G.R. No. 221709 - National Power Corporation vs. Delta P, Inc.

Case Summary (G.R. No. 221709)

Key Dates and Applicable Law

Key dates: Delta P’s takeover (2002–2003 period), NAPOCOR memorandum (February 26, 2003), NAPOCOR letter to Delta P (March 7, 2003), Delta P’s collection action and RTC judgment in Civil Case No. 3766 (July 15, 2003), NAPOCOR’s debit memo (December 4, 2003), RTC decision in Civil Case No. 3997 (March 30, 2012), CA decision (March 26, 2015), Supreme Court decision (October 16, 2019). Applicable constitutional framework: 1987 Philippine Constitution (decision date after 1990). Governing substantive law and doctrines invoked in the litigation include the Civil Code provisions on donation and unjust enrichment (Article 22 and Articles 725–726 cited), the doctrine of solutio indebiti (Article 2154 Civil Code), and the jurisprudential doctrine of immutability/finality of judgment and its exceptions.

Factual Background

Delta P succeeded to operations of PPC’s generating plant and sought payment for electricity “off‑taken” by NAPOCOR under a PPA that was between PPC and NAPOCOR. NAPOCOR refused to redirect payments to Delta P on the ground that PPC remained the contracting party. Delta P threatened to cease operations for lack of funds. To avert an imminent power shortage, NAPOCOR—on the request of the local government—supplied bunker fuel and paid manpower costs for the plant while Delta P addressed internal problems. NAPOCOR did not insert any written condition that the supplied fuel would be reimbursed by Delta P. Separately, Delta P obtained a final RTC judgment in Civil Case No. 3766 ordering NAPOCOR to pay amounts totaling P87,944,215.67 for electricity off‑taken from December 25, 2002 to June 25, 2003; NAPOCOR paid the adjudged amount.

Procedural History

After NAPOCOR’s fuel supply, it later issued a debit memo on December 4, 2003, deducting P24,449,247.36 from amounts due to Delta P as alleged incremental costs incurred in supplying fuel from February 25, 2003 to June 25, 2003. Delta P filed Civil Case No. 3997 to declare the debit void and recover the amount. The RTC rendered judgment favoring Delta P, declaring the debit illegal and ordering NAPOCOR to pay P24,449,247.36 plus interest and attorney’s fees. The RTC denied NAPOCOR’s motion for reconsideration. The CA affirmed the RTC in full. NAPOCOR filed this petition for review on certiorari to the Supreme Court, which partly granted relief.

Issues Presented

Whether NAPOCOR’s supply of fuel to Delta P was gratuitous and in the nature of a donation. 2) Whether Delta P is liable to reimburse NAPOCOR for the fuel supply and, if so, whether NAPOCOR’s post‑audit and unilateral debit of P24,449,247.36 was valid and properly substantiated, given the prior final judgment in Civil Case No. 3766.

Parties’ Positions

NAPOCOR’s contentions: The fuel supply was not gratuitous; had NAPOCOR intended a donation it would have so indicated, especially given public funds and audit exposure. The debit represented legitimately substantiated incremental costs (market fluctuations, transshipment costs) uncovered by a post‑audit and hence NAPOCOR was entitled to recover those costs from Delta P under unjust enrichment and solutio indebiti principles. Delta P’s contentions: The lower courts already resolved these matters; the judgment in Civil Case No. 3766 was final and was paid by NAPOCOR without qualification, so NAPOCOR could not unilaterally reduce payment by the amount later debited. Delta P emphasized absence of any formal notice to it about post‑audit adjustments and maintained that acceptance of the fuel did not imply assent to reimbursement.

Court’s Findings on Fact‑Finding and Standard of Review

The Supreme Court adhered to the RTC and CA findings that the debit was unilaterally imposed by NAPOCOR and that NAPOCOR’s supply of fuel was an act of liberality—i.e., gratuitous. The Court reiterated the established rule to accord great weight to trial court findings on credibility and facts, especially where the CA affirmed those findings, citing cases such as Gatan v. Vinarao and Bank of the Philippine Islands v. Leobrera.

