ManilaTHIRD
DIVISION
NATIONAL
POWER
CORPORATION,
Petitioner,
G.
R.
No. 112702
September
26, 1997
-versus-
COURT
OF APPEALS
and CAGAYAN ELECTRIC
POWER AND LIGHT
CO., INC. (CEPALCO),
Respondents.
________________________________________
PHIVIDEC
INDUSTRIAL
AUTHORITY,
Petitioner,
G.
R.
No. 113613
September
26, 1997
-versus-
COURT
OF APPEALS
and CAGAYAN ELECTRIC
POWER AND LIGHT
CO., INC. (CEPALCO),
Respondents.
D
E C I S I
O N
ROMERO,
J.:
Offered for resolution
in these consolidated petitions for review on certiorari is the issue
of
whether or not the National Power Corporation (NPC) has jurisdiction to
determine whether it may supply electric power directly to the
facilities
of an industrial corporation in areas where there is an existing and
operating
electric power franchisee.
On June 17, 1961, the
Cagayan Electric and power Light Company [CEPALCO] was enfranchised by
Republic Act No. 3247 "to construct, maintain and operate an electric
light,
heat and power system for the purpose of generating and/or distributing
electric light, heat and/or power for sale within the City of Cagayan
de
Oro and its suburbs" for fifty [50] years. Republic Act No. 3570,
approved
on June 21, 1963, expanded the area of coverage of the franchise to
include
the municipalities of Tagoloan and Opol, both in the Province of
Misamis
Oriental. On August 4, 1969, Republic Act No. 6020 further amended the
same franchise to include in the areas of CEPALCO's authority of
"generating
and distributing electric light and power for sale," the municipalities
of Villanueva and Jasaan, also of the said province.cralaw:red
Presidential Decree
No. 243, issued on July 12, 1973, created a "body corporate and
politic"
to be known as the Philippine Veterans Investment Development
Corporation
[PHIVIDEC] vested with authority to engage in "commercial, industrial,
mining, agricultural and other enterprises" among other powers[1]
and "to allow the full and continued employment of the productive
capabilities
of and investment of the veterans and retirees of the Armed Forces of
the
Philippines." On August 13, 1974, Presidential Decree No. 538 was
promulgated
to create the PHIVIDEC Industrial Authority [PIA, a subsidiary of
PHIVIDEC,
to carry out the government policy "to encourage, promote and sustain
the
economic and social growth of the country and that the establishment of
professionalized management of well-planned industrial areas shall
further
this objective."[2]
Under Sec. 3 of P.D. No. 538, the first area for development shall be
located
in the municipalities of Tagoloan and Villanueva.[3]
This area forms part of the PHIVIDEC Industrial Estate Misamis Oriental
[PIE-MO].cralaw:red
As manager of PIE-MO,
PIA granted the Ferrochrome Philippines, Inc. [FPI] and Metal Alloys
Corporation
[MAC] authority to operate in its area of development. On July 6, 1979,
PIA granted CEPALCO a temporary authority to retail electric power to
the
industries operating within the PIE-MO.[4]
The Agreement executed by PIA and CEPALCO authorized CEPALCO "to
operate,
administer, construct and distribute electric power within the PHIVIDEC
Industrial Estate, Misamis Oriental, such authority to be co-extensive
with the territorial jurisdiction of PHIVIDEC Industrial Estate, as
defined
in Sec. 3 of P. D. No. 538 and shall be for a period of five (5) years,
renewable for another five (5) years at the option of CEPALCO." The
parties
provided further that:
9. At the end of the
fifth year, or at the end of the 10th year, should this Agreement be
thus
renewed, PIA has the option to take over the operation of the electric
service and acquire by purchase CEPALCO's assets within PIE-MO. This
option
shall be communicated to CEPALCO in writing at least 24 months before
the
date of acquisition of assets and takeover of operation by PIA. Should
PIA exercise its option to purchase the assets of CEPALCO in PIE-MO,
PIA
shall respect the right of ownership of and maintenance by CEPALCO of
those
assets inside PIE-MO not covered by such purchase.
According to PIA,[5]
CEPALCO proved no match to the power demands of the industries in
PIE-MO
that most of these companies operating therein closed shop.[6]
Impelled by a "desire to provide cheap power costs to power-intensive
industries
operating within the Estate," PIA applied with the National Power
Corporation
[NPC] for direct power connection which the latter in due course
approved.[7]
One of the companies which entered into an agreement with the NPC for a
direct sale and supply of power was the Ferrochrome Phils., Inc. [FPI].
Contending that the
said agreement violated its right as the authorized operator of an
electric
light and power system in the area and the national electrification
policy,
CEPALCO filed Civil Case No. Q-35945, a petition for prohibition,
mandamus
and injunction before the Regional Trial Court of Quezon City against
the
NPC. Notwithstanding NPC's claim that it was authorized by its Charter
to sell electric power "in bulk" to industrial enterprises, the lower
court
rendered a decision on May 2, 1984, restraining the NPC from supplying
power directly to FPI upon the ground that such direct sale, supply and
delivery of electric power by the NPC to FPI was violative of the
rights
of CEPALCO under its legislative franchise. Hence, the lower court
ordered
the NPC to "permanently desist" from effecting direct supply of power
to
the FPI and "from entering into and/or implementing any agreement or
arrangement
for such direct power connection, unless coursed through the power
line"
of CEPALCO.cralaw:red
Eventually, the case
reached this Court through G. R. No. 72085.[8]
On December 28, 1989, the Court denied the appeal interposed by NPC on
the ground that the statutory authority given to the NPC as regards
direct
supply of power to BOI-registered enterprises "should always be
subordinate
to the 'total-electrification-of-the-entire-country-on-an-area-coverage
basis policy' enunciated in P. D. No. 40,"[9]We held further that:
Nor should we lose
sight of the factual findings of the court a quo that
petitioner-appellee
CEPALCO had not only been authorized by the Phividec Industrial
Authority
to provide electrical power to the Phividec Industrial Estate within
which
the FPI plant is located, but that petitioner-appellee CEPALCO had in
fact,
supplied the latter's power requirements for the construction of its
plant,
upon FPI's application therefor as early as October 17, 1980.
