U. BAÑEZ ELECTRIC LIGHT COMPANY (UBELCO), PLAINTIFF-APPELLANT, VS. ABRA ELECTRIC COOPERATIVE, INC. (ABRECO) AND/OR JEREMIAS ZAPATA, NATIONAL POWER CORP. (NPC) AND NATIONAL ELECT…

Appeal from the dismissal of the complaint in Civil Case No. 718
of the Court of First Instance of Abra for failure to
state a cause of action.  The appeal had
originally been brought to the Court of Appeals but was subsequently certified
to this Court on the ground that it raises purely questions of law.

It appears that in
June 1973, UBELCO filed a complaint in the court a quo alleging
that it is the holder of a Congressional franchise for electric and power
system in the Municipality of Bangued, Province of Abra,
granted under Republic Act No. 4143; that under the said Act, when defendant
NPC shall have established its lines in the areas adjacent to or over the
territory covered by plaintiff’s franchise, the NPC “may make available
its power and heat only after negotiations with and through U. Bañez Electric Light Company, or with the authority and
consent of the grantee”; that the defendant NPC is now in a position to
service the several municipalities in the Province of Abra,
including Bangued, but for one reason or another, and
notwithstanding repeated requests made by the plaintiff, NPC has unlawfully failed and refused to
enter into a power service contract with the plaintiff to its great damage and
prejudice; that defendant ABRECO, with the encouragement of and in connivance
with defendant NEA, has illegally attempted to establish, operate and maintain
an electric system within the municipality of Bangued
without a valid franchise and without authority from the Public Service
Commission, as required by law, drawing power from defendant NPC without negotiating with or
obtaining the consent of the
plaintiff, in violation of Republic Act No. 4143; that the municipality of Bangued, Abra has no right to
grant an electric franchise to defendant ABRECO because said act is ultra vires and because of the existence of
plaintiff’s franchise and also because there is no necessity to allow two
electric systems to operate within the same municipality; that defendants
ABRECO and NEA are attempting to construct, maintain and operate an electric
system within the municipality
of Bangued, in violation of the rights of plaintiff,
and unless said defendants are enjoined, the plaintiff would suffer grave and
irreparable damage and in­jury; and that plaintiff has no other plain, speedy
and adequate remedy in the ordinary course of law.  Plaintiff then prayed:

1. That pending trial a writ of preliminary injunction be issued
restraining defendant ABRECO from constructing, maintaining and operating an
electric system within Bangued, Abra;
prohibiting defendant NPC from entering into any form of power service contract
with ABRECO; and after trial, the aforesaid writ be made permanent;

2. That the power and electric franchise granted by the Municipal
Council of Bangued, Abra to
defendant ABRECO be declared illegal and void;

3.  That the National Power
Corporation be ordered to enter into a power service contract with the
plaintiff; and

4. That plaintiff be awarded damages and
attorney’s fees.

After filing their joint answer, defendants ABRECO and NEA moved
to dismiss.  So did defendant NPC.  The common grounds relied upon are:  (1) failure of the complaint to state a cause
of action, and (2) lack of jurisdiction over the nature of the action.

Upon a consideration of the above motions and the opposition
thereto, the court a quo
issued an order dated September 3, 1973
dismissing the complaint for failure to state a cause of action.  This is the order now assailed in this
appeal, which raises one basic issue: 
whether on the basis of the allegations of the complaint, a sufficient
cause of action has been pleaded against the defendants.

According to appellant, in resolving the motion to dismiss, the
lower court disregarded some allegations deemed admitted by the motion, while
taking into account facts and
circumstances not deemed admitted because they were not alleged in the
complaint.

A motion to dismiss on the ground of failure to state a cause of
action hypothetically admits the truth of the facts alleged in the
complaint.  When the facts alleged in the
complaint show that the defendant has committed acts constituting a delict or wrong by which he violates the rights of the plaintiff,
causing him loss or injury, there is sufficient allegation of a cause of
action.  Otherwise, there is none.

The hypothetical admission is however limited to the relevant and
material facts well pleaded in the complaint and inferences fairly deducible therefrom.  The
admission does not extend to conclusions or interpretations of law; nor does it
cover allegations of fact the falsity of which is subject to judicial
notice.  [Mathay vs.
Consolidated Bank and Trust Company, 58 SCRA 559; De Dios
vs. Bristol Laboratories (Phils.) Inc., 55
SCRA 349.]

Nevertheless, in resolving a motion to dismiss, the court is not
restricted to the consideration of the facts alleged in the complaint and
inferences fairly deducible therefrom.  The court may consider other facts within the
range of judicial notice, as well as relevant laws and jurisprudence which of
course the courts are bound to take into account.

