ONG HIN LIAN (PACIFIC ELECTRIC LIGHT), AND THE MUNICIPAL GOVERNMENT OF SURIGAO, PETITIONERS AND APPELLANTS, VS. THE SURIGAO ELECTRIC COMPANY, RESPONDENT AND APPELLEE.

This is a petition for review of the orders of the Public Service
Commission dated March 23, 1932, March 29, 1932, and April 29, 1932,
entered in cases Nos. 14973, 26811, 27697, and 28072 of the Public
Service Commission. The four cases were, by agreement of the parties
and by order of the commission, jointly heard.

Respondent-appellee, by Act No. 3419, approved December 7,1927, was
granted a franchise to install, operate and maintain an electric light,
heat, and power system in the municipality of Surigao, Province of
Surigao. The municipal government of Surigao, being opposed to this
grant, granted a municipal franchise to another entity by name of the
Surigao Electric Light Company. These two grants were submitted to the
Public Service Commission and after hearing and much argument, that
commission properly held that a holder of a legislative franchise had
preference over the holder of a municipal franchise granted more than a
year later.

Section 2, of Act No. 3419, among other things,
provided for approval by the provincial and municipal authorities
concerned of the distribution system and in its decision of August 12,
1930, the Public Service Commission directed that appellee submit
within sixty days a plan of the municipality of Surigao showing the
location and installation of the post and distribution line of the
proposed electric plant duly approved by the corresponding municipal
and provincial authorities. Within the extension of time granted by the
Public Service Commission appellee submitted a plan for approval, that
upon disapproval of such original plan, another was re-submitted with
the information that the applicant was willing to accept any reasonable
modification that the said municipal council might deem proper to make,
and also submitted a tentative approval of the plans by the district
engineer of Surigao.

The municipal council of Surigao, being
hostile to appellee, refused to approve any plan submitted by appellee
and believing that under the provisions of section 2, of Act No. 3419,
requiring their approval of the lay-out, they could nullify the Act of
the Philippine Legislature by arbitrary action.

About six
months after the decision of the Public