Here’s a bird’s eye view of the previously posted complicated NPC case with citation 273 SCRA 419, supra.
This is a landmark case ( geez, I didn’t know my teacher assigned good cases to me to discuss in class, dang! or was it randomly given, but I still end up gettin' the lion's share. Yet I hadn’t been reading.. darn my busy schedule!.. tsk, sayang I could have done everything way differently better).
This case was decided by the Supreme Court in 1997. It really seemed they may have decided on this, but actually what SC merely did was to define the borders. It denied the petitions filed respectively and remanded the case to the Department of Energy directing it to conduct a hearing to determine whether it is CEPALCO or the NPC that should supply electric power to the industries in the PIE-MO area.
First, let’s lay down the facts…
- 1961 by virtue of R.A. 3247 CEPALCO (was created) to supply electricity w/in the CDO area for 50 years
- 1973 by virtue of P.D. 243 PHIVIDEC (was created) a GOCC which was given authority to engage in commercial mining & agriculture in order to explore & develop the countryside
- 1974 thru P.D. 538 PIA (was created by PHIVIDEC as subsidiary) to carry out PHIVIDEC mandate to promote & sustain economic & social growth & development in the countryside
And the area PIA targeted to first focus development on is the Misamis Oriental area which form part of Cagayan de Oro where PHIVIDEC Industrial Estate – Misamis Oriental (PIE-MO) is situated.
Now in order to perform its mandate to bring development to the countryside PIA contracted FPI & MAC which are construction and mining firms and then subsequently granted CEPALCO to supply electricity within PIE-MO for a period of 5 years renewable at the option of CEPALCO.
Here’s the start of the bone of contention..
After a considerable time doing business with CEPALCO , CEPALCO according to PIA proved no match (to the extent of high power cost) to the power demands of PIE-MO.
Impelled to have a change with the current arrangement, while contract between PIA and CEPALCO subsists PIA applied with NPC for direct power connection coursed through FPI which NPC in due course approved.
Now contending that said agreement between PIA and NPC violated its right as the sole franchisee and authorized electric operator in the area CEPALCO filed petitions for prohibition, mandamus and injunction in the QC RTC.
RTC favored CEPALCO , restrained NPC from supplying direct to FPI stating it is violative of the legislative franchise rights of CEPALCO.
CA affirmed the RTC ruling.
Issue:
Can NPC supply directly to PIA? (In short, who has a better right, NPC or CEPALCO?)
(PIA asserts that it may receive power directly from the NPC because it is a public utility. It avers that P.D. No. 538, as amended, empowers PIA "as and to be a public utility to operate and serve the power needs within PIE-MO..”)
Held:
(As I’ve said in my previous post, this is a consolidated case, a series of issues and complaints, actions and contentions had been filed and addressed upon, including issues that the Energy Regulatory Board (ERB) is the proper administrative body for such hearings. I’m just looking at this case in a bird’s eye view)
On PIA:
SC now therefore revisits definition of the term "public utility" which is a business or service engaged in regularly supplying the public with some commodity or service of public consequence such as electricity, gas, water, transportation, telephone or telegraph service. The term implies public use and service.
Petitioner PIA is a subsidiary of the PHIVIDEC with "governmental and proprietary functions." Sec. 4 of P.D. No. 538 specifically confers upon it the following powers To operate, administer and manage the PHIVIDEC
Clearly then, the PIA is authorized to render indirect service to the public by its administration of the PHIVIDEC industrial areas like the PIE-MO and may, therefore, be considered a public utility. As it is expressly authorized by law to perform the functions of a public utility, a certificate of public convenience, as suggested by the Court of Appeals, is not necessary for it to avail of a direct power connection from the NPC. However, such authority to be a public utility may not be exercised in such a manner as to prejudice the rights of existing franchisees. In fact, by its actions, PIA recognized the rights of the franchisees in the area.
On NPC:
NPC's assertion that its "authority to entertain and hear direct connection applications is a necessary incident of its express authority to sell electric power in bulk" is baseless.
Even without the new legislation affecting its power to conduct hearings, it is certainly irregular, if not downright anomalous for the NPC itself to determine whether it should supply power directly to the PIA or the industries within the PIE-MO.
It simply cannot arrogate unto itself the authority to exercise non-rate fixing powers which now devolves upon the Department of Energy and to hear and eventually grant itself the right to supply power in bulk.
Take note: SC did not categorically decide on this case whether it is CEPALCO or NPC which has the better right to supply electric power to PIE-MO. It merely defined the borders.
SC directed the Department of Energy to conduct a hearing with utmost dispatch to determine whether it is the CEPALCO or the NPC, through the PIA, which should supply electric power to the industries in the PIE-MO area.
Note:
In Villanueva’s book on Commercial Law Review, he cited this case to coincide with the Duties of Directors, Trustees, or Officers of Corporation, particularly the Liability of Corporation for the Acts of the Officers.
The author wrote that “the finding of solidary liability among the corporation and its officers and directors would be baseless when the decision contains no allegation, finding or conclusion regarding particular acts committed by said director and officers that show them to have been individually guilty of unmistakable malice, bad faith, or ill-motive in their personal dealings with third parties.”
In this case as we have clearly pointed out, the Supreme Court had merely defined the demarcation lines, it did not clearly sanctioned the act of PIA or its Board of Directors of disregarding subsisting contract and entering a new agreement with a 3rd party which is NPC to the prejudice of CEPALCO.
I don’t know the reason why the Supreme Court did not want to categorically decide who has the better right and who had been guilty of bad faith in this case. I could only speculate..
I don’t think the SC doesn’t have someone in mind when it comes to’ who has a better right’ issue. And I’m sure we all know basing everything in sheer legality that CEPALCO has a better right in here.
Thing is, I think the SC was in a bit of a dilemma in deciding in this case, that’s why it threw the obligation to decide to an administrative body rather than go through the ordeal. If the SC will really be asked to decide on this, I’m sure they will favor CEPALCO and affirm the CA decision which previously affirmed the RTC ruling. The basis is the legislative franchise given to CEPALCO. But why didn't they do that?
I think the reason why the SC did not decide is because if it has to decide then it will have to decide in favor of CEPALCO because the is issue is clearly a question of law, and it cannot decide against law. Courts are upheld by law and have sworn to uphold the law, it cannot go against its nature. And this is to say that in hind site, the SC is actually eyeing to render its favor to NPC. It’s just that the SC deems it to be improper.
This is clearly a choice between LAW (cepalco) vs. PROGRESS (npc). Why? Do you think the judiciary is merely interested in the interpretation of the law?, In a holistic point of view as we see in this case, it has exercised its magnanimity and threw the decision making power to the executive body who of course will decide in favor of progress, that which of course will coincide with their programs.
Beautiful isn’t it?.. I could be wrong but.. well at least that’s how I see it.
But do note further:
I haven’t looked into the circumstances prevailing at that time as well as the subsequent DOE decision result. I’m merely basing everything on my reading on this case.
