CITY OF LAOAG AND MUNICIPALITY OF SAN NICOLAS, ILOCOS NORTE, PETITIONERS, VS. THE PUBLIC SERVICE COMMISSION AND ILOCOS NORTE ELECTRIC COMPANY, INC., RESPONDENTS.

This is a petition for review filed by petitioners herein, City
of Laoag and Municipality of San Nicolas, Province of
Ilocos Norte, seeking the reversal of the decision of
the Public Service Commission, herein referred to as PSC, rendered in Cases
Nos. 66497 and 66-4893, dated April 17, 1968, authorizing the Ilocos Norte Electric Company, Inc. (INELCO for short) to
charge its authorized rates as reduced by 5% effective January 1, 1960 in
accordance with the order of January 1, 1960, plus the voluntary reduction of
3% made by applicant INELCO, effective January 1, 1963, or a total reduction of
8%, aside from reductions in the municipal and street lighting presently
enjoyed by the local governments of Laoag City and
San Nicolas municipality.

INELCO has for several years maintained and operated the electric
light, heat and power services in the City of Laoag and the municipality
of San Nicolas, Ilocos
Norte under and by virtue of certificate of public convenience and necessity
granted by the PSC and renewed by Republic Act No. 3583, approved on June 21, 1963.  Before January
1, 1960, the consuming public and the petitioners had been
protesting against INELCO’s alleged inefficient
management and inadequate supply of electric power in Laoag City
and San Nicolas, Ilocos Norte specially the low
voltage and constant brown-outs, coupled with the high and exorbitant prices
and rates being charged.  In view of
these protests, and after exchanges of opinions in public hearings held by the
Municipal Council of Laoag, wherein all parties
interested were present, INELCO reduced its rates to the extent of 5% effective
January 1, 1960 except
street lightings of petitioners which enjoyed 20% reduction.  This reduction was approved by the PSC in an
order dated January 21, 1960
but upon the instance of the Municipal Council of Laoag,
the reduction of 5% was made to retroact since August 1959 as embodied in the
order of the PSC dated June 23, 1960.  INELCO asked for a reconsideration of this
order so that the 5% reduction be made effective only
as of January 1, 1960.  The request for reconsideration was pending
when the PSC, during the hearing held on December 7, 1962, directed the parties to meet and agree
among themselves and to submit an amicable settlement
if possible.

On December 17, 1962,
the Municipal Council of Laoag filed with the PSC
their Resolution No. 476 wherein after hearing, the opinions and manifestations
of parties interested on proposed rates for the supply of electric power were
adopted, and that a committee was constituted so that these proposed rates be accepted by INELCO and submitted for approval by the
PSC.  Said rates as proposed were as
follows:

“PROPOSED RATES OF
THE ILOCOS NORTE ELECTRIC COMPANY

PROPOSED RATES:

Flat Rates . . .           . .
.       . 12 hour service

20 watts  . . .             . . .       .  P1.50 per month

25 watts  . . .             . . .       .  2. 00 per month

40 watts  . . .             . . .       .  This we do not
propose for there is no bulb with this size

50 watts  . . .             . . .       .  P4.50 per month

60 watts  . . .             . . .       .  We do not propose on
this for there is no bulb with this size

75 watts  . . .             . . .       .  P3.75 per month

80 watts  . . .             . . .       .  We do not propose on
this for there is no bulb with this size

100 watts . . .            . . .. .  . .  P4.00
per month

150 watts . . .            . . .. .  . .  P5.50
per month

200 watts  . . .           . . 
. ……  P7.50 per month

MUNICIPAL STREET LIGHTINGS MUST GO ON WITH THE 20% DEDUCTION.

PROPOSED RATES FOR METER RATES:

24 Hour Service (Residential)

For the first 30 kwh
per month  . . .  P.25 centavos per kwh

For the next 20 kwh per month . . .     .20 centavos per kwh

For all over 100 “      “           ” .
. .      
.17 centavos per kwh

MINIMUM CHARGE:  – P3.50 per month (13 kwh) for a connection of 220 watts or less, plus
P0.01 per watt per month for a conversion in excess of 250 watts.”  (pp. 4-5, Rollo).

