Facts:

In the case of Alger Electric, Inc. v. Court of Appeals and Northern Cement Corporation (G.R. No. L-34298), dated February 28, 1985, petitioner Alger Electric, Inc. sought a prohibition against respondents Northern Cement Corporation (Northern) and the National Power Corporation (NPC). Alger was granted a legislative franchise under Republic Act No. 3826 on June 22, 1963, which authorized it to provide electric light, heat, and power within specified areas, including several municipalities in La Union and Pangasinan. On August 16, 1968, Northern executed a contract with NPC for the direct supply of electric power to its cement plant in Labayog, Sison, Pangasinan. Alger contended this contract violated Section 2 of its franchise, which required NPC to supply power only through Alger or with its consent in adjacent areas. Consequently, Alger filed a petition for prohibition in the Court of First Instance of Manila, seeking to declare the contract null and void and to secure a prel

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Facts:

Legislative Franchise and Scope of Authority

• Alger Electric, Inc. was granted a legislative franchise under Republic Act No. 3826 on June 22, 1963 for a period of fifty (50) years.
• The franchise conferred the right, privilege, and authority to construct, maintain, and operate an electric light, heat, and power system for the generation and/or distribution of electricity within the municipalities of Sto. Tomas, Damortis, and Rosario in La Union, and in Sison in Pangasinan.
• Section 2 of RA No. 3826 provided a specific condition that if the National Power Corporation (NPC) established its lines in the adjacent or nearby territory, then NPC may make its power available only after negotiations with or through Alger Electric, Inc., or with the grantee’s authority and consent.

Contract between NPC and Northern Cement Corporation

• On August 16, 1968, respondent Northern Cement Corporation and NPC executed a contract for the direct supply of electric power to Northern’s cement plant located in Labayog, Sison, Pangasinan.
• Alger Electric, Inc. questioned the validity of this direct sale, contending that the contract violated Section 2 of their legislative franchise which mandated that power distribution must occur through Alger.

Filing of the Petition and Relief Sought

• In response to the contract, Alger filed a petition for prohibition with a preliminary injunction in the Court of First Instance of Manila.
• The petition alleged that the contract was patently illegal because it contravened the exclusive rights granted under Section 2 of the franchise, effectively bypassing Alger’s role in power distribution.
• Alger prayed for the annulment of the contract and for a writ of preliminary injunction to prevent the enforcement of the contract pending the resolution of the dispute.

Procedural History in the Trial Court

• The trial court denied the writ of preliminary injunction in two separate orders.
• Respondent Northern filed a motion to dismiss and/or for summary judgment on several grounds:
• The petition failed to state a valid cause of action for a special civil action such as prohibition.
• The Court of First Instance of Manila lacked jurisdiction because the act to be restrained was to be performed in Sison, outside its territorial jurisdiction.
• Section 2 of the legislative franchise was alleged to be unconstitutional.
• The franchise did not contain a specific prohibition against NPC supplying power directly to Northern.
• Alger sought to amend its complaint, including changes such as altering designations (from petitioner to plaintiff and respondent to defendant), omitting certain designations (e.g., “Prohibition with Preliminary Injunction”), modifying allegations to emphasize actual damages, and adding further factual assertions.
• Although Northern opposed the amendments on the ground that they materially altered the cause of action and the nature of the proceedings, the trial court admitted the amended complaint and set the trial continuation for January 6, 1970.

Appeal and Subsequent Judicial Developments

• Following the trial court’s order on the amended complaint, respondent Northern filed a petition for certiorari, prohibition, and mandamus with a preliminary injunction in the Court of Appeals.
• The Court of Appeals sided with Northern by setting aside the trial court’s order to amend the petition and ordering the trial court to address the motion to dismiss based on jurisdiction.
• The appellate court's reasoning was that the subject matter—the enforcement of the contract—was to occur in Sison, Pangasinan, thus outside the territorial jurisdiction of the trial court.
• The controversy centered on whether the original petition, albeit drafted as a petition for prohibition with preliminary injunction, could be ethically and legally converted into an ordinary civil action for annulment of the contract without violating jurisdictional rules.

Central Facts on the Cause of Action

• The core of Alger’s claim was that the contract executed between NPC and Northern was null and void ab initio because it violated the exclusive rights under Section 2 of RA No. 3826.
• Although the petition was initially framed for prohibition with a preliminary injunction, its factual matrix clearly indicated a civil action for annulment of the contract.
• The procedural posture of the case, including the admission of the amended complaint by the trial court, hinged on the interpretation of the petition’s cause of action rather than its formal label.

Issue:

• Whether the original petition, filed as a special civil action for prohibition with preliminary injunction, could be validly amended to transform it into an ordinary civil action for annulment of the contract without breaching jurisdictional boundaries.

• Whether the trial court possessed jurisdiction from the inception of the case despite allegations that the act to be restrained was to be performed in Sison, which is outside the trial court’s territorial jurisdiction.

• Whether Section 2 of Republic Act No. 3826, which mandates that electric power from NPC must be available only through negotiations with or through Alger Electric, Inc., constitutes an enforceable exclusive franchise or if its exclusivity conflicts with constitutional and statutory provisions.

• Whether the proper remedy in the case is to annul the contested contract (as the facts suggest) rather than to issue a writ of prohibition, and if the re-characterization of the action is permissible under the rules of pleading and jurisdiction.

• Whether any constitutional issues raised by respondent Northern regarding the alleged unconstitutionality of Section 2 need to be addressed or if the case can be resolved solely on non-constitutional, statutory grounds.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)