It bears emphasis then
that "it is only after a hearing [or an opportunity for such a hearing]
where it is established that the affected private franchise holder is
incapable
or unwilling to match the reliability and rates of NPC that direct
connection
with NPC may be granted." Here, petitioner-appellee's reliability as a
power supplier and ability to match the NPC rates were never put in
issue.
It is immaterial that
petitioner-appellee's franchise was not exclusive. A privilege to sell
within specified territory, even if not exclusive, is a valuable
property
right entitled to protection against unauthorized competition.[10]
Notwithstanding said
decision, in September 1990, FPI filed a new application for the direct
supply of electric power from NPC. The Hearing Committee of the NPC had
started hearing the application but CEPALCO filed with the Regional
Trial
Court of Quezon City a petition for contempt against NPC officials led
by Ernesto Aboitiz. On August 10, 1992, the trial court found the
respondents
in direct contempt of court and accordingly imposed upon them a fine of
P500.00 each.cralaw:red
The respondent NPC officials
challenged before this Court the judgment holding them in contempt of
court
through G. R. No. 107809, [Aboitiz v. Regino].[11] In the Decision of July
5,
1993,
the Court upheld the contempt ruling and, after quoting the lower
court's
decision of May 2, 1984 which the Court upheld in G. R. No. 72085, said:
These directives show
that the lower court [and this Court] intended the arrangement between
FPI and CEPALCO to be permanent and free from NAPOCOR's influence or
intervention.
Any attempt on the part of NAPOCOR or its officers and/or employees to
strike a deal with FPI would be a clear and direct disobedience to a
lawful
order and therefore contemptuous.cralaw:red
The petitioners call
the attention of the Court to the statement of CEPALCO that "NAPOCOR
has
already implemented in full" the May 2, 1984 decision of the lower
court
as affirmed by this Court. They suggest that in view of this, the
decision
no longer has any binding effect upon the parties, or to put it another
way, has become functus officio. Consequently, when they entertained
the
re-application of FPI for direct power connection to NAPOCOR, they were
not disobeying the May 2, 1984 order of the trial court and so should
not
be held in contempt.cralaw:red
This argument must be
rejected in view of our finding of the permanence and comprehensiveness
of the challenged order of the trial court. "Permanent" is not a
difficult
word to understand. It means "lasting or intended to last indefinitely
without change." As for the scope of the order, NAPOCOR was directed to
"desist from effecting, causing, and continuing the direct supply, sale
and delivery of electricity from its power line to the plant of
Ferrochrome
Philippines, Inc., and from entering into and/or implementing any
agreement
or arrangement for such direct power connection, unless coursed through
the power line of petitioner." (Emphasis supplied).cralaw:red
Meanwhile, the NPC Hearing
Committee[12]
proceeded with its hearings. CEPALCO was duly notified thereof but it
opted
to question the committee's jurisdiction. It did not submit any
evidence.
Consequently, in its Report and Recommendation dated September 27,
1991,
the committee gave weight to the evidence presented by FPI that CEPALCO
charged higher rates than what the NPC would if allowed to supply power
directly to FPI. Although the committee considered as unfounded FPI's
claim
of CEPALCO's unreliability as a power supplier,[13]
it nonetheless held that:
Form (sic)
the foregoing and on the basis of the decision of the Supreme Court in
the case of National Power Corporation and Fine Chemicals [Phils.] Inc.
v. The Court of Appeals and the Manila Electric Company, G. R. No.
84695,
May 8, 1990, FPI is entitled to a direct connection to NPC as applied
for
considering that CEPALCO is unwilling to match the rates of NPC for
directly
serving FPI and that FPI is a duly registered BOI registered
enterprises
(sic). The Supreme Court in the
aforestated case
has
ruled as follows:
As consistently ruled
by the Court pursuant to P.D. No. 380 as amended by P.D. No. 395, NPC
is
statutorily empowered to directly service all the requirements of a BOI
registered enterprise provided that, first, any affected private
franchise
holder is afforded an opportunity to be heard on the application
therefor
and second, from such a hearing, it is established that said private
franchise
holder is incapable or unwilling to match the reliability and rates of
NPC for directly serving the latter [National Power Corporation v.
Jacinto,
134 SCRA 435 (1985). National Power Corporation v. Court of Appeals,
161
SCRA 103 (1988)].[14]
However, considering the
"better and priority right" of PIA, the committee recommended that
instead
of a direct power connection by the NPC to FPI, the connection should
be
made to PIA "as a utility user for its industrial Estate at Tagoloan,
Misamis
Oriental."[15]
For its part, on November
3, 1989, CEPALCO filed with the Energy Regulatory Board (ERB) a
petition
praying that the ERB "order the discontinuance of all existing direct
supply
of power by the NPC within petitioner's franchise area" (ERB Case No.
