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105 views32 pages2.national Power Corp. v. CA, 345 Phil. 9 (1997) G.R. No. 112702 September 26, 1997
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Camille TapecCopyright
© © All Rights Reserved
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‘SUPREME COURT REPORTS ANNOTATED VOLUME 279,
506 SUPREME COURT REPORTS ANNOTATED
Court of Appeals
National Power Corporation v:
G.R. No. 112702. September 26, 1997.
NATIONAL POWER CORPORATION, petitioner, vs.
COURT OF APPEALS and CAGAYAN ELECTRIC
POWER AND LIGHT CO., INC. (CEPALCO), respondents.
G.R. No. 113613. September 26, 1997.
PHIVIDEC INDUSTRIAL AUTHORITY, petitioner, vs.
COURT OF APPEALS and CAGAYAN ELECTRIC
POWER AND LIGHT CO., INC. (CEPALCO), respondents.
Actions; Motion to Dismiss; Litis Pendentia; Requisites—In
order to constitute a ground for the abatement or dismissal of an
action, litis pendentia must exhibit the concurrence of the
following requisites: (a) identity of parties, or at least such as
representing the same interest in both actions; (b) identity of
rights asserted and relief prayed for, the relief being founded on
the same facts, and (c) identity in the two (2) cases should be such
that the judgment that may be rendered in the pending case
would, regardless of which party is successful, amount to res
judicata in the other.
Same; Same; Same; As a rule, the second case filed should be
abated but the ‘priority-in-time rule” may give way to the criterion
of “more appropriate action,” though more recently, the criterion
used was the “interest of justice rule.”—As a rule, the
filed should be abated under the maxim qui prior est tempore,
potior est jure. However, this rule is not a hard and fast one. The
“priority-in-time rule” may give way to the criterion of “more
cond ¢:
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sn2 ‘veo SUPREME COURT REPORTS ANNOTATED VOLUME 279
appropriate action.” More recently, the criterion used was the
“interest of justice rule.” We hold that the last criterion should be
the basis for resolving this case, although it was filed later than
Civil Case No. 62490 which, upon its transfer, became Civil Case
No. 93-14795. In so doing, we shall avoid multiplicity of suits
which is the matrix upon which itis pendentia is anchored and
eventually bring about the final settlement of the recurring issue
of whether or not the NPC may supply power directly to the
industries within PIE-MO, notwithstanding the operation of
franchisee CEPALCO in the same area.
«THIRD DIVISION.
507
VOL. 279, SEPTEMBER 26, 1997
s
National Power Corporation vs. Court of Appeals
Same; Same; Same; The principle of litis pendentia which
ordinarily demands the dismissal of an action filed later than
another, should be considered under the primordial concept of
“interest of justice,” in order that a recurrent issue common to all
cases may be definitively resolved.—It should be noted that there
is yet pending another case, namely, Civil Case No. 91-383,
instituted by PIA against CEPALCO in the Regional Trial Court
of Misamis Oriental which apparently deals with a related issue—
PIA’s franchise or authority to provide power to enterprises
within the PIE-MO. Hence, the principle of litis pendentia which
ordinarily demands the dismissal of an action filed later than
another, should be considered under the primordial concept of
“interest of justice,” in order that a recurrent issue common to all
cases may be definitively resolved.
Administrative Law; Public Utilities; Words and Phrases;
“Public Utility,” Explained.—A “public utility” is a business or
service engaged in regularly supplying the public with some
commodity or service of public consequence such as electricity,
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gas, water, transportation, telephone or telegraph service. The
term implies public use and service.
Same; Same; Certificates of Public Convenience; As the
Phividec Industrial Authority is expressly authorized by law to
perform the functions of a public utility, a certificate of public
convenience is not necessary for it to avail of a direct power
connection from the National Power Corporation. —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.
Same; Same; Rate-Fixing; Energy Regulatory Board;
Department of Energy; The determination of which of two public
utilities has the right to supply electric power to an area which is
within the coverage of both is certainly not a rate-fixing function
which should remain with the ERB, a function which the
Department of Energy took over with the enactment of R.A. No.
7638.—The determination of which of two public utilities has the
right to supply electric power
508
508 SUPREME COURT REPORTS ANNOTATED
National Power Corporation vs. Court of Appeals
to an area which is within the coverage of both is certainly not a
rate-fixing function which should remain with the ERB, It deals
with the regulation of the distribution of energy resources which,
under Executive Order No. 172, was expressly a function of ERB.
However, with the enactment of Republic Act No. 7638, the
Department of Energy took over such function, Hence, it is thi
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‘SUPREME COURT REPORTS ANNOTATED VOLUME 279,
Department which shall then determine whether CEPALCO or
PIA should supply power to PIE-MO.
Same; Same; Same; National Power Corporation; Due
Process; 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.—Clearly,
petitioner 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 now 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.
