NATIONAL POWER CORPORATION AND FINE CHEMICALS (PHILS.), INC., PETITIONERS, VS. THE COURT OF APPEALS AND THE MANILA ELECTRIC COMPANY, RESPONDENTS.

This is a petition for review on certiorari, with prayer
for the issuance of temporary restraining order, of the August 11, 1988 decision* of the
Court of Appeals in CA-G.R. SP No. 12939 dismissing the petition for certiorari,
prohibition and mandamus.

Herein petitioner FINE Chemicals (Phils.)
Inc. (FINE for short) is a corporation registered with the Board of Investments
(BOI for short) and engaged in the manufacture of plastics for export.  Sometime in September, 1986, it filed an
application for direct power connection with herein co-petitioner National
Power Corporation (NPC for short).  NPC,
acting on the same, wrote a letter to herein private respondent Manila Electric
Company (MERALCO for short), dated November 18, 1986 (Rollo,
p. 54), wherein it stated that as per Memorandum of Understanding between NPC
and BOI, the NPC is authorized to connect directly to its system qualified
industrial consumers.  However, due to
its policy not to compete directly with its customers, NPC requests that it be
informed whatever definite decision MERALCO is contemplating on the requests of
FINE and of Rizal Cement for such direct
connection.  MERALCO, in a letter dated
December 3, 1986 (Ibid., p. 55), advised NPC that they are not in a
position to grant the request since to allow large consumers to tap directly to
NPC will mean foregoing the share of the subsidy burden which will ultimately
be borne by the other remaining large consumers, and that it will also mean
costly duplication of facilities. 
MERALCO, in a letter dated February
27, 1987 (Ibid., p. 56) further stated,
among others, that the direct connection of industries under BOI-NPC memorandum
of understanding dated January 12,
1981, presupposes the inability of the utility/cooperatives to meet
certain standard of financial and technical capability, both of which are not
true in the case of MERALCO.  NPC, in a
letter dated March 16, 1987 (Ibid., p. 57), informed MERALCO that in the
absence of a clear-cut policy that will inhibit NPC from acceding to the said
request, NPC is now preparing and will put up the necessary facilities to
supply power to FINE; and that they are now negotiating the terms and
conditions of the supply.  MERALCO, in a
letter dated March 20, 1987 (Ibid., pp. 58-59), registered its strong
objection; reiterated its assurance that it is financially and technically
capable of serving the power requirements of FINE; and with the statement that
a draft executive order creating the Energy Regulatory Board has been prepared
and may be issued momentarily, urged NPC to hold off any further action towards
serving applicant directly, lest it will pre-empt that Board from implementing government prescription on this
issue.  But on July 12,
1987, NPC started to supply the electric requirements of FINE by
direct power supply connection.

Hence, on July 22, 1987,
MERALCO filed with the Regional Trial Court of Pasig,
presided over by Judge Eutropio Migrino,
a petition for Prohibition, Mandamus and Damages with Preliminary
Injunction against petitioners NPC and FINE Chemicals (Phil.) Inc., docketed therein
as Civil No. 54733 (Ibid., pp. 23-53).

On August 4, 1987, FINE filed its opposition to MERALCO’s application for preliminary injunction,
maintaining that the application for injunctive relief had become moot and
academic since, prior to the filing of the petition, the direct power service
had already been consummated and the requisite power lines and facilities of
NPC had long been installed and fully operational.

Accordingly, MERALCO amended its petition by incorporating
therein an application for a writ of preliminary mandatory injunction.

On August 11, 1987,
FINE moved to dismiss the amended petition on the ground of insufficiency of
the allegations in the petition to plead a cause of action (Ibid., pp.
60-70).  NPC adopted FINE’s
motion to dismiss.

Meanwhile, trial judge allowed reception of MERALCO’s
evidence in support of its application for a writ of preliminary mandatory
injunction, over FINE’s objection.

On August 25, 1987,
MERALCO was granted leave to file its second amended petition so as to incorporate this time an allegation of
grave and irreparable injury.

With the admission of MERALCO’S second amended petition, FINE
filed a manifestation adopting its motion to dismiss dated August 10, 1987 as its motion to dismiss the
second amended petition.  On the other
hand, MERALCO filed its opposition thereto on September 11, 1987.