89-430).
On July 17, 1992, the ERB ruled that CEPALCO "is relatively efficient
and
reliable as manifested by its very low system losses (far from the 14%
standard) and very high power factors" and therefore CEPALCO is
technically
capable "to distribute power to its consumers within its franchise
area,
particularly the industrial customers." It disposed of the petition as
follows:
WHEREFORE, in view
of the foregoing premises, when the petitioner has been proven to be
capable
of distributing power to its industrial consumers and having passed the
secondary considerations with a passing mark of 85%, judgment is hereby
rendered granting the relief prayed for. Accordingly, it is hereby
declared
that all direct connection of industries to NPC within the franchise
area
of CEPALCO is no longer necessary. Therefore, all existing NPC direct
supply
of power to industrial consumers within the franchise area of CEPALCO
is
hereby ordered discontinued.[16]
However, during the pendency
of the Aboitiz case in this Court or on August 3, 1992, PIA contracted
the NPC for the construction of a 138 kilovolt [KV] transmission line
from
Namutulan substation to the receiving and/or substation of PIA.[17]
As expected, on February
17, 1993, CEPALCO filed in the Regional Trial Court of Pasig [Branch
68],
a petition for certiorari, prohibition, mandamus and injunction against
the NPC and some officials of both the NPC and PIA.[18]
Docketed as SCA No. 290, the petition specifically sought the issuance
of a temporary restraining order. However, after hearing, the prayer
for
the temporary restraining order was denied by the court in its order of
March 12, 1993.[19]
CEPALCO filed a motion for the reconsideration of said order while NPC
and PIA moved for the dismissal of the petition.[20]
On June 23, 1993, noting
the cases filed by CEPALCO all seeking exclusivity in the distribution
of electric power to areas covered by its franchise, the court[21]
ruled that "the right of petitioner to supply electric power in the
aforesaid
area to the exclusion of other entities had been settled once and for
all
by the Regional Trial Court of Quezon City wherein petitioner obtained
a favorable judgment." Hence, the petition was dismissed on the ground
of res judicata.[22]
Forthwith, CEPALCO elevated
the case to this Court through a petition for certiorari, prohibition
and
injunction with prayer for the issuance of a preliminary injunction or
a temporary restraining order. The petition was docketed as G. R. No.
110686
but on August 18, 1993, the Court referred it to the Court of Appeals
pursuant
to Sec. 9, paragraph 1 of B. P. Blg. 129 conferring upon the appellate
court original jurisdiction to issue writs of prohibition and
certiorari
and auxiliary writs.[23]
In the Court of Appeals, the petition was docketed as CA-G. R. No.
31935-SP.cralaw:red
On September 10, 1993,
the Fifteenth Division of the Court of Appeals issued a resolution[24]
denying the prayer for the issuance of a temporary restraining order on
the strength of Sec. 1 of P.D. No. 1818. It ruled that since the NPC is
a public utility, it "enjoys the protective mantle" of said decree
prohibiting
courts from issuing restraining orders or preliminary injunctions in
cases
involving infrastructure and natural resource development projects of,
and operated by, the government.[25]
However, on September
17, 1993, upon a motion for reconsideration filed by CEPALCO and a
re-evaluation
of the provisions of P. D. No. 1818, the Court of Appeals set aside its
resolution of September 10, 1993 and held that:
xxx the project intended
by respondent NPC, which is the construction, completion and operation
of the 138-kv line, is not in consonance with the intendment of said
Decree
which is to protect public utilities and their projects and activities
intended for public convenience and necessity. The project of
respondent
NPC is intended to serve exclusively the needs of private entities,
Metal
Alloys Corporation and Ferrochrome Philippine in Tagoloan, Misamis
Oriental.cralaw:red
Accordingly, the Court
of Appeals issued a temporary restraining order directing the private
respondents
therein "to immediately cease and desist from proceeding with the
construction,
completion and operation of the 138-kv line subject of the petition."
The
NPC, PIA and the officers of both were directed to explain why the
preliminary
injunction prayed for should not issue.[26]
In due course, the Court
of Appeals rendered the decision[27]
of November 15, 1993 assailed herein. After ruling that the lower court
gravely abused its discretion in dismissing the petition below on the
grounds
of res judicata and litis pendentia, the Court of Appeals confronted
squarely
the issue of whether or not "the NPC itself has the power to determine
the propriety of direct power connection from its lines to any entity
located
within the franchise area of another public utility."[28]
Elucidating that the
ruling of this Court in both G. R. No. 78609 [NPC v. Court of Appeals][29]
and G. R. No. 87697 [Del Monte (Philippines), Inc. v. Hon. Felix M. de
Guzman, etc., et al.][30]
categorically held that before a direct connection to the NPC maybe
granted,
a proper administrative body must conduct a hearing "to determine which
entity, the franchise holder or the NPC, has the right to supply
electric
power to the entity applying for direct connection," the Court of
Appeals
declared:
We have no doubt that
the ERB, and not the NPC, is the administrative body referred to by the
Supreme Court where the hearing is to be conducted to determine the
propriety
of direct connection. The charter of the ERB [P. D. 1206 in relation to
E. O. 172] is clear on this:
The Board shall,
after
due notice and hearing, exercise the following powers and functions,
among
others:
xxx
xxx
xxx
e. Issue
Certificate
of Public Convenience for the operation of electric power utilities and
services, including the establishment and regulation of areas of
operation
of particular operators of public power utilities and services, the
fixing
of standards and specifications in all cases related to the issued
Certificate
of Public Convenience.