On June 5, 1963,
when the case was called for hearing, the matter as to whether or not an
amicable settlement between the petitioners and the respondent INELCO was arrived
at, was raised by the PSC.  INELCO alleged that there was an agreement
entered into by it and the respective Mayors of Laoag
City and San Nicolas, Ilocos Norte, whereby the rates
charged by the INELCO be reduced to a total of eight (8%) per cent, but the
validity of said agreement was questioned by the petitioners on the ground that
said contract was never approved by their respective Councils.

In its order dated June
5, 1963, the Public Service Commission set the case for
hearing.  When the case was heard on
March 17, 1964, the PSC gave the petitioners an opportunity to file, as they
did file, an opposition dated May 25, 1964 alleging specific affirmative
matters in support of their prayer that the rates and charges collected by,
INELCO be reduced to the proposed rates contained in the above mentioned
Resolution No. 476 of the Municipal Council of Laoag
City, and that INELCO be required to render a more efficient and satisfactory
service to consumers in accordance with rules and regulations of the PSC.

On February 3, 1965,
the petitioners filed a Motion for Authority to examine Books of Accounts of
Applicant, INELCO.  Such motion was
granted by the PSC.  INELCO then filed a
motion for reconsideration from PSC’s order granting
the motion to examine books of accounts. 
PSC issued an order dated June 9, 1965 directing that the examination of
books of accounts of INELCO be conducted by a committee of three (3),
consisting of a representative from GAO as chairman, one representative from
INELCO and the other one from the opposition as members, to be designated by
said parties respectively.

The Auditor General submitted to the Public Service Commission,
through his letter dated July 18, 1966
the report dated June 30, 1966
of the Audit and Examination Committee.

On April 17, 1968,
the Public Service Commission rendered its decision stating:

“The records and evidence show that applicant has implemented
the 5% reduction of its rates effective January 1, 1960 in accordance with the
order of Commission dated January 1, 1960; that in no alternative to the motion
of oppositors that the effective date of the 5%
reduction be made retroactive to August 1, 1959, INELCO voluntarily reduced its
rates by 3% effective January 1, 1963 as agreed upon with the Municipal Mayors of
Laoag and San Nicolas, Ilocos
Norte; that to make the reduction retroactive to August 1, 1959, INELCO will
suffer serious dislocation in its finances which may impair the operation of
the electric service and be detrimental to the public interest.  INELCO further states that subsequent to the
audit of its accounts, due to the implementation of the minimum wage law which
will entail an additional outlay in salaries of P25,620.00, the increase cost
of fuel which will raise its fuel and oil expense by about P3,000.00 yearly,
and the increasing cost of materials, supplies and various spare parts
necessary to keep the power plants in satisfactory and efficient conditions;
that the company has not been reached by the lines of the National Power
Corporation; that as per audit report, INELCO made a net profit of only
P4,952.88 on an invested capital of P189,423.71; and that the excess in power
losses suffered by the company which theoretically reduced its operating
expenses in the projected improvement in its distribution and transmission
lines to be financed from its increased capitalization and from bank
borrowings.”

“Upon consideration of all the foregoing, the Commission
believes that applicant may be as it is hereby AUTHORIZED to continue charging
its present authorized rates as reduced by 5% effective January 1, 1960 in
accordance with the order of January 21, 1960 plus the voluntary reduction of
3% made by INELCO effective January 1, 1963 or a total reduction of 8% in all,
aside from the reduction in the Municipal and street lighting presently enjoyed
by local governments of Laoag and San Nicolas.” (pp. 27-28, Rollo).

