Surigao Electric Company vs Municipal of Surigao 24

SCRA 898
Facts

Congress amended the Public Service Act eliminating the requirements of a certificate
of public convenience and necessity from the Public Service Commission for public
services owned and controlled by the government but at the same time affirming its
power of regulation. The petitioners Surigao Electric Co. and Arturo Lumanlan to whom
the rights and privileges of the former including its plants and facilities were transferred
challenged the validity of such order of the Public Service Act holding that it had no
alternative but to approve the tentative schedules of rate submitted by the Municipality
of Surigao.
Issue 

Whether or not the Municipality of Surigao has the power to directly maintain and
operate an electric plant without obtaining a specific franchise for the purpose and
without obtaining specific franchise from the Public Service Commission.

Held 

The court held that a municipality corporation maintains a dual personality:

governmental and corporate. No franchise or right can override the proper exercise of
police power of the government. Municipal corporations may promote public services
without the need of a certificate of public convenience. The Amendatory Act provided in
the Public Service Act lend encouragement and support for municipality corporaions to
undertake activities and the result of which is competing firms would be adversely
affected.
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A municipal government or a municipal corporation such as the Municipality of Surigao is a
government entity recognized, supported and utilized by the National Government as a part of its
government machinery and functions; a municipal government actually functions as an extension of
the national government and, therefore, it is an instrumentality of the latter; and by express
provisions of Section 14(e) of Act 2677, an instrumentality of the national government is exempted
from the jurisdiction of the PSC except with respect to the fixing of rates.