G.R. No. 84695 May 8, 1990
National Power Corporation and Fine Chemicals (Phils.), Inc., petitioners, vs. The Court of Appeals and The Manila Electric Company, respondents.

FACTS

Petitioner Fine Chemicals (Phils.), Inc. (FINE), a BOI-registered export manufacturer, applied for a direct power connection with co-petitioner National Power Corporation (NPC). NPC informed respondent Manila Electric Company (MERALCO) of this application pursuant to an NPC-BOI Memorandum of Understanding. MERALCO objected, asserting it was financially and technically capable of serving FINE and that allowing direct connection would shift subsidy burdens to other consumers. Despite MERALCO’s objections and its request to await a pending executive order creating an Energy Regulatory Board, NPC proceeded and began directly supplying power to FINE on July 12, 1987.
MERALCO filed a petition for Prohibition, Mandamus, and Damages with Preliminary Injunction against NPC and FINE in the Regional Trial Court. FINE moved to dismiss the petition for lack of cause of action, arguing the direct connection was already operational, rendering injunctive relief moot. The trial court denied the motion to dismiss. Without seeking reconsideration, FINE filed a Petition for Certiorari, Prohibition, and Mandamus with the Court of Appeals, which dismissed the petition. NPC intervened and adopted FINE’s petition. Petitioners now seek review by the Supreme Court.

ISSUE

Whether the trial court correctly denied the motion to dismiss MERALCO’s petition.

RULING

The Supreme Court ruled that the trial court erred in not dismissing MERALCO’s petition. The core legal issue was the validity of MERALCO’s claimed exclusive franchise to distribute power within its area. The Court clarified that a public utility franchise is not inherently exclusive. Citing Alger Electric, Inc. v. Court of Appeals, the Court held that exclusivity is disfavored in law and is only justified when the grantee is self-sufficient and can supply service at reasonable prices. It is against public interest if the franchise holder acts as an unnecessary middleman increasing costs for power-intensive industries.
The evidence revealed MERALCO could not match NPC’s lower direct power rates, as admitted in testimony that MERALCO, as a retailer, must charge more than NPC’s wholesale rate to make a profit. MERALCO’s petition was fundamentally an attempt to annul the direct supply contract between NPC and FINE using technicalities, despite being unable to provide cheaper power. No useful purpose would be served by remanding the case for trial, as the substantive issue of exclusivity was already resolved by established doctrine. Furthermore, no denial of due process occurred, as the essence of due process is the opportunity to be heard, which petitioners had. Consequently, MERALCO’s petition in the lower court was ordered dismissed.