Manila Electric Co. Vs Pasay Transportation Co.

Facts:
The Manila Electric company filed a petition before the court requesting the members of the SC
sitting as board of arbitrators to fix the terms upon which certain transportation companies shall
be permitted to use the Pasig bridge of the MERALCO.
MERALCO submits the petition before the court by virtue of Act No. 1446, section 11 which
states: - Whenever any franchise or right of way is granted to any other person or corporation, now or
hereafter in existence, over portions of the lines and tracks of the grantee herein, the terms on
which said other person or corporation shall use such right of way, and the compensation to be
paid to the grantee herein by such other person or corporation for said use, shall be fixed by the
members of the SC sitting as a board of arbitrators, the decision of a majority of whom shall be final.
For every franchise granted, terms as to the usage and compensation to be paid to the grantee
shall be fixed by the members of the SC sitting as board of arbitrators, a majority vote is required
and this is final.
Copies were sent to the affected transportation company once of which is the Pasay
Transportation and to Atty. Gen which disclaimed any interest.
Frame works of the statute: SC sitting as board of arbitrators and as an entity; Decision is final;
Franchise granted to Meralco although only a contract bet parties to it is now affecting rights of
persons not signatories to it.
The parties to an arbitration may not oust the courts of jurisdiction of the matters submitted to an
arbitration. It has been held that a clause in a contract, providing that all matters in dispute
between the parties shall be referred to arbitrators and to them alone, is contrary to public policy
and cannot oust the courts of jurisdiction.
ISSUE:
Whether or not the members of the SC can sit as arbitrators and fix the terms and compensation
as is asked of them in this case.
HELD:
Meralco is banking on the case of Tallassee Falls Mfg Co v. Commissioners Court where it was held that a
state legislature authorizing the commissioners court of a certain country to regulate and fix the rate of
toll to be charged by the owners of a bridge is not unconstitutional as delegating legislative
power to the courts. But that is not the question here, the question is not one whether or not there
has been a delegation of legislative authority to a court. More precisely, the issue concerns the
legal right of the members of the SC, sitting as a board of arbitrators the decision of a majority of
whom shall be final, to act in that capacity.

Dilemma of the court:

1. SC sitting as a board of arbitrator exercising judicial functions.
Case I would not fall within the jurisdiction granted the SC = if it does, it would mean
that the courts would be ousted of jurisdiction and render the award a nullity. If the
proper construction, the courts would then have the anomaly of a decision by the
members of the SC, sitting as board of arbitrators, taken therefrom to the courts and
eventually coming before the SC, where the SC would review the decision of its
members acting as arbitrators.
2. Members of the SC sitting as arbitrators, exercising administrative or quasi- judicial
functions.
Case 2 would mean that the members of the SC, sitting as a board of arbitrators, be
considered as administrative or quasi -judicial in nature, that would result in the
performance of duties which the members of the SC could not lawfully take it upon
themselves to perform.
It is judicial power only which is exercised by the SC. Just as the SC as the guardian on
constitutional rights should not sanction usurpation by any other departments of the government.
Its power should be confined strictly within the granted by the Organic Act.
Exercise of jurisdiction by the SC cannot mean exercise of jurisdiction by the members of the SC
sitting as board of arbitrators.