G. R. No. 35705. October 17, 1932
CEBU ICE & COLD STORES CORPORATION, PETITIONER AND APPELLANT, VS. CONSTANCIA VELEZ, RESPONDENT AND APPELLEE.
OSTRAND, J.:
Commission granting the application of the respondent herein, Qonstancia Velez,
for a certificate of public convenience for the operation, installation, and
maintenance of an ice and cold storage plant and a refrigerating system in the
municipality of Cebu, Province of Cebu. The petitioner and opponent, Cebu Ice
& Cold Stores Corporation, is duly organized under the laws of the
Philippine Islands and has been engaged in the business of manufacturing and
selling ice in the municipality of Cebu, Province of Cebu, since 1921, At
present it is the only ice plant in Cebu.
Cebu is an important port in the Visayan Islands and has about 65,000
inhabitants. There are hospitals, hotels, refreshment parlors, restaurants,
pansiterias, catrinderias, and Japanese fishermen, who use ice daily in large
quantities.
Upon trial the Public Service Commission found that the present output of the
petitioner, Cebu Ice & Cold Stores Corporation is insufficient and
inadequate for the consumption of the general public in that territory and that
the public opinion in Cebu demands more ice and better service than that which
has been rendered by the opponent, Cebu Ice & Cold Stores Corporation, and
the commission thereupon ordered the issuance of the certificate of public
convenience for the respondent, Constancia Velez. From this decision the
opponent, Cebu Ice & Cold Stores Corporation, brought the case to this court
by petition for review.
The errors assigned by the appellant relate to questions of fact, and we are
of the opinion that the findings of the commission are in accordance with the
evidence adduced at the trial. While it is the duty of the Government as far as
possible to protect public utility operators against unfair competition, it is
nevertheless obvious that public convenience must have the first consideration.
In this particular case the commission says:
“The evidence adduced by the applicant establishes the following facts:
“That the opponent’s ice plant is insufficient, defective, and does not serve
the public adequately, inasmuch as it can hardly supply inferior ice that has
not been freezing the required length of time, on some occasions disposing of
ice that instead of the 50 hours needed, has been freezing for only 15; that it
has been unable to sell ice to many, because ice is first sold to regular
customers and then to ticket-holders, rejecting small purchasers, especially
those buying small quantities; that the applicant is ready to invest air the
necessary money in the ice plant she intends to establish, with large
refrigerators to preserve fish and other products not sold during the day in the
municipality of Cebu; that the applicant proposes to sell ice from 6 in the
morning till 6 in the afternoon; that the ice plant shall be established on F.
Ramos Street, and the Cold Stores on Comercio Street; that there are candy and
ice-cream manufacturers in the municipality of Cebu working day and night, who
require 10 blocks of ice daily, but who can hardly purchase 4 blocks from the
opponent’s plant; that after 6 o’clock in the afternoon the opponent’s plant
shuts its doors, and there are hours when there is not enough ice for sale.“Several witnesses have testified in this case to show that the service
rendered by the opponent is inadequate and improper, because it has not been
able to supply them with ice at the time and in the amount desired; that the
numerous Japanese fishermen in the municipality of Cebu do not have all the ice
they need to preserve their catch in said municipality and along the sea coast;
that some of these require as many as 17 to 18 tons of ice for each trip, and
have not been able to get them because there was not enough ice.* * * * * * *
“It is true that the ice plant of the opponent, Cebu Ice & Cold Stores’
Corporation, has a capacity of from 20 to 25 tons a day, but it is no less
certain that the demand for ice in the municipality of Cebu, taking into account
the population, the number of Japanese fishermen requiring ice-as much as ten
tons daily-the ice-cream vendors, the restaurants, refreshment parlors, hotels,
bars, and hospitals, is so great that it cannot be supplied by all the ice
produced in the opponent’s plant.“Would the present situation be remedied by ah increase in the production of
ice by the opponent? It could have done so ere now if it had been more diligent
and attentive to the public interests; but all the same, it is one thing to have
but one ice plant in a given locality supplying it in great quantities, and
another to have two or more (at least in provincial capitals, like Cebu), so far
as ensuring a steady supply goes, for one can never tell when the machinery or
motor will break down. Thus, in the City of Manila, we have three different
plants, which the San Miguel Brewery has gradually acquired, and which still
