DELTA P, INC., PLAINTIFF-APPELLEE, VS. NATIONAL POWER CORPORATION, DEFENDANT-APPELLANT.
CORALES, J.:
The Antecedents
On December 23, 2002, Delta P, an independent power producer, took over the operations of Paragua Power Corporation’s (PPC) generating plant in Puerto Princesa City. At that time, PPC had a Power Purchase Agreement[4] (PPA) with NPC wherein the latter agreed to purchase the electricity generated by the former to meet NPC’s obligation to supply the consumers of Palawan Electric Cooperative, Inc. (PALECO) in Puerto Princesa City and the towns of Narra, Aborlan, and Quezon, Palawan.
As a result of the takeover, NPC was requested to direct its payment to Delta P. However, NPC refused to do so, insisting that PPC, not Delta P, is the contracting party to the PPA. Later on, Delta P advised NPC that it could no longer operate the power station for lack of funds.
On February 26, 2003, NPC Vice-President for Strategic Power Utilities Group (SPUG), Lorenzo S. Marcelo (Marcelo), issued a Memorandum[5] to NPC President Rogelio M. Murga (Murga) seeking the latter’s approval to supply the fuel and pay the manpower services of PPC’s generating plant due to the imminent power shortage in Puerto Princesa, Palawan caused by Delta P’s inability to produce the required electricity due to the lack of bunker fuel. The relevant portions of the Memorandum read:
x x x The request is being made to address the imminent power shortage in Puerto Princesa, Palawan as a result of the inability of Delta Phi, the current operator of the Paragua plant, to produce required electricity due to lack of bunker fuel (Please refer to attached letter of Governor Joel T. Reyes).
Background
x x x
Delta-P has recently indicated that it can no longer support its plant operations without the payment from NPC. Delta-P has not placed any fuel order and informed that its fuel inventory will last only until 10 March 2003.
Because of the above situation, SPUG is operating its existing plants for base load and only dispatches PPC’s plant as complementary supply for meeting the demand of Puerto Princesa and Narra.
Costs of Fuel and Personnel Services to be Shouldered by NPC
The personnel services cost that NPC will have to pay for the operation of the PPC plant amounts to P500,000 a month. The costs of fuel to be supplied by NPC will depend on the usage of the PPC plant as follows:
Case 1: Full utilization of the PPC plant + NPC as back-up Case 2: 8 MW PPC Plant + NPC Case 3: 3.50 MW PPC Plant + NPC Case 4: Total NPC (with 3-hour rotating brownout during peak hour because of NPC’s limited capability) x x x
Of the four (4) cases mentioned above, we recommend Case 3 because it will entail the least upfront (sic) financial exposure on the part of NPC and at the same time, avoid brownouts. x x x All costs amounting to P7.7 million and incidental expenses shall be chargeable to Paragua Power Corp. (Emphasis and underscoring appear in the original text of the letter)
Murga approved Marcelo’s recommendation,[6] thus, the latter sent a March 7, 2003 letter[7] to Delta P’s Plant Manager informing him that upon the request of the local government of Palawan, NPC would supply fuel to Delta P’s power plant and pay the salaries of its manpower while the latter’s internal problem is being resolved.
Insisting on its right to collect payment of electricity “off-taken” by NPC from its generating plant, Delta P instituted on March 12, 2003 an action for collection of sum of money against NPC, docketed as Civil Case No. 3766 and raffled to RTC, Branch 95. In its July 15, 2003 Judgment,[8] the RTC, Branch 95 upheld Delta P’s right to be paid for the electricity “off-taken” by NPC from the months of December 2002 to June 2003 under Invoice Nos. 2003-001 to 2003-009 even though there is no existing contract between them. It stressed that NPC benefited from the electricity “off-taken” from Delta P without paying a single centavo, thus, based on the doctrines of accion in rem verso and unjust enrichment, NPC should be held liable for the said obligation. To do otherwise would cause injustice not only on the part of Delta P but also to the people of Puerto Princesa City, who have been paying their electric bills to PALECO, for they are the ones directly affected by the continuous power interruption. It ordered NPC to pay P87,944,215.67 representing the P90,394,855.86 total value of the invoices from January 28, 2003 to June 27, 2003 less P2,450,640.19 for adjustment in billing due to reduction in tariff effective March 9, 2003 for the billing period February 25, 2003 to March 25, 2003. The July 15, 2003 Judgment in Civil Case No. 3766 attained finality and was implemented against NPC.