Respondent Judge, in an order dated September 16, 1987, denied the motion to dismiss (Ibid.,
p. 79), the pertinent portion of which, reads:

“The Motion to Dismiss is anchored on the ground of lack of
cause of action.

Well settled rule is that when the motion to dismiss is anchored on lack of cause of
action, the facts alleged in the complaint are assumed and no other fact can be
considered in resolving said motion.

After going carefully over the complaint, the Court believes, and
so holds, that if not properly traversed, it can render a valid judgment
thereon.

WHEREFORE, respondent Fine Chemicals (Phils.),
Inc.’s said motion to dismiss is hereby denied.”

FINE, without filing a motion for reconsideration, on October 1, 1987, filed with
respondent Court of Appeals a Petition for Certiorari, Prohibition and Mandamus
(Ibid., pp. 80?98).  NPC, on the other hand, on October 13, 1987, filed a Petition
for Leave to File Intervention to Adopt Petition and Motion for Extension of
Time to File Supplemental Petition (Ibid., pp. 93-103) which was filed
on October 28, 1987 (Ibid.,
pp. 6-7).

Respondent Court of Appeals, in a decision promulgated on August 11, 1988, dismissed the
petition for certiorari, prohibition and mandamus (Ibid.,
pp. 149-154).  Hence, the instant
petition.

The Second Division of this Court, after the filing of the
required pleadings, in a resolution dated March 8, 1989 (Ibid., p. 199),
resolved to give due course to the petition, and to require the parties to
submit simultaneously their respective memoranda.  In compliance therewith, petitioners’ filed
their memorandum on June 30, 1989
(Ibid., pp. 221-233) while MERALCO filed its memorandum on July 3, 1989
(Ibid., pp. 240-253).

The instant petition is impressed with merit.

The main issue in this case is whether or not MERALCO’s
petition in the lower court should be dismissed.

The answer is in the affirmative.

It is significant that this case is elevated to the Court of Appeals
and now to this Court because of the denial of petitioner’s motion to dismiss
the amended petition of MERALCO. 
Unquestionably, it is but an incident to the main case and the ordinary
procedure would have been to file an answer, go to trial and if the decision is
adverse, reiterate the issue on appeal (Newsweek, Inc. v. I.A.C., 142 SCRA 177
[1986]). 
But this general rule is subject to certain exceptions, among
which are, if the court in denying the motion to dismiss acts without or in excess of jurisdiction or with
grave abuse of discretion.  The reason
is, it would be unfair to require the defendant to undergo the ordeal and
expense of trial under such circumstances as the remedy of appeal would not be plain and adequate.  More importantly, petitioner’s motion to
dismiss is based on the ground that the complaint states no cause of action, so
that there is no need for a full blown trial (Newsweek, Inc. v. I.A.C., Ibid).

In addition, applying the rule enunciated in Gayos
v. Gayos (67 SCRA 146 [1975]) and reiterated in Alger
Electric, Inc. v. Court of Appeals (135 SCRA 43 [1985]), that it is a cherished
rule of procedure for this Court to always strive to settle the entire
controversy in a single proceeding leaving no root or branch to bear the seeds
of future litigation, it appears that the disposition of the incident as well
as the main issue in the case at bar is in consonance with an efficient
administration of justice, now that the facts are before this Court.

MERALCO’s claim in its petition for
Prohibition and Mandamus before the Regional Trial Court is anchored
on its standing as a holder of a franchise for the sale and distribution of
electric power in various areas of the country including Calamba,
Laguna.  MERALCO asserts that it has the
right to be heard on any application for direct power connection and to defeat
such application by showing its ability or willingness to match the rates of
NPC (Rollo, pp. 222-223).  As earlier stated, it also expressed the fear
that to allow large consumers to tap directly to NPC will mean foregoing the
share of the subsidy burden which will ultimately be borne by the other
consumers.

As consistently ruled by
this Court pursuant to P.D. No. 380 as amended by P.D. No. 395, NPC is
statutorily empowered to directly service all the requirements of a BOI
registered enterprise provided that, first, any affected private franchise
holder is afforded an opportunity to be heard on the application therefor and second, from such a hearing, it is established
that said private franchise holder is incapable or unwilling to match the
reliability and rates of NPC for directly serving the latter (National Power
Corporation v. Jacinto, 134 SCRA 435 [1985]; National Power Corporation v. Canares, 140 SCRA 336 [1985]; National Power Corporation v.
Court of Appeals, 161 SCRA 103 [1988]).

