G.R. No. L-20993 and G.R. No. L-21221, September 28, 1968.
RIZAL LIGHT & ICE CO., INC., petitioner, vs. THE MUNICIPALITY OF MORONG, RIZAL and THE PUBLIC SERVICE COMMISSION, respondents. (L-20993)

RIZAL LIGHT & ICE CO., INC., petitioner, vs. THE PUBLIC SERVICE COMMISSION and MORONG ELECTRIC CO., INC., respondents. (L-21221)

FACTS

Petitioner Rizal Light & Ice Co., Inc. (RLIC) held a certificate of public convenience to operate an electric light, heat, and power service in Morong, Rizal, granted in 1949. In 1956, the Public Service Commission (PSC) ordered RLIC to show cause why it should not be penalized for violations of its certificate conditions and PSC regulations, including failure to raise service voltage and install a kilowattmeter. After RLIC failed to appear at a hearing in February 1957, the PSC revoked its certificate. Upon motion, this was reinstated after RLIC showed its manager’s illness caused the non-appearance. The Municipality of Morong then petitioned in June 1958 for revocation of RLIC’s certificate, alleging failure to comply with conditions. Multiple inspections by PSC engineers from 1958 to 1961 found RLIC non-compliant with directives. After RLIC failed to file a reply to a 1961 inspection report as ordered, the PSC considered the case submitted. On July 29, 1962, RLIC’s plant burned. On August 20, 1962, the PSC, based on the inspection reports, ordered the cancellation and revocation of RLIC’s certificate and forfeiture of its franchise for failure to render efficient service. RLIC moved for reconsideration on September 18, 1962.
Meanwhile, on September 10, 1962, Morong Electric Co., Inc. (MECI) applied for a certificate to operate the same service, having received a municipal franchise. RLIC opposed the application. The PSC denied RLIC’s motion to dismiss MECI’s application (which argued MECI lacked legal personality as its incorporation certificate was issued after its application) on January 17, 1963, finding MECI a de facto corporation. On February 15, 1963, the PSC denied RLIC’s motion for reconsideration of the revocation order. On March 13, 1963, the PSC granted MECI’s application for a certificate, noting the absence of electric service in Morong after RLIC’s revocation and MECI’s financial capacity. RLIC filed petitions for review of both PSC decisions.

ISSUE

In G.R. No. L-20993: (1) Whether the PSC acted without or in excess of jurisdiction by delegating the hearing to a non-lawyer official; (2) Whether the cancellation of RLIC’s certificate was unwarranted due to insufficient evidence and lack of opportunity to present defense; (3) Whether the PSC failed to protect RLIC’s investment; (4) Whether the PSC erred in imposing the penalty of revocation.
In G.R. No. L-21221: (1) Whether the PSC erred in denying RLIC’s motion to dismiss MECI’s application and proceeding with the hearing; (2) Whether the PSC erred in granting MECI a certificate as it was not financially capable; (3) Whether the PSC’s findings of fact were unsupported by evidence; (4) Whether the PSC failed to protect RLIC’s investment.

RULING

The Supreme Court affirmed the decisions of the Public Service Commission in both cases.
In G.R. No. L-20993: (1) The PSC did not act in excess of jurisdiction. The official, Pedro S. Talavera, as a division chief, was authorized under Commonwealth Act No. 146 to hear the case and receive evidence. The law does not require hearing officers to be lawyers. (2) The cancellation was warranted. The PSC based its decision on inspection reports by its engineers from 1958, 1959, 1960, and 1961, which constituted substantial evidence of RLIC’s violations and failure to improve service despite directives. RLIC was given ample opportunity to be heard but failed to submit its reply to the final inspection report as ordered. (3) The PSC was not obligated to protect RLIC’s investment under the circumstances. The primary consideration is public interest, not the protection of a utility that has persistently failed to provide adequate service. (4) The penalty of revocation was justified given RLIC’s prolonged failure to comply with PSC orders and its certificate conditions, rendering service inefficient and inadequate.
In G.R. No. L-21221: (1) The PSC correctly denied the motion to dismiss. MECI was a de facto corporation at the time of application, as it had colorable compliance with incorporation laws and was acting in good faith. The subsequent issuance of its certificate of incorporation cured any defect. (2) The PSC’s finding that MECI was financially capable was supported by evidence, including its paid-up capital and a loan commitment. (3) The PSC’s findings of fact, including the absence of electric service in Morong, are conclusive and binding on the Supreme Court if supported by evidence, which they were. The PSC could also take judicial notice of its own records in the related case against RLIC. (4) The claim for protection of investment was without merit for the same reasons stated in G.R. No. L-20993. The grant of a certificate to a new operator after the lawful revocation of the previous holder’s certificate does not constitute ruinous competition.