Same; Same; Same; Franchises; Exclusivity of any public
franchise has not been favored by the Supreme Court such that in
most, if not all, grants by the government to private corporations,
the interpretation of rights, privileges or franchises is taken
against the grantee.—On the other hand, ventilating the issue in a
public hearing would not unduly prejudice CEPALCO although it
was enfranchised by law earlier than the PIA. Exclusivity of any
public franchise has not been favored by this Court such that in
most, if not all, grants by the government to private corporations,
the interpretation of rights, privileges or franchises is taken
against the grantee. Thus in Alger Electric, Inc. v. Court of
Appeals, the Court said: “x x x Exclusivity is given by law with the
understanding that the company enjoying it is self-sufficient and
capable of supplying the needed service or product at moderate or
reasonable prices. It would be against public interest where the
firm granted a monopoly is merely an unnecessary conduit of
electric power, jacking up prices as a superfluous middleman or
an inefficient producer which cannot supply cheap electricity to
power intensive industries. It is in the public interest when
industries dependent on heavy use of electricity
509
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‘SUPREME COURT REPORTS ANNOTATED VOLUME 279,
VOL, 279, SEPTEMBER 26, 1997 509
National Power Corporation us. Court of Appeals
are given reliable and direct power at the lower costs thus
enabling the sale of nationally marketed products at prices within
the reach of the masses. x x x.”
PETITIONS for review on certiorari of a decision of the
Court of Appeals.
The facts are stated in the opinion of the Court.
The Government Corporate Counsel for PHIVIDEC
Industrial Authority.
Alampay, Gatchalian, Mawis, Carranza & Alampay
for CEPALCO.
ROMERO,
Offered for resolution in these consolidated petitions for
review on certiorari is the issue of whether or not the
National Power Corporation (NPC) has jurisdiction to
determine whether it may supply electric power directly to
the facilities of an industrial corporation in areas where
there is an existing and operating electric power
franchisee.
On June 17, 1961, the Cagayan Electric and Power
Light Company (CEPALCO) was enfranchised by Republic
Act No. 3247 “to construct, maintain and operate an
electric light, heat and power system for the purpose of
generating anWor distributing electric light, heat and/or
power for sale within the City of Cagayan de Oro and its
suburbs” for fifty (50) years. Republic Act No. 3570,
approved on June 21, 1963, expanded the area of coverage
of the franchise to include the municipalities of Tagoloan
and Opol, both in the Province of Misamis Oriental. On
August 4, 1969, Republic Act No. 6020 further amended the
same franchise to include in the areas of CEPALCO's
authority of “generating and distributing electric light and
power for sale,” the municipalities of Villanueva and
Jasaan, also of the said province.
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‘SUPREME COURT REPORTS ANNOTATED VOLUME 279,
Presidential Decree No. 243, issued on July 12, 1973,
created a “body corporate and politic” to be known as the
Philippine Veterans Investment Development Corporation
(PHIVIDEC) vested with authority to engage in
“commercial,
510
510 SUPREME COURT REPORTS ANNOTATED
National Power Corporation us. Court of Appeals
industrial, mining, agricultural and other enterprises”
among other powers. and “to allow the full and continued
employment of the productive capabilities of and
investment of the veterans and retirees of the Armed
Forces of the Philippines.” On August 13, 1974,
Presidential Decree No. 538 was promulgated to create the
PHIVIDEC Industrial Authority (PIA), a subsidiary of
PHIVIDEC, to carry out the government policy “to
encourage, promote and sustain the economic and social
growth of the country and that the establishment of profes-
sionalized management of well-planned industrial areas
shall further this objective.” Under Sec. 3 of P.D. No. 538,
the first area for development shall be located in the
municipalities of Tagoloan and Villanueva. This area
forms part of the PHIVIDEC Industrial Estate Misamis
Oriental (PIE-MO).
As manager of PIE-MO, PIA granted the Ferrochrome
Philippines, Inc. (FPI) and Metal Alloys Corporation (MAC)
authority to operate in its area of development. On July 6,
1979, PIA granted CEPALCO a temporary authority to
retail electric power to the industries operating within the
PIE-MO. The Agreement executed by PIA and CEPALCO
authorized CEPALCO “to operate, administer, construct
and distribute electric power within the PHIVIDEC
Industrial Estate, Misamis Oriental, such authority to be
co-extensive with the territorial jurisdiction of PHIVIDEC
Industrial Estate, as defined in Sec. 3 of P.D. No. 538 and
shall be for a period of five (6) years, renewable for another
five (5) years at the option of CEPALCO.” The parties
provided further that:
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1 Sec. 3 (a).
