PHILIPPINE SINTER CORPORATION and PHIVIDEC INDUSTRIAL AUTHORITY, petitioners, vs. CAGAYAN ELECTRIC POWER and LIGHT CO., INC

Baguio City

THIRD DIVISION

G.R. No. 127371      April 25, 2002
PHILIPPINE SINTER CORPORATION and PHIVIDEC INDUSTRIAL AUTHORITY, petitioners,
vs.
CAGAYAN ELECTRIC POWER and LIGHT CO., INC., respondent.

SANDOVAL-GUTIERREZ, J.:

Before this Court is a petition for review¹ questioning the Decision² of the Court of Appeals dated July 23, 1996 in CA-G.R. SP No. 36943, "Cagayan Electric Power and Light Co., Inc. vs. Hon. Cesar M. Ybañez, et al." which reversed the decision of the Regional Trial Court of Cagayan de Oro City, Branch 17, in Civil Case No. 94-186 for injunction.

The antecedents are:

On January 21, 1987, President Corazon C. Aquino and her Cabinet approved a Cabinet Reform Policy for the power sector and issued a Cabinet Memorandum, Item No. 2 of which provides:

"Continue direct connection for industries authorized under the BOI-NPC Memorandum of Understanding of 12 January 1981, until such time as the appropriate regulatory board determines that direct connection of industry to NPC is no longer necessary in the franchise area of the specific utility or cooperative. Determination shall be based in the utility or cooperatives meeting the standards of financial and technical capability with satisfactory guarantees of non-prejudice to industry to be set in consultation with NPC and relevant government agencies and reviewed periodically by the regulatory board." (emphasis ours)

Pursuant to such Cabinet Memorandum, respondent Cagayan Electric Power and Light, Co. (CEPALCO), grantee of a legislative franchise³ to distribute electric power to the municipalities of Villanueva, Jasaan and Tagoloan, and the city of Cagayan de Oro, all of the province of Misamis Oriental, filed with the Energy Regulatory Board (ERB) a petition entitled "In Re: Petition for Implementation of Cabinet Policy Reforms in the Power Sector," docketed as ERB Case No. 89-430. The petition sought the "discontinuation of all existing direct supply of power by the National Power Corporation (NPC, now NAPOCOR) within CEPALCO's franchise area."⁴

The ERB issued a notice of public hearing which was published in the newspapers and posted in the affected areas. It likewise furnished NAPOCOR and the Board of Investments (BOI) copies of the petition and directed them to submit their comments.

After hearing, the ERB rendered a decision⁵ granting the petition, the dispositive portion reads:

"WHEREFORE, in view of the foregoing premises, where 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 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 (now NAPOCOR) direct supply of power to industrial consumers within the franchise area of CEPALCO is hereby ordered to be discontinued. x x x."⁶

NAPOCOR filed a motion for reconsideration, which the ERB denied. Thereafter, NAPOCOR filed a petition for review with the Court of Appeals. On October 9, 1992, the Court of Appeals dismissed the petition, holding that the motion for reconsideration filed by NAPOCOR with the ERB was out of time and therefore, the assailed decision became final and executory and could no longer be subject of a petition for review.1âwphi1.nêt

On a petition for review on certiorari,⁷ this Court affirmed the Resolution of the Court of Appeals. Judgment was entered on September 22, 1993, thus rendering final the decision of the ERB.⁸

To implement the decision in ERB Case No. 89-430, CEPALCO wrote Philippine Sinter Corporation (PSC), petitioner, and advised the latter of its desire "to have the power supply of PSC, directly taken from NPC (NAPOCOR), disconnected, cut and transferred" to CEPALCO.⁹ PSC is an entity operating its business within the PHIVIDEC¹⁰ Industrial Estate (located in the Municipalities of Tagoloan and Villanueva, Misamis Oriental, covered by CEPALCO's franchise). The Estate is managed and operated by the PHIVIDEC Industrial Authority (PIA).¹¹ PSC refused CEPALCO's request, citing its contract for power supply with NAPOCOR effective until July 26, 1996.

