Surigao Electric Co. v. Municipality of Surigao
REITERATIONFacts
The Antecedents: Petitioner Surigao Electric Co., Inc. (Surigao Electric) was a legislative franchise holder. On February 16, 1962, its rights, privileges, plant, and facilities were transferred to petitioner Arturo Lumanlan, Sr. Respondent Municipality of Surigao sought to operate an electric plant. Procedural History: Respondent Public Service Commission (PSC), in an order dated July 11, 1963, approved the tentative schedule of rates submitted by the Municipality of Surigao, holding that it had no alternative but to do so. The PSC reasoned that a municipal government, as a government entity and an instrumentality of the national government, is exempted from PSC jurisdiction except for rate fixing, citing amendments to the Public Service Act (Republic Act No. 2677). The Petition: Petitioners challenged the validity of the PSC order, raising issues concerning the PSC's jurisdiction over municipal entities operating public services and the effect of their legislative franchise.
Issue(s)
Whether a municipal government can directly maintain and operate an electric plant without obtaining a specific franchise and a certificate of public convenience and necessity from the Public Service Commission. Whether the legislative franchise granted to Surigao Electric Co., Inc. overrides the amendments to the Public Service Act and the exercise of police power by the government.
Ruling
The Supreme Court affirmed the order of the Public Service Commission dated July 11, 1963, and the subsequent order of February 7, 1964, denying the motion for reconsideration. The Court held that the Municipality of Surigao, as a government entity and an instrumentality of the national government, is exempt from the requirement of a certificate of public convenience and necessity for operating an electric plant, although the PSC retains jurisdiction over the fixing of rates.
Ratio Decidendi
On the issue of whether a municipal government can operate an electric plant without a certificate of public convenience and necessity: The Court affirmed the PSC's ruling that a municipal government, being a government entity and an instrumentality of the national government, is exempted from the requirement of obtaining a certificate of public convenience and necessity under the amended Public Service Act (Republic Act No. 2677). The Court emphasized that while the term "municipal corporations" was not explicitly used, the term "government entities" encompasses municipalities, aligning with the dual character of municipal corporations as governmental branches. This interpretation gives significance to every word of the statute and maintains the harmony of the legislative scheme, further supported by the policy of promoting municipal autonomy as expressed in the Local Autonomy Act. On the issue of whether the legislative franchise overrides amendments to the Public Service Act and police power: The Court held that any privilege claimed under a legislative franchise cannot override the constitutional restriction that franchises are subject to amendment, alteration, or repeal by Congress. Furthermore, such franchises cannot be availed of to defeat the proper exercise of the police power. The Court cited the principle that the government cannot be disarmed of powers necessary to accomplish its ends by implications that would transfer essential functions to privileged corporations. The amendatory act in question was seen as encouraging municipal corporations to engage in public services for community welfare, which falls within the scope of police power, rather than constituting an unlawful taking or appropriation of private property.
Main Doctrine
A municipal corporation, being an instrumentality of the national government, is exempted from the requirement of obtaining a certificate of public convenience and necessity from the Public Service Commission for operating public services, except with respect to the fixing of rates. This exemption is derived from amendments to the Public Service Act and aligns with the broader policy of promoting municipal autonomy and public welfare.