ERNESTO A. PAPA, AND CONRADO V. ATANACIO, PETITIONERS, VS. SEVERO J. SANTIAGO, RESPONDENT. RESOLUTION ON THE MOTION FOR RECONSIDERATION

Respondent Severo J. Santiago has
petitioned for a reconsideration of our main decision of August 31, 1962,
revers­ing that of the Public Service Commission which denied the application
of Ernesto A. Papa and Conrado Atanacio
in PSC Case No. 94119 for a certificate of public convenience and necessity to
install and operate a telephone system in Pasig, Rizal, and simultaneously granted the application for the
same purpose filed by Severo J. Santiago in PSC Case
No. 101261.

It will be recalled that this Court in a preceding
appeal (G.R. No. L-12433) remanded the case back to the Public Service
Commission for further proceedings to determine which of the "two
applicants is entitled to a certificate of public
convenience and necessity, assuming that they are both qualified," since
the matter "rests in the sound discretion of the Commis­sion."

Pursuant to the directive from this Court, the Commission of
Public Services held hearings, and after receiving the evidence of the parties,
decided in favor of Severo J. Santiago, as above noted, on the following basis:

"The Commission finds that whereas the applicant Severo J. Santiago, has already in his possession a
complete set of equipment and material for his proposed telephone system in Pasig, the other applicants, Ernesto A. Papa and Conrado V. Atanacio, have not yet
completed their equip­ment; that whereas applicant Santiago has already
installed not only his central office equipment but also his outside plant
equipment and facilities and that he has even connected telephone lines to a
num­ber of residential houses and commercial offices, including some offices of
the Government, and this system has actually been tested by engineers of the
Commission, and found to be satisfactory producing clear and distinct sound,
the equipment of the ap­plicants, Papa and Atanacio,
are scattered in at least four different places in Manila, Quezon
City, and Meycauayan (Bulacan)
and are not yet installed; that whereas the equipment already installed by the
applicant Santiago is ready for the immediate use of the public of Pasig, those of the applicants Papa and Atanacio,
being incomplete and un-installed, are not yet ready for use; that whereas the
equipment already installed by the applicant, Severo
J. San­tiago, has been designed and installed to meet, by way of initial
service, the requirements of Pasig for a period of
five (5) years, that proposed by the other applicants is designed to serve
less; that whereas the applicant Santiago is already possessed with the
necessary tests and repair tools, equipment and material to insure a continuous
service, the other applicants Papa and Atanacio are
not so equipped; that whereas applicant Santiago having already design­ed his
telephone system to meet the requirements of Pasig
for a period of five (5) years, will not need any major financing to expand his
service, the other applicants Papa and Atanacio
having designed their proposed telephone system for a less initial service,
have yet to acquire additional equipment for any expansion of their proposed
service and according to their own evidence, the applicant, Ernesto A. Papa,
will rely on a loan from the RFC for this purpose; that whereas the telephone
system of applicant, Se­vero J. Santiago, as proposed
by him can easily meet the requirements of the new manufacturing, industrial
and commercial houses in Pasig, thru the
establishment and use of private exchange switchboards, the other applicants do
not propose the use of private exchange switchboards; and whereas we find the
applicant Santiago far more responsible financially speaking and better
qualified on a technical basis than the other applicants this Commission should grant the certificate
of public convenience and necessity to the said ap­plicant, Severo
J. Santiago.  Moreover, to grant the
certificate of public convenience and necessity to the applicant, Severo J. Santiago, will result in the immediate operation
of a telephone system in Pasig.  On
the other hand, to grant it to the other applicants, Papa and Atanacio,
will only result in further delay in the establishment of the telephone system,
aside from the fact that in this event, Santiago will have to remove all the equipment which
he has already installed at such great expense."

Upon appeal, this Court reversed the verdict of the Public
Service Commission on the following grounds:

(1) That to offset
the prior application and operative municipal franchise granted to Papa and Atanacio, it is not only necessary for the other   applicant to prove superior equipment and
preparation, but also to show that the prior applicants are not themselves
qualified.