To restrain the execution of the ERB Decision, PSC and PIA filed a complaint for injunction against CEPALCO with the Regional Trial Court of Cagayan de Oro City, Branch 17, docketed as Civil Case No. 94-186. They alleged, inter alia, that there exists no legal basis to cut-off PSC's power supply with NAPOCOR and substitute the latter with CEPALCO since: (a) there is a subsisting contract between PSC and NAPOCOR; (b) the ERB decision is not binding on PSC since it was not impleaded as a party to the case; and (c) PSC is operating within the PHIVIDEC Industrial Estate, a franchise area of PIA, not CEPALCO, pursuant to Sec. 4 (1) of P.D. 538. Moreover, the execution of the ERB decision would cause PSC a 2% increase in its electrical bills.

On April 11, 1994, the trial court rendered judgment¹² in favor of PSC and PIA, thus:

"WHEREFORE, premises considered, judgment is hereby rendered, by preponderance of evidence, in favor of plaintiffs PSC and PIA and against defendant CEPALCO and the petition for injunction should be, as it is hereby, GRANTED. Accordingly, the defendant CEPALCO, its agents and/or representative, and all those acting in its behalf, are hereby ordered to refrain, cease and desist from cutting and disconnecting and/or causing to be cut and disconnected the direct electric power supply of the plaintiff PSC from the NPC and from transferring the same to defendant CEPALCO, now and until July 26, 1996, when the contract between plaintiff PSC and the NPC for direct power supply shall have expired. The counter-claim filed by defendant CEPALCO is DISMISSED. No pronouncement as to costs.

SO ORDERED."¹³

CEPALCO filed a motion for reconsideration but was denied by the trial court in its order dated December 13, 1994. Aggrieved, CEPALCO appealed to the Court of Appeals. On July 23, 1996, the Court of Appeals rendered its decision,¹⁴ the dispositive portion of which reads:

"WHEREFORE, IN VIEW OF THE FOREGOING, the petition is hereby GRANTED. The assailed Decision dated April 11, 1994 and the Order dated December 13, 1994 are SET ASIDE. The writ of preliminary injunction earlier issued is DISSOLVED. No pronouncement as to costs.

SO ORDERED."¹⁵

PSC and PIA filed a motion for reconsideration, which was denied in a Resolution¹⁶ dated December 2, 1996. Hence the instant petition.

Petitioners submit the following issues for our resolution:

I. THE DECISION OF THE ERB IS CONTRARY TO THE CABINET POLICY REFORM.

II. THE ERB DECISION INVOLVED ADJUDICATION OF RIGHTS TO THE PREJUDICE OF PETITIONERS PIA AND PSC.

III. THE CABINET POLICY REFORM CANNOT AMEND THE CHARTER OF PIA, PD 538, AS AMENDED.

IV. PETITIONERS PIA AND PSC WERE NOT NOTIFIED BY CEPALCO OF ITS PETITION WITH THE ERB.

V. CIVIL CASE NO. 91-383 ENTITLED PHIVIDEC INDUSTRIAL AUTHORITY VS. CEPALCO BEFORE BRANCH 17, REGIONAL TRIAL COURT OF CAGAYAN DE ORO CITY REINFORCES THE ISSUE THAT THE ERB DECISION MUST NECESSARILY BE ENJOINED FROM BEING ENFORCED AGAINST PIA AND PSC.

VI. THE ERB DECISION IS NOT FINAL AND EXECUTORY.¹⁷

Petitioners contend that the ERB decision is contrary to the Cabinet Policy Reform since PIA, one of the relevant government agencies referred to in the Cabinet Memorandum, was not consulted, much less notified by the ERB before it rendered its decision; that since PIA is not a party in ERB Case No. 89-430, then the decision therein does not bind it; that P.D. 538 (the charter of PIA) excluded the municipalities of Tagoloan and Villanueva, Misamis Oriental, from the franchise area of CEPALCO and transferred the same to PIA; and that the ERB decision is not final and executory since the same is subject to periodic review under the Cabinet Memorandum.