Moreover, NPC is not an
administrative body as jurisprudentially defined, and that the NPC
cannot
usurp a power it has never been conferred by its charter or by other
law
the power to determine the validity of direct connection agreement it
enters
into in violation of a power distributor's franchise.
Thus, considering that
PIA professes to be and intends to engage in the business of a public
power
utility, it must first apply for a public convenience and necessity
[conferment
of operating authority] with the ERB. This may have been the opportune
time for ERB to determine whether to allow PIA to directly connect with
NPC, with notice and opportunity for CEPALCO considering that, as the
latter
alleges, this new line which NPC is installing duplicates that existing
Cepalco 138 kv line which NPC itself turned over to Cepalco and for
which
it was paid in full.cralaw:red
Consequently, the Court
of Appeals affirmed the dismissal of the petition, annulled and set
aside
the decision of the Hearing Committee of the NPC on direct connection
with
PIA, and ordered the NPC "to desist from continuing the construction of
that NPC-Natumulan-Phividec 138 kv transmission line."[31]
Without filing a motion
for the reconsideration of said Decision, NPC filed in this Court on
December
9, 1993, a motion for an extension of time within which to file "the
proper
petition." The motion which was docketed as G. R. No. 112702, was
granted
on December 20, 1993 with warning that no further extension would be
granted.
Thereafter, NPC filed a motion praying that it be excused from filing
the
petition on account of the filing by PIA in the Court of Appeals of a
motion
for the reconsideration of the Decision of November 15, 1993. In the
Resolution
of February 2, 1994, the Court noted and granted petitioner' s motion
and
considered the case "closed and terminated."[32]
This resolution was withdrawn in the Resolution of February 8, 1995[33]
in view of the "inadvertent clerical error" terminating the case, after
the NPC had mailed its petition for review on certiorari on February
21,
1994.[34]
In the meantime, PIA
filed a motion for reconsideration of the appellate court's Decision of
November 15, 1993 arguing in the main that, not being a party to
previous
cases between CEPALCO and NPC, it was not bound by decisions of this
Court.
The Court of Appeals denied the motion on January 28, 1994 on the basis
of stare decisis where once the court has laid down a principle of law
as applicable to a certain state of facts, it will adhere to and apply
the principle to all future cases where the facts are substantially
thesame.[35]
Hence, PIA filed a petition for review on certiorari which was docketed
as G. R. No. 113613.cralaw:red
G. R. Nos. 112702 and
113613 were consolidated on June 15, 1994.[36]
In G. R. No. 112702, petitioner NPC contends that private respondent
CEPALCO
is not entitled to relief because it has been forum-shopping. Private
respondent
had filed Civil Case No. Q-93-14597 in the Regional Trial Court of
Quezon
City which had been forwarded to it by the Regional Trial Court of
Pasig.
Said case and the instant case [SCA No. 290] deal with the same issue
of
restoring CEPALCO' s right to supply power to FPI and MAC. Petitioner
thus
contends that because the principle of litis pendentia applies,
although
other parties are involved in the case before the Quezon City court,
there
is no basis for granting relief to private respondent CEPALCO "[s]ince
the dismissal for lack of jurisdiction was affirmed by the respondent
court."[37]
Corollarily, petitioner asserts that because the main case herein was
dismissed
"without trial," the respondent appellate court should not have
accorded
private respondent affirmative relief.[38]
Petitioner NPC's contention
is based on the fact that on October 6, 1992, private respondent
CEPALCO
filed against the NPC in the Regional Trial Court of Pasig, Civil Case
No. 62490, an action for specific performance and damages with prayer
for
preliminary mandatory injunction directing the NPC to immediately
restore
to CEPALCO the distribution of power pertaining to MAC's consumption.[39]
However, no summons was served and the ex-parte writ prayed for was not
issued. Nevertheless, the case was forwarded to the Regional Trial
Court
of Quezon City where it was docketed as Civil Case No. 93-14597. That
case
was pending when SCA No. 290 was filed before the Regional Trial Court
of Pasig.cralaw:red
The Court of Appeals
affirmed the lower court's dismissal of the case neither on the grounds
of res judicata nor litis pendentia but on the "only
one
unresolved issue, which is whether the NPC itself has the power to
determine
the propriety of direct power connection from its lines to any entity
located
within the franchise area of another public utility."[40]
The Court of Appeals opined that the effects of litis pendentia could
not
have resulted in the dismissal of SCA No. 290 because Civil Case No.
Q-35945
which became G. R. No. 72085 was based on facts totally different from
that of SCA No. 290.cralaw:red
In invoking litis
pendentia, however, petitioner NPC refers to this case, SCA No.
290,
and Civil Case No. 93-14597. SCA No. 290 and Civil Case No. 93-14597
may
both have the same objective, the restoration of CEPALCO's right to
distribute
power to PIE-MO areas under its franchise aside from the fact that the
cases involve practically the same parties. However, litis pendentia
may
not be successfully invoked to cause the dismissal of SCA No.
290.
