Case Digest (G.R. No. L-24396) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Santiago P. Alalayan, et al. v. National Power Corporation, petitioners Alalayan and Philippine Power and Development Company, both holders of franchises to operate electric plants in Laguna, entered into indefinite supply contracts with respondent National Power Corporation (NPC) in 1956, renewable upon two years’ written notice. On June 17, 1961, Congress approved Republic Act No. 3043, amending Commonwealth Act No. 120 as amended, and enacted Section 3, empowering NPC, in any supply contract with a franchisee receiving at least 50% of its power from NPC, to cap the franchisee’s net profit at 12% annually of its investments plus two-month operating expenses and to renew existing contracts to give effect to this profit limitation. NPC then approved a 17.5% rate increase effective July 1, 1962 (later deferred to January 1, 1964), threatening to cut off power to any franchisee who refused to sign the revised contract. In June 1963, the Philippine Power and Development Company Case Digest (G.R. No. L-24396) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Subject Matter
- Petitioners: Santiago P. Alalayan (suing for himself and others similarly situated) and Philippine Power and Development Company, franchise holders of electric plants in Laguna.
- Respondents: National Power Corporation (NPC) and Administrator of Economic Coordination.
- Contracts and Operations
- NPC supplied at least 50% of electric power to 137 franchise holders (including petitioners) under existing indefinite contracts, terminable upon two-year notice.
- Petitioner Alalayan’s contract (May 26, 1956) specified demand and energy charges at fixed rates, payable monthly.
- Legislative Background
- June 18, 1960: Act increasing NPC’s authorized capital to P100 million.
- June 17, 1961: Republic Act No. 3043 enacted, amending the Charter to include Section 3 limiting franchise holders’ net annual profit to 12% of investments plus two-month operating expenses and authorizing NPC to renew existing contracts accordingly.
- Proceedings Below
- June 1962 – NPC approved a 17.5% rate increase, deferring its effect several times and threatening to cut supply if contracts were not signed.
- Petitioners filed for declaratory relief and preliminary injunction to declare Section 3 of RA 3043 unconstitutional for:
- Violating the “one subject, expressed in title” requirement (Art. VI, Sec. 21).
- Infringing due process (liberty to contract).
- Philippine Power and Development Company was dismissed; Alalayan remained sole petitioner.
- Lower court denied the preliminary injunction (Mar. 21, 1963) and, after trial and memoranda, upheld the constitutionality of Section 3 (Jan. 30, 1965).
- Stipulations and Evidence
- Sample contracts and NPC letters detailing rate adjustments and deferrals (June 22, 1962; Aug. 15, 1962; June 25, 1963).
- Congressional records on House Bill No. 5377 and Senate Bill No. 613 leading to RA 3043.
Issues:
- Constitutional Validity of Section 3, RA 3043
- Does it violate the “single subject” rule by embedding a non‐germane rider in a charter amendment?
- Does it infringe due process by unduly restricting franchise holders’ liberty to contract or effect a confiscation?
- Does its application to existing contracts impair contractual obligations?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)