(2) That the following circumstances operated against the position
of Severo J. Santiago:

(a)  
That in the public bidding conducted by the
Municipal Council of Pasig, Papa and Atanacio won against the Republic Telephone Co., Inc., of
which Santiago was President and
principal stockholder;

(b)  
That Santiago
operated a telephone system without license or permit, leading to a cease and
desist order from the Commission, upon complaint of Papa and Atanacio;

(c)  
That even before finality of the Com­mission’s
decision in his favor, Santiago operat­ed his telephone system, albeit with the
apparent acquiescence of the Public Service Commission, when the Presidential
approval of his municipal franchise, required by Act 667, was conditioned upon
the Commission’s decision becoming final; and

(d)  
That Severo J.
Santiago being already the operator of telephone systems in other municipal­ities,
the appealed award would likely create a monopoly prejudicial to public interest.

Severo J. Santiago in due time filed a
motion praying that this Court’s decision be reconsidered and reversed, on the
ground that the rival applicant was not properly qual­ified, and that the
violations charged against him (Santiago) were untrue and not supported by
facts, since the "cease and desist" order of the Commission itself
showed that it had been issued ex parte and was
contingent in operation, and in fact the charges of illegal operation had been
subsequent­ly dismissed.  Santiago
further submitted affidavits purporting to show that Conrado
Atanacio, co-applicant of Papa, had withdrawn as
early as 1957, from their joint enterprise, for which a certificate of public
convenience had been applied for; and further challenging Papa’s financial resources
to estab­lish the service applied for, since at the time of the trial of the
case before the Commission, Papa’s equipment was not really complete, as the
telephone cables he had shown for inspection by the technicians of the Public
Service Commission were not his, but belonged to one Ocampo,
who had merely granted Papa an option to purchase the cables, and that Papa had
subsequently failed to take up the option, with the result that Ocampo had sold the same cables to the Republic Telephone
Company.

Applicant Papa having opposed the motion for reconsidera­tion,
the Court resolved to remand the case for
reception of evidence of Papa’s financial ability to maintain the service
applied for.  The Commission, having done so, it remitted the new evidence to this
Court in December, 1966.

The evidence submitted at the rehearing confirms the al­legations made by movant
Santiago, and shows that as early as May 1957, Papa’s co-petitioner, Conrado Atanacio, had advised his
associate that he was no longer interested in PSC Case No. 94119, due to his
belief that Papa and he were not in a pos­ition to finance and establish the
telephone system in Pasig
which requires considerable initial
and year to year invest­ment.  Ricardo Ocampo, for his part, testified that the tele­phone cable
of 51 pairs that the applicant Papa had listed as part of his equipment,
actually were his (Ocampo’s) and that Papa only had
an option to buy said cables for
P10,000.00 which he promised to pay if
he won the case then pending before the Public
Service Commission; that Papa never was in posses­sion of the cable, and
in fact the same was examined by the PSC inspectors in Ocampo’s
house; that later, Ocampo sold the cable to
Santiago’s Republic Telephone Company with Papa’s knowledge and without objections
from him.

It is markworthy that, originally, Papa
and Atanacio had listed this 51 pairs of telephone
cable among their assets (Exh. N-2,
PSC Rec. Vol. I, p. 68) without disclosing that their acquisition
thereof was contingent upon favorable decision by the Commission, and that
revelation of this unfavorable detail was forced upon them (or rather, upon
Ernesto Papa, since Atanacio had withdrawn from the
enterprise) only when years later, Santiago called attention to this fact in
his motion to have this Court’s decision recon­sidered.  While Papa’s conditional acquisition of this
essential portion of his equipment (the telephone cable) is now being palliated on the plea that he
was entitled to minimize the risks in case of unfavorable action, still it was
his plain duty to frankly disclose such circumstance to the Commission, in
order to enable it to assess thoroughly the capacity and reliability of the
applicant.  It can readily be understood
that had the Commission been apprised of the true facts concerning this portion
of Papa’s equipment, it would have inquired more thoroughly into the
applicant’s resources.  As things stand,
Papa’s concealment tended to mislead
the Commission, and such tactics cannot but affect his case unfavorably.  That he finally admitted the truth at the
rehearing ordered by this Court and there exhibited Ocampo’s
receipt (Exh. 2a-Papa) where the contingent
transaction is set down, can not cure Papa’s initial disingenuousness, making
virtue out of necessity.