2 Secs. 1 & 2.
9 See. 3 of P.D. No.
which the Authority shall develop shall be that located in the
municipalities of Tagoloan and Villanueva in the Province of Misamis
Oriental, bounded on the West by Macajalar Bay, on the North by the
Taganga Creek, on the East by the Kiamo and Kirahon plateaus and the
South by the ‘Tagoloan River containing an area of 3,000 hectares more or
less x x x.
4 Rollo of G.R. No. 113613, pp. 118-121.
138 describes the arca as follows: “The first Area
511
VOL. 279, SEPTEMBER 26, 1997 511
National Power Corporation vs. Court of Appeals
“9, At the end of the fifth year, or at the end of the 10th year,
should this Agreement be thus renewed, PIA has the option to
take over the operation of the electri service and acquire by
purchase CEPALCO’s assets within PIE-MO. This option shall be
communicated to CEPALCO in writing at least 24 months before
the date of acquisition of assets and takeover of operation by PIA.
Should PIA exercise its option to purchase the assets of
CEPALCO in PIE-MO, PIA shall respect the right of ownership of
and maintenance by CEPALCO of those assets inside PIE-MO not
covered by such purchase. x x x.”
According to PIA, CEPALCO proved no match to the
power demands of the industries in PIE-MO that most of
these companies operating therein closed shop. Impelled
by a “desire to provide cheap power costs to power-
intensive industries operating within the Estate,” PIA
applied with the National Power Corporation (NPC) for
direct power connection which the latter in due course
approved. One of the companies which entered into an
agreement with the NPC for a direct sale and supply of
power was the Ferrochrome Phils., Inc. (FPI).
Contending that the said agreement violated its right as
the authorized operator of an electric light and power
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‘SUPREME COURT REPORTS ANNOTATED VOLUME 279,
system in the area and the national electrification policy,
CEPALCO filed Civil Case No. Q-35945, a petition for
prohibition, mandamus and injunction before the Regional
Trial Court of Quezon City against the NPC.
Notwithstanding NPC’s claim that it was authorized by its
Charter to sell electric power “in bulk” to industrial
enterprises, the lower court rendered a decision on May 2,
1984, restraining the NPC from supplying power directly to
FPI upon the ground that such direct sale, supply
5 In its Report and Recommendation dated September 27, 1991 on the
application of FPI and PHIVIDEC for direct power connection to the NPC,
the NPC Hearing Committee found that PHIVIDEC had terminated the
Agreement of July 6, 1979 and that CEPALCO’s continued supply of
power to the PIE-MO was merely upon PHIVIDEC’s tolerance (Rollo of
GAR, No. 113618, p. 424),
6 Ibid., pp. 61-62.
7 Dbid., p. 142.
512
512 SUPREME COURT REPORTS ANNOTATED
National Power Corporation vs.
Sourt of Appeals
and delivery of electrie power by the NPC to FPI was
violative of the rights of CEPALCO under its legislative
franchise. Hence, the lower court ordered the NPC to
“permanently desist” from effecting direct supply of power
to the FPI and “from entering into and/or implementing
any agreement or arrangement for such direct power
connection, unless coursed through the power line” of
CEPALCO.
Eventually, the case reached this Court through G.R.
No. 72085. On December 28, 1989, the Court denied the
appeal interposed by NPC on the ground that the statutory
authority given to the NPC as regards direct supply of
power to BOl-registered enterprises “should always be
subordinate to the ‘total-electrification-of-the-entire-
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‘SUPREME COURT REPORTS ANNOTATED VOLUME 279,
country-on-an-area-coverage basis policy’ enunciated in
P.D. No. 40.” We held further that:
“Nor should we lose sight of the factual findings of the court a quo
that petitioner-appellee CEPALCO had not only been authorized
by the Phividec Industrial Authority to provide electrical power to
the Phividec Industrial Estate within which the FPI plant is
located, but that petitioner-appellee CEPALCO had in fact,
supplied the latter’s power requirements for the construction of
its plant, upon FPI's application therefor as early as October 17,
1980.
It bears emphasis then that ‘it is only after a hearing (or an
opportunity for such a hearing) where it is established that the
affected private franchise holder is incapable or unwilling to
match the reliability and rates of NPC that a direct connection
with NPC may be granted.’ Here, petitioner-appellee’s reliability
as a power supplier and ability to match the NPC rates were
never put in issue.
It is immaterial that petitioner-appellee’s franchise was not
exclusive. A privilege to sell within specified territory, even if not
exclusive, is a valuable property right entitled to protection
against unauthorized competition.”
5 Cagayan Electric Power and Light Company, Inc. v. National Power
Corporation, G.R. No. 72085, December 28, 1989, 180 SCRA 628, 631.
8 Ibid., p. 633.
10 [bid., p. 634.