While initially, MERALCO
may have been deprived of the right to be heard in an administrative
proceeding, but in subsequent proceedings before the courts, it had been given
ample opportunity to show that it is capable and willing to match NPC rates but
failed.  On the contrary, in a hearing
before the trial court on August
12, 1987, for the issuance of preliminary mandatory injunction,
MERALCO thru its witness V.C. Flordeliza, admitted
on cross examination that it cannot charge the same rate NPC is charging
because MERALCO has to make a profit on
its investment.

Flordeliza testified as follows:

“Q.  By
the way, are you also aware of the power rates that Meralco
is charging Fine Chemicals, Inc. for the supply
of electric power?

“A.   Per
kilowatthour, it is about P2.00 sir.

“Q.  And,
are you also aware of the charges of NPC to Meralco
for the supply of power of electricity that
Meralco supplies to its customers of any
nature?

“A.   Approximately
the rate is P1.00 per kilowatthour, sir.

“Q.  Would
you say that it is the same rate NPC charging its all direct customers, the
rates NPC is charging Meralco, the rate Meralco is charging its customers?

“A.   I
am not sure of that, sir.

xxx                            xxx                               xxx.

“Q.  You
said a while ago that the rate Meralco is charging
its customers, the same rate NPC charges its customers also?

“A.   Of
course Meralco would have to make some profit on its
investment.  Meralco
charges P2.00 per kilowatthour to its customers.  Naturally,
it would make some profit as allowed by the Board of Energy, sir.

“Q.  But,
the rate NPC is charging Meralco is just a minimal
rate?

“A.   No,
because NPC is the wholesaler and Meralco is only a
retailer.  WE NATURALLY CANNOT SELL TO OUR
CUSTOMERS THE SAME RATE NPC IS CHARGING US.  AS I HAVE SAID, WE HAVE
TO MAKE A PROFIT ON OUR INVESTMENT, SIR.” (Cont. of Cross Examination of
Witness V.C. Flordeliza, 12 August 1987, p. 41, tsn.).” (Rollo, pp. 20-21)

In this Court, MERALCO never committed itself by categorically
stating that it can match NPC rates. 
Instead it confined itself to the statement that it is financially and
technically capable of meeting FINE’s power
requirements while in its
Memorandum it avers that
“At this point in time, it would be highly improper to ask Meralco whether it can match the rate of NPC.” Verily,
the intent to evade the issue and to avail of technicalities to annul the
contract between FINE and NPC are clearly evident so that no useful purpose
will be served to remand this case to the trial court only to have the latter’s
decision raised again to the Court of Appeals and then to this Court.

Moreover, there is no denial of due process to speak of.  As ruled by this Court, the heart of
procedural due process is the need for notice and an opportunity to be heard
(Planters Products, Inc. v. National Labor Relations Commission, G.R. No.
78524, January 20, 1989).  What due
process abhors is not lack of previous notice but absolute lack of opportunity
to be heard (Relucio III v. Macaraig,
G.R. No. 82007, May 10, 1989).

Ultimately, the issue of exclusivity has already been laid to rest by this Court with the
established principle that the exclusive nature of any public franchise is not
favored and that in all grants by the government to private corporations, the
interpretation of rights, privileges or franchises is taken against the
grantee.  More specifically, this Court
ruled:

“x x x
Exclusivity is given by law with the understanding that the company enjoying it
is self-sufficient and capable of supplying the needed service or product at
moderate or reasonable prices.  It would
be against public interest where the firm granted a monopoly is merely an unnecessary conduit of
electric power, jacking up prices as a superfluous middleman or an inefficient
producer which cannot supply cheap electricity to power intensive
industries.  It is in the public interest
when industries dependent on the heavy use of electricity are given reliable
and direct power at the lowest costs thus enabling the sale of nationally
marketed products at prices within the reach of the masses.  x x x” (Alger Electric, Inc. v. Court of Appeals, 135 SCRA
45-46 [1985]).

PREMISES CONSIDERED,
MERALCO’s petition in the lower court is hereby
DISMISSED.

SO ORDERED.

Melencio-Herrera, (Chairman),
Padilla, Sarmiento, and
Regalado, JJ., concur.

* Special Second Division; penned
by Associate Justice Alfredo Marigomen and concurred
in by Associate Justices Reynato S. Puno and Regina Ordonez Benitez.