function distinctly and separately. Apart from them we have the Government
plant, and in town so near as Paranaque, Claloocan, Malabon, and others
adjoining Manila, notwithstanding the great quantity of ice manufactured in this
city, there are ice plants operating in the suburbs. In the capital of Iloilo
there are two ice plants. In one town of the Province of Laguna, namely, San
Pablo, two ice plants are in operation.“It is contended that to permit another ice plant in the municipality of Cebu
would be to bring about a ruinous competition which would in the long run injure
the public, but this argument is not decisive, for reasonable and well-regulated
competition should be stimulated because it encourages and, promotes a public
service as well as the interests of the community. Ruinous competition ought to
be avoided, but constructive and well-regulated competition makes for the
progress and development of the ice industry for the benefit of the community.“A slight analysis of the operation of the ice plant of the opponent, the
Cebu Ice & Cold Stores Corporation, would throw light on the decision of
this case.“The annual report submitted by the opponent-shows that with P150,200 paid up
capital, the gross income of the business during the year 1930 was P131,371.83,
the expenses P72,256.79, and the resulting net income P59,115.O4, or 39 per cent
of the capital invested. “Notwithstanding these profits, the reduction in the
opponent’s rates has gone on so slowly that today it still charges P0.0275 per
kilo of ice madfe with undistilled water; whereas in Manila the price for each
kilo is P0.015, although the manufacture of ice from distilled water is much
more expensive; the applicant, on the other hand, undertakes to charge at the
rate fixed by the commission, and at all events less than the opponent
charges.
* * * * * * *
“From the opponent’s plan set forth in Exhibit 6, to reduce the charge to
P0.02 per kilo of ice when the daily consumption reaches 15 tons, it appears
that the public itself is expected to develop the industry, without any
encouragement on its part, whereas it is the opponent alone who should try to
bring about such increase by means of efficient service and a reasonable charge,
sufficiently low to bring it within the reach of the majority of the public, to
the end that the use of ice may benefit the greatest possible number of people.“According to the very testimony of the manager of the opponent, the capacity
of the plant is almost double that of the original machine installed before the
year 1924, and the demand for ice has been on the increase.“Now then, according to the data contained in the opponent’s annual report,
two-thirds of the business is done in the plant itself, and only one-third of
the ice sold is delivered, and with all that, according to the same manager,
complaints have been received touching the delivery service, and no showing has
been attempted of the means employed to obviate such complaints. It should not
wait for the commission to say and advice what should be done in every separate
case-the commission’s supervisory function is merely regulative, and not
directive or administrative, for these are by their nature things resting with
the board of directors and management of the company concerned; it is for them
to seek adequate means to render the service more efficient.“It would seem, however, that the directors of the opponent have taken up a
merely passive and expectant attitude; thinking perhaps that at any rate the
public has to go to it, as being the only company supplying ice.“The operation of an ice plant of the capacity specified in the application,
which is one-fifth of the opponent’s capacity, supposing the two companies
rendered equal service with equal efficiency, would take away one-fifth of the
opponent’s business, about P26,000 which is 44 per cent of its net profit, and
this would leave to the opponent a net profit of 22 per cent or 23 per cent,
without taking into account such new customers as it might gain by the
stimulated activity generated by competition.“If, on the other hand, the opponent should come out second best in this
competition, because the public favors the applicant as rendering a more
efficient service, that, too, would be a benefit to the public, which would
undoubtedly recompense the company rendering the better service. The opponent
would not be greatly prejudiced, and on the other hand, the public would receive
the benefit of a “more efficient service.
* * * * * * *
“Apart from this, the Supreme Court of these Islands, at least in three cases
which the commission has at hand, has stated:” ‘The proof in the record shows that the consumption of ice in the great
municipality of San Pablo and neighboring towns is excessively low, and it is
probable that with the fomentation of interest in the consumption of ice, there
can be developed a clientele ample to take the product of both factories.’