513
VOL. 279, SEPTEMBER 26, 1997 513
National Power Corporation vs. Court of Appeals
Notwithstanding said decision, in September 1990, FPI
filed a new application for the direct supply of electric
power from NPC. The Hearing Committee of the NPC had
started hearing the application but CEPALCO filed with
the Regional Trial Court of Quezon City a petition for
contempt against NPC officials led by Ernesto Aboitiz. On
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‘SUPREME COURT REPORTS ANNOTATED VOLUME 279,
August 10, 1992, the trial court found the respondents in
direct contempt of court and accordingly imposed upon
them a fine of P500.00 each. The respondent NPC officials
challenged before this Court the judgment holding them in
contempt of court through G.R. No. 107809, (Aboitiz v.
Regino). In the Decision of July 5, 1993, the Court upheld
the contempt ruling and, after quoting the lower court's
decision of May 2, 1984 which the Court upheld in G.R. No.
72085, said
“These directives show that the lower court (and this Court)
intended the arrangement between FPI and CEPALCO to be
permanent and free from NAPOCOR’s influence or intervention.
Any attempt on the part of NAPOCOR or its officers and/or
employees to strike a deal with FPI would be a clear and direct
disobedience to a lawful order and therefore contemptuous.
The petitioners call the attention of the Court to the statement
of CEPALCO that ‘NAPOCOR has already implemented in full’
the May 2, 1984 decision of the lower court as affirmed by this
Court. They suggest that in view of this, the decision no longer
has any binding effect upon the parties, or to put it another way,
has become functus officio. Consequently, when they entertained
the re-application of FPI for direct power connection to
NAPOCOR, they were not disobeying the May 2, 1984 order of the
trial court and so should not be held in contempt.
This argument must be rejected in view of our finding of the
permanence and comprehensiveness of the challenged order of the
trial court. ‘Permanent’ is not a difficult word to understand. It
means ‘lasting or intended to last indefinitely without change.’ As
for the scope of the order, NAPOCOR was directed to ‘desist from
effecting, causing, and continuing the direct supply, sale and
delivery of electricity from its power line to the plant of
Ferrochrome Philippines, Inc., and from entering into and/or
implementing any
11 GR. No. 107809, July 5, 1993, 224 SCRA 500.
514
51d SUPREME COURT REPORTS ANNOTATED
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‘SUPREME COURT REPORTS ANNOTATED VOLUME 279,
National Power Corporation vs. Court of Appeals
agreement or arrangement for such direct power connection,
unless coursed through the power line of petitioner.” (Italics
supplied.)
Meanwhile, the NPC Hearing Committee’ proceeded with
its hearings. CEPALCO was duly notified thereof but it
opted to question the committee’s jurisdiction. It did not
submit any evidence. Consequently, in its Report and
Recommendation dated September 27, 1991, the committee
gave weight to the evidence presented by FPI that
CEPALCO charged higher rates than what the NPC would
if allowed to supply power directly to FPI. Although the
committee considered as unfounded FPYs claim of
CEPALCO’s unreliability as a power supplier, it
nonetheless held that:
“Form (sic) the foregoing and on the basis of the decision of the
Supreme Court in the case of National Power Corporation and
Fine Chemicals (Phils.) Inc. v. The Court of Appeals and the
Manila Electrie Company, G.R. No. 84695, May 8, 1990, FPI is
entitled to a direct connection to NPC as applied for considering
that CEPALCO is unwilling to match the rates of NPC for directly
serving FPI and that FPI is a duly registered BOI registered
enterprises (sie). The Supreme Court in the aforestated case has
ruled as follows:
‘As consistently ruled by the Court pursuant to P.D, No. 380 as amended
by P.D. No. 395, NPC is statutorily empowered to directly service all the
requirements of a BOI registered enterprise provided that, first, any
affected private franchise holder is afforded an opportunity to be heard
on the application therefor and second, from such a hearing, it is
established that said private franchise holder is incapable or unwilling to
mateh the reliability and rates of NPC for directly serving the latter
(National Power Corporation v. Jacinto, 134 SCRA 435 [1985]. National
Power Corporation v. Court of Appeals, 161 SCRA 103 [1988)."""
12 With Hector N. Campos as chairman and Eleuterio M. Olaer, C.C.
Alcantara and Armando Minia as members.
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18 Rollo of G.R. No. 113613, pp. 425-426,
«4 Ibid., p. 426.
515
VOL. 279, SEPTEMBER 26, 1997 515
National Power Corporation vs. Court of Appeals
However, considering the “better and priority right” of PIA,
the committee recommended that instead of a direct power
connection by the NPC to FPI, the connection should be
made to PIA “as a utility user for its industrial Estate at
Tagoloan, Misamis Oriental.”