On July 30, 2003, NPC sent to Delta P a Notice of Termination[9] reminding the latter that it undertook the supply of fuel requirement of the generating plant as a remedial measure to address the imminent power shortage in Puerto Princesa City, but with the payment of the adjudged amount in Civil Case No. 3766, there is no longer any basis for NPC to continue with the fuel supply; thus, it will terminate the said supply of fuel to the 16MW Power Plant effective August 15, 2003.
Subsequently, the parties agreed that Delta P should continue generating and supplying electricity in Palawan with the express undertaking of NPC to pay monthly invoices for the services rendered by Delta P at the power station.[10] The contractual relationship of the parties went on smoothly until NPC issued on December 4, 2003 Debit Memo No. SI-03-12-0041[11] (Debit Memo) deducting P24,449,247.36 from Delta P’s account for the alleged incremental costs of the fuel it had supplied to Delta P from February 25, 2003 to June 25, 2003.
On July 20, 2004, Delta P filed the sum of money case assailing the validity of the Debit Memo for lack of prior agreement authorizing payment of the fuel costs. It never requested NPC to supply fuel in the power station but the latter voluntarily did so to avoid a disruption of operation. Its acceptance of NPC’s fuel should not be construed as an implied approval to bear the incremental costs of such fuel and in fact, in its previous invoices to NPC from February 25, 2003 to June 25, 2003, it did not include the fuel costs component of the electricity it generated and supplied at the power station. It prayed for the payment of the amount deducted by NPC from its account plus exemplary damages and attorney’s fees.[12]
In its defense, NPC invoked the principle of solutio indebiti and the innominate contract of facio ut des meaning “I do that you may give”. It argued that Delta P voluntarily accepted and benefited from the fuel supplied by NPC, thus, equity and justice demand that Delta P should give back what is due to NPC. It added that during the processing of the disbursement voucher for the payment of the monetary judgment in Civil Case No. 3766, Delta P was already informed that the invoices subject of the July 15, 2003 Decision would be audited and adjusted in the next monthly billing. Upon audit, it was discovered that there were variances between the actual costs of fuel and the fuel costs tariff, i.e., Delta P computed total tariff based on forex rates and fuel costs tariff but refused to take into account occasional fluctuations in the same or the actual fuel costs from month to month. NPC informed Delta P’s representative of the discrepancies and explained that the P24,449,247.36 incremental costs of fuel would be debited in the next invoice in order to recover the overpayment erroneously made by NPC. It claimed that the correctness of Delta P’s invoices was never resolved in Civil Case No. 3766, in fact, the same were neither pre-audited nor identified in court. Lastly, NPC denied liability for damages and interposed counterclaims for litigation expenses plus moral and exemplary damages.[13]
Delta P filed its Reply[14] refuting NPC’s arguments as to the incorrect computation of fuel costs in the invoices subject of Civil Case No. 3766. Delta P insisted that it did not intend or agree to bear the fuel costs, rather, it was NPC which undertook to supply fuel at its own cost. It disputed the applicability of the doctrine of solutio indebiti arguing that it was a judgment creditor of NPC by virtue of the July 15, 2003 Decision in Civil Case No. 3766 which clearly ordered NPC to pay the amounts subject of Delta P’s invoices, without need of post audit or any other condition.
