SAN ILDEFONSO ELECTRIC PLANT, INC., PETITIONER, VS. BALIUAG ELECTRIC LIGHT AND POWER CO., INC. AND THE PUBLIC SERVICE COM­MISSION, RESPONDENTS.

The San Ildefonso Electric Plant, Inc.
seeks the reversal of a joint decision of the Public Service Commission in the
above-entitled two (2) cases.

The first was PSC Case No. 62-5006, involving an application of
said corporation – hereinafter referred to as the Petitioner – for a
certificate of public convenience and necessity to install, operate and
maintain an electric plant in the Municipality of San Ildefonso,
Province of Bulacan, for the purpose of supplying
electric lighting, heat and power service to the inhabitants of said
municipality.  The second was PSC Case
No. 64-3136, involving an application of the Baliuag
Electric Light and Power Company, Inc. – hereinafter referred to as the
Respondent – for an identical certificate of public convenience and necessity
from said Commission.  For obvious
reasons, the applicant in each case filed an opposition in the other and the
two (2) cases were jointly heard and decided by the Commission, which granted
Respondent’s application in the second case and denied that of Petitioner in
the first.

Petitioner seasonably filed a motion for new trial, upon the
ground of newly discovered evidence. 
Said motion was granted and the two (2) cases were re-opened for the
presentation of further evidence, after which the Commission issued an order,
dated May 4, 1966,
reaffirming its previous decision.  A
reconsideration thereof and of said order having been denied, Petitioner filed
its petition for review herein, in which it maintains that the Commission erred
in rendering said decision and in issuing the order of May 4, 1966,
because:  (1) Petitioner was the first to
apply for the service in question; (2) Respondent is not financially capable to
operate and maintain the aforementioned service; (3) Respondent’s municipal
franchise is null and void because its corporate charter did not authorize it
to operate in the municipality of San Ildefonso; and
(4) the revocation of the Petitioner’s municipal franchise by the municipal
council of San Ildefonso was null and void.

With respect to the first question, the Commission had this to
say:

“Without going into the many debatable legal points raised by
applicants during the hearings and in their memoranda, the Commission after
careful consideration finds that there is an urgent need for electric service
in the municipality of San Ildefonso, Bulacan; that both applicants hold valid and subsisting
franchises from the Municipal Council of San Ildefonso,
and that both applicants are legally and financially qualified to operate the
proposed public service.  As the
operation of two different entities for the supply of electricity over the same
territory, in this instance the municipality
of San Ildefonso,
is considered not in the public interests for obvious reasons, the issue in
these cases is reduced to the question of which of the two applicants can
render the better service.

“The San Ildefonso Electric Plant,
Inc. filed its application in 1962 and the Baliuag
Electric Light and Power Co., filed its application in 1964.  Ordi­narily, and in accordance with
precedents and juris­prudence, all things being equal, the award shall be for
the prior applicant, the San Ildefonso Electric
Plant, Inc. in these cases.  A close
study of the records, however, has led the Commission to make a different finding.

“The records show that the San Ildefonso
Electric Plant, Inc. was granted its franchise by the municipal council on July 15, 1958 and the same was
approved by the Provincial Board of Bulacan on May 15, 1961.  It filed its present application, Case No. 62-5006,
for the approval of said franchise by the Commission on September 3, 1962. 
Hearing of this case was set by the Commission on October 22, 1962 and then postponed successively
six times before hearing on the merits started on May 30, 1963, when applicant presented one witness.  Then for one full year applicant showed
little or no interest in the successful prosecution of its application until
the Baliuag Electric Light and Power Co., Inc. was
granted a franchise by the municipal council of San Ildefonso.

“In sharp contrast, with respect to the Baliuag
Electric Light and Power Co., Inc., the records show that it secured its
municipal franchise on April 16, 1964,
had it approved by the Provincial Board on May 6, 1964 and filed its application with the Commission
on July 5, 1964.  What took the San Ildefonso
Electric Plant, Inc. more than four long years to do, the Baliuag
Electric Light and Power Co., Inc., accomplished in less than two months.  The records also reveal many other instances,
bordering what might be called negli­gence, on the rather listless manner in
which applicant San Ildefonso Electric Plant, Inc.
went about in prose­cuting its application.

“Thus while priority in the filing of its application is a
factor favoring the grant of a certificate to applicant San Ildefonso
Electric Plant, Inc., the Commission is not so inclined.  The lackadaisical manner in which it
prosecuted its avowed purpose of supplying the much needed electric service to
the people of San Ildefonso placed in grave doubt the
seriousness of its purpose.  Also, if
such will be its standard conduct in the operation of a public utility, the
same certainly will not promote public convenience.  On the other hand, the Baliuag
Elec­tric Light and Power Co., Inc., is a successful public service operator of
long standing presently serving the municipalities of Bustos,
Baliuag and Norzagaray in Bulacan, nearby towns of San Ildefonso
with electric service.  It has thus the
distinct advantage of experience and ‘know-how’ over the San Ildefonso Electric Plant, Inc.”^[1]

The foregoing findings are borne out by the record.  Indeed, the same shows, on the part of
Petitioner herein, a degree of neg­ligence and lack of interest even greater
than that indicated in the decision appealed from.  Thus, Petitioner did absolutely nothing to
secure the approval by the Provincial Board of Bulacan
of the fran­chise granted to the former by the municipal council of San Ildefonso, despite the fact that the latter had repeatedly
called its (Petitioner’s) attention thereto and asked it to expedite action
thereon.  Hence, on May 15, 1961 – or
almost three years since the grant of Petitioner’s franchise on July 15, 1958 – the council passed
its Resolution No. 64 urging the Provincial Board to approve said franchise,
which the Board did on June 21, 1961.