For its part, on November 3, 1989, CEPALCO filed with
the Energy Regulatory Board (ERB) a petition praying that
the ERB “order the discontinuance of all existing direct
supply of power by the NPC within petitioner's franchise
area” (ERB Case No. 89-430). On July 17, 1992, the ERB
ruled that CEPALCO “is relatively efficient and reliable as
manifested by its very low system losses (far from the 14%
standard) and very high power factors” and therefore
CEPALCO is technically capable “to distribute power to its
consumers within its franchise area, particularly the
industrial customers.” It disposed of the petition as follows:
“WHEREFORE, in view of the foregoing premises, when the
petitioner has been proven to be capable of distributing power to
its industrial consumers and having passed the secondary
considerations with a passing mark of 85%, judgment is hereby
rendered granting the relief prayed for. Accordingly, it is hereby
declared that all direct connection of industries to NPC within the
franchise area of CEPALCO is no longer necessary. Therefore, all
existing NPC direct supply of power to industrial consumers
within the franchige area of CEPALCO is hereby ordered
discontinued. x x x.”
However, during the pendency of the Aboitiz case in this
Court or on August 3, 1992, PIA contracted the NPC for the
construction of a 138 kilovolt (KV) transmission line from
Namutulan substation to the receiving and/or substation of
PIA.
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‘As expected, on February 17, 1993, CEPALCO filed in
the Regional Trial Court of Pasig (Branch 68), a petition for
cer-
18 Ibid., p. 428,
16 Rollo of G.R. No. 113613, pp. 105-107.
17 Ibid., p. 143.
516
516 SUPREME COURT REPORTS ANNOTATED
National Power Corporation vs
Court of Appeals
tiorari, prohibition, mandamus and injunction against the
NPC and some officials of both the NPC and PIA.
Docketed as SCA No. 290, the petition specifically sought
the issuance of a temporary restraining order. However,
after hearing, the prayer for the temporary restraining
order was denied by the court in its order of March 12,
." CEPALCO filed a motion for the reconsideration of
said order while NPC and PIA moved for the dismissal of
the petition.
On June 23, 1993, noting the cases filed by CEPALCO
all seeking exclusivity in the distribution of electric power
to areas covered by its franchise, the court ruled that “the
right of petitioner to supply electric power in the aforesaid
area to the exclusion of other entities had been settled once
and for all by the Regional Trial Court of Quezon City
wherein petitioner obtained a favorable judgment.” Hence,
the petition was dismissed on the ground of res judicata
Forthwith, CEPALCO elevated the case to this Court
through a petition for certiorari, prohibition and injunction
with prayer for the issuance of a preliminary injunction or
a temporary restraining order. The petition was docketed
as G.R. No. 110686 but on August 18, 1993, the Court
referred it to the Court of Appeals pursuant to Sec. 9,
paragraph 1 of B.P. Blg. 129 conferring upon the appellate
court original jurisdiction to issue writs of prohibition and
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‘SUPREME COURT REPORTS ANNOTATED VOLUME 279,
certiorari and auxiliary writs. In the Court of Appeals, the
petition was docketed as CA-G.R. No. 31935-SP.
On September 10, 1993, the Fifteenth Division of the
Court of Appeals issued a resolution denying the prayer
for the
18 Ibid., p. 148.
19 Ibid., p. 166.
2 Ibid., p. 63.
21 Presided by Judge Santiago G. Estrella.
22 Rollo of G.R. No. 113613, p. 184.
2% Rollo of CA-G.R. No, 31935-SP, p. 105.
2% Penned by Associate Justice Quirino D. Abad Santos, Jr. and
concurred in by Associate Justices Oscar M. Herrera and Alfredo J.
Lagamon,
517
VOL. 279, SEPTEMBER 26, 1997 517
National Power Corporation vs. Court of Appeals
issuance of a temporary restraining order on the strength
of Sec. 1 of P.D. No. 1818. It ruled that since the NPC is a
public utility, it “enjoys the protective mantle” of said
decree prohibiting courts from issuing restraining orders or
preliminary injunctions in cases involving infrastructure
and natural resource development projects of, and operated
by, the government.
However, on September 17, 1993, upon a motion for
reconsideration filed by CEPALCO and a re-evaluation of
the provisions of P.D. No. 1818, the Court of Appeals set
aside its resolution of September 10, 1993 and held that:
“x x x the project intended by respondent NPC, which is the
construction, completion and operation of the 138-kv line, is not in
consonance with the intendment of said Decree which is to protect
public utilities and their projects and activities intended for public
convenience and necessity. The project of respondent NPC is
intended to serve exclusively the needs of private entities, Metal
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Alloys Corporation and Ferrochrome Philippine in Tagoloan,
Misamis Oriental.”
Accordingly, the Court of Appeals issued a temporary
restraining order directing the private respondents therein
“to immediately cease and desist from proceeding with the
construction, completion and operation of the 138-kv line
subject of the petition.” The NPC, PIA and the officers of
both wore directed to explain why the preliminary
injunction prayed for should not issue.