In order to constitute a ground for the abatement or dismissal of an
action,
litis pendentia must exhibit the concurrence of the
following
requisites:
(a) identity of parties, or at least such as representing the same
interest
in both actions; (b) identity of rights asserted and relief prayed for,
the relief being founded on the same facts, and (c) identity in the two
(2) cases should be such that the judgment that may be rendered in the
pending case would, regardless of which party is successful, amount to
res judicata in the other.[41]
As a rule, the second case filed should be abated under the maxim qui
prior
est tempore, potior est jure. However, this rule is not a hard and fast
one. The "priority-in-time rule" may give way to the criterion of "more
appropriate action." More recently, the criterion used was the
"interest
of justice rule."[42]
We hold that the last
criterion should be the basis for resolving this case, although it was
filed later than Civil Case No. 62490 which, upon its transfer, became
Civil Case No. 93-14795. In so doing, we shall avoid multiplicity of
suits
which is the matrix upon which litis pendentia is anchored and
eventually
bring about the final settlement of the recurring issue of whether or
not
the NPC may supply power directly to the industries within PIE-MO,
notwithstanding
the operation of franchisee CEPALCO in the same area.cralaw:red
It should be noted that
there is yet pending another case, namely, Civil Case No. 91-383,
instituted
by PIA against CEPALCO in the Regional Trial Court of Misamis Oriental
which apparently deals with a related issue PIA' s franchise or
authority
to provide power to enterprises within the PIE-MO.[43]
Hence, the principle of litis pendentia which ordinarily demands the
dismissal
of an action filed later than another, should be considered under the
primordial
concept of "interest of justice," in order that a recurrent issue
common
to all cases may be definitively resolved.cralaw:red
The principal and common
question raised in these consolidated cases is: whether or not the NPC
may supply power directly to PIA in the PIE-MO area where CEPALCO has a
directly franchise. Petitioner PIA in G. R. No. 113613 asserts that it
may receive power directly from the NPC because it is a public utility.
It avers that P. D. No. 538, as amended, empowers PIA "as and to be a
public
utility to operate and serve the power needs within PIE-MO, i.e.,
a specific area constituting a small portion of petitioner's franchise
coverage," without, however, specifying the particular provision which
so empower PIA.[44]
A "public utility" is
a business or service engaged in regularly supplying the public with
some
commodity or service of public consequence such as electricity, gas,
water,
transportation, telephone or telegraph service.[45]
The term implies public use and service.[46]
Petitioner PIA is a
subsidiary of the PHIVIDEC with "governmental and proprietary
functions."[47]Sec. 4 of P. D. No. 538 specifically confers upon it the following
powers:
a. To operate,
administer
and manage the PHIVIDEC Industrial Areas and other areas which shall
hereafter
be proclaimed, designated and specified in subsequent Presidential
Proclamation;
to construct acquire, own, lease, operate and maintain infrastructure
facilities,
factory buildings, warehouses, dams, reservoirs, water distribution,
electric
light and power systems, telecommunications and transportation
networks,
or such other facilities and services necessary or useful in the
conduct
of industry and commerce or in the attainment of the purposes and
objectives
of this Decree; (Emphasis supplied)
Clearly then, the PIA is
authorized to render indirect service to the public by its
administration
of the PHIVIDEC industrial areas like the PIE-MO and may, therefore, be
considered a public utility. As it is expressly authorized by law to
perform
the functions of a public utility, a certificate of public convenience,
as suggested by the Court of Appeals, is not necessary for it to avail
of a direct power connection from the NPC. However, such authority to
be
a public utility may not be exercised in such a manner as to prejudice
the rights of existing franchisees. In fact, by its actions, PIA
recognized
the rights of the franchisees in the area.
Accordingly, in pursuit
of its powers "to grant such franchise for and to operate and maintain
within the Areas electric light, heat or power systems," etc. under
Sec.
4 (i) of P.D. No. 538 and its rule-making power under Sec. 4 (1) of the
same law, on July 20, 1979, the PIA Board of Directors promulgated the
"Rules and Regulations To Implement the Intent and Provisions of
Presidential
Decree No. 538."[48]
Rule XI thereof on "Utilities and Services" provides as follows:
Sec. 1. Utilities.-
It is the responsibility of the Authority to provide all required
utilities
and services inside the Estate:
(a) Contracts for the
purchase of public utilities and/or services shall be subject to the
prior
approval of the Authority; Provided, however, that similar contract[s]
existing prior to the effectivity of this Rules and Regulations shall
continue
to be in full force and effect.
xxx
xxx
xxx
(Emphasis
supplied)
It should be noted that
the Rules and Regulations took effect thirty (30) days after its
publication
in the Official Gazette on September 24, 1979 or more than three (3)
months
after the July 6, 1979 contract between PIA and CEPALCO was entered
into.
As such, the Rules and Regulations itself allowed the continuance of
the
supply of electric power to PIE-MO by CEPALCO.
That the contract of
July 6, 1979 was not renewed by the parties after the expiration of the
five-year period stipulated therein did not change the fact that within
that five-year period, in violation of both the contract and its Rules
and Regulations, PIA applied with the NPC for direct power connection.
Thematter was aggravated by NPC's favorable action on the application,
totally unmindful of the extent of its powers under the law which, in
National
Power Corporation v. Court of Appeals,[49]
the Court delimits as follows:
xxx It is immaterial
whether the direct connection is merely an improvement or an increase
in
existing voltage, as alleged by petitioner, or a totally new and
separate
electric service as claimed by private respondent. The law on the
matter
is clear. P. D. 40 promulgated on 7 November 1972 expressly provides
that
the generation of electric power shall be undertaken solely by the NPC.
However Section 3 of the same decree also provides that the
distribution
of electric power shall be undertaken by cooperatives, private
utilities
[such as the CEPALCO], local governments and other entities duly
authorized,
subject to state regulation. ( Emphasis supplied)
The same case ruled that
"[i]t is only after a hearing [or an opportunity for such a hearing]
where
it is established that the affected private franchise holder is
incapable
or unwilling to match the reliability and rates of NPC that a direct
connection
with NPC may be granted."[50]
As earlier stated, the Court arrived at the same ruling in the later
cases
of G. R. Nos. 72085, 84695 and 87697.