(Dauner vs. Unson, G. R. No. 28957.)“In the case of San Miguel Brewery vs. Lapid, the Supreme Court said:
” ‘The commission, in view of the evidence presented before it and of the
fact that the consumers could obtain ice at a much lower price under the
certificate to be issued in favor of the applicant Fortunato G. Lapid, deemed it
convenient for the inhabitants of the municipality of Cavite and of the other
municipalities of the province to have an ice-plant in that locality. And
although we may concede the great facilities which the San Miguel Brewery has
for sending its ice to the Province of Cavite, nevertheless, we do not believe
it justified in the present case to substitute our judgment for that of the
Public Service Commission, the power of the court being limited to reviewing its
order and to see whether or not there is evidence in the case which reasonably
supports the issuance of said order.’ (53 Phil., 539)“In Limjoco vs. Cabrera, although Limjoco had an iee plant in the capital of
Batangas: and the right to supply Lemery, the Supreme Court affirmed the
decision of this commission, looking only to ‘the better service and convenience
of the necessities of its inhabitants, which would tend to stimulate the
development of the industry and commerce so necessary to the economic life of a
municipality.’ (G. R. No. 32863.) And it cannot be held that the case of
Batangas Transportation Co. vs. Orlanes (52 Phil., 455), is applicable to the
present case, because the omnibus service is wholly distinct and different from
the service of an ice plant.“In the case of motor trucks, after the first and second trip, there are many
other trips to be made by other trucks which will go along the same way and the
same route.“One may imagine the great prejudice to the community, if owing to one of
those accidents that are so frequent, the only ice plant in the locality, with
the number of inhabitants that the Province of Cebu contains, should not be able
to supply ice one day or a number of days, on account of some trouble in the
motor or machinery, or because of a strike, or what not.“The commission believes the public is entitled to protection against these
contingencies, and so it may at any moment have the ice needed for the
consumption of the neighborhood and the uses of life.”
It seems evident that in and around the municipality of Cebu, the demand for
ice is more than the opponent, Cebu Ice & Cold Stores Corporation, can
properly supply.
The decision of the commission is well justified by the evidence, and the
petition brought by the opponent, Cebu Ice & Cold Stores Corporation, is
denied with the costs against the said opponent. So ordered.
Villamor, Villa-Real, Abad Santos, and Imperial, JJ., concur.
DISSENTING
HULL, J., with whom concur Malcolm, Vickers, and Butte,
JJ.,
In my opinion, an examination of the evidence of record shows that the
findings of fact, as made by the Public Service Commission, are not reasonably
supported by the evidence. According to the testimony of the respondent, the
capacity of the Cebu Ice & Cold Stores Corporation plant is more than three
times the average sale of ice in Cebu. The plant itself, and the books of the.
company, are subject to the inspection of the Public Service Commission, and
such a definite statement, that is subject to accurate check, is worth more than
the vague testimony of interested parties. As an example of the testimony as
compared with the findings of the commission, the testimony of Julian Santiago,
an employee of the petitioner is a striking example. In his direct testimony he
said that he needed ten blocks of ice daily for his ice cream parlor and that he
had been able to buy only four or five blocks a day, yet on cross-examination
stated that for the time that he had been in business he had taken only from two
to four blocks a day, and had always been able to secure them except for a short
time in November, 1928. On this testimony is based the finding of “10 cakes of
ice” quoted in the majority opinion of this court.
The decision of the Public Service Commission shows clearly that they believe
the oppositor is making too much money, and charging excessive price for ice,
and that therefore, competition should be encouraged in order that the people of
Cebu will have greater facilities and cheaper ice. Nothing is said about the
fact that no formal complaint has been made as to the price of ice in Cebu; nor
has the commission exercised its power to reduce the price charged by the
oppositor, if in fact it is excessive.
It is also to be noted that a short time ago there was another small ice
plant in Cebu that no longer exists as it lost money and went out of business.
As this court clearly pointed out, in Batangas Transportation Co. vs. Orlanes
(52 Phil., 455), the control by the Public Service Commission over a public
utility, is to take the place of competition; sound public policy prohibits the
establishment of a second public utility when the existing utility is rendering
a sufficient, adequate, and satisfactory service to the public; and even when
the first operator is not rendering such service, he should be given an
opportunity to remedy the defects of service before competition is permitted.
Certainly it should be competition or regulation. Business can not well stand
both. If the views of the Public Service Commission, as announced in this case,
are to be followed, the policy of the law will be defeated. The exercise of
their powers should be insisted upon rather than permitting competition, claimed
to be necessary to protect the public interest, which claim, if true, arises
from lack of action on the part of the Public Service Commission.
For the foregoing reasons, I believe the orders under review should be
vacated.