In due course, the Court of Appeals rendered the
decision of November 15, 1993 assailed herein. After
ruling that the lower court gravely abused its discretion in
dismissing the petition below on the grounds of res judicata
and itis pendentia, the Court of Appeals confronted
squarely the issue of
25 Rollo of G.R. No. 113613, p. 221.
26 Ibid, pp. 224-225,
27 Penned by Associate Justice Quirino D. Abad Santos, Jr. and
concurred in by Associate Just
ces Emeterio C. Cui and Nathanael P. de
Pano, dr.
518
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National Power Corporation vs. Court of Appeals
whether or not “the NPC itself has the power to determine
the propriety of direct power connection from its lines to
any entity located within the franchise area of another
public utility.”
Elucidating that the ruling of this Court in both G.R.
No. 78609 (NPC v. Court of Appeals) and G.R. No. 87697
(Del Monte [Philippines], Inc. v. Hon. Felix M. de Guzman,
etc, et al.) categorically held that before a direct
connection to the NPC may be granted, a proper
administrative body must conduct a hearing “to determine
which entity, the franchise
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28 Ibid., p. 112,
29 Decided on May 5, 1988 (161 SCRA 100)
30 In the Minute Resolution of September 4, 1989 the Court dismissed
the petition in this case and said:
“x x x the Court finds lack of merit in petitioner's claim that the order of
disconnection issued by the Court of Appeals is qualified by the 5 May 1988
decision of this Court, which allegedly requires that, before the order of
disconnection can be effected, a hearing should first be held to detormine whether
franchise holder is incapable or unwilling to match the reliability and rates of
NPC. The required hearing which was found to be lacking in the case at bar
should have been held before the case even arose and not after the Court has
already ruled against NPC and order has been issued to disconnect the direct line
of petitioner to NPC, as well as to allow CEPALCO to supply the power to
petitioner.
's decision in G.R. No, 78605 is clear that before
The statement of this Court in
a direct connection to NPC may be granted, a hearing (or an opportunity for such a
hoaring) should be first conducted. Since under the circumstances, no hearing took
place, then it is only proper that NPC be disqualified to directly supply the power
to petitioner. The negotiations between petitioner and CEPALCO which followed
after this Court's decision was rendered, do not rectify the previous lack of
hearing, The hearing required in the case at bar is one conducted before a proper
administrative body to determine as to which entity, ie, CEPALCO or NPC, has
the right to supply electric power to petitioner; negotiations between the parties is
not a substitute to such a hearing.”
519
VOL. 279, SEPTEMBER 26, 1997 519
National Power Corporation vs. Court of Appeals
holder or the NPC, has the right to supply electric power to
the entity applying for direct connection,” the Court of
Appeals declared:
“We have no doubt that the ERB, and not the NPC, is the
administrative body referred to by the Supreme Court where the
hearing is to be conducted to determine the propriety of direct
connection. The charter of the ERB (PD 1206 in relation to EO
172) is clear on this:
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“The Board shall, after due notice and hearing, exercise the following
powers and functions, among others:
e. Issue Certificate of Public Convenience for the operation of electric
power utilities and services, ... including the establishment and
regulation of areas of operation of particular operators of public power
utilities and services, the fixing of standards and specifications in all
cases related to the issued Certificate of Public Convenience .
Moreover, NPC is not an administrative body as
jurisprudentially defined, and that the NPC cannot usurp a power
it has never been conferred by its charter or by other law—the
power to determine the validity of direct connection agreement it
enters into in violation of a power distributor's franchise.
Thus, considering that PTA professes to be and intends to
engage in the business of a publi power utility, it must first apply
for a public convenience and necessity (conferment of operating
authority) with the ERB. This may have been the opportune time
for ERB to determine whether to allow PIA to directly connect
with NPC, with notice and opportunity for CEPALCO considering
that, as the latter alleges, this new line which NPC is installing
duplicates that existing Cepalco 138 kv line which NPC itself
turned over to Cepalco and for which it was paid in full.”
Consequently, the Court of Appeals affirmed the dismissal
of the petition, annulled and set aside the decision of the
Hearing Committee of the NPC on direct connection with
PIA, and ordered the NPC “to desist from continuing the
construction of that NPC-Natumulan-Phividec 138 kv
transmission line.”
31 Ibid., p. 114-4.
520
520 SUPREME COURT REPORTS ANNOTATED
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Without filing a motion for the reconsideration of said
Decision, NPC filed in this Court on December 9, 1993, a
motion for an extension of time within which to file “the
proper petition.” The motion which was docketed as G.R.
No. 112702, was granted on December 20, 1993 with
warning that no further extension would be granted.
Thereafter, NPC filed a motion praying that it be excused
from filing the petition on account of the filing by PIA in
the Court of Appeals of a motion for the reconsideration of
the Decision of November 15, 1993. In the Resolution of
February 2, 1994, the Court noted and granted petitioner's
motion and considered the case “closed and terminated.”