We agree with movant Santiago
that the facts thus dis­closed at the Commission rehearing (and which were not
re­vealed when the case was first heard) emphasize the correct­ness of the
Commission’s decision in preferring Santiago’s
application over that of Papa.  They
point to the meager­ness of Papa’s resources and deny his alleged capability to
render satisfactory service.  The
cardinal rule in cases of this nature, is to adhere to what is best for the
interest of the public, and favor what would best serve the public convenience
(In re Gregorio, 77 Phil. 908, 914 and cases therein cited; Carmelo
and Oriol vs. Monserrat, 55
Phil. 644).  And, considering that as
pointed out in the previous quotation from the appealed decision, Santiago’s
equipment had been tested, found satisfactory and ready for immediate use by
the public, while Papa’s had not yet been completed and tested; that Santiago’s
system was designed to meet the needs of Pasig for
the next five years, while that of Papa was designed for a much less extensive
coverage; and that Santiago was far more responsible, financially and technical­ly,
while Papa, on his evidence, had to rely on an expected loan from the RFC to
expand his original limited service, there can be no doubt that the approval of
Santiago’s ap­plication corresponded to the demands of public interest, that is
ever the paramount, in fact, the overriding considera­tion.

Furthermore, the withdrawal of Papa’s co-applicant, Atanacio (even granting that the latter was merely contrib­uting his labor and industry as Papa claimed in his testi­mony), would
further pose the problem whether a grant of Papas application by the Commission
would be in accordance with the municipal franchise upon which the application
was predicated.  Since the franchise was
admittedly granted by the Pasig
authorities to both Papa and Atanacio jointly, a
certificate of convenience granted to Papa alone would, in effect, amend the
municipal franchise without the consent of its grantor.  It may well be doubted whether such amend­ment
lay within the power of the Public Service Commission.  Then, again, Papa deprecated Atanacio’s financial contribu­tion to their joint
enterprise as nil, claiming that Atana­cio was a mere industrial associate; but the version
is in­consistent with Papa’s original Exhibit N, p. 3 (PSC Rec., Vol. I, p. 65) where Atanacio is listed as owner and prop­rietor of Atanacio’s Electrical Equipment & Supply, "which
is on a profitable basis." Thus, the credit standing of Atanacio was originally advanced by Papa as a basis for fa­vorable
action by the Commission in his favor.

To minimize the impact of the disclosure that Ocampo’s
cables were not really part of his proposed equipment when the Commission heard
and decided the case, Papa sought to introduce evidence at the 1966 rehearing
that he had later purchased another 4 reels (10,000 feet) of telephone cable to
replace the cables of Ocampo (t.s.n.,
p. 129); but also admitted that he used part of these replacements in his Mey­cauayan telephone network, while the rest he had sold,
with other equipment, for P50,000.00 (t.s.n., pp. 131-132).  These transactions, being subsequent to the
rendition of the Commission’s decision were inadmissible to determine Papa’s
resources and financial responsibility at the time of his application; but even if considered, such evidence
proves the slenderness of the resources at Papa’s disposal, and casts doubt on
his ability to render adequate service. 
There is no reason for compelling the public to be content with Papa’s
limited and uncertain service, where Santiago’s
decidedly better offer is available.

For the same reason,
no much weight can be accorded to the fact of Papa’s priority of application
and that he had won the bidding for the telephone service.  Such circums­tance can not override the
paramount regard for public interest and convenience.  More so when, as previously explained,
issuance of a certificate of convenience to Papa alone,
would not be in conformity with the basic municipal franchise in fa­vor of both
Ernesto Papa and Conrado Atanacio,
and there is no proof that the grantor would consider the absence of Atana­cio as indifferent.