Petitioner NPC attempted
to abide by these rulings when it conducted a hearing to determine
whether
it may supply power directly to PIA. While it notified CEPALCO of the
hearing,
the NPC is not the proper authority referred to by this Court in the
aforementioned
earlier decisions, not only because the subject of the hearing is a
matter
involving the NPC itself, but also because the law has created the
proper
administrative body vested with authority to conduct a hearing.cralaw:red
CEPALCO shares the view
of the Court of Appeals that the Energy Regulatory Board [ERB] is the
proper
administrative body for such hearings. However, a recent legislative
development
has overtaken said view. The ERB, which used to be the Board of Energy,
is tasked with the following powers and functions by Executive Order
No.
172 which took effect immediately after its issuance on May 8, 1987:
Sec. 3. Jurisdiction,
Powers and Functions of the Board.- When warranted and only
when
public necessity requires, the Board may regulate the business of
importing,
exporting, re-exporting, shipping, transporting, processing, refining,
marketing and importing, distributing energy resources.
The Board shall,
upon
prior notice and hearing, exercise the following, among other powers
and
functions:
(a) Fix and regulate
the prices of petroleum products;
(b) Fix and regulate
the rate schedule or prices of piped gas to be charged by duly
franchised
gas companies which distribute gas by means of underground pipe system;
(c) Fix and regulate
the rates of pipeline concessionaires under the provisions of Republic
Act No. 387, as amended, otherwise known as the "Petroleum Act of
1949,"
as amended by Presidential Decree No. 1700;
(d) Regulate the
capacities
of new refineries or additional capacities of existing refineries and
license
refineries that may be organized after the issuance of this Executive
Order,
under such terms and conditions as are consistent with the national
interest;
(e) Whenever the
Board
has determined that there is a shortage or any petroleum product, or
when
public interest so requires, it may take such steps as it may consider
necessary, including the temporary adjustment of the levels of prices
of
petroleum products and the payment to the Oil Price Stabilization Fund
created under Presidential Decree No. 1956 by persons or entities
engaged
in the petroleum industry of such amounts as may be determined by the
Board,
which will enable the importer to recover its cost of importation.
As may be gleaned from
said provisions, the ERB is basically a price or rate-fixing agency.
Apparently
recognizing this basic function, Republic Act No. 7638 [An Act Creating
the Department of Energy, Rationalizing the Organization and Functions
of Government Agencies Related to Energy, and for Other Purposes],[51]
which was approved on December 9, 1992 and which took effect fifteen
days
after its complete publication in at least two (2) national newspapers
of general circulation, specifically provides as follows:
Sec. 18. Rationalization
or Transfer of Functions of Attached or Related Agencies.-
The
non-price regulatory jurisdiction, powers, and functions of the Energy
Regulatory Board as provided for in Section 3 of Executive Order No.
172
are hereby transferred to the Department.
The foregoing
transfer
of powers and functions shall include all applicable funds and
appropriations,
records, equipment, property, and such personnel as may be necessary.
Provided, That only such amount of funds and appropriations of the
Board as well as only the personnel thereof which are completely or
primarily
involved in the exercise by said Board of its non-price regulatory
powers
and functions shall be affected by such transfer.
The power of the NPC to
determine, fix, and prescribe the rates being charged to its customers
under Section 4 of Republic Act No. 6395, as amended, as well as the
power
of electric cooperatives to fix rates under Section 16 (o), Chapter II
of Presidential Decree No. 269, as amended, are hereby transferred to
the
Energy Regulatory Board. The Board shall exercise its new powers only
after
due notice and hearing and under the same procedure provided for in
Executive
Order No. 172.
Upon the effectivity
of Republic Act No. 7638, then Acting Chairman of the Energy
Coordinating
Council Delfin Lazaro transmitted to the Department of Justice the
query
of whether or not the "non-power rate powers and functions" of the ERB
are included in the "jurisdiction, powers and functions transferred to
the Department of Energy." Answering the query in the affirmative, the
Department of Justice rendered Opinion No. 22 dated February 12, 1993
the
pertinent portion of which states:
xxx we believe that
since the provision of Section 18 on the transfer of certain powers and
functions from ERB to DOE is clear and unequivocal, and devoid of any
ambiguity,
in the sense that it categorically refers to "non-price jurisdiction,
powers
and functions" of ERB under Section 3 of E. O. No. 172, there is no
room
for interpretation, but only for application, of the law. This is a
cardinal
rule of statutory construction.
Clearly, the parameters
of the transfer of functions from ERB to DOE pursuant to Section 18,
are
circumscribed by the provision of Section 3 of E. O. No. 172 alone so
that,
if there are other "related" functions of ERB under other provisions of
E. O. No. 172 or other energy laws, these "related" functions, which
may
conceivably refer to what you call "non-power rate powers and
functions"
of ERB, are clearly not contemplated by Section 18 and are, therefore,
not to be deemed included in the transfer of functions from ERB to DOE
under the said provision.
