G.R. No. L-2624 - Macondry and Co., Inc. vs. El Administrador de Rentas Internas

CEPALCO was enfranchised by Republic Act No. 3247 on June 17, 1961 to construct, maintain, and operate an electric light, heat, and power system within Cagayan de Oro and its suburbs for 50 years.
Its franchise was later expanded by Republic Act No. 3570 (June 21, 1963) to include Tagoloan and Opol in Misamis Oriental, and further amended by Republic Act No. 6020 (August 4, 1969) to cover Villanueva and Jasaan.
Presidential Decree No. 243 (July 12, 1973) created the Philippine Veterans Investment Development Corporation (PHIVIDEC) for various commercial and industrial purposes, including employment for veterans.
Subsequently, Presidential Decree No. 538 (August 13, 1974) established the PHIVIDEC Industrial Authority (PIA) as a subsidiary tasked to promote industrial development, with its initial area located in Tagoloan and Villanueva (forming part of the PHIVIDEC Industrial Estate Misamis Oriental – PIE-MO).

As manager of the PIE-MO, PIA entered into agreements with local industries such as Ferrochrome Philippines, Inc. (FPI) and Metal Alloys Corporation (MAC) for operation within the estate.
On July 6, 1979, PIA granted CEPALCO temporary authority to retail electric power to industries operating in the PIE-MO, with a contract term of five (5) years, renewable for an additional five (5) years.
The agreement also provided that at the end of the term(s), PIA had the option to take over or purchase CEPALCO’s assets within the estate, subject to certain conditions including respecting non-purchased assets.

Following claims by PIA that CEPALCO could not meet the power demands of the industries in PIE-MO, several industries closed down, prompting PIA to seek a more economical solution for power supply.
PIA applied to the National Power Corporation (NPC) for a direct power connection, a request which NPC approved.
Ferrochrome Philippines, Inc. (FPI) was among the entities entering into an agreement with NPC for direct supply, thereby challenging CEPALCO’s exclusive franchise rights.

CEPALCO filed Civil Case No. Q-35945 before the Regional Trial Court of Quezon City seeking prohibition, mandamus, and injunction against NPC, arguing that a direct connection to FPI violated its statutory franchise rights and national electrification policy.
On May 2, 1984, the RTC ordered NPC to permanently desist from directly supplying power to FPI and to transact such supplies exclusively via CEPALCO’s power line.
The case was elevated to the Supreme Court (G.R. No. 72085), which denied NPC’s appeal and reaffirmed that a proper hearing must determine whether the affected private franchisee could match NPC’s reliability and rates before direct connection was allowed.
In subsequent years, further actions ensued:

FPI reapplied for a direct supply in September 1990 with NPC, leading to hearings by the NPC Hearing Committee.
CEPALCO contested jurisdiction in the Hearing Committee and filed additional petitions, including actions for contempt and subsequent petitions for writs of certiorari, prohibition, and injunction.
Various cases (e.g., G.R. Nos. 112702 and 113613) were consolidated, involving issues of forum shopping, litis pendentia, and the proper determination of rights to supply electric power within the PIE-MO.

NPC, by its charter, claimed authority to sell electric power “in bulk” but its exercise of this power was subject to judicial limitations, particularly where it conflicted with private franchise rights.
The Energy Regulatory Board (ERB), formerly tasked with fixing rates and later subject to functions transferred to the Department of Energy (DOE) by Republic Act No. 7638, emerged as the proper administrative body to conduct hearings on such matters.
New legislative provisions shifted non-price regulatory functions from the ERB to the DOE, thus affecting NPC’s claim to determine directly the propriety of direct power connections within areas already franchised to CEPALCO.
Interpretations of “public utility” roles and the doctrines on exclusive franchises further complicated the issue, with considerations that even non-exclusive franchises in public utilities provided valuable protected rights against unauthorized competition.

Whether NPC has the jurisdiction to determine if it may directly supply power to industries within an area already covered by the franchise of CEPALCO.
Whether NPC’s authority to sell electric power “in bulk” extends to its ability to bypass existing aggregated franchise rights, particularly within the PIE-MO.

Whether a proper hearing was conducted to ascertain if CEPALCO was incapable or unwilling to match NPC’s rates and reliability before permitting a direct supply application for FPI by NPC.
The adequacy of the notification and opportunity for CEPALCO to be heard in the administrative process pursuant to established jurisprudence.

Whether PIA, as a subsidiary of PHIVIDEC functioning as a public utility, may independently secure a direct power connection from NPC without prejudicing the rights of CEPALCO.
The impact of legislative changes transferring non-price regulatory functions from the ERB to the DOE on the NPC’s purported power to unilaterally determine direct connection eligibility.

Whether the principle of litis pendentia, which calls for the dismissal of a later-filed action when another similar suit is pending, should be applied to dismiss or abate CEPALCO’s actions given the existence of similar cases with overlapping issues.
How the "interest of justice" rule might override the strict "priority-in-time" requirement in instances of recurring and common controversies.