For its part, respondent CEPALCO maintains that the ERB decision shows that it has met the requirements of the Cabinet Policy Reforms on financial and technical capability of the utility or cooperative. Anent petitioners' argument that the ERB decision does not bind them for lack of personal notice, respondent explains that such notice is not required since the proceedings in the ERB are in rem. Besides, the only issue in the ERB case is whether or not CEPALCO has met the standards mandated by the Cabinet Policy Reforms. Lastly, respondent contends that what is subject to periodic review under the Cabinet Memorandum is only the capability standards.

This is not the first time that a controversy arose involving the franchise of CEPALCO vis-à-vis the authority of NAPOCOR to supply power directly. In National Power Corporation vs. Court of Appeals,¹⁸ this Court held that CEPALCO is the lawful provider of the increased power supply to the Philippine Packing Corporation under PD 40¹⁹ promulgated on November 7, 1972. The Court ruled that distribution of electric power, whether an increase in existing voltage or a new and separate electric service, shall be undertaken by cooperatives, private utilities (such as CEPALCO), local governments and other entities duly authorized subject to state regulation.

Subsequently, this Court, in Cagayan Electric Power and Light Company, Inc. vs. National Power Corporation,²⁰ sustained the decision of the trial court ordering NAPOCOR to permanently desist from continuing the direct supply, sale and delivery of electricity to Ferrochrome Philippines, Inc., an industry operating its business within the PHIVIDEC Industrial Estate, Tagoloan, Misamis Oriental, because it violates the right of CEPALCO under its legislative franchise. The Court stressed that the statutory authority (PD 395) given to NAPOCOR with respect to sale of energy in bulk directly to BOI-registered enterprises should always be subordinate to the "total-electrification-of-the-entire-country-on-an-area-coverage-basis policy" enunciated in P.D. No. 40.

In National Power Corporation vs. Court of Appeals,²¹ this Court struck down as irregular the determination by the NAPOCOR on whether or not it should supply power directly to the PIA or the industries within the PHIVIDEC Industrial Estate-Misamis Oriental (PIE-MO); and held that such authority pertains exclusively to the ERB which was transferred to the Department of Energy (DOE) pursuant to Republic Act No. 7638. Consequently, the Court remanded the case to the DOE to determine whether it is CEPALCO or the NAPOCOR, through the PIA, which should supply electric power to the industries in the PIE-MO.

In the present case, the only issue for our determination is whether or not injunction lies against the final and executory judgment of the ERB.

We rule in the negative.

In Bachrach Corporation vs. Court of Appeals,²² this Court, through Mr. Justice Jose C. Vitug, pertinently held:

"The rule indeed is, and has almost invariably been, that after a judgment has gained finality, it becomes the ministerial duty of the court to order its execution. No court, perforce, should interfere by injunction or otherwise to restrain such execution. The rule, however, concededly admits of exceptions; hence, when facts and circumstances later transpire that would render execution inequitable or unjust, the interested party may ask a competent court to stay its execution or prevent its enforcement. So, also, a change in the situation of the parties can warrant an injunctive relief."

Clearly, an injunction to stay a final and executory decision is unavailing except only after a showing that facts and circumstances exist which would render execution unjust or inequitable, or that a change in the situation of the parties occurred. Here, no such exception exists as shown by the facts earlier narrated. To disturb the final and executory decision of the ERB in an injunction suit is to brazenly disregard the rule on finality of judgments. In Camarines Norte Electric Cooperative, Inc. vs. Torres,²³ we underscored the importance of this principle, thus:

"We have stated before, and reiterate it now, that administrative decisions must end sometime, as fully as public policy demands that finality be written on judicial controversies. Public interest requires that proceedings already terminated should not be altered at every step, for the rule of non quieta movere prescribes that what had already been terminated should not be disturbed. A disregard of this principle does not commend itself to sound public policy."