It may be argued that
Section 26 of R.A. No. 7638 contains a repealing clause which provides
that:
All laws,
presidential
decrees, executive orders, rules and regulations or parts thereof,
inconsistent
with the provisions of this Act, are hereby repealed or modified
accordingly
and, therefore, all provisions
of E. O. No. 172 and related laws which are inconsistent with the
policy,
purpose and intent of R. A. No. 7638 are deemed repealed. It has been
said,
however, that a general repealing clause of such nature does not
operate
as an express repeal because it fails to identify or designate the act
or acts that are intended to be repealed. Rather, it is a clause which
predicates the intended repeal upon the condition that a substantial
conflict
must be found on existing and prior acts of the same subject matter.
Such
being the case, the presumption against implied repeals and the rule on
strict construction regarding implied repeals shall apply ex propio
vigore.
For the legislature is presumed to know the existing laws so that, if
repeal
of particular or specific laws is intended, the proper step is to so
express
it. The failure to add a specific repealing clause particularly
mentioning
the statute to be repealed indicates that the intent was not to repeal
any existing law on the matter, unless an irreconcilable inconsistency
and repugnancy exists in the terms of the new and the old laws [Iloilo
Palay and Corn Planters Association, Inc. vs. Feliciano, 13 SCRA 377;
City
of Naga vs. Agna, 71 SCRA 176, cited in Agpalo, Statutory Construction,
1990 Edition, pp. 191-192].
In view of the foregoing,
it is our opinion that only the non-price regulatory functions of ERB
under
Section 3 of E. O. 172 are transferred to the DOE. All other powers of
ERB which are not within the purview of its "non-price regulatory
jurisdiction,
powers and functions" as defined in Section 3 are not so transferred to
DOE and accordingly remain vested in ERB.cralaw:red
The determination of
which of two public utilities has the right to supply electric power to
an area which is within the coverage of both is certainly not a
rate-fixing
function which should remain with the ERB. It deals with the regulation
of the distribution of energy resources which, under Executive Order
No.
172, was expressly a function of ERB. However, with the enactment of
Republic
Act No. 7638, the Department of Energy took over such function. Hence,
it is this Department which shall then determine whether CEPALCO or PIA
should supply power to PIE-MO.cralaw:red
Clearly, petitioner
NPC's assertion that its "authority to entertain and hear direct
connection
applications is a necessary incident of its express authority to sell
electric
power in bulk" is now baseless.[52]
Even without the new legislation affecting its power to conduct
hearings,
it is certainly irregular, if not downright anomalous for the NPC
itself
to determine whether it should supply power directly to the PIA or the
industries within the PIE-MO. It simply cannot arrogate unto itself the
authority to exercise non-rate fixing powers which now devolves upon
the
Department of Energy and to hear and eventually grant itself the right
to supply power in bulk.[53]
On the other hand, ventilating
the issue in a public hearing would not unduly prejudice CEPALCO
although
it was enfranchised by law earlier than the PIA. Exclusivity of any
public
franchise has not been favored by this Court such that in most, if not
all, grants by the government to private corporations, the
interpretation
of rights, privileges or franchises is taken against the grantee. Thus
in Alger Electric, Inc. v. Court of Appeals,[54]
the Court said.
xxx Exclusivity is
given by law with the understanding that the company enjoying it is
self-sufficient
and capable of supplying the needed service or product at moderate or
reasonable
prices. It would be against public interest where the firm granted a
monopoly
is merely an unnecessary conduit of electric power, jacking up prices
as
a superfluous middleman or an inefficient producer which cannot supply
cheap electricity to power intensive industries. It is in the public
interest
when industries dependent on heavy use of electricity are given
reliable
and direct power at the lower costs thus enabling the sale of
nationally
marketed products at prices within the reach of the masses.
WHEREFORE, both petitions
in G. R. Nos. 112702 and 113613 are hereby DENIED. The Department of
Energy
is directed to conduct a hearing with utmost dispatch to determine
whether
it is the Cagayan Electric Power and Light Co. Inc. or the National
Power
Corporation, through the PHIVIDEC Industrial Authority, which should
supply
electric power to the industries in the PHIVIDEC Industrial
Estate-Misamis
Oriental.
This Decision is immediately
executory.cralaw:red
SO ORDERED.cralaw:red
Narvasa, C.J.,
Melo and Francisco, JJ., concur.
Panganiban, J.,
took no part.cralaw:red
_______________________________________
Endnotes
[1]Sec. 3 [a].
[2]
Secs. 1 & 2.
[3]Sec. 3 of P.D. No. 538 describes the area as follows: "The first Area
which
the Authority shall develop shall be that located in the municipalities
of Tagoloan and Villanueva in the Province of Misamis Oriental, bounded
on the West by Macajalar Bay, on the North by the Taganga Creek, on the
East by the Kiamo and Kirahon plateaus and the South by the Tagoloan
River
containing an area of 3,000 hectares more or less
[4]
Rollo of G.R. No. 113613, pp. 118-121.
[5]
In its Report and Recommendation dated September 27, 1991 on the
application
of FPI and PHIVIDEC for direct power connection to the NPC, the NPC
Hearing
Committee found that PHIVIDEC had terminated the Agreement of July 6,
1979
and that CEPALCO's continued supply of power to the PIE-MO was merely
upon
PHIVIDEC's tolerance [Rollo of G.R. No. 113613, p. 424].
[6]
Ibid., pp. 61-62.
[7]
Ibid., p. 142.
[8]
Cagayan Electric Power and Light Company, Inc. v. National Power
Corporation,
G.R. No. 72085, December 28, 1989, 180 SCRA 628, 631.
[9]
Ibid., p. 633.
[10]
Ibid., p. 634.
