B2022 REPORTS ANNOTATED Aug.
30, 1968
Surigao Electric Co. v Municipality of Surigao Surigao Electric Co. v Municipality of Surigao
I. Recit-ready summary or government-owned or controlled corporations," but at the same time
affirming its power of regulation, more specifically as set forth in the next
Surigao Electric Co., Inc., a legislative franchise holder, and petitioner section of the law, which while exempting public services owned or
Arturo Lumanlan to whom, the rights and privileges of the former as well as operated by any instrumentality of the government or any government-
its plant and facilities were transferred. They challenge the validity of the owned or controlled corporations from its supervision, jurisdiction and
order of respondent Public Service Commission, wherein it held that it had control stops short of including "the fixing of rates."
"no other alternative but to approve as [it did approve] the tentative
schedule of rates submitted by the applicant," the other respondent, the Surigao Electric Co., Inc., a legislative franchise holder, and petitioner
Municipality of Surigao. Arturo Lumanlan to whom, on February 16, 1962, the rights and privileges
The issue is: W/N a municipal government can directly maintain and of the former as well as its plant and facilities were transferred. They
operate an electric plant without obtaining a specific franchise for the challenge the validity of the order of respondent Public Service
purpose and without a certificate of public convenience and necessity duly Commission, wherein it held that it had "no other alternative but to approve
issued by the Public Service Commission as [it did approve] the tentative schedule of rates submitted by the
YES. A municipal government actually functions as an extension applicant," the other respondent herein, the Municipality of Surigao
of the national government and, therefore, it is an instrumentality of
the latter; and by express provisions of Section 14(e) of Act 2677 (Public
III. Issue/s
Service Act), an instrumentality of the national government is exempted
from the jurisdiction of the PSC except with respect to the fixing of
1. W/N a municipal government can directly maintain and operate
rates. In Mendoza v. De Leon, there has been a recognition by this Court of
an electric plant without obtaining a specific franchise for the
the dual character of a municipal corporation, one as governmental,
purpose and without a certificate of public convenience and
being a branch of the general administration of the state, and the other
necessity duly issued by the Public Service Commission
as quasi-private and corporate. Governmental affairs do not lose their
governmental character by being delegated to the municipal governments.
Legislative and governmental powers are "conferred upon a municipality, IV. Ratio/Legal Basis
to better enable it to aid a state in properly governing that portion of its
YES. "A municipal government or a municipal corporation such as the
people residing within its municipality, such powers [being] in their nature
Municipality of Surigao is a government entity recognized, supported and
public. Rather, a municipal corporation, by virtue of Commonwealth Act
utilized by the National Government as a part of its government machinery
No. 2677 (Public Service Act), may further promote community welfare by
and functions; a municipal government actually functions as an
itself engaging in supplying public services, without the need of a certificate
of public convenience extension of the national government and, therefore, it is an
instrumentality of the latter; and by express provisions of Section 14(e)
of Act 2677 (Public Service Act), an instrumentality of the national
government is exempted from the jurisdiction of the PSC except with
II. Facts of the case
respect to the fixing of rates. This exemption is even clearer in Section
13(a).
June 18, 1960, Congress further amended the Public Service Act, one
of the changes introduced was to do away with the requirement of a The question involved is one of statutory interpretation. Ascertain
certificate of public convenience and necessity from the Public Service the intent of Congress in introducing the above amendments, more
Commission for "public services owned or operated by government entities specifically, in eliminating the requirement of the certificate of public
G.R. NO: L-22766 PONENTE: Fernando, J.
ARTICLE; TOPIC OF CASE: GENERAL PRINCIPLES DIGEST MAKER: Leshen, Brian
B2022 REPORTS ANNOTATED Aug. 30, 1968
Surigao Electric Co. v Municipality of Surigao Surigao Electric Co. v Municipality of Surigao
convenience and necessity being obtained by government entities, or by Rather, a municipal corporation, by virtue of Commonwealth Act No.
government-owned or controlled corporations operating public services. 2677 (Public Service Act), may further promote community welfare by
Here, the Municipality of Surigao is not a government-owned or controlled itself engaging in supplying public services, without the need of a certificate
corporation. It cannot be said, however, that it is not a government entity. of public convenience. If at all then, the exercise of this governmental
prerogative comes within the broad, well-nigh, undefined scope of the
In Mendoza v. De Leon, there has been a recognition by this Court police power. It is not here, of course, the ordinary case of restraint on
of the dual character of a municipal corporation, one as governmental, property or liberty, by the imposition of a regulation. What the amendatory
being a branch of the general administration of the state, and the other act in effect accomplishes is to lend encouragement and support for the
as quasi-private and corporate. Governmental affairs do not lose their municipal corporation itself undertaking an activity as a result of which,
governmental character by being delegated to the municipal governments. profits of a competing private firm would be adversely affected.
Nor does the fact that such duties are performed by officers of the
municipality which, for convenience, the state allows the municipality to V. Disposition
select, change their character. To preserve the peace, protect the morals and
health of the community and so on is to administer government, whether it WHEREFORE, the order of respondent Public Service Commission of
be done by the central government itself or is shifted to a local organization. July 11, 1963, as well as the order of February 7, 1964, denying the motion
for reconsideration, are affirmed. Costs against petitioners.
A well-known authority, Dillon, was referred to stress the undeniable
fact that "legislative and governmental powers" are "conferred upon a
municipality, to better enable it to aid a state in properly governing that
portion of its people residing within its municipality, such powers [being] in
their nature public.
Whatever privilege may be claimed by petitioners cannot override the
specific constitutional restriction that no franchise or right shall be granted
to any individual or corporation except under a condition that it shall be
subject to amendment, alteration or repeal by Congress. Such amendment or
alteration need not be express; it may be implied from a latter act of general
applicability, such as the one now under consideration.
Public Service Act provides for the procedure to be followed
whenever the Government or any political subdivision thereof decides to
acquire and operate a public utility owned and operated by any individual or
private corporation. What is to be regulated, therefore, by this enactment is
the exercise of eminent domain, which is a taking of private property for
public use upon the payment of just compensation. There is here no taking.
There is here no appropriation. What was owned before by petitioners
continue to remain theirs. There is to be no transfer of ownership.
G.R. NO: L-22766 PONENTE: Fernando, J.
ARTICLE; TOPIC OF CASE: GENERAL PRINCIPLES DIGEST MAKER: Leshen, Brian
