GR 37560; (February, 1933) (Digest)
G.R. No. 37560 ; February 14, 1933
ONG HIN LIAN (PACIFIC ELECTRIC LIGHT) and THE MUNICIPAL GOVERNMENT OF SURIGAO, petitioners-appellants, vs. THE SURIGAO ELECTRIC COMPANY, respondent-appellee.
FACTS
The Surigao Electric Company (appellee) held a legislative franchise ( Act No. 3419 ) to operate an electric system in Surigao. The Municipal Government of Surigao, opposed to this grant, later issued a municipal franchise to Ong Hin Lian (Pacific Electric Light). The Public Service Commission (PSC) ruled that the legislative franchise took precedence. A condition in the legislative franchise required municipal and provincial approval of the distribution system plans. The hostile municipal council refused to approve any plans submitted by the appellee, attempting to nullify the franchise. Appellee later adopted and submitted the appellant’s already-approved plans to the PSC, which authorized appellee to proceed and denied appellant’s application for a certificate. Appellants challenged appellee’s corporate status, while appellee questioned appellant’s legal personality. Appellee had also entered into an oral contract with Butuan Sawmill, Inc. for plant construction and operation.
ISSUE
1. Whether the municipal council could nullify the legislative franchise by arbitrarily refusing to approve the distribution plans.
2. Whether the appellee’s failure to incorporate promptly and defects in its corporate status voided its franchise.
3. Whether the PSC’s orders favoring the legislative franchise holder were valid.
RULING
1. No. The municipal council’s approval power was intended to protect the municipality from unsightly or improper construction, not to frustrate legislative intent. Arbitrary refusal to approve plans cannot defeat a legislative franchise.
2. No. The appellee’s delay in formal incorporation did not automatically void the franchise, especially absent fraud. The PSC properly allowed the defect to be cured.
3. Yes. The PSC’s orders were affirmed as legally sound and supported by evidence. However, the PSC was directed to investigate and formally approve or disapprove the oral contract between appellee and Butuan Sawmill, Inc., to ensure public protection from excessive costs or unreliable power. Costs were imposed on appellants.
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