This was followed by another period of inaction on the part of
Petitioner herein, which did not file, its application for a certificate of
public convenience with the Commission until about 15 months later, or on September 2, 1962.  Even then, although the case had been set for
hearing on October 22, 1962, and the application was then unop­posed,
Petitioner had the hearing postponed six (6) times, until May 30, 1963, when
hearing on the merits began and Petitioner introduced the testimony of only one
(1) witness.  After another period of
inaction of Petitioner herein, or on August
15, 1963, the municipal council of San Ildefonso
passed Resolution No. 86, revoking and cancelling
Peti­tioner’s franchise, which resolution was approved by the Provincial Board
on October 27, 1963.  Sometime later, or on April 16, 1964, said council granted the
franchise of Respondent herein, which was approved by the Provincial Board on May 6, 1964.  The corresponding application was filed with
the Commission two (2) months thereafter, or on July 5, 1964.

Under the circumstances, the Commission was fully justified in
entertaining grave doubts on the seriousness or earnestness of Pe­titioner’s
purpose and in concluding, from its past conduct, as con­trasted with that of
Respondent herein, as a public service operator in the neighboring towns of Baliuag, Bustos and San Rafael,
that pub­lic convenience would be promoted by authorizing Respondent to ren­der,
also, such service in San Ildefonso, instead of
granting it to Petitioner herein.

Although priority in the filing of the application is “an
element to be considered”, it is “not ordinarily of sufficient
importance to control the granting of a certificate of public
convenience”, because, when there are various applications, the Public
Service Commis­sion “is authorized to determine” which one “can
best meet the requirements of the public convenience.”1 As stated in another case:

“”(P)riority of application in
the granting of a certificate of public convenience, although to be
considered, is not necessarily a controlling reason for the issuance of the
corresponding certificate to the prior applicant.  It has been repeatedly held by public utility
regulatory bodies that the question to be considered in cases where there are
many appli­cations over the same territory is, which applicant or applicants
can render the best service, consider­ing the whole territory to be developed
and served by the kind of service under consideration and the conditions and
qualifications of the respective appli­cants to furnish the same.”2

In the language of Batangas
Transportation Co. v. Banaag Transportation Co.,3
“financial conditions and business facilities being equal, we
believe priority in the filing of the application to being equal, be an
important factor in determining the right to the certificate applied
for.”  In the case at bar, the
parties herein are not in the same condition. 
Respondent has proven experience and efficiency, whereas Petitioner has
no experience whatsoever, apart from demonstrating marked sluggishness.  Moreover, it is well-settled that, in cases
of this nature, the most important consideration is public interest or the
service to the public, which Respondent is, manifestly, in a better position to
promote.

Petitioner insists that Respondent is not financially capable of
rendering the service in question because it is in arrears in the pay­ment of
obligations, in the total sum of P75,847.33 (P14,000 to the Reparations
Commission, P50,233.097 to the Development Bank and P11,614.24 to the Rural
Electrification Administration), in addition to its current obligations
aggregating P29,602.54 (P7,555.07, representing the current payroll,
P12,533.70, by way of taxes and insurance dues, and P9,513.77, for Meralco bills), apart from the total sum of P146,280.33,
consisting of P81,822.66, for accounts payable, P8,926.98, for interests, and
P55,520, as used-up cus­tomers’ deposits.

Upon the other hand, as stated in the order of May 4, 1966, the
accuracy of which is not contested:

“On the other hand, the Baliuag
Electric presented Jose M. Cruz, its Executive Vice-Pre­sident and Assistant
General Manager, who testified that the arrears in payment to the three
government entities mentioned above were due to the expansion program of the
company and the construction of the electric system in San Ildefonso,
Bulacan; that it is at present operating in the
municipalities of Baliuag, Bustos,
and San Rafael, and that the loan obtained from the Electrification Administration
has been invested in the said three towns; that in the Development Bank of the
Philippines, it submitted collaterals consisting of land measuring 5,000 square
meters near the poblacion of Baliuag
with a value of not less than P200 a square meter, which land is registered in
the name of Vicente R. Cruz and Cristina R. Mateo, who are the majority
stockholders of the Baliuag Elec­tric Light, Mr. Cruz
being the present President and General Manager and Cristina Mateo being the
Treasurer of the corporation; that aside from the said property, the whole
distribution system installed in the territorial jurisdiction of Baliuag costing about P700,000 to P800,000 was also
submitted as a collateral; that with the Electri­fication Administration, the Balivag Electric submitted as collateral six (6) hectares
of land located at Bustos including 300 mango trees
worth P10,000 per hectare and P300 per mango tree.  In addition thereto, they gave as collaterals
a lot near the public market in the poblacion of Baliuag, measuring 2,780 square meters with a market value
of not less than P200 per square meter; the lot and house near their residence
in Baliuag also in the poblacion
measuring more or less 2,000 square meters with a market value of P22,500 for
the lot and P15,000 for the house; the whole transmission and distribution
system in the munici­pality of Bustos and in San
Rafael and also the improvements in Baliuag totaling
about P450,000; that the gross income of the electric plant is about P55,000.00
a month for the entire system with a net profit of P15,000 per month; and that
it has also invested the sum of P40,000 for the installa­tion of the electric
system in the municipality of San Ildefonso.”1

