[ G.R. No. 112702. February 17, 1999]




Quoted hereunder, for your information, is a resolution of this Court dated FEB 17, 1999.

G.R. No. 112702 (National Power Corporation v. Cagayan Electric Power and Light Company, Inc. [CEPALCO].) and G.R. No. 113613 (Phivodec Industrial Authority vs. Cagayan Electric power and Light Company, Inc. [CEPALCO].)

In the Resolution of April 14, 1998, the Court denied with finality the motions for reconsideration filed by petitioners Phividec Industrial Authority (PIA) and national Power Corporation (NPC) as well as the latter's supplemental motion for reconsideration of the Decision of September 26, 1997. On May 22, 1998, entry of judgment was made in these cases and the records were accordingly transmitted to the Court of Appeals on September 16, 1998.

It appears, however, that on December 22, 1997, private respondent Cagayan Electric Power & Light Co. (CEPALCO), had filed a motion for partial reconsideration of the same Decision of September 26, 1997 and that, on November 18, 1998, it filed a motion for early resolution of said motion for partial reconsideration.

In acting on the motions for reconsideration of petitioners NPC and PIA, the Court took into account the consolidated comment thereon of private respondent CEPALCO that should ordinarily have incorporated what are now alleged in the instant motion for partial reconsideration to facilitate disposition thereof. Nonetheless, in the interest of justice, the Court shall take action on that motion for partial reconsideration notwithstanding the entry of judgment in these cases. However, to pave the way for the consideration of the instant motion for partial reconsideration, the entry of judgment made on May 22, 1998 must be recalled as it is hereby recalled.

Private respondent CEPALCO's motion for partial reconsideration is anchored on the following allegations:

1. The statutory definition of a "public utility" excludes an entity such as PIA and does not contemplate the contumacious defiance of law and jurisprudence that is actually going on inside PIE-MO.

2. Jurisprudence has consistently defined "public utility" in a manner that clearly excludes an entity such as PIA.

3. To vest PIA with the status of a public utility and to not require it to procure a CPCN will defeat the considerations of public safety and welfare behind the CPCN requirement.

4. The rules on res judicata and stare decision are clearly applicable. the court should have simply referred to and applied its earlier decisions in CEPALCO vs. NPC, 180 SCRA 682 and in NPC vs. CA, G.R. No. 107462.

In support of its argument that PIA is not a public utility, private respondent CEPALCO quotes Section 13, paragraph (b) of the Public Service Act that defines the term "public service" as follows:

"(b) The term 'public service' includes every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier . . . electric light, heat and power . . . systems . . . and other similar services." (Underscoring supplied.)

Alleging that this definition of "public service" also defines "public utility," private respondent contends that petitioner PIA does not in fact have any "electric light, heat and power system - whether in PIE-MO or elsewhere" and therefore, it "cannot be said to be operating one "for hire or compensation." Private respondent adds that the "non-existent system is not being used for 'general business purposes' because PIA, under its own charter, is not a juridical person established to make a business out of distributing electricity" but to "operate, administer and manage the PHIVIDEC Industrial areas."1 [Private respondent's motion for partial reconsideration, pp. 4-5.]

The Court is not about to dispute private respondent's claim that it owns the power distribution facilities existing within PIE-MO. That is a factual issue that is not within this Court's power to determine. However, as this Court said in the Resolution of April 14, 1998, the Decision of September 26, 1997 is about the authority of petitioner NPC "to engage in the distribution of power through the PIA in an area where a franchisee operates." In other words, the issue of whether or not petitioner PIA is a public utility has been settled both in the Court's Decision as well as in the said Resolution and neither has private respondent CEPALCO alleged enough reasons here to unravel that settled issue. It should be added, however, that as a public utility, petitioner PIA need not secure a certificate of public convenience and necessity (CPCN) by clear provision of paragraph (a) of Section 13 of the Public Service Act, which, in part, states:

"x x x Provided, That public services owned or operated by government entities of government-owned or controlled corporation shall be regulated by the Commission in the same way as privately-owned public services, but certificates of public convenience or certificates of public convenience and necessity shall not be required of such entities or corporations: x x x."