Corollarily, Section 10 of Executive Order No. 172 (the law creating the ERB) provides that a review of its decisions or orders is lodged in the Supreme Court.²⁴ Settled is the rule that where the law provides for an appeal from the decisions of administrative bodies to the Supreme Court or the Court of Appeals, it means that such bodies are co-equal with the Regional Trial Courts in terms of rank and stature, and logically, beyond the control of the latter.²⁵ Hence, the trial court, being co-equal with the ERB, cannot interfere with the decision of the latter. It bears stressing that this doctrine of non-interference of trial courts with co-equal administrative bodies is intended to ensure judicial stability in the administration of justice whereby the judgment of a court of competent jurisdiction may not be opened, modified or vacated by any court of concurrent jurisdiction.²⁶

Granting that the ERB decision has not attained finality, or that the ERB is not co-equal with the RTC, still injunction will not lie. As a rule, to justify the injunctive relief prayed for, the movant must show: (1) the existence of a right in esse or the existence of a right to be protected; and (2) the act against which injunction is to be directed is a violation of such right.²⁷ In the case at bar, petitioners failed to show any clear legal right which would be violated if the power supply of PSC from the NAPOCOR is disconnected and transferred to CEPALCO. If it were true that PSC has the exclusive right to operate and maintain electric light within the municipalities of Tagoloan and Villanueva pursuant to its charter (PD 538), then this Court would have made such pronouncement in National Power Corporation vs. Court of Appeals.²⁸ 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.²⁹ More importantly, the Constitution prohibits monopoly of franchise.³⁰ Another significant fact which militates against the claim of PIA is that it previously allowed CEPALCO to distribute electric power to industries operating within the PHIVIDEC Industrial Estate. This, to our mind, sufficiently indicates PIA's recognition of CEPALCO's franchise. Indeed, it is unimaginable that an implementation of a long-standing government policy which had been sustained by this Court³¹ can be stalled by an injunctive writ.

Likewise, petitioners' assertion that the ERB decision contradicts the Cabinet Reform Policy is misplaced. On the contrary, we find the decision to be in accord with the policy that direct connection with the NAPOCOR is no longer necessary when a cooperative or utility, such as CEPALCO, operating within a franchise proves to be capable of distributing power to the industries therein. In this regard, it is apt to reiterate the pronouncement of this Court in Cagayan Electric Power and Light Company, Inc. vs. National Power Corporation:³²

"It is likewise worthy of note that the defunct Power Development Council, in implementing P.D. 395, promulgated on January 28, 1977 PDC Resolution No. 77-01-02, which in part reads:

'1) At any given service area, priority should be given to the authorized cooperative or franchise holder in the right to supply the power requirement of existing or prospective industrial enterprises (whether BOI-registered or not) that are located or plan to locate within the franchise area or coop service area as shall be determined by the Board of Power or National Electrification Administration whichever the case may be.'

The statutory authority given to respondent-appellant NPC in respect of sales of energy in bulk direct to BOI registered enterprises should always be subordinate to the "total-electrification-of-the-entire-country-on-an-area-coverage-basis policy" enunciated in P.D. No. 40. Thus, in NPC vs. CEPALCO, supra, this Court held:

'x x x The law on the matter is clear. PD 40 promulgated on 7 November 1973 expressly provides that the generation of electric power shall be undertaken solely by the NPC. However, Section 3 of the same decree also provides that the distribution of electric power shall be undertaken by cooperatives, private utilities (such as CEPALCO), local governments and other entities duly authorized, subject to state regulation. x x x.'" (emphasis ours)

WHEREFORE, the petition is DENIED. The challenged Decision of the Court of Appeals in CA-G.R. SP No. 36943 is hereby AFFIRMED.