Commenting thereon, the Commission expressed itself as follows:

“After a careful consideration of the evidence submitted by
both parties at the new trial of these cases, the Commission believes that
there is no ground for altering its finding in the decision ren­dered in these
cases on October 11, 1965 that the applicant Baliuag
Electric Light & Power Company is financially capable of installing,
maintaining, and operating the electric system in the munici­pality of San Ildefonso, Bulacan, for which it
was granted a certificate of public convenience and necessity by virtue of the
said decision.  The mere fact that the Balivag Electric Light has incurred in arrears in the
payment of its obligations to the Reparations. 
Commission, the Development Bank of the Philippines, and the Rural
Electrification Administration is not sufficient in our opinion to form a
conclusion that the Baliuag Electric Light &
Power Company is not financially capable of operating the electric service in
the municipality of San Ildefonso, Bulacan, considering that such arrears have been due to the
fact that the Baliuag Electric has invested a
considerable amount for the expansion and improvement of its services in the
municipalities of Baliuag, Bustos,
and San Rafael and the construction of the electric system in the municipality
of San Ildefonso and that it has sufficient
collaterals to answer for the settlement of its obliga­tions with the said
lending institutions.”1

We have repeatedly held that the evaluation of the evidence is
primarily a function of the Commission and that its findings and con­clusions
thereon will not be disturbed unless they are not reasonably supported by the
evidence.2
Such support exists in the case at bar.

Petitioner assails Respondent’s authority to operate in San Ildefonso, the same not being mentioned in its
(Respondent’s) charter as part of the territory in which it may discharge its
functions.  The issue thus raised by
Petitioner herein has, however, become moot owing to the fact that, long before
the rendition of the Commission’s decision, said charter had been duly amended
to include the munici­pality of San
Ildefonso within the
area of Respondent’s operations.

Moreover, a public service corporation may derive its powers, not
only from its charter of incorporation, but also, from a franchise or special
charter granted thereto by the legislature through a municipal corporation.

“Public service corporations include, among others, gas,
electric light, street railway, water, and general railroad companies.  The powers of such companies often depend,
not only on their charters, but also on the construction of special charters
grant­ed them by the legislature directly or through the me­dium of a
municipality, such as the franchise x x x.”1

Hence, in Oakland Electric Co. v. Union Gas,2 it was held that an electric light
company is not impliedly prohibited from contracting to furnish
electricity for lighting purposes to an adjoin­ing town because its charter
expressly authorizes it to set poles and extend wires through the streets of
certain named towns, not including the town contracted with.

It is lastly urged that the Commission erred in not passing upon
the validity of the resolution of the municipal council of San Ildefonso, revoking Petitioner’s municipal franchise
without pre­vious notice and hearing.  We
find no merit in this pretense, not only because the Commission has no
authority to annul said reso­lution, the power to do so being within the
province of ordinary courts of justice,3 but, also, because, even if
Petitioner’s fran­chise had not been cancelled or revoked, the Commission would
still have been justified in denying its (Petitioner’s) application and
overruling its opposition to that of Respondent herein.  In fact, the Commission did so assuming that
Petitioner’s municipal franchise was still in existence.

WHEREFORE, the decision appealed from is hereby affirmed,
with costs against the Petitioner.

IT IS SO ORDERED.

Reyes, JBL, Dizon, Makalintal, Zaldivar, Sanchez, Ruiz
Castro, Fernando, Capistrano, Teehankee, and
Barredo, JJ., concur.

^[1] Rollo, pp. 14-16.

1
De los Santos
v. Pasay Transportation Co., 54 Phil. 357.

2
Mindanao Bus Co. v. Cagayan-Misamis Land
Transpor­tation Co., 55 Phil. 826, 829. Underscoring ours.

3
55 Phil. 745, 755.

1
Rollo, pp. 34-36.

1
Rollo, pp. 36-37.

2
Serrano v. Public Service Commission, L-24165, August 30, 1968;
Philippine Rabbit v. Gabatin, L-24472, July
31, 1968, citing Pangasinan Transportation Co. v.
Feliciano, L-14401, August 31, 1962.

1
Fletcher, Cyc. Corporations, Vol. 6, pp. 542-543.

2
107 Me. 279, 78 Atl. 288.

3 Batangas Laguna Tayabas Bus v. Public Service Commission, L-25994
and L-26004-46, August 31, 1966.