Now, the Congressional
franchise of the appellant-Republic Act No. 4143 enacted in 1964 – provides
that subject to the provisions of the Constitution –

“In the event that the National Power Corporation shall have
established its lines in the areas
adjacent to or over the territory covered by this franchise, the National Power
Corporation may make available its power and heat only after negotiations with and through U. Bañez Electric Light Company, or with the authority and consent of the grantee.” (Section 2).

Subsequently however or on July 28, 1969, Republic Act No. 6038 was enacted creating the NEA and granting to elec­tric cooperatives exemption from taxes
and fees.  It further provides that –

“The National Power Corporation shall except
with respect to the National Government, give preference in
the sale of its power and
energy to cooperatives, and shall otherwise provide the maximum support and assistance to cooperatives of
which it is capable,
including assistance in developing
dependable and reliable arrangements for their supplies of bulk power, either
from it­self or from other sources.  In pursuance of the foregoing policy, the
National Power Corporation shall
not, except upon prior written
agreement approved by the cooperative’s board, compete in the sale of power and energy
which, without regard to the
location of the point of delivery thereof, will be utilized and
consumed within any area franchised to a cooperative.”

“No franchise for service shall be granted to any other person
within any area or portion for which a
cooperative holds a franchise unless and except to the extent that (1) the cooperative’s board consents
thereto by resolution duly adopted or (2) the Public Service Commission
determines that the cooperative is unable within a reasonable time, or is
unwilling, to supply service therein…” [Section 41,
paragraphs (b) and (c).  RA 6038
was The NEA Charter on September 3,
1973 when the questioned order of the court a quo was issued.]

Hand in hand with the creation of NEA, the charter of NPC was
revised on September 10, 1971 (RA 6395), empower­ing NPC “to sell electric
power in bulk to (1) industrial enterprises, (2) city, municipal or provincial
systems and other government institutions, (3) electric cooperatives, (4)
franchise holders, and (5) real estate subdivisions.” [Section 3 (g)] The
said Act mandates that in its relations with electric cooperatives, the NPC
shall be governed by the provisions of the NEA Charter.  (Section 15.)

Thus, in the light of the statutory mandate that in the sale of
electric power, the NPC shall give preference to electric cooperatives over all
other buyers except the national government, and provide electric cooperatives
with the maximum support and assistance it is capable of giving – considered in
relation with the Constitutional provision against monopoly in the field of
public utilities (Art. XIV, Sec. 5) – there is good reason to hold that the
1964 UBELCO franchise (which after all is subject to amendment, alteration or
repeal when public interest so requires) was modified pro tanto by the cited provisions of the NEA
and NPC Charters; and accordingly, as held by the court a quo in sustaining the motion to
dismiss, the NPC can supply ABRECO directly with electric power as mandated by
RA 6038 and RA 6395 without negotiating with and acting through or seeking the
consent/authorization of UBELCO.

So viewed, the complaint does not sufficiently state a cause of
action against the appellees, and the same was pro­perly
dismissed on that basis.  The lower
court, contrary to the impression of appellant, acted correctly in considering
as hypothetically admitted only the facts alleged in the complaint, in applying
relevant constitutional and statutory provisions to the facts deemed
established by the filing of the motion to dismiss, and in disregarding
averments of legal conclusions such as the allegations that the franchise
granted by the Municipal Council of Bangued, Abra, to ABRECO pursuant to Act 667 is ultra vires and
void; that the NPC
has entered into a power contract with ABRECO
in violation of law; and that the NPC has refused to
supply UBELCO with electric
power in violation of and contrary
to law.  (See appellant’s brief, 18-21.)

The usual test of the sufficiency of the facts alleged in a
complaint, to constitute a cause of action, is whether or not, admitting the
facts alleged, the court could render a valid judgment
upon the same in accordance with the prayer of the complaint.

In the instant case, on the basis of the facts deemed established
as distinguished from the averments of legal conclusions in the complaint, NPC
can not be restrained from entering into a power contract with ABRECO and compelled to conclude a
power contract with UBELCO, which
are the principal reliefs prayed for in the complaint.  Moreover, it is admitted that NPC and ABRECO have already concluded a power
contract.  It is too late to restrain
them from entering into such agreement.

WHEREFORE, the appealed Order of dismissal is
affirmed.  Costs
against the appellant.

SO ORDERED.

Teehankee, (Chairman), Melencio-Herrera, Vasquez, Relova,
and Gutierrez, Jr., JJ.,
concur.