On May 30, 1968
counsel for the petitioners got a xerox copy of said
decision.  Later, on June 18, 1968, petitioners filed motion for
reconsideration with the PSC which was denied on May 21, 1970. 
Hence, the petitioners filed a petition for review with this Court on June 18, 1970, making the following
assignments of error:

1. RESPONDENT PUBLIC
SERVICE COMMISSION ERRED IN SUSTAINING THE EXORBITANT RATES CHARGED BY
RESPONDENT PUBLIC UTILITY DESPITE THE LATTER’S DEFICIENT, POOR AND
UNSATISFACTORY SERVICE AND IN DISREGARDING THE REDUCED RATES PROPOSED BY
PETITIONERS.

2. RESPONDENT PUBLIC
SERVICE COMMISSION ERRED IN HOLDING THAT RESPONDENT INELCO IS RENDERING
EFFICIENT AND SATISFACTORY SERVICE NOTWITHSTANDING FACTS AND PROOFS TO THE
CONTRARY.

The above assignments of error raise purely questions of fact and
call for a review of the evidence considered by the PSC in arriving at its
decision.  This Court has consistently
ruled that “where the petition for review disputes merely the sufficiency
of the evidence the findings cannot be disturbed.  It is not for this Court to determine
credibility and preponderance of proof nor to examine the proof de novo
and determine for itself whether or not the preponderance of evidence really
justifies the decision.  It is not to
substitute its discretion for that of the PSC on questions of fact.” (City of Tagbilaran vs. Lim, L-30323,
August 31, 1973, 52 SCRA 381; Ledesma vs. PSC, et.
al., L-26900, February 27, 1970, 31 SCRA 805, 809-810).  In the light of the above ruling, this Court
has found no reason to disturb the findings of fact made by PSC.

The issue of whether or not the respondent PSC erred in sustaining
the exorbitant rates charged by INELCO despite the latter’s deficient, poor and
unsatisfactory service and in disregarding the reduced rates proposed by
petitioners, has already been rendered moot and academic by the incidents which
transpired subsequent to the filing of this petition.  It appears that during the pendency of the present petition for review, the City of Laoag, the Province of llocos
Norte (which includes the Municipality of San Nicolas) and Engineer Dominador Siazon, essentially the
same parties as in the present petition for review, filed with the PSC on April
1, 1971 under case No. 71-2390 a petition for reduction of the respondent
company’s electrical rates.  Over INELCO’s objection involving the present petition for
review, the PSC gave due course to the petition in PSC case No. 71-2390 for
reduction of rates in accordance with the ruling of the Supreme Court in the
case of Raymundo Transportation Co. V. Tanay Transit Co., 63 Phil. 1064, that the commission is
not a judicial body and its findings and orders are not res
judicata with respect to future
proceedings.  (p. 174, Rollo).

The proceedings in PSC Case No. 71-2390 included:  (a) a series of hearings by the commission;
(b) two GAO rate audits:  one covering
the period January 1 to December 31, 1970, and the other a recomputation
of the audit for the same year on the assumption that the respondent company
would be totally purchasing its power requirement from the National Power
Corporation; and (c) two compromise agreements between the parties.  (p. 174, Rollo).

On September 20, 1971, the parties, City of Laoag
and Province of Ilocos Norte (including San Nicolas)
and INELCO entered into a compromise agreement in accordance with which PSC in
its decision dated December 1, 1971 revised the rates, and directed INELCO to
file an application for approval of commercial and industrial rates within 30
days from receipt thereof since the compromise agreement did not provide for
rate schedules specifically for commercial and industrial users.

INELCO moved to reconsider the portion of the decision that
directed it to file an application for approval of commercial and industrial
rates.  In the course of the
reconsideration, however, the parties submitted their second compromise
agreement which was approved by the Commission en banc in its order of
April 24, 1972 in PSC case No. 71-2390. 
This en banc order of April 24, 1972 adjudicated with finality
the petition for rate reduction in PSC case No. 71-2390, superseding the rate
decision of December 1, 1971 in the same case.

The schedule of rates subject of the Compromise Agreement entered
into by the parties as approved by the Commission in its order dated April 24, 1972 is as follows:

Schedule A

FLAT RATES

Hour of Service – 6:00 P. M. to 6:00
A. M.