Our previous decision also held against applicant Santiago that
he had been operating in Pasig even before the
finality of the Commission’s decision, prompting the latter to issue a
"cease and desist" order on June 27, 1957, of the following tenor:

"Upon consideration of the petition dated June 20, 1957, filed
by Ernesto A. Papa and Con­rado V. Atanacio, thru counsel, alleging that applicant Severo J. Santiago has been operating a telephone service
for hire or compensation in Pasig notwithstanding the
fact that said Santiago has no certificate nor authority to operate his
telephone system, and it appearing from the re­cords of this case that the
decision approving the franchise and ordering the issuance of the certificate
for the operation of a telephone system in Pasig has
not yet been released so that Severo J. Santiago has
no authority nor certif­icate to operate a telephone service for hire in Pasig, Rizal, and pursuant to the
prayer in the petition, applicant Severo J. Santiago
and/or Republic Telephone Company is hereby ordered to cease and desist
immediately from operating his telephone system in question for hire or compen­sation,
and in the event that he has operated
his system and collected amounts from his cus­tomers, he is ordered to
immediately refund said amounts and is warned that if he persists in operating
his telephone system as a public util­ity, the Commission will proceed to take
action against him for violations of the Public Service Law." (Emphasis
supplied.)

Mature reflection upon the terms of the order, however, shows
that the same does not substantiate the charge. 
In the first place, the order appears on its face to have been issued ex
parte; it only mentions the complaint filed by
Papa and Atanacio, but makes no reference to any
answer thereto by Santiago or to
any hearing thereon or to any evidence in support of the charge.  Secondly, the order to desist and refund is
plainly contingent, as it is prefaced by the expres­sion "and in the event
that he has operated his system and col­lected amounts from his
customers," clearly indicating the ab­sence of evidence showing that
Santiago had in fact operated illegally. 
The records are further bereft on any proof of il­legal operation, and Santiago’s
claim that the charge was ul­timately dismissed has not been contradicted.  We are forced to conclude that the charge of
illegal operation was without foundation.

The last objection formulated in our previous decision against
the appealed award by the Public Service Commission, was that the Republic
Telephone Company, that Santiago con­trols, was already operating telephone
systems in many other municipalities, citing Benitez vs. Santos,
L-12911, February 29, 1960, to the effect that "a monopolistic trend with
its concomitant evils, can only serve to prejudice public interest."
Reflection upon recent experience, of which this Court may well take notice,
shows that however valid the doctrine in the Benitez vs. Santos
case should be in connection with the fields of transportation and
merchandising, it is less valid in the sphere of telephone communication.  Here, the desirability of the service
rendered lies in the ability of every subscriber to obtain fast and reliable
connection with every other subscriber at any given time and place; and
experience has shown that the main obstacle to such efficien­cy is the
existence and multiplicity of independent systems.  Interconnection between them is difficult,
laborious and time consuming.  One need
only recall the persistent complaints of the public concerning the hardships
and delays in obtaining interconnections between say, the Philippine Long
Distance Telephone and the Government Telephone systems, or between customers
served by the former and those of the Re­public Telephone Company in Marikina or other outlying communities, in order to realize
to what extent inter-system jealousies and differences in technical equipment
can block fast intercommunication, to the prejudice of the general public.  The difficulties described would be greatly
compounded were the certificate granted Ernesto Papa, in view of the existing
grant of a legislative franchise to the Re­public Telephone Company (Rep. Act
No. 3662) for the same municipality of Pasig.  It is difficult to discern what reasons of
public convenience (as distinguished from the interest of the operators) could
justify the splitting of a small community between two separate telephone
systems, each understandably intent in satisfying its own subscribers and
reluctant to favor those of its rival. 
The unfortunate experience of the independent systems operating in Manila
would be then merely repeated.

In view of the foregoing factors, and considering the clear
superiority of applicant Santiago, vis-a-vis his opponent, from the standpoint of financial means, technical
resources and experience, as determined by the Public Serv­ice Commission; and
bearing in mind the long standing doctrine of this Court not to interfere with
the judgment of the Commission so long as it is supported by the evidence, a
doctrine constantly adhered to from Ynchausti
vs. Public Utility Commission, 44 Phil. 363 (1923) down to Red Line
Transportation Co. vs. Santo Tomas, L-18472, January 30, 1967), we are left with no alternative but to
conclude that the reversal of the Commission’s award in our former decision was
without adequate justification.

WHEREFORE, our previous decision is hereby reconsidered
and set aside, and another one shall be entered, affirming the appealed
judgment of the Public Service Commission, in its cases Nos. 94119 and
101261.  Without costs.

SO
ORDERED.

Concepcion, C.J., Dizon,
Regala, Makalintal, Bengzon, J.P., Zaldivar, and Sanchez, JJ., concur.

Castro, J., did not take part.