Analysis: Donation and Immutability of Judgment

The Court concluded that NAPOCOR’s fuel supply lacked any contemporaneous condition or annotation evidencing intent to charge Delta P; no document indicated the supply was a loan or conditional advance. Given NAPOCOR’s status as a government entity subject to audit, the Court emphasized that if NAPOCOR intended recovery it should have protected its interest by a clear caveat. Consequently, the supply was characterized as a donation under Civil Code principles (Articles 725–726 and related rulings). The Court applied the doctrine of immutability/finality of judgment to bar re‑opening or modification of the RTC’s prior final and executory judgment in Civil Case No. 3766: that judgment ordered NAPOCOR to pay specific invoices without subtraction, and NAPOCOR had paid pursuant to that directive. The Court held that allowing a post‑audit to alter the amount of a final judgment would subvert finality; the asserted post‑audit did not qualify as a supervening event warranting departure from immutability because it related to amounts already litigated and adjudicated and pre‑existed the judgment’s finality.

Analysis: Unjust Enrichment and Solutio Indebiti

Although the lower courts found no unjust enrichment, the Supreme Court determined that the inference was manifestly mistaken and that unjust enrichment was present. The Court articulated the two elements of unjust enrichment: (1) the recipient is benefited without a valid basis or justification; and (2) such benefit is at the expense of another. The Court found that Delta P received and retained the benefit of fuel without any legal obligation or consideration given to NAPOCOR, thereby causing a patrimonial loss to NAPOCOR. The Court nonetheless rejected solutio indebiti (payment by mistake) as a remedy because the supply/payment was not shown to be made through mistake or to satisfy the requisites of Article 2154; NAPOCOR failed to establish the element of mistake necessary for solutio indebiti.

Remedy and Remand

The Supreme Court partially granted NAPOCOR’s petition by holding Delta P liable under the doctri

Case Syllabus (G.R. No. 221709)

Procedural History

Petition for Review on Certiorari under Rule 45 filed with the Supreme Court challenging the Court of Appeals (CA) Decision dated March 26, 2015 and its Resolution dated November 25, 2015 in CA-G.R. CV No. 99605.
The CA affirmed the Regional Trial Court (RTC), Puerto Princesa City, Branch 47, Decision dated March 30, 2012 in Civil Case No. 3997.
The RTC decision had declared NAPOCOR’s debit for fuel costs void and ordered payment to Delta P; the RTC denied NAPOCOR’s motion for reconsideration by Order dated July 4, 2012.
NAPOCOR’s Motion for Reconsideration at the CA was denied; CA issued Decision (March 26, 2015) and Resolution (November 25, 2015).
The Supreme Court rendered its Decision on October 16, 2019 (G.R. No. 221709), partly granting the petition and remanding the case to the trial court for further proceedings.

Parties and Role

Petitioner: National Power Corporation (NAPOCOR).
Respondent: Delta P, Inc. (Delta P), an independent power producer that took over operations of a generating plant in Puerto Princesa City previously operated by Paragua Power Corporation (PPC).
Third-party factual context: Paragua Power Corporation (PPC) had a Power Purchase Agreement (PPA) with NAPOCOR to supply electricity to meet NAPOCOR’s obligations to Palawan Electric Cooperative, Inc. consumers in Puerto Princesa City and nearby towns.