20 Watts  .
. . . . . . . . . P 2.50

25    
“       . . . . . . . . .
.     3.00

40    
“       . . . . . . . . .
.     4.00

50    
“       . . . . . . . . .
.     5. 00

60    
“       . . . . . . . . .
.     6. 00

75    
“       . . . . . . . . .
.     7. 50

80    
“       . . . . . . . . .
.     8. 00

100   “       .
. . . . . . . . .     9. 00

150   “       .
. . . . . . . . .   13. 00

200   “       .
. . . . . . . . .    17. 00

Schedule B

STREET (NATIONAL, PROVINCIAL AND/OR

MUNICIPAL AND
PLAZA LIGHTINGS

Hours of Service – 6:00 P.
M. to 6:00 A. M. Rates – same as for those in Rate A, Flat Rates, except a
discount of thirty percent (30%) is Applicable

Schedule C

METERED RATES

Hours of Service – continuous

For the first 15 kwh
per month at P 0.30

For the next 35  “     “        “        “       .27

“     “     ” 50       “     
“       “     
“      .22

“     “     ” 100      “      “       “       “       .20

For all over 200  “      “       “        “      .18

Plus P0.0125/kwhr for every P0.01/kwhr
that NPC will increase rates over present NPC rates.

MINIMUM CHARGE:

P4.50 per month for connection of 200 watts or
less plus P0.01 per watt per month for connection in excess of 200 watts.

Schedule D

TEMPORARY LIGHTING

P0.01 per watt per night

Minimum Charge – P1.00″ (pp. 157-158, Rollo)

On June 13, 1972, this Court resolved:  “(a) to require the parties to COMMENT
within 10 days from notice, on the order en banc of the Public Service
Commission dated April 24, 1972 unanimously approving a compromise agreement
entered into between the City of Laoag and Ilocos Norte Electric Co. Inc.; and (b) to require the
parties to STATE within the same period of time, whether this case has been
rendered moot and academic by the aforesaid order of the Public Service
Commission.” (p.166, Rollo).

On August 4, 1972, petitioner’s counsel, pursuant to the aforestated resolution filed a Manifestation and Motion
with this Court whereby he manifested that he was not aware of the compromise
agreement entered into between the City of Laoag and
INELCO; that he did not intervene in any proceeding before the PSC on account
of which said compromise agreement was reached; that he was not in a position
to comment on the compromise agreement, nor in a position to express any
opinion as to whether or not the present case has been rendered moot and
academic by the aforesaid order of the PSC; and that he requested that he be
furnished a copy of the said compromise agreement.  (pp. 169-170, Rollo).

Public Service Commission, on the other hand, filed its COMMENT
dated August 7, 1972
stating:

“(6) xxx the rates as finally
approved in the PSC’s order of April 24, 1972 are actually lower than the
rates approved in the decision of December
2, 1971 and even lower than the rates sought to be reviewed
in the present petition for review. 
The petitioners themselves by their own act of proposing the approval of
these rates in their last compromise agreement with the respondent, INELCO had
in effect acknowledged that these rates so approved by the Commission are just
and reasonable.

For all the foregoing, our conclusion is that the en banc
order of the Commission in PSC case no. 71-2390 validly rendered moot and
academic the petition for review in the present case.” (pp.
175-176, Rollo).

Respondent INELCO, in its manifestation dated September 20, 1972 filed with this
Court, manifested that it concurred with the observations and conclusions set
forth in the comment submitted by PSC, and that it adopted the said comment as
its own.” (p, 190, Rollo).

After a careful review of the records of this case, there is no
showing that petitioners herein were able to give comment as to the order en
banc of the PSC dated April 24,
1972, unanimously approving a compromise agreement entered into by Laoag City
and INELCO.  Petitioners, however,
neither deny nor question the said compromise agreement which fixed the new
electric rates.  Such inaction of the
petitioner constitutes an implicit acceptance that they are bound by it.  Where the petitioners have not raised any
complaint or question against the terms set forth in the compromise agreement,
they should be deemed to be satisfied with, and that they find no legal or
equitable objection to the said agreement.