[11]
G.R. No. 107809, July 5, 1993, 224 SCRA 500.
[12]
With Hector N. Campos as chairman and Eleuterio M. Olaer, C.C.
Alcantara
and Armando Minia as members.
[13]
Rollo of G.R. No. 113613, pp. 425-426.
[14]
Ibid., p. 426.
[15]
Ibid., p. 428.
[16]
Rollo of G.R. No. 113613, pp. 105-107.
[17]
Ibid., p. 143.
[18]
Ibid., p. 148.
[19]
Ibid., p. 166.
[20]
Ibid., p. 63.
[21]
Presided by Judge Santiago G. Estrella.
[22]
Rollo of G.R. No. 113613, p. 184.
[23]
Rollo of CA-G.R. No. 31935-SP, p. 105.
[24]
Penned by Associate Justice Quirino D. Abad Santos, Jr. and concurred
in
by Associate Justices Oscar M. Herrera and Alfredo J. Lagamon.
[25]
Rollo of G.R. No. 113613, p. 221.
[26]
Ibid., pp. 224-225.
[27]
Penned by Associate Justice Quirino D. Abad Santos, Jr. and concurred
in
by Associate Justices Emeterio C. Cui and Nathaniel P. de Pano,
Jr.
[28]
Ibid., p. 112.
[29]
Decided on May 5, 1988 [161 SCRA 100].
[30]
In the Minute Resolution of September 4, 1989 the Court dismissed the
petition
in this case and said: xxx the Court finds lack of merit in
petitioner's
claim that the order of disconnection issued by the Court of Appeals is
qualified by the 5 May 1988 decision of this Court, which allegedly
requires
that, before the order of disconnection can be effected, a hearing
should
first be held to determine whether franchise holder is incapable or
unwilling
to match the reliability and rates of NPC. The required hearing which
was
found to be lacking in the case at bar should have been held before the
case even arose and not after the Court has already ruled against NPC
and
order has been issued to disconnect the direct line of petitioner to
NPC,
as well as to allow CEPALCO to supply the power to petitioner.
The
statement of this Court in its decision in G. R. No. 78605 is clear
that
before a direct connection to NPC may be granted, a hearing (or an
opportunity
for such a hearing) should be first conducted. Since under the
circumstances,
no hearing took place, then it is only proper that NPC be disqualified
to directly supply the power to petitioner. The negotiations between
petitioner
and CEPALCO which followed after this Court's decision was rendered, do
not rectify the previous lack of hearing. The hearing required in the
case
at bar is one conducted before a proper administrative body to
determine
as to which entity, i.e. CEPALCO or NPC, has the right to supply
electric
power to petitioner; negotiations between the parties is not a
substitute
to such a hearing.
[31]
Ibid., p. 114-A.
[32]
Rollo of G.R. No. 112702, p. 5.
[33]
Ibid., p. 83.
[34]
Ibid., p. 7.
[35]
Rollo of G.R. No. 113613, p. 116.
[36]
Ibid., p. 326-A.
[37]
Petition, pp. 14-19.
[38]
Ibid., pp. 22-24.
[39]
Rollo of G.R. No, 112702, pp. 56-61.
[40]
Decision, p. 13.
[41]
Victronics Computers, Inc. v. RTC, Br. 63, Makati, G.R. No. 104019,
January
25, 1993, 217 SCRA 517, 529.
[42]
Ibid., pp. 531-534.
[43]
Petition in G.R. No. 113613, p. 15.
[44]
Petition in G.R. No. 113613, pp. 31-32.
[45]
64 AM. JUR. 549 cited as footnote No. 1 in Albano v. Reyes, G.R. No.
83551,
July 11, 1989, 175 SCRA 264, 270.
[46]Sec. 14 of Commonwealth Act No. 146 states that "public utilities"
include
"every individual, copartnership, association, corporation, or
joint-stock
company, whether domestic or foreign, their lessees, trustees, or
receivers
appointed by any court whatsoever, or any municipality, province, or
other
department of the Government of the Philippines that now may own,
operate,
manage or control in the Philippines, for hire or compensation, any
common
carrier, railroad, gas, electric light, heat, power xxx" In Kilusang
Mayo
Uno Labor Center v. Garcia, Jr. [G. R. No. 115381, December 23, 1994,
239
SCRA 386, 391], however, Court defines public utilities as "privately
owned
and operated businesses whose services are essential to the general
public.
They are enterprises which specially cater to the needs of the public
and
conduce to their comfort and convenience." (Emphasis supplied)
[47]Sec. 3, P.D. 538.
[48]
75 O.G. 7848.
[49]
G.R. No. 78605, May 5, 1988, 161 SCRA 100, 104-105.
[50]
Ibid., pp. 105-106.
[51]
89 O.G. 166.
[52]
Petitioner NPC's Memorandum, p. 23.
[53]
In NPC v. Court of Appeals [G. R. No. 84695, May 8, 1990, 185 SCRA 169]
which petitioner NPC Hearing Committee, in its report dated September
27,
1991, used as a basis for its claim that it has the power to make a
direct
connection with FPI, the Court indeed held that the "NPC is statutorily
empowered to directly service all the requirements of a BOI registered
enterprise" subject to the conditions that there must be a hearing
which
establishes that the private franchise holder is incapable or unwilling
to match the reliability and rates of the NPC for providing power
directly.
However, this jurisprudential pronouncement has been rendered obsolete
by Republic Act No. 7638 as discussed earlier.
[54]
L-34298, February 28, 1985, 135 SCRA 37, 46. |