Teresa Electric and Power Co. v. Public Service Commission
REITERATIONFacts
1. The Antecedents: Filipinas Cement Corporation (Filipinas) sought a certificate of public convenience and necessity to operate an electric plant within its factory site in Teresa, Rizal. This plant was intended to supply electricity solely for its cement manufacturing operations and for its employees residing within the factory compound. Teresa Electric and Power Co., Inc. (petitioner), already operating an electric plant in the same municipality under a subsisting certificate, opposed the application. Petitioner argued that Filipinas lacked the necessary authorization in its articles of incorporation, had not secured municipal approval, and that petitioner itself was willing and able to supply Filipinas' electricity needs. 2. Procedural History: Filipinas filed its application with the Public Service Commission (PSC) on May 24, 1962. Petitioner filed a written opposition, and after hearings where Filipinas presented its evidence and petitioner cross-examined witnesses, the PSC denied petitioner's motion for postponement. The PSC considered the application submitted for resolution. On March 15, 1963, the PSC granted Filipinas a certificate of public convenience and necessity for fifty years, finding that the proposed service would be limited to Filipinas' factory needs and its employees, would not adversely affect petitioner, and that Filipinas would purchase power from MERALCO. Petitioner's subsequent motion to set aside the decision and reopen the case was denied by the PSC en banc on August 12, 1963. 3. The Petition: This case is a petition for review filed by Teresa Electric and Power Co., Inc. seeking to set aside the PSC's decision. The petition raises three main questions: (1) whether Filipinas needed a municipal or legislative franchise prior to obtaining a certificate of public convenience; (2) whether Filipinas' articles of incorporation authorized it to operate an electric plant; and (3) whether a certificate could be granted to Filipinas despite the existence of petitioner as an operator in the same municipality. Petitioner argues that Act No. 667 requires a franchise, that Filipinas' articles are insufficient, and that competition should be avoided. The petition seeks to overturn the PSC's grant of the certificate to Filipinas.
Issue(s)
Whether Filipinas Cement Corporation should have secured a municipal or legislative franchise before being entitled to a certificate of public convenience and necessity to operate an electric plant. Whether Filipinas Cement Corporation's articles of incorporation authorized it to operate an electric plant. Whether Filipinas Cement Corporation could be granted a certificate of public convenience and necessity to operate an electric plant notwithstanding the existence of an electric plant operator in the same municipality.
Ruling
The Supreme Court affirmed the decision of the Public Service Commission, holding that Filipinas Cement Corporation was entitled to a certificate of public convenience and necessity. The Court ruled that Act No. 667, requiring a franchise, applies only to services intended for business purposes and the general public, not to private industrial operations like that of Filipinas. The Court also found that Filipinas' articles of incorporation authorized the operation of the electric plant, and that the existence of another operator does not preclude the grant of a new certificate if public interest and necessity warrant it, especially considering the significant difference in power capacity needed.
Ratio Decidendi
On Whether Filipinas Cement Corporation should have secured a municipal or legislative franchise before being entitled to a certificate of public convenience and necessity to operate an electric plant: The Court held that Act No. 667, which requires a municipal or legislative franchise, is intended for entities seeking to construct and maintain electric lines or power plants for business purposes, meaning to render service to the general public. Since Filipinas applied for a certificate to operate an electric plant exclusively for its own use in connection with its cement factory and for its employees living within the factory compound, it did not require a franchise under Act No. 667. All that Filipinas needed was a certificate of public convenience and necessity, which was granted by the respondent Public Service Commission. The Court emphasized that the requirements of Act No. 667, such as paying a percentage of gross receipts into the provincial treasury and subject rates to regulation, are clearly for public service operations. On Whether Filipinas Cement Corporation's articles of incorporation authorized it to operate an electric plant: The Court found that Filipinas' articles of incorporation, specifically paragraph 7, provided authority to secure rights, powers, privileges, franchises, and concessions necessary or related to the operation of its cement factory. Furthermore, the articles allowed the corporation to generally perform any and all acts connected with the business of manufacturing cement or arising therefrom or incidental thereto. The Court reasoned that the operation of an electric light, heat, and power plant is necessarily connected with the business of manufacturing cement, as electricity is a virtual necessity for modern industries. Therefore, the operation of the electric plant was within the scope of Filipinas' corporate powers. On Whether Filipinas Cement Corporation could be granted a certificate of public convenience and necessity to operate an electric plant notwithstanding the existence of an electric plant operator in the same municipality: The Court affirmed that while operators of public convenience deserve protection from unnecessary competition, no one has an exclusive right to a franchise or a certificate of public convenience. The grant of such certificates should be guided primarily by public service and interest. In this case, it was established that the petitioner's electric plant had a load capacity of only 200 kilowatts, while Filipinas required 6,000 kilowatts to operate its cement factory. This significant disparity demonstrated that the petitioner was in no condition to supply the power needs of Filipinas, thus justifying the grant of a certificate to Filipinas in the interest of industrial necessity and public service.
Main Doctrine
The Public Service Commission may grant a certificate of public convenience and necessity for the operation of an electric plant even if another operator exists in the same municipality, provided the new service is primarily for the applicant's own industrial needs and its employees, and does not adversely affect the existing operator. Furthermore, Act No. 667, which requires a municipal or legislative franchise, applies only to services intended for business purposes and the general public, not to private industrial operations.