Case Summary (G.R. No. L-34298)
Applicable Law
The primary legal framework for this case includes Republic Act No. 3826, which provides the legislative franchise for Alger Electric, Inc., alongside constitutional provisions from the 1935 Constitution, as it predates the 1987 Constitution. Notably, the relevant articles include Article XIV, Section 8, which addresses the exclusivity of public utility franchises, and Article VI, Section 21(1), which prohibits legislative riders.
Case Background and Initial Legal Proceedings
Alger Electric, Inc. received a legislative franchise allowing it to operate an electric supply service within specific municipalities. Subsequently, on August 16, 1968, Northern Cement Corporation and NPC entered into a contract for NPC to directly supply power to Northern's cement plant. Alger Electric contested this arrangement by filing a petition for prohibition with a preliminary injunction, asserting that the contract violated Section 2 of Republic Act No. 3826. The trial court denied the issuance of the preliminary injunction, leading to a series of motions and responses from both parties.
Respondent's Arguments and Motion to Dismiss
Northern Cement filed a motion to dismiss the petitioner’s case on multiple grounds, including a lack of proper cause of action, the trial court's lack of jurisdiction, and the constitutionality of Section 2 of the franchise. The respondent further contended that the legislative franchise did not expressly prohibit their direct procurement of power from NPC.
Amended Complaint and Trial Court's Jurisdiction
The petitioner sought to amend its original complaint, which the trial court eventually allowed, asserting that the amendments did not change the original cause of action. The trial court's decision to admit the amended complaint was met with a motion for certiorari and prohibition from Northern, which the Court of Appeals later supported by ruling that the trial court lacked jurisdiction due to the nature of the actions taking place outside its territorial scope.
Appeal to the Supreme Court
Upon appeal to the Supreme Court, the pivotal issue revolved around whether the original petition could be amended and whether the trial court had maintained jurisdiction throughout the proceedings. The Court noted that the case's core issue was the legality of the contract between Northern and NPC in relation to Alger Electric’s legislative franchise.
Interpretation of Section 2 of Republic Act No. 3826
The Supreme Court evaluated the legality of Section 2 of the franchise, determining that the subscription to exclusivity in public utility franchises is not favored unless explicitly stipulate
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Background of the Case
- Petitioner Alger Electric, Inc. was granted a legislative franchise under Republic Act No. 3826 for a duration of fifty (50) years starting June 22, 1963.
- The franchise allowed Alger Electric to construct, maintain, and operate an electric power system in certain municipalities in La Union and Pangasinan.
- On August 16, 1968, Northern Cement Corporation (Northern) and the National Power Corporation (NPC) entered into a contract for NPC to supply electric power directly to Northern's cement plant in Sison, Pangasinan.
- Alger Electric contended that this contract was illegal as it violated Section 2 of their franchise, which required NPC to negotiate with Alger before supplying power in the franchise area.
Petitioner’s Claims
- Alger Electric filed a petition for prohibition with preliminary injunction against Northern and NPC, seeking to have the August 16, 1968 contract declared null and void.
- The petitioner argued that the direct sale of power to Northern by NPC circumvented its rights under the legislative franchise.
- Alger Electric requested a writ of preliminary injunction to prevent Northern and NPC from enforcing the contract while the case was pending.
Proceedings in the Trial Court
- The trial court denied the writ of preliminary injunction in two separate orders.
- Following the submission of evidence, Northern filed a motion to dismiss, citing several grounds:
- Lack of cause of