Facts:

The case involves the petitioners, City of Laoag and Municipality of San Nicolas, both located in the Province of Ilocos Norte, against the respondents, the Public Service Commission (PSC) and the Ilocos Norte Electric Company, Inc. (INELCO). The dispute dates back to events surrounding electric rates charged by INELCO, which provided electric light, heat, and power services under a certificate of public convenience granted by the PSC. Prior to January 1, 1960, the residents of Laoag City and San Nicolas expressed discontent over INELCO’s management and the reliability of electric supply, particularly noting issues such as low voltage and frequent brown-outs accompanied by high rates.

In response to public protests, INELCO reduced its rates by 5% effective January 1, 1960, with an additional retroactive reduction directed by the PSC. This rate reduction was later followed by a voluntary 3% reduction that took effect in January 1963. The PSC, after reviewing a petition for rate

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Facts:

Background and Parties

• Petitioners: The City of Laoag and the Municipality of San Nicolas, Ilocos Norte, who had longstanding grievances regarding INELCO’s management and electrical service, such as frequent brown-outs, low voltage, and high rates.
• Respondents: The Public Service Commission (PSC) and Ilocos Norte Electric Company, Inc. (INELCO), the latter being granted a certificate of public convenience and necessity, which had been renewed under Republic Act No. 3583.

Rate Reductions and Initial Orders

• Prior to January 1, 1960, the consuming public along with local government units protested INELCO’s inadequate service and excessive rates.
• In response, after public hearings, INELCO reduced its rates by 5% effective January 1, 1960 in accordance with a PSC order dated January 21, 1960, but later, by order of June 23, 1960, this reduction was retroactively applied to August 1959 at the instance of the Municipal Council of Laoag.
• INELCO, however, petitioned for reconsideration so that the 5% reduction be effective as of January 1, 1960 only.

Subsequent Developments and Administrative Proceedings

• On December 7, 1962, the PSC directed parties to attempt an amicable settlement; on December 17, 1962, the Municipal Council of Laoag filed Resolution No. 476 which proposed new rate schedules for electric service, including detailed flat and metered rate systems.
• During later hearings (notably on March 17, 1964) and subsequent opposition filed by the petitioners, the PSC allowed the petitioners to express their concerns about the rates and demanded better service from INELCO.
• On February 3, 1965, petitioners moved for the authority to examine INELCO’s Books of Accounts, a motion which was granted and later revisited by a committee composed equally of representatives from the GAO, INELCO, and the opposition.

PSC Decision and Filing of Motions

• On April 17, 1968, the PSC rendered its decision acknowledging that INELCO had implemented a 5% reduction effective January 1, 1960 (as per the initial order) and a voluntary additional 3% reduction effective January 1, 1963, totaling an 8% reduction overall—excluding the separate 20% reduction for municipal street lightings.
• Petitioners received a copy of this decision on May 30, 1968, but later filed a motion for reconsideration on June 18, 1968, which was denied due to its tardiness.
• On June 18, 1970, petitioners filed a petition for review with the Supreme Court, raising specific assignments of error regarding the alleged exorbitant rates and INELCO’s unsatisfactory service.

Emergence of the Compromise Agreement

• Subsequent to the filing of the petition for review, the City of Laoag, the Province of Ilocos Norte (including San Nicolas), and INELCO, under PSC case No. 71-2390, pursued a petition for a new rate reduction through a series of hearings, GAO audits, and preliminary agreements.
• On September 20, 1971, a compromise agreement was reached between the parties, which was later confirmed by a final en banc PSC order on April 24, 1972, establishing new schedule rates for flat, street, metered, and temporary lighting services.
• Petitioners’ counsel did not adequately object or provide comment regarding this compromise agreement, thereby implying acceptance of the new rates.

Procedural and Notice Issues

• The PSC decision was initially served by registered mail; however, due to a change of address by the petitioners’ counsel, the notice was returned unclaimed.
• The subsequent acquisition of the decision by counsel was deemed sufficient for compliance with notice requirements, although the later filing of the motion for reconsideration exceeded the 15-day period prescribed by law.
• Ultimately, the finality of the PSC decision was established by operation of law on June 29, 1968, as the necessary appeals were not timely filed.

Issue:

Whether the Public Service Commission erred in sustaining INELCO’s approved rates despite allegations of deficient and unsatisfactory service.

• Petitioners argued that the rates were exorbitant and incompatible with the poor service delivered by INELCO.
• The dispute centered on whether evidence of inadequate service should have resulted in lower charges.

Whether the effective date for the 5% rate reduction should have been retroactive to August 1959 instead of January 1, 1960.

• Petitioners maintained that retroactive application was justified by earlier public protests and the Municipal Council’s intervention.
• INELCO contended that retroactivity would cause significant financial and operational dislocations.

Whether the subsequent compromise agreement reached in PSC case No. 71-2390 rendered the issues in the petition for review moot and academic.

• The new rates established by the compromise agreement were lower than the originally contested rates.
• Petitioners’ failure to challenge or object to the compromise agreement was interpreted as an implicit acceptance of its terms, thus extinguishing the controversy.

Whether the petition for review was timely filed in light of the statutory deadlines for motions and appeals under the Public Service Act.

• The petitioners’ motion for reconsideration was filed 19 days after receipt of the decision, exceeding the 15-day limit.
• Similarly, the petition for review was challenged on the grounds of untimeliness given the finalization of the PSC decision.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)