In the ensuing trial, Delta P’s Plant Manager, Engr. Edmund Abayon, its Chief Finance Officer, Anthony Katigbac (Katigbac), and its Vice-President for Operations from March 2003 to May 2007, Engr. Cesar Solleza (Solleza), all testified that the invoices subject of NPC’s Debit Memo were the same as that referred in the July 15, 2003 Decision in Civil Case No. 3766. They recounted that Delta P never included the fuel costs component in its invoices while NPC regularly paid the same. Katigbac and Solleza added that the fuels supplied by NPC to Delta P were purchased at spot market prices, which were higher than the average contracted price used by Delta P as basis for its adjustment; thus, NPC’s purchase price went up to such an extent that it even exceeded Delta P’s revenue and the fuel costs component could no longer be adjusted. The unrecovered fuel costs therefore referred to the difference between the spot market price and the contracted price.[15]
On the other hand, NPC presented Engr. Rafael Lorenzo Abergas (Abergas) and its Budget Control and Monitoring Officer, Salvacion F. Aragon (Aragon). Abergas claimed that Marcelo’s February 26, 2003 Memorandum stated that NPC would not incur incremental costs while the PPA stipulated that should NPC supply fuel, it would not incur additional costs. When the invoices subject of Civil Case No. 3766 were audited, a difference of P24,449,247.36 between the fuel price cap allowed in the PPA and the actual fuel costs was discovered.[16] According to Aragon, such invoices are still subject to adjustment and audit on the part of NPC, as annotated on Delta P’s June 27, 2003 consolidated billing.[17] NPC’s Legal Department recommended to debit the incremental fuel costs to Delta P’s account because prior to NPC’s supply of fuel to Delta P, the latter had included the fuel costs component in its billings pursuant to the PPA between PPC and NPC. Meanwhile, NPC did not charge Delta P with any fuel tariff during the time that the former supplied fuel to the latter.[18]
The Ruling of the RTC
In its March 30, 2012 Decision,19 the RTC ruled in favor of Delta P and held that its cause of action is based on the final and executory judgment in Civil Case No. 3766, thus, the PPA between NPC and PPC, as well as the internal communications of NPC, i.e., the February 26, 2003 Memorandum of Marcelo and the annotation on the June 27, 2003 Disbursement Voucher, are immaterial. It stressed that there is nothing in the July 15, 2003 Judgment in Civil Case No. 3766 which allows the adjustment of the amounts covered by Delta P’s invoices either due to post audit or prior agreement between the parties. The obligation to satisfy the judgment is actually unconditional and already final, as such, NPC could no longer assail the correctness of the invoices which was clearly mentioned in the dispositive portion of the July 15, 2003 Judgment in Civil Case No. 3766. The court a quo also dismissed the application of the principle of solutio indebiti considering that the payment made by NPC was by virtue of the July 15, 2003 Judgment in Civil Case No. 3766, not by mere mistake. It disposed the case as follows:
WHEREFORE, premises considered, judgment is hereby rendered, to wit:
1. Declaring the debit made by the National Power Corporation on the account of the Delta P, Incorporated for the period from February 25, 2003 to June 25, 2003 for “cost of fuel delivered to DELTA P” in the total amount of TWENTY FOUR MILLION, FOUR HUNDRED FORTY-NINE THOUSAND, TWO HUNDRED FORTY-SEVEN PESOS AND THRITY-SIX (sic) CENTAVOS (PHP24,449,247.36) to be void and illegal;
2. Ordering the National Power Corporation to pay Delta P, Incorporated:
- TWENTY FOUR MILLION, FOUR HUNDRED FORTY-NINE THOUSAND, TWO HUNDRED FORTY-SEVEN PESOS AND THRITY-SIX (sic) CENTAVOS (PHP24,449,247.36) plus legal interest from the finality of this Decision until full payment;
- FIVE HUNDRED THOUSAND PESOS (PHP500,000.00) as attorney’s fees;
With costs against the defendant.
SO ORDERED.
NPC moved for reconsideration but the RTC denied the same through its July 4, 2012 Order.[20]
Hence, this appeal with the following assignment of errors:[21]
I.
THE TRIAL COURT ERRED IN DECLARING THE DEBIT MADE BY THE NATIONAL POWER CORPORATION ON THE ACCOUNT OF DELTA P. INC. FOR THE PERIOD OF FEBRUARY 25, 2003 TO JUNE 25, 2003 FOR “COST OF FUEL DELIVERED TO DELTA P.” IN THE TOTAL AMOUNT OF TWENTY FOUR MILLION, FOUR HUNDRED FORTY-NINE THOUSAND, TWO HUNDRED FORTY-SEVEN PESOS AND THIRTY SIX CENTAVOS (PHP 24,449,247.36) TO BE VOID AND ILLEGAL.
II.
THE TRIAL COURT ERRED IN ORDERING THE NATIONAL POWER CORPORATION TO PAY DELTA P. INC. TWENTY FOUR MILLION, FOUR HUNDRED FORTY-NINE THOUSAND, TWO HUNDRED FORTY-SEVEN PESOS AND THIRTY SIX CENTAVOS (PHP 24,449,247.36) PLUS LEGAL INTEREST AND ATTORNEY’S FEES.