Contrary to private respondent CEPALCO's contention, not all public utilities are privately owned. The test of whether or not an entity is a public utility is the fact of its being impressed with public interest. Thus,

"The public or private character of he enterprise does not depend, however, on the number of persons by whom it is used, but on whether or not it is open to the use and service of all members of the public who may require it, to the extent of its capacity; and the fact that only a limited number of persons may have occasion to use it does not make it a private undertaking if the public generally has a right to such use. It has been stated that the true criterion by which to determine whether a plant or system is a public utility is whether or not the public may enjoy it of right or by permission only. It is the duty which the purveyor or producer of the service or commodity has undertaken to perform in behalf of the public generally, or of any defined portion of it, which stamps him as a public utility, and not the use which the consumer makes of the service or commodity furnished." 2 [73 C.J.S. 992-993.]

Private respondent CEPALCO's fear that public safety and welfare would be compromised should petitioner PIA be vested with the status of a public utility is simply preposterous. Section 13 of the Public Service Act, heavily relied upon by private respondent in its arguments, clearly provides that the Public Service Commission had "jurisdiction, supervision, and control over all public services and their franchises, equipment, and other properties." Under Section 4 of Republic Act No. 7638, the government agency that now takes charge of distribution of energy is the Department of Energy (DOE).3 [Under memorandum Order No. 386 issued on August 26, 1991 by then President Corazon C. Aquino, petitioner PIA is one of the government and/or controlled corporations that shall be monitored by the Government Corporate Monitoring and Coordinating Committee (GCMCC) for calendar year 1992.] In connection thereto, the Energy Industry Administration Bureau shall, under Section 12 (c) of the same law, "assist in the formulation of regulatory policies to encourage and guide the operations of both government and private entities involved in energy resource supply activities such as independent power production, electricity distribution, as well as the importation, exportation, stockpiling, storage, shipping, transportation, refinement, processing, marketing, and distribution of all forms of energy products, whether conventional or nonconventional."

Petitioner PIA is a subsidiary of PHIVIDEC that is a government-owned and controlled corporation. As this Court has noted in the Decision of September 26, 1997, petitioner PIA was created by virtue of P.D. No. 538 to perform functions necessary or useful in the conduct of industry and commerce in the PHIVIDEC industrial areas. It has the power to "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 such other facilities and services necessary or useful on the conduct of industry and commerce or in the attainment of the purposes and objectives of this Decree."4 [Sec. 4, P.D. No. 538.]

Private respondent CEPALCO's invocation of the doctrines of res judicata and stare decisis is unnecessary. The ruling in Cagayan Electric Power and Light Company, Inc. v. National power Corporation 5 [G.R. No. 72085, December 28, 1989, 180 SCRA 628.] is apposite to the ruling in this case. This can be gleaned from the following statement of this Court in that case:

"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 plants, 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."

The relevance of this observation of the Court is brought to fore by the allegation in the petition in G.R. No. 113613 that private respondent CEPALCO

"x x x subsequently proved unable, and was in fact capacity, to adequately supply the power needs, much less power at reasonable rates, of all industries and entities inside PIE-MO. As a result thereof, many industries closed shop one after the other thereby dislocating thousands of workers and their families and directly threatening the very survival and viability of this particular industrialization effort of petitioner and the government;" 6 [Petition in G.R. No. 113611, pp. 14-15.]

Public utilities must serve public interest. To attain that goal, the public must be given the widest choice as to which public utility would best suit their needs. It is in this light that the Decision of September 26, 1997 was promulgated - there must be a hearing conducted by the appropriate government agency to determine which public utility must distribute electric power to the industries within the area covered by the PHIVIDEC.

ACCORDINGLY, the instant motion for partial reconsideration is hereby DENIED with FINALITY. Entry of judgment in these cases shall forthwith be made in due course. Henceforth, no pleadings from any of the parties involved shall be entertained."

Very truly yours,


Clerk of Court

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