Manuel Loring, Jr. In July 1973, PECO replaced the hotel’s burnt current transformers. The new transformers had a multiplier factor of 120, not 80 as before. PECO formally advised Loring of this change. From September 1973 to September 1978, PECO billed the hotel for its consumption. However, due to an internal procedural failure—the meter reading department not being informed of the change—PECO erroneously used the old multiplier of 80 for 61 months. This resulted in an underbilling of 744,880 kilowatt-hours, valued at P297,497.47. The error was discovered only in 1978 during an internal reorganization. PECO then demanded payment of the deficiency from the respondents, who refused.
ISSUE
Whether the trial court and the Court of Appeals erred in denying PECO’s claim for the collection of the alleged deficiency in electric consumption charges arising from its own computational error.
RULING
The Supreme Court denied the petition and affirmed the lower courts’ rulings. The legal logic rests on the principle of equitable estoppel and the allocation of loss due to one’s own negligence. The Court emphasized that the mistake was solely attributable to PECO’s gross inefficiency and the culpable negligence of its own employees in failing to apply the correct multiplier for five years. The respondents, as ordinary consumers, had no participation in the meter reading, computation, or billing processes. They rightfully relied on the official monthly bills presented by PECO and paid them accordingly. Having induced this reliance through its regular billings, PECO is now estopped from asserting a contrary claim to recover a loss caused by its own error. The Court further applied the equitable maxim that where one of two innocent parties must suffer a loss, it should be borne by the one whose omission or commission caused it. Here, PECO’s erroneous conduct was the direct cause of the injury. Therefore, it cannot pass the financial consequence of its internal negligence to its blameless customer.