Cagayan Electric Power and Light Co., Inc. vs. National Power Corp.
Case
G.R. No. 72085
Decision
Date
Dec 28, 1989
CEPALCO challenged NPC's direct power supply to FPI within its franchise area. SC ruled NPC must prioritize franchised utilities under P.D. No. 40, affirming CEPALCO's property rights and national electrification policy.
The case involves Cagayan Electric Power and Light Company, Inc. (CEPALCO) as the petitioner-appellee and the National Power Corporation (NPC) as the respondent-appellant. The dispute arose from an agreement dated August 20, 1980, between NPC and Ferrochrome Philippines, Inc. (FPI), a BOI-registered enterprise located in the Phividec Industrial Estate, Tagoloan, Misamis Oriental. CEPALCO, a private corporation established under Republic Act No. 3247 and its amendments, holds a legislative franchise to operate electric power systems in several municipalities, including Tagoloan and Cagayan de Oro City. NPC, a government-owned corporation, is authorized to generate and transmit electric energy across the Philippines.
CEPALCO contended that NPC's agreement with FPI violated its rights as the authorized electric utility in the area and contravened the national electrification policy. Consequently, CEPALCO filed a petition for prohibition, mandamus, and injunction in the Reg...
Case Digest (G.R. No. 72085)
Facts:
Parties and Authorizations
Cagayan Electric Power and Light Company, Inc. (CEPALCO)
- A private corporation organized under Republic Act No. 3247, as amended by R.A. Nos. 3570 and 6020.
- Authorized by its legislative franchise to construct, maintain, and operate electric and power systems within specified municipalities in Misamis Oriental and in Cagayan de Oro City and its suburbs.
- A government-owned and controlled corporation authorized under its Charter (Republic Act No. 6395, as amended by P.D. Nos. 380 and 395).
- Empowered to generate, transmit, and set up transmission grid systems and generation facilities across Luzon, Visayas, and Mindanao.
The Controversial Agreement and Its Background
On August 20, 1980, NPC entered into an agreement with Ferrochrome Philippines, Inc. (FPI).
- The agreement was for the direct sale, supply, and delivery of electric power to meet the power requirements of FPI’s plant operations.
- FPI, a BOI-registered power-intensive industry, is situated at the Phividec Industrial Estate in Tagoloan, Misamis Oriental, an area within CEPALCO’s franchise territory.
- Argued that NPC’s direct power supply arrangement with FPI infringed on its exclusive rights under its legislative franchise.
- Contended that the conduct violated the national electrification policy which reserves the distribution of power for franchised utilities.
Procedural History and Lower Court Proceedings
CEPALCO's Legal Relief
- Instituted a petition for prohibition, mandamus, and injunction before the Regional Trial Court of Quezon City (Civil Case No. C-35945).
- Sought a restraining order or preliminary injunction to prevent NPC from directly connecting or supplying power to FPI.
- The lower court initially issued an order on August 12, 1982, directing NPC to refrain from direct supply or connection of power to FPI.
- The order was later modified after the parties filed a joint "Manifestation and Motion" which allowed NPC to supply power during the pendency of the case under mutually agreed terms.
- Claimed its agreement with FPI was supported by its Charter, which allegedly allowed the sale of power in bulk to industrial or BOI-registered enterprises without restrictions.
- Asserted that CEPALCO’s franchise was non-exclusive and therefore did not bestow an absolute right to be the only supplier in the area.
Additional Factual and Contextual Elements
Relevant Statutory Provisions and Policies
- The case discusses key provisions of P.D. No. 395 (amending P.D. No. 380) and the national electrification policy under P.D. No. 40, which reserves power distribution for franchised utilities.
- Also noted are the implementation guidelines indicated in the defunct Power Development Council’s Resolution No. 77-01-02.
- CEPALCO had previously provided power to FPI for the construction of its plant as early as October 17, 1980, under authorization from the Phividec Industrial Authority.
- Despite this prior conduct, CEPALCO maintained that any direct contracts entered into by NPC should be subject to a hearing to determine if the franchised operator could match NPC’s reliability and rates.
Issue:
Central Question Raised
Whether or not NPC is legally authorized, under the pertinent laws and its Charter, to sell, supply, and deliver electric power directly to BOI-registered enterprises (such as FPI).
Whether such direct transactions violate the rights of the authorized franchised utilities, specifically CEPALCO, particularly given the national electrification policy that prioritizes franchised operators in their respective service areas.
Sub-Issues Involved
The conflict between statutory authority granted to NPC for bulk sales of power and the protection afforded to private franchises through due process.
The interpretation and application of existing laws, including the statutory framework established by P.D. Nos. 40, 380, and 395, in the context of direct power supply agreements.