This resolution was withdrawn in the Resolution of
February 8, 1995 in view of the “inadvertent clerical
error” terminating the case, after the NPC had mailed its
petition for review on certiorari on February 21, 1994.
In the meantime, PIA filed a motion for reconsideration
of the appellate court’s Decision of November 15, 1993
arguing in the main that, not being a party to previous
cases between CEPALCO and NPC, it was not bound by
decisions of this Court. The Court of Appeals denied the
motion on January 28, 1994 on the basis of stare decisis
where once the court has laid down a principle of law as
applicable to a certain state of facts, it will adhere to and
apply the principle to all future cases where the facts are
substantially the same. Hence, PIA filed a petition for
review on certiorari which was docketed as G.R. No.
113613.
G.R. Nos. 112702 and 113613 were consolidated on June
15, 1994.
In G.R. No. 112702, petitioner NPC contends that
private respondent CEPALCO is not entitled to relief
because it has been forum-shopping. Private respondent
had filed Civil Case
8 Rollo of G.R. No. 112702, p. 5
38 Ibid., p. 83.
34 Ibid, p. 7
9% Rollo of G.R. No, 113613, p. 116.
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8 Ibid., p. 326-2
521
VOL. 279, SEPTEMBER 26, 1997 521
National Power Corporation vs. Court of Appeals
No. Q-93-14597 in the Regional Trial Court of Quezon City
which had been forwarded to it by the Regional Trial Court
of Pasig. Said case and the instant case (SCA No. 290) deal
with the same issue of restoring CEPALCO’s right to
supply power to FPI and MAC. Petitioner thus contends
that because the principle of itis pendentia applies,
although other parties are involved in the case before the
Quezon City court, there is no basis for granting relief to
private respondent CEPALCO “(s)ince the dismissal for
lack of jurisdiction was affirmed by the respondent court.”
Corollarily, petitioner asserts that because the main case
herein was dismissed “without trial,” the respondent
appellate court should not have accorded private
respondent affirmative relief.
Petitioner NPC's contention is based on the fact that on
October 6, 1992, private respondent CEPALCO filed
against the NPC in the Regional Trial Court of Pasig, Civil
Case No. 62490, an action for specific performance and
damages with prayer for preliminary mandatory injunetion
directing the NPC to immediately restore to CEPALCO the
distribution of power pertaining to MAC’s consumption.
However, no summons was served and the ex-parte writ
prayed for was not issued. Nevertheless, the case was
forwarded to the Regional
Trial Court of Quezon City where it was docketed as
Civil Case No. 93-14597. That case was pending when SCA
No. 290 was filed before the Regional Trial Court of Pasig.
The Court of Appeals affirmed the lower court's dismissal
of the case neither on the grounds of res judicata nor liti
pendentia but on the “only one unresolved issue, which it
whether the NPC itself has the power to determine the
propriety of direct power connection from its lines to any
entity located within the franchise area of another public
utility.” The Court of Appeals opined that the effects of
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litis pendentia could not have resulted in the dismissal of
SCA No. 290 be-
87 Petition, pp. 14-19.
38 Tbid., pp. 22-24.
89 Rollo of G.R. No, 112702, pp. 56-61
49 Decision, p. 13.
522 SUPREME COURT REPORTS ANNOTATED
‘National Power Corporation vs. Court of Appeals
cause Civil Case No. 0-35945 which became G.R. No.
72085 was based on facts totally different from that of SCA
No. 290, In invoking litis pendentia, however, petitioner
NPC refers to this case, SCA No. 290, and Civil Case No.
93-14597. SCA No. 290 and Civil Case No. 93-14597 may
both have the same objective, the restoration of
CEPALCO’s right to distribute power to PIE-MO areas
under its franchise aside from the fact that the cases
involve practically the same parties. However, itis
pendentia may not be successfully invoked to cause the
dismissal of SCA No. 290.
In order to constitute a ground for the abatement or
dismissal of an action, litis pendentia must exhibit the
concurrence of the following requisites: (a) identity of
parties, or at least such as representing the same interest
in both actions; (b) identity of rights asserted and relief
prayed for, the relief being founded on the same facts, and
( identity in the two (2) cases should be such that the
judgment that may be rendered in the pending case would,
regardless of which party is successful, amount to res
judicata in the other. As a rule, the second case filed
should be abated under the maxim qui prior est tempore,
potior est jure, However, this rule is not a hard and fast
one. The “priority-in-time rule” may give way to the
criterion of “more appropriate action.” More recently, the
criterion used was the "interest of justice rule.”
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We hold that the last criterion should be the basis for
resolving this case, although it was filed later than Civil
Case No. 62490 which, upon its transfer, became Civil Case
No. 93-14795. In so doing, we shall avoid multiplicity of
suits which is the matrix upon which litis pendentia is
anchored and eventually bring about the final settlement of
the recurring issue of whether or not the NPC may supply
power directly to the industries within PIE-MO,
notwithstanding the operation of franchisee CEPALCO in
the same area.