NPC insists that it did not intend to supply fuel to Delta P gratuitously. As a government owned and controlled corporation, all its expenses would be subject to post audit and it would not be so brazen to provide succor to Delta P and infuse the latter with the needed capital funds for free without the formalities required by law. In fact, the intention that all monthly costs and incidental expenses, such as price fluctuations and fuel delivery costs, shall be chargeable to Delta P was evident as early as the time when Murga approved Marcelo’s February 26, 2003 Memorandum recommending the supply of fuel to Delta P. Thus, when NPC took the responsibility of delivering fuel to Delta P, the latter was greatly benefited and pursuant to the principle of facio ut des and unjust enrichment, it should compensate NPC for all the incremental costs of the fuel delivery, including market fluctuations and transshipment costs. Delta P cannot limit its obligation to NPC by the mere exclusion of the fuel costs tariff from the billings, which formula does not include the incremental costs in the delivery and the increase in the price of fuel in the international market that was paid by NPC upon delivery of fuel to Delta P. NPC further contends that the accuracy of Delta P’s invoices for February 25, 2003 to June 25, 2003 was not put in issue in Civil Case No. 3766 and the July 15, 2003 Judgment did not even discuss the accuracy of the said invoices. It takes exception to the rule on immutability of judgment and argues that the circumstances which transpire after the finality of the July 15, 2003 Judgment in Civil Case No. 3766 rendered its execution unjust and inequitable considering that the invoices subject of the said case were not pre-audited and the P24,449,247.36 incremental costs is simply too great of an amount to forgo. NPC claims that it validly debited from Delta P’s account the amount of P24,449,247.36 incremental costs for its delivery of fuels from the period of March 2003 to June 2003.[22]
Delta P echoes the assailed Decision in asserting that the July 15, 2003 Judgment in Civil Case No. 3766 involved the validity of the invoices referred in NPC’s Debit Memo and the monetary obligation adjudged therein was unconditional and no longer subject to post audit. Invoking the doctrine of conclusiveness of judgment, Delta P argues that NPC should not be allowed to challenge the July 15, 2003 Judgment in Civil Case No. 3766, as what cannot be done directly may not likewise be done indirectly. It debunks the application of the the principle of unjust enrichment or solutio indebiti. Delta P adds that it would not have continued the operation of the generating plant where it not for the clear offer of NPC to shoulder the full costs of the fuel supply. The sentence alluded to by NPC in the February 26, 2003 stating that “all costs amounting to P7.7 million and incidental expenses shall be chargeable to Paragua Power Corp.” is a mere afterthought which pertains to PPC’s liability, not Delta P. Thus, NPC is bound, not only by the parties’ agreement that it would supply fuel to Delta P and bear all pertinent costs, but also by all consequences in keeping with good faith, usage, and law.[23]
This Court’s Ruling
The appeal lacks merit.
Unjust Enrichment and Solutio Indebiti: Inapplicable;
NPC’s Supply of Fuel: Gratuitous
Unjust enrichment is a term used to depict result or effect of failure to make remuneration of or for property or benefits received under circumstances that give rise to legal or equitable obligation to account for them; to be entitled to remuneration, one must confer benefit by mistake, fraud, coercion, or request. It is not itself a theory of reconvey, but a prerequisite for the enforcement of the doctrine of restitution. Thus, a party invoking this principle must prove that the other party knowingly received something of value to which he was not entitled and that the state of affairs are such that it would be unjust for the person to keep the benefit. Unjust enrichment claims do not lie simply because one party benefits from the efforts or obligations of others. It must be shown that the party invoking it was unjustly enriched, either illegally or unlawfully.[24]
On the other hand, the juridical relation of solutio indebiti arises when (1) payment was made even if there is no obligation to do so, and (2) the payment was by reason of an essential mistake of fact[25] or that mistaken supposition of the existence of a specific fact where it would not have been known otherwise.[26]
None of the foregoing circumstances for unjust enrichment or solutio indebiti is attendant in this case. The records are bereft of any indication that NPC supplied fuel to Delta P out of mistake, fraud, coercion, or request by the latter. NPC’s various documentary evidence even indicate that it voluntarily and unilaterally undertook to supply fuels to Delta P with full knowledge of the consequences thereof and the available options.
We note that right from the start, NPC conveyed to Delta P that it would supply fuels in the latter’s generating plant as well as pay the salaries of its manpower upon the request of the local government. In the February 26, 2003 Memorandum, NPC referred to a “request x x x being made to address the imminent power shortage in Puerto Princesa, Palawan”, but Delta P was not identified as the requesting party, instead, reference was made to a letter from one Governor Joel T. Reyes.[27] Even the purely informative tenor of NPC’s March 7, 2003 letter suggested that from the beginning, Delta P had no involvement and was not even consulted when NPC made the decision to supply fuels for the generating plant.
There is also no mistake of fact considering the clear text of the February 26, 2003 Memorandum which amply reflected NPC’s awareness of the separate and distinct personalities of PPC and Delta P. NPC even stated that PPC, not Delta P, was required to pay the fuel costs.
