Case Summary (G.R. No. L-21804)
Background of the Case
Filipinas Cement Corporation applied to the Public Service Commission (PSC) for a certificate of public convenience and necessity (CPCN) to construct and operate an electric plant at its factory site in Teresa, Rizal, to supply electric power and lighting solely to its cement factory and its employees within the factory compound. The PSC granted the certificate on March 15, 1963, for a period of fifty years starting June 26, 1958. Teresa Electric and Power Co., Inc., which held a subsisting CPCN for supplying electricity in Teresa since June 2, 1960, opposed the grant on several grounds, including Filipinas' alleged lack of authority and the existence of an incumbent electric service provider.
Petitioner's Opposition and Filipinas' Defense
Petitioner argued: (1) it was the authorized electric power operator in Teresa; (2) Filipinas lacked authority under its articles of incorporation to operate an electric plant; (3) Filipinas had no municipal council authorization; (4) it was ready to supply Filipinas' electric needs; and (5) the cement business was not within the jurisdiction of the PSC. Filipinas countered that paragraph 7 of its articles authorized it to operate the electric plant; municipal council approval was not required for the CPCN; and that it met the legal requisites of Filipino citizenship, financial capacity, and service necessity for issuance of the CPCN.
Proceedings Before the Public Service Commission
The PSC conducted hearings where Filipinas presented evidence that the proposed electric service was limited exclusively to its factory and personnel without adverse impact on petitioner’s service. Filipinas also showed it would purchase electric current from MERALCO rather than generate its own and that installation would not significantly utilize municipal streets. The PSC denied petitioner's motion to postpone the presentation of its evidence and deemed the case submitted for decision. The Commission granted the CPCN to Filipinas, subject to specific conditions, on March 15, 1963.
Issues for Resolution
- Whether Filipinas was required to secure a municipal or legislative franchise before obtaining a CPCN to operate an electric plant;
- Whether Filipinas was authorized under its articles of incorporation to operate and maintain an electric plant;
- Whether Filipinas could be granted a CPCN despite the presence of an existing electric plant operator in the same municipality.
Requirement of Franchise Under Act No. 667
Petitioner argued that Act No. 667 required prior municipal or legislative franchise before issuance of a CPCN for electric service. However, the Supreme Court clarified that Act No. 667 was intended only for persons or corporations seeking a franchise to construct and maintain electric lines for general public service at rates regulated by government. Filipinas’ electric plant was established exclusively for its own use and for the free use of its employees within the factory complex, thus not engaging in a general electric service for the public. Consequently, the Court held that Filipinas needed only a CPCN, not a municipal or legislative franchise, to operate its electric plant.
Authority Under Filipinas' Articles of Incorporation
The Court found that paragraph 7 of Filipinas’ Articles of Incorporation authorized the corporation to obtain and utilize rights, powers, privileges, franchises, and concessions necessary or related to its cement manufacturing business. Operating an electric plant was deemed necessarily connected to cement manufacturing, especially considering the essential role of electricity in modern industrial operat
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Facts of the Case
- Teresa Electric and Power Co., Inc. (hereinafter "Petitioner") is a domestic corporation operating an electric plant in Teresa, Rizal, under a subsisting certificate of public convenience and necessity issued on June 2, 1960.
- Filipinas Cement Corporation (hereinafter "Filipinas") is a domestic corporation engaged in the manufacture and sale of cement.
- Filipinas filed, on May 24, 1962, an application with the Public Service Commission (PSC) for a certificate of public convenience and necessity to establish, maintain, and operate an electric plant on its factory site in Teresa, Rizal, to supply electric power and light to its cement factory and employees within its compound.
- Petitioner opposed Filipinas' application on various grounds, including lack of municipal authorization and Filipinas being unauthorized by its articles of incorporation to operate an electric plant.
- Filipinas countered by citing its articles of incorporation authorizing operation of such an electric plant and argued no municipal or legislative franchise was required for the operation of an electric plant exclusively for its use.
- The PSC conducted hearings, during which petitioner’s motion for postponement was denied and the case was submitted for resolution.
- PSC granted Filipinas the certificate of public convenience and necessity on March 15, 1963, subject to conditions, emphasizing that Filipinas’ electric service would be limited to its factory and employees without affecting petitioner’s operations.
- Petitioner’s motion for reconsideration was denied by the PSC en banc on August 12, 1963, leading to this petition for review.
Issues Presented
- Whether Filipinas was required to secure either a municipal or legislative franchise before being entitled to a certificate of public convenience and necessity to operate 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 cer