Case Summary (G.R. No. L-24396)
Single‐Subject and Title Requirement
Under Article VI, Section 21 of the 1935 Constitution, no bill may embrace more than one subject, which must be expressed in its title. Petitioner argued Section 3 was not germane to the amendatory act’s title. The Court applied a liberal test: a title need only be broad enough to inform legislators and the public of the object of the law, without cataloguing every detail. References in a title to the statute being amended suffice to cover amendments thereto. Prior precedents held that the constitutional provision aims to prevent deceptive omnibus legislation, not to cripple legislative detail. The Supreme Court concluded Section 3 was germane to the act’s purpose and title, and no single‐subject violation occurred.
Due Process and Police Power
Petitioner contended the profit cap deprived him of the liberty to contract without due process. The Court reaffirmed that regulatory measures concerning property and contracts fall within the State’s police power and may restrict economic liberty so long as they are reasonable, non-arbitrary, and serve the general welfare. Citing numerous precedents upholding regulations on labor, tenancy, public utilities, prices, welfare schemes, and market operations, the Court held that Section 3’s profit limitation was neither confiscatory nor arbitrary. The 12% cap, previously upheld as generous in utility rate cases, did not deprive petitioner of due process. Absent evidence proving unreasonable or oppressive application, the provision stood as a valid exercise of police power.
Impairment of Contracts Clause
Though not directly argued, petitioner implied that applying Section 3 to existing contracts breached Article III, Section 1(11) of the 1935 Constitution, which prohibits laws impairing contractual obligations. The Court held that bona fide exercises of police power apply to existing utilities and tenancy contracts to effectuate remedial legislation. Precedents confirm that regulatory statutes, even wh
...continue readingCase Syllabus (G.R. No. L-24396)
Nature and Purpose of the Proceeding
- Petition for declaratory relief under Sec. 12, Rule 3, Rules of Court.
- Challenge to the validity of Section 3 of Republic Act No. 3043, an amendatory statute.
- Relief sought: declaration that the rider limiting franchise-holder net profits is unconstitutional and injunctive relief against its enforcement.
Factual Background
- Petitioners are franchise holders of electric plants in Laguna (Alalayan and Philippine Power and Development Company).
- Respondent NPC supplies at least 50% of their electric power under valid, existing contracts with 137 franchisees nationwide.
- Contracts continue indefinitely unless terminated by two years’ written notice.
- NPC approved rate increases totaling at least 17.5%, with deferred effectivity and threats to cut off supply if revised contracts were not signed.
Statutory Provision at Issue
- Section 3, Republic Act No. 3043 (June 17, 1961):
• NPC may require, in any power-supply contract with a franchisee receiving ≥50% power from NPC, that the franchisee’s net profit not exceed 12% annually on investments plus two-month operating expenses.
• NPC must renew existing contracts to give effect to this limit.
• Excess profits, if verified by the PSC, are to be returned pro rata to customers.
Procedural History
- June 18, 1960: Act increasing NPC’s authorized capital to P100 million took effect.
- June 17, 1961: Republic Act No. 3043, including the challenged rider, was enacted.
- Petition filed challenging the rider as violative of:
• Single-subject requirement (Art. VI, Sec. 21(1), Constitution).
• Due process (liberty to contract). - Prayer for preliminary and permanent injunctions and declaration of unconstitutionality.
- Philippine Power and Development Company dismissed itself from the suit (Jan. 25, 1963).
- NPC opposed the injunction (filed Feb. 15, 1963).
- Lower court denied preliminary injunction (Mar. 21, 1963) and ultimately upheld the rider’s validity (Jan. 30, 1965).
- Appeal was taken to the Supreme Court.
Issues Presented
- Whether Section 3 of R.A. 3043 uncon