41 Vietronies Computers, Inc, v. R'l
January 25, 1993, 217 SCRA 517, 529.
42 Ibid., pp. 531-534.
Br. 63, Makati, G.R. No, 104019,
523
VOL. 279, SEPTEMBER 26, 1997 523
National Power Corporation vs. Court of Appeals
It should be noted that there is yet pending another case,
namely, Civil Case No. 91-383, instituted by PIA against
CEPALCO in the Regional Trial Court of Misamis Oriental
which apparently deals with a related issue—PLA’s
franchise or authority to provide power to enterprises
within the PIEMO. Hence, the principle of litis pendentia
which ordinarily demands the dismissal of an action filed
later than another, should be considered under the
primordial concept of “interest of justice,” in order that a
recurrent issue common to all cases may be definitively
resolved.
The principal and common question raised in these
consolidated cases is: whether or not the NPC may supply
power directly to PIA in the PIE-MO area where
CEPALCO has a franchise. Petitioner PIA in G.R. No.
113613 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-
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MO, ic., a specific area constituting a small portion of
petitioner's franchise coverage,” without, however,
specifying the particular provision which so empowers
PIA.
A “public utility” 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.
48 Petition in G.R. No. 113618, p. 15.
44 Petition in G.R. No. 113613, pp. 81-32
45 64 AM, JUR. 549 cited as footnote No. 1 in Albano v. Reyes, G.R. No.
83551, July 11, 1989, 175 SCRA 264, 270.
48 Sec. 14 of Commonwealth Act No. 146 states that “public utilities”
include “every individual, copartnership, association, corporation, or joint-
stock company, whether domestic or foreign, their lessees, trustees, or
receivers appointed by any court whatsoever, or any municipality,
province, or other department of the Government of the Philippines that
now may own, operate, manage or control in the Philippines, for hire or
compensation, any common carrier, railroad, x x x, gas, electric light, heat,
power x xx." In Kilusang
524
524 SUPREME COURT REPORTS ANNOTATED
National Power Corporation vs. Court of Appeals
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:
“a. To operate, administer and manage the PHIVIDEC Industrial
Areas and other areas which shall hereafter be proclaimed,
designated and specified in subsequent Presidential
Proclamation; to construct, acquire, own, lease, operate and
maintain infrastructure facilities, factory buildings, warehouses,
dams, reservoirs, water distribution, electric light and power
systems, telecommunications and transportation networks, or
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SUPREME COURT REPORTS ANNOTATED VOLUME 279
such other facilities and services necessary or useful in the conduct
of industry and commerce or in the attainment of the purposes and
objectives of this Decree”; (Italics supplied.)
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.
Accordingly, in pursuit of its powers “to grant such
franchise for and to operate and maintain within the Areas
electric light, heat or power systems,” etc, under Sec. 4 (i) of
P.D, No, 538 and its rule-making power under Sec. 4 (1) of
the same law, on July 20, 1979, the PIA Board of Directors
promulgated the “Rules and Regulations To Implement the
Intent
Mayo Uno Labor Center v. Gareia, Jr. (G.R. No. 115381, December 23,
1994, 239 SCRA 386, 391), however, Court defines public utilities
“privately owned and operated businesses whose services are essential to
the general public. They are enterprises which specially cater to the needs
of the public and conduce to their comfort and convenience.” (Italics
supplied.)
47 Sec. 3, PD. 538.
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National Power Corporation vs. Court of Appeals
and Provisions of Presidential Decree No. 538.”" Rule XI
thereof on “Utilities and Services” provides as follows:
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“SECTION 1. Utilities—It is the responsibility of the Authority to
provide all required utilities and services inside the Estate:
XXX XXX XXX,
a) Contracts for the purchase of public utilities and/or services
shall be subject to the prior approval of the Authority; Provided,
however, that similar contract(s) existing prior to the effectivity of
this Rules and Regulations shall continue to be in full force and
effect.
XXX XXX XXX,
(italics supplied.)
It should be noted that the Rules and Regulations took
effect thirty (30) days after its publication in the Official
Gazette on September 24, 1979 or more than three (3)
months after the July 6, 1979 contract between PIA and
CEPALCO was entered into. As such, the Rules and
Regulations itself allowed the continuance of the supply of
electric power to PIEMO by CEPALCO.
That the contract of July 6, 1979 was not renewed by the
parties after the expiration of the five-year period
stipulated therein did not change the fact that within that
five-year period, in violation of both the contract and its
Rules and Regulations, PIA applied with the NPC for direct
power connection. The matter was aggravated by NPC's
favorable action on the application, totally unmindful of the
extent of its powers under the law which, in National
Power Corporation v. Court of Appeals, the Court delimits
as follow:
“