We could not also find any showing of NPC’s prior intention to recover fuel costs from Delta P. As earlier pointed out, the documents presented by NPC do not evince such intent while the March 7, 2003 letter and the July 30, 2003 Notice of Termination were silent as to such payment or reimbursement. In fine, NPC is bound by its representation that Delta P was not obliged to pay for the fuels supplied to the generating plant.
In this light, NPC’s supply of fuels to Delta P’s generating plant partook the nature of a donation. A donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it.[28] It entails a reduction in the patrimony of the donor, a corresponding increase in the patrimony of the donee, and an intent to do an act of liberality, or animus donandi, which are all attendant in this case. NPC evidently supplied the fuel without intending any corollary obligation of repayment on the part of Delta P. Needless to state, NPC undertook the supply of fuel upon two (2) particular considerations, i.e., the power crisis that threatened Palawan and the intervention of local government, which are clearly stated in its communications with Delta P as well in its internal Memorandum dated February 26, 2003. These motivations or primordial considerations do not contradict, and therefore cannot negate, the donative intent evinced by NPC.[29]
With Our foregoing disquisition, it would be superfluous to discuss the effects of the July 15, 2003 Judgment in Civil Case No. 3766. It did not escape Our attention that NPC’s Debit Memo did not refer to any specific invoice or billing that could have been the subject of Civil Case No. 3766. Worse, NPC failed to substantiate with competent evidence its allegation of overpayment and the alleged prevailing circumstances which rendered the execution inequitable. It bears stressing that mere allegations are not the proof required by the Rules of Court.[30]
WHEREFORE, the appeal is DENIED for lack of merit. The March 30, 2012 Decision and the July 4, 2012 Order of the Regional Trial Court, Branch 47, Puerto Princesa City in Civil Case No. 3997 are hereby AFFIRMED.
SO ORDERED.
Villon, J., Chairperson and Zalameda, JJ., concur.
[1] See Notice of Appeal in relation to the September 25, 2012 Order giving due course thereto, records, pages 606-607 and 619, respectively.
[2] Penned by Presiding Judge Jocelyn Sundiang-Dilig, ibid., pages 553-585.
[3] Ibid., pages 604-605.
[4] Ibid., pages 88-106.
[5] Ibid., pages 509-510.
[6] See page 2 of the Memorandum wherein Rogelio M. Murga’s signature appeared under the word “Approved;”, ibid.
[7] Ibid., page 9.
[8] Penned by Acting Judge Nelia Yap-Fernandez, ibid., pages 10-14.
[9] Ibid., page 15.
[10] See paragraph 12 of the Complaint for Sum of Money in Civil Case No. 3997 which was admitted by NPC in paragraph 7 of its Answer, ibid., page 4 and 75, respectively.
[11] Ibid., page 434.
[12] See Complaint for Sum of Money in Civil Case No. 3997, ibid., pages 2-7.
[13] See NPC’s Answer, ibid., pages 73-85.
[14] Ibid., pages 112-127.
[15] TSN, Engr. Edmund Abayon, May 22, 2008; TSN, Anthony Katigbac, September 4, 2008; TSN, Cesar Solleza, September 5, November 13, and November 14, 2008.
[16] TSN, Rafael Lorenzo Abergas, September 3, 2010; TSN, Salvacion F. Aragon, June 16, 2011.
[17] See June 27, 2003 Disbursement Voucher, records, pages 86-87.
[18] See February 7, 2011 letter, ibid., page 514.
[19] Supra, at note 2.
[20] Supra, at note 3.
[21] See pages 1-2 of Appellant’s Brief, rollo, pages 35-37.
[22] See Appellant’s Brief and Reply, ibid., pages 35-60 and 112-117, respectively.
[23] See Brief for Plaintiff-Appellee, ibid., pages 66-108.
[24] See Philippine Commercial v. Balmaceda, G.R. No. 158143. September 21, 2011, citing University of the Philippines v. Philab Industries, G.R. No. 152411. September 29, 2004.
[25] See Philippine National Bank v. Cheah Chee Chong, G.R. No. 170865. April 25, 2012.
[26] See Commissioner of Internal Revenue v. Acesite (Philippines), G.R. No. 147295. February 16, 2007.
[27] Supra, at note 7.
[28] See New Civil Code, Article 725.
[29] See Abello v. Commissioner of Internal Revenue, G.R. No. 120721. February 23, 2005.
[30] See Manaloto v. Veloso, G.R. No. 171365. October 6, 2010.