SO ORDERED.

Vitug, Panganiban, and Carpio, JJ., concur.
Melo, J., on official leave.

Footnotes

¹ Under Rule 45 of the 1997 Rules of Civil Procedure, as amended.

² Penned by Associate Justice Fermin A. Martin, and concurred in by Presiding Justice Nathanael P. de Pano, Jr. and Associate Justice Conchita Carpio Morales, First Division.1âwphi1.nêt

³ On June 17, 1961, R.A. 3247 granted CEPALCO the franchise "to construct, maintain and operate an electric light, heat and power system for the purpose of generating and/or distributing electric light, heat and/or power for sale within the City of Cagayan de Oro and its suburbs" for fifty years. On June 21, 1963, R.A. 3570 expanded the area of coverage to include the Municipalities of Tagoloan and Opol, Misamis Oriental. R.A. 6020 (August 4, 1969) further expanded CEPALCO's authority to include the municipalities of Villanueva and Jasaan, also of said province.

⁴ ERB Decision, Rollo, p. 216.

⁵ Dated July 17, 1992, Annex "1," Comment, pp.216-224.

⁶ Ibid., pp. 223-224.

⁷ G.R. 108562.

⁸ CA Decision, Rollo, p. 49.

⁹ RTC Decision, Rollo, p. 64.

¹⁰ 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, 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."

¹¹ 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 professionalized management of well-planned industrial areas shall further this objective." Under Sec. 3 of the said law, the first area for development shall be located in the municipalities of Tagoloan and Villanueva.

¹² Annex "C," Petition, Rollo, pp. 62-70.

¹³ Ibid., p. 70.

¹⁴ Annex "A," Petition, Rollo, pp. 46-57.

¹⁵ Ibid., p. 56.

¹⁶ Annex "B," Petition, Rollo, pp. 59-61.

¹⁷ Petitioners' Memorandum, Rollo, p. 345.

¹⁸ 161 SCRA 101 (1988).

¹⁹ Sections 1 and 3 of PD 40 entitled "Establishing Basic Policy for the Electric Power Industry" provides that:

"1. The attainment of total electrification on an area coverage basis, which is a declared policy of the State, shall be effected primarily through:

a) The setting up of island grids with central/linked-up generation facilities.

b) The setting up of cooperatives for distribution of power.

3. The distribution of electric power generated by the NPC shall be undertaken by:

a) Cooperatives

b) Private Utilities

c) Local governments

d) Other entities duly authorized subject to state regulation."

²⁰ 180 SCRA 628 (1989).

²¹ 279 SCRA 506 (1997).

²² 296 SCRA 487, 495 (1998).

²³ 286 SCRA 666, 681 (1998).

²⁴ Now transferred to the Court of Appeals by virtue of Rule 43 of the 1997 Revised Rule of Civil Procedure, as amended.

²⁵ Olaguer vs. Regional Trial Court, NCJR, Br. 48, 170 SCRA 478, 487 (1989), citing National Electrification Administration vs. Mendoza, 138 SCRA 635 (1985); PCGG vs. Peña, 159 SCRA 556, 564 (1988).

²⁶ Freeman, Inc. vs. Securities and Exchange Commission, 233 SCRA 735, 742 (1994), citing Philippine Pacific Fishing, Co, Inc. vs. Luna, G.R. No. 59070, March 15, 1982, 112 SCRA 604.

²⁷ Ortanez-Enderes vs. Court of Appeals, 321 SCRA 178, 186 (1999).

²⁸ Supra.

²⁹ National Power Corporation vs. Court of Appeals, supra.

³⁰ Sec. 11, Article XII of the 1987 Constitution.

³¹ National Power Corporation vs. Court of Appeals, supra; Cagayan Electric Power and Light Company, Inc. vs. National Power Corporation, supra.

³² Supra.