Title
Manila Electric Co. vs. De Vera
Case
G.R. No. 46001
Decision Date
Sep 12, 1938
Meralco challenged PSC's rate reduction, citing errors in evidence consideration, charge adjustments, and profit calculations. SC upheld PSC's authority, affirming rate adjustments and dismissing Meralco's petition.
reduction of electrical rates
documents as evidence
reasonableness of findings

Case Summary (G.R. No. 46001)

Public Service Commission’s Joint Proceedings and the Residential Rate Structure

The Public Service Commission conducted joint hearings on the two related matters, over the Manila Electric Company’s jurisdictional objection. In open court, the commission ruled that it would proceed under **article 17(a) of Law No. 146 of the Mancomunidad, and held that the allegation that the reopening of Expediente No. 46482 was due to a reconsideration was unfounded. The commission further stated that it could act without prior hearing under the cited authority, but would nonetheless hear all proofs both parties wished to present.

After hearings, and following suggestions of the respondent commissioner, the petitioner submitted amended rate schedules, first incorporated as Appendix A to its brief, and later—after further proposals and counter-proposals—submitted revised amended schedules on November 11, 1937, incorporated as Appendix A of the petitioner’s brief. For residential service, the revised schedules were classified into four groups, labeled schedules A, B, C, and D, based on consumption ranges measured in square meters gross (“sq.m gross” appears in the source) and including defined charges per kilowatt-hour. The schedules also included minimum charges and stepwise kilowatt-hour allotments with corresponding per-kilowatt-hour rates.

Under the petitioner’s revised schedules submitted on November 11, 1937, the minimum charges were listed as P2.00 for schedule A, P2 for schedule B, P1.50 for schedule C, and P1 for schedule D (as set out in the source’s reproduced schedule table), each tied to included kilowatt-hour amounts.

The Respondent Commissioner’s Modification and the Petition for Review

The respondent commissioner modified the petitioner’s proposed residential minimum charges by reducing them: from P2.00 to P2 for schedule A, from P2 to P1.50 for schedule B, from P1.50 to P1 for schedule C, and from P1 to P0.50 for schedule D. The commissioner approved the revised amended schedules in other respects. The petitioner disagreed, filed a motion for reconsideration, and the motion was denied.

The petitioner then instituted proceedings for review of the respondent commissioner’s decision. In its brief, the petitioner assigned five errors. The first two errors challenged the respondent commissioner’s decision-making process, asserting that it improperly took into consideration materials not presented in evidence at the hearing and of which the petitioner allegedly had no knowledge: first, an auditor’s report of the Public Service Commission; and second, a memorandum from the Accounting Division on average profit obtained by the petitioner during 1926 to 1936.

The third error attacked the fixing of revised minimum charges for residential service in schedules B, C, and D, asserting that there was no evidence to justify the reduced minimum charges fixed by the respondent commissioner. The fourth error challenged the finding that in 1936 the petitioner made a net profit of 12.27% on its business operations. The fifth error challenged the denial of the petitioner’s motion for reconsideration.

In oral argument, however, the petitioner pressed only the third assignment of error, and then only with reference to the reduction to 50 centavos under schedule D.

The Supreme Court’s Treatment of the First and Second Assignments of Error

The Court held that the first two assignments of error lacked merit. It reasoned that the report and memorandum referred to in those assignments formed part of the official records of the Public Service Commission. The commission took notice of them and could properly consider them without the need for formal presentation as evidence. In support of that approach, the decision invoked prior rulings, including Manila Yellow Taxicab & Aero Taxicab Co. vs. Danon, 58 Phil., 75, Manila Electric Co. vs. Balagtas, 58 Phil., 429, Manila Yellow Taxicab Co. vs. Araullo, 60 Phil., 833, and Sambrano vs. Northern Luzon Transportation Co., 35 Off. Gaz., 2271.

The Court also emphasized the statutory context of the commission’s fact-finding authority under section 17(a) of Commonwealth Act No. 146, under which the commission could investigate upon its own initiative or upon complaint in writing, any matter concerning any public service within its jurisdiction.

The Court’s Review of the Minimum Charges and the Profit Finding

On the third assignment of error, the Court addressed the reduction of minimum charges for residential service in schedules B, C, and D, as reflected in the modifications it had earlier described. The petitioner argued that there was no evidentiary basis for the minimum charges fixed by the respondent commissioner.

The Court examined the evidence and concluded it could not say that the commission’s findings were not reasonably supported by the evidence presented. The Court stressed, in particular, the manner in which the petitioner computed its profits for 1936, stating that its computation was based on the operation in that year of its electrical department alone. The Court further held that there was a legal presumption that the rates fixed by the Public Service Commission were reasonable and that it could not conclude that the commission abused its discretion in fixing those rates. In support, the decision cited Ynchausti Steamship Co. vs. Public Utility Commissioner and Board of Appeal, 42 Phil., 621, 624.

As to the fourth assignment of error, which also challenged the commission’s percentage of net profit for 1936, the Court treated the issue as one involving a question of fact. It reiterated that its examination of the evidence did not justify disturbing the commission’s findings.

Accordingly, the Court overruled both the third and fourth assignments of error.

The Court further stated that the fifth assignment of error did not require separate consideration.

Intervention of Dr. Pedro Gil and Radio Theater, Inc., and Limits on Pronouncements

After the filing of the petition for review, Dr. Pedro Gil (represented by Attorneys Duran and Lim) and Radio Theater, Inc. (and other commercial and industrial entities, represented by Attorney Jacobo Gonzales) moved to intervene. The Supreme Court granted the motion on May 5, 1938, notwithstanding the petitioner’s objection.

Intervenors filed separate briefs. Intervenor Radio Theater, Inc., et al. sought modification of the commission’s decision by abolishing the “blocking” of electrical consumption in residential schedules A, B, C, and D and in its place determining and fixing a straight residential rate reflecting a reduction of 46.25%. They also sought a parallel reduction in the electrical bills of commercial and industrial consumers by 46.25%. Their argument appeared to be predicated on a report submitted by a representative of the General Auditing Office (identified as Exh. Gil-1, p. xxxvi).

Intervenor Gil objected to the amended schedules of rates as unjust, unreasonable, unjustly discriminatory, and unduly preferential. He prayed for modification by eliminating what he termed “block charges” contained in the residential service schedules A, B, C, and D, adopting instead a flat rate of P0.50 per k.w.h. used during the month, while maintaining the minimum charges stated in the respective schedules (P2, P1.50, P1, and P0.50).

The Court declined to rule on these broad r

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