Antecedent Facts — Operational and Contractual Background

Delta P took over operations of PPC’s generating plant; the original contracting party under the PPA was PPC, not Delta P.
NAPOCOR initially refused to direct payments to Delta P on the ground that PPC remained the contracting party under the PPA.
Delta P advised NAPOCOR it could no longer operate the power station for lack of funds after NAPOCOR’s refusal to redirect payments.
On February 26, 2003, NAPOCOR’s Vice-President for Strategic Power Utilities Group, Lorenzo S. Marcelo, issued a Memorandum to NAPOCOR President Rogelio M. Murga seeking approval to supply fuel and pay manpower services of PPC’s generating plant because of an imminent power shortage in Puerto Princesa City allegedly caused by Delta P’s inability to produce electricity due to lack of bunker fuel.
Murga approved Marcelo’s Memorandum; Marcelo wrote to Delta P’s Plant Manager on March 7, 2003 informing that NAPOCOR would supply fuel and pay manpower salaries while Delta P’s internal problems were resolved, upon request of the local government of Palawan.
Delta P filed an action for collection (Civil Case No. 3766) on March 12, 2003 to collect payment for electricity off-taken by NAPOCOR.
On July 15, 2003, the RTC in Civil Case No. 3766 rendered judgment in favor of Delta P, applying the doctrines of accion in rem verso and unjust enrichment and ordered NAPOCOR to pay P87,944,215.67 (P90,394,855.86 less P2,450,640.19 adjustment), representing invoices from January 28, 2003 to June 27, 2003 as specified in the dispositive of that judgment.
The judgment in Civil Case No. 3766 became final and was implemented; NAPOCOR paid the adjudged amount.
On July 30, 2003, NAPOCOR sent a Notice of Termination and thereafter Delta P stated it would terminate fuel supply effective August 15, 2003; subsequently the parties agreed that Delta P would continue generating and supplying electricity with NAPOCOR’s express undertaking to pay monthly invoices.
On December 4, 2003, NAPOCOR issued Debit Memo S1-03-12-0041 debiting P24,449,247.36 from Delta P’s account for alleged incremental costs of the fuel NAPOCOR supplied from February 25, 2003 to June 25, 2003.
Delta P filed a sum of money case assailing the validity of the Debit Memo for lack of prior agreement authorizing payment of fuel costs and asserting that acceptance of the fuel did not imply consent to bear its costs.
NAPOCOR countered that Delta P voluntarily accepted and benefited from the fuel, and that post-audit showed variances between actual fuel costs and fuel cost tariff.

Issues Presented

Whether NAPOCOR’s supply of fuel to Delta P was gratuitous and in the form of a donation.
Whether Delta P is liable to reimburse NAPOCOR for fuel supplied and whether NAPOCOR’s post-audit and computation (debited amount P24,449,247.36) validly justified the debit despite the final judgment in Civil Case No. 3766.

Arguments of NAPOCOR (Petitioner)

The lower courts erred in characterizing the supply of fuel as gratuitous/donation; if NAPOCOR intended the supply to be free, it would have manifested gratuitous intent clearly given that public funds were used and subject to post-audit.
The debit of P24,449,247.36 corresponded to incremental costs NAPOCOR had to shoulder for supplying fuel to Delta P from February 25, 2003 to June 25, 2003 and was properly substantiated by competent evidence.
Delta P’s invoices excluded market fluctuations and transshipment costs, causing NAPOCOR to overpay by P24,449,247.36 (difference between allowable fuel cost and actual fuel cost).
Upon NAPOCOR’s delivery of fuel, Delta P became liable to compensate for incremental costs, invoking unjust enrichment and solutio indebiti principles as applicable remedies; the post-audit constituted a supervening event justifying the debit.
NAPOCOR contends it properly substantiated overpayment and prevailing circumstances rendering the unilateral debit equitable and valid.

Arguments of Delta P (Respondent)

NAPOCOR raised arguments already considered and resolved by the trial court and CA; petitioner’s points are reiterations of matters adjudicated below.
Payment made by NAPOCOR to Delta P pursuant to Civil Case No. 3766 was final and executory, therefore immutable and unalterable.
The cause of action in the sum of money case is not contractual but is based on the final judgment in Civil Case No. 3766; NAPOCOR’s post-audit argument based on the PPA with PPC is irrelevant.
NAPOCOR’s allegedly contested amounts and post-audit adjustments were only communicated internally and were not formally conveyed to Delta P; the adjusted invoices formed part of the decision in Civil Case No. 3766 and NAPOCOR’s deduction was unilateral.
The final judgment was satisfied by NAPOCOR when it paid the sums adjudged without condition or qualification.