The Compromise Agreement answers the issues presented in this
petition for review.  It provides for the
electric rates which should .be deemed reasonable because otherwise,
petitioners would not have entered into said agreement.  The nature of the compromise agreement is
such that, “it supersedes all agreements and proceedings that had
previously taken place and constitutes a final and definite settlement of the
controversies by and between the parties. 
xxx The purpose of a compromise agreement is
precisely to replace and terminate controverted
claims.” (Article 2028, Civil Code).

In the case of Socorro vs. Ortiz (L-23608, December 24, 1964, 12
SCRA 641), this Court had the occasion to rule that petition for certiorari
may be dismissed in view of the compromise agreement entered into by the
parties.  Thus, in the case at bar, the en
banc order of the PSC in case no. 71-2390 approving the compromise
agreement entered into by essentially the same parties as in the present
petition for review, validly rendered moot and academic this petition.

Even in the absence of the aforementioned incident, the present
petition shall, nevertheless, have to be dismissed on the ground that it was
filed out of time.  The records show that
the decision in question was served upon the petitioners through counsel by
registered mail on April 25, 1968,
duly addressed to the said counsel’s address of record – Jai-Alai
Building, Taft
Avenue, Manila.  The registered mail matter aforementioned was
returned to the PSC unclaimed because, as per the manifestation of said counsel
in the course of the oral examination held before the PSC en banc on
November 28, 1968, he had moved to another office address – Suite 12-B, G. E. Antonino Building, T. M. Kalaw
Street, Ermita, Manila, without filing with the PSC a
timely notice of change of address.

On May 30, 1968, however, the said counsel for the petitioners,
per his own admission given in the course of the oral arguments before the PSC en
banc, actually obtained a copy of the decision from the secretary of the
PSC, and on the basis of the said copy, he was able to prepare the motion for
reconsideration which was filed on June 18, 1968.

In the case of De los Reyes vs. Ugarte, (L-82, December 1, 1945, 75 Phil. 505), this Court
held that” x x x
Requirement as to notice of judgment was however, substantially complied with
when petitioner acquired knowledge of the writ of execution con­taining a
literal copy of the judgment, so much so that he filed later a motion to quash
and a motion for relief.” By analogy, having this case in mind, the copy
of the decision obtained by the petitioners’ counsel serves as a substantial
compliance with the requirement of notice of the judgment.

Section 34 of the Public Service Act (CA No. 146, as amended)
provides that a motion for reconsideration of any order, ruling or decision of
he Public Service Commission must be filed not later than fifteen (15) days
after the date of notice of such order, ruling or decision.  And Section 36 thereof also provides that any
order, ruling or decision of the said Commission may be appealed by way of a
petition for review filed with the Supreme Court within a period of thirty (30)
days from notification of such order, ruling or decision.

In the case at bar, when on June 18, 1968 the petitioners filed
with the PSC their motion for reconsideration of its decision, a full nineteen
(19) days had elapsed since May 30, 1968 when they received notice
thereof.  The said motion for
reconsideration was, therefore, clearly filed out of time, and the PSC should
have denied the said motion on that ground.

The aforementioned motion for reconsideration having been filed
out of the 15-day reglementary period, and no appeal
by way of a petition for review pursuant to Section 36 of the Public Service
Act having been filed with this Court within thirty (30) days from May 30,
1968, the decision now appealed from already had became final on June 29,
1968.  It became final by operation of
law since the perfection of appeal within the period prescribed by law is
jurisdictional.  (Reyes
vs. Carrasco, L-28783, March 31, 1971, 38 SCRA 296; Bello
vs. Fernando, L-16970, January 30, 1962).

WHEREFORE, in view of the foregoing, this petition shall
be as it is hereby ordered dismissed.

Teehankee, (Chairman), Makasiar, Fernandez, Guerrero, and Melencio-Herrera, JJ., concur.