Case Summary (G.R. No. 161594)
Key Dates and Procedural History
Filipinas filed its PSC application on May 24, 1962. Hearings were held, and the case was considered submitted after the PSC denied petitioner’s motion for postponement on December 17, 1962. The PSC issued the challenged certificate on March 15, 1963, subject to conditions. Petitioner sought reconsideration, denied August 12, 1963; petitioner filed a petition for review with the Supreme Court on September 9, 1963 and sought a preliminary injunction which this Court denied by resolution dated September 11, 1963. The Supreme Court thereafter reviewed the PSC decision.
Applicable Law and Constitutional Basis
The decision was rendered in 1967; the relevant constitutional framework is that in force prior to 1987 (the 1935 Constitution was operative at the time). Statutory provisions materially considered include Act No. 667 (regulating franchises to construct and maintain electric lines and requiring municipal council application and franchise-related payments) and Commonwealth Act No. 146, as amended (governing the PSC’s authority to issue certificates of public convenience and necessity, specifically section 15).
Issues Presented
- Whether Filipinas was required to secure a municipal or legislative franchise before obtaining a PSC certificate to operate and maintain an electric plant.
- Whether Filipinas’ articles of incorporation authorized it to operate and maintain an electric plant.
- Whether the PSC could grant such a certificate to Filipinas notwithstanding the existence of an incumbent electric plant operator in the same municipality.
Analysis — Franchise Requirement (Act No. 667 vs. PSC Certificate)
The Court analyzed Act No. 667 and concluded it was intended to govern applications for franchises to construct and maintain electric lines and plants for business purposes directed to the general public, including specific rate filings and franchise payments to provincial treasuries. Filipinas’ proposed service was limited to supplying its internal factory needs and providing light facilities to employees within its compound (employees to receive service free). Given this limited, internal, nonpublic-service scope, the Court found Act No. 667’s municipal franchise requirements inapplicable. Instead, the PSC’s authority under Commonwealth Act No. 146 to issue certificates of public convenience and necessity was the appropriate regulatory mechanism for such a private, ancillary industrial plant. Thus, Filipinas did not need a municipal or legislative franchise to obtain the PSC certificate for the described limited service.
Analysis — Corporate Power Under Articles of Incorporation
The Court examined paragraph 7 of Filipinas’ articles of incorporation, which authorized the corporation to secure and utilize governmental rights, powers, privileges, franchises, and concessions necessary or related to the operation of its cement factory, and broadly to perform acts connected with the manufacture of Portland cement or incidental thereto. The Court reasoned that operating an electric light, heat, and power plant is necessarily connected to the manufacturing of cement—modern industrial operations commonly require on-site generation or dedicated power installations. Accordingly, the corporate charter’s grants were sufficient to authorize Filipinas to operate the proposed electric plant for its factory and compound employees.
Analysis — Competition, Public Interest, and Capacity
Petitioner argued that its existing operation in the municipality entitled it to protection against another operator. The Court reiterated the principle that no one has an exclusive right to a franchise or a certificate of public convenience; grants must be guided by public service and public interest. The Court also noted that protection from unnecessary or unlawful competition is not absolute and must yield to considerations of public convenience. Crucially, the PSC found—and the Court accepted on the record—that petitioner lacked the capacity to meet Filipinas’ power requirements: petitioner’s load capacity was approximately 200 kilowatts while Filipinas required about 6,000 k
...continue readingCase Syllabus (G.R. No. 161594)
Parties
- Petitioner: Teresa Electric Light and Power Co., Inc., a domestic corporation operating an electric plant in Teresa, Rizal, under a subsisting certificate of public convenience and necessity issued on June 2, 1960 (PSC Case No. 129940).
- Respondent (administrative): Public Service Commission (PSC), respondent below which issued the challenged certificate.
- Respondent (private): Filipinas Cement Corporation (hereinafter "Filipinas"), a domestic corporation engaged in the manufacture and sale of cement and the applicant for the certificate in question.
Nature of the Case
- Petition for review of a decision of the Public Service Commission dated March 15, 1963 (Case No. 62-3521) granting Filipinas a certificate of public convenience and necessity to establish, maintain and operate an electric plant in its factory site at Teresa, Rizal.
- Relief sought: Review and setting aside of the PSC decision; petitioner earlier sought preliminary mandatory and prohibitory injunctions restraining enforcement of the PSC decision, which this Court denied by resolution dated September 11, 1963.
Relevant Dates and Administrative Actions
- Certificate to Filipinas granted by PSC: March 15, 1963 (certificate stated for a period of fifty years from June 26, 1958).
- Filipinas' application for certificate filed with PSC: May 24, 1962.
- Resumption of PSC hearing and commercial calendar dispute: December 17, 1962 (petitioner's motion for postponement denied).
- Petitioner's motion to set aside PSC decision and to re-open case: Denied en banc by PSC on August 12, 1963.
- Petition for review to the Supreme Court filed: September 9, 1963.
- Resolution denying petitioner's petition for preliminary injunction: September 11, 1963.
- Supreme Court decision date in the reported case: September 25, 1967.
Factual Background
- Filipinas sought to install, maintain and operate an electric plant in Sitio Kaysapon, barrio Pamanaan, municipality of Teresa, Rizal, to supply electric power and light to:
- Its cement factory (for its own operational needs).
- Its employees living within its compound (for their use; the latter to be serviced free of charge).
- Filipinas asserted that its proposed electric service was limited to the exclusive needs of its cement factory and employees, would not adversely affect petitioner’s services, would purchase electric current from MERALCO rather than generate its own, and would not traverse municipal streets except small portions of private properties.
- Petitioner alleged it was the duly authorized operator of electric light, heat and power service in Teresa and opposed the grant of the certificate to Filipinas.
Procedural History Before the Public Service Commission
- Filipinas filed the application on May 24, 1962; hearings ensued before the PSC.
- Filipinas presented oral and documentary evidence; petitioner's counsel cross-examined Filipinas' witnesses.
- On December 17, 1962 petitioner’s counsel moved urgently for postponement of the presentation of petitioner’s evidence alleging a conflicting preliminary hearing in Caloocan City; PSC denied the motion in open court, noting the hearing date had been agreed upon after consultation of calendars, and considered the application submitted for resolution.
- Upon consideration, the PSC issued the certificate on March 15, 1963 pursuant to Section 15 of Commonwealth Act No. 146, as amended, subject to enumerated conditions.
- Petitioner moved to set aside the PSC decision and to re-open the case; the PSC denied the motion en banc on August 12, 1963.
- Petitioner then filed the instant petition for review with the Supreme Court.
Issues Presented to the Court
- Whether Filipinas should have secured either a municipal or legislative franchise before it could be entitled to a certificate of public convenience and necessity to operate and maintain an electric plant.
- Whether under its Articles of Incorporation Filipinas is authorized to operate and maintain an electric plant.
- Whether Filipinas could be granted a certificate of public convenience and necessity to operate and maintain an electric plant notwithstanding the existence of an electric plant operator (petitioner) in the same municipality.
Petitioner’s Contentions (Summarized)
- Act No. 667 of the Philippine Commission requires a municipal or legislative franchise as a condition precedent to granting a certificate of public convenience and necessity to operate and maintain an electric plant.
- Filipinas is not authorized by its Articles of Incorporation to operate an electric plant.
- The Municipal Council of Teresa had not authorized Filipinas to operate the proposed service.
- Petitioner is willing a