Case Summary (G.R. No. L-20993)
Background of the Petitioner’s Franchise and Revocation Proceedings
Rizal Light & Ice Co., Inc. was originally granted a certificate of public convenience and necessity by the PSC in 1949, authorizing it to operate electric services in Morong. Following alleged violations of the certificate’s conditions and PSC regulations, the Commission ordered the company to show cause why its franchise should not be revoked. The petitioner failed to appear at the initial hearing, resulting in the revocation order, which was later set aside when it was discovered that the absence was due to the manager's illness. Despite reinstatement, further petitions and inspections revealed deficiencies and non-compliance. The PSC eventually cancelled the certificate and forfeited the franchise in 1962, finding inadequate and unsatisfactory service which was against public interest.
Summary of the Procedural History and Petitioner’s Injunction Pleas
The petitioner sought relief from the Supreme Court to set aside the PSC orders canceling and later revoking the certificate, and to enjoin enforcement of such orders during the pendency of their appeals. The Court denied these petitions for preliminary injunctions, noting lack of merit, allowing the PSC decisions to stand pending resolution of the substantive appeals.
Challenges to the PSC Procedures and Jurisdiction
The petitioner argued that the PSC acted without jurisdiction or in excess thereof by delegating hearing and evidence reception to Mr. Pedro S. Talavera, a division chief who was not a lawyer, contrary to Section 32 of Commonwealth Act No. 146. The Supreme Court, however, held that this procedural objection was waived because petitioner did not timely raise it before the PSC, participated in hearings conducted by Talavera, and only questioned the delegation after an adverse decision. Jurisdictional questions concerning delegation are procedural and must be timely raised; otherwise, they are deemed waived.
Review of the Sufficiency and Credibility of Evidence for Revocation
Rizal Light contended that the PSC’s decision was unjustified as it relied on inspection reports not subjected to cross-examination, and that it did not consider favorable testimony offered in a related case. The Court emphasized its limited appellate role, which is not to weigh evidence de novo but to determine if there was substantial evidence supporting the PSC’s findings. The inspection reports constituted sufficient evidence, and petitioner waived the opportunity to cross-examine or present contrary evidence. The Court further ruled that the PSC properly refused to take judicial notice of subsequent contradictory testimony unavailable during the revocation proceeding, thereby affirming that the petitioner had a fair hearing based on the evidence submitted.
The Allegation of Bias in PSC Acting as Prosecutor and Judge
The petitioner argued that the PSC’s concurrent roles as prosecutor, investigator, and adjudicator violated principles of fairness. The Court rejected this argument, observing that the Commission is empowered by law to investigate, require compliance, and enforce rules in public service cases. It has the statutory authority to initiate investigations and issue orders based on those inquiries, provided due process is observed by affording the respondent an opportunity to be heard.
Protection of Investment and Public Interest Considerations
Petitioner claimed the PSC erred in failing to protect its investment despite arguments under the "protection-of-investment" rule established in prior cases. The Court clarified that such protection is not absolute and does not apply to operators who fail to comply with license conditions or rules, or who fail to provide adequate and satisfactory service. The paramount concern is the public interest, not the private investment. The Commission’s revocation was justified due to petitioner’s persistent non-compliance and inadequate service.
Appropriateness of revocation penalty rather than a fine
The petitioner contested the severity of revoking its franchise, suggesting a fine would suffice as in analogous cases. The Court upheld the PSC’s discretion to impose cancellation and revocation penalties under Section 16(n) of Commonwealth Act No. 146, finding ample grounds to do so given petitioner’s persistent violations and substandard service. The Court emphasized that fines are cumulative and not exclusive remedies; thus the PSC’s decision was within reasonable discretion.
Validity of Morong Electric’s Franchise and Corporate Personality
Morong Electric Co., Inc. was granted a municipal franchise in May 1962 but incorporated only in October 1962. The petitioner challenged the validity of this franchise and the corporation’s legal personality at the time of application, arguing that lacking prior legal existence invalidated the franchise and the Commission’s approval. The Court acknowledged that Morong Electric did not have juridical personality when the franchise was initially granted but held that the subsequent incorporation and acceptance of the franchise cured such defect. Citing authoritative U.S. corporate law texts, the Court recognized Morong Electric as a de facto corporation at the time of application in a practical sense, making the franchise valid.
Morong Electric’s Financial Capability and Promotion of Public Interest
The Court accepted the PSC’s factual determination that Morong Electric was financially qualified to undertake and maintain the electric service. Petitioner’s challenges to inconsistencies in financi
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Case Syllabus (G.R. No. L-20993)
Background and Procedural Posture
- Two interrelated cases consolidated for decision involving Rizal Light & Ice Co., Inc. ("petitioner") challenging orders of the Public Service Commission ("Commission").
- G.R. No. L-20993: Petition to review and set aside Commission orders dated August 20, 1962, and February 15, 1963, which revoked petitioner’s certificate of public convenience and necessity and forfeited its franchise for electric service in Morong, Rizal.
- Petition for preliminary injunction filed by petitioner to suspend enforcement of revocation denied by the Supreme Court on March 12, 1963.
- G.R. No. L-21221: Petition to review and set aside the Commission’s decision dated March 13, 1963, which granted a certificate of public convenience and necessity to Morong Electric Co., Inc. ("Morong Electric") for the same service territory.
- Petitioner’s corresponding petition for injunction also denied on May 6, 1963.
- Supreme Court affirms the decisions below.
Facts of the Case
- Rizal Light & Ice Co., Inc. was a duly incorporated domestic corporation granted in 1949 a certificate by the Commission to operate electric light, heat, and power service in Morong, Rizal.
- The Commission found petitioner’s service deficient and violating regulatory directives, notably for failing to raise and maintain service voltage and install proper monitoring equipment.
- Petitioner failed to appear at a February 18, 1957 hearing, resulting in an initial cancellation and revocation order, which was subsequently set aside after petitioner’s explanation of its manager’s illness.
- Respondent Municipality of Morong initiated a formal complaint in 1958 to revoke petitioner’s certificate due to unsatisfactory service and noncompliance.
- Multiple inspections by Commission engineers from 1958 to 1961 documented deficiencies and failures in petitioner’s electric plant and service.
- Petitioner agreed to submit the case for decision based on the engineers’ inspection reports and waived its right to cross-examination and presentation of defense evidence.
- Petitioner’s electric plant was destroyed by fire on July 29, 1962.
- The Commission, relying on inspection reports, ordered revocation of petitioner’s certificate on August 20, 1962, concluding the petitioner was unable to provide adequate service in public interest.
- Morong Electric requested and received a municipal franchise on May 6, 1962, prior to corporate incorporation in October 1962, and thereafter applied to the Commission for a certificate to operate the electric service.
- Petitioner opposed Morong Electric’s certificate application alleging illegal status and unfair competition, among other grounds.
- Despite petitioner’s opposition and motions, the Commission approved Morong Electric’s application on March 13, 1963 after determining their financial capability and the public’s need for electric service.
Issues Presented
- Whether the delegation of hearing authority to Mr. Pedro S. Talavera, a non-lawyer division chief, violated the Commission’s jurisdiction.
- Whether the revocation of petitioner’s certificate was supported by sufficient evidence and whether petitioner was denied due process.
- Whether the Commission should have protected petitioner’s investment despite the revocation proceedings.
- Whether the penalty of revocation and forfeiture of franchise was excessively harsh and unjustified.
- Whether Morong Electric had a valid corporate personality and legal capacity to apply for and accept an electric service franchise.
- Whether Morong Electric was financially capable of operating the electric service.
- Whether the approval of Morong Electric’s certificate was prejudicial to the petitioner’s rights and public interest.
Court’s Analysis on Delegation of Hearing Authority (G.R. No. L-20993)
- Mr. Pedro S. Talavera was confirmed not to be a lawyer.
- Under amended Section 32 of Commonwealth Act No. 146, only lawyer division chiefs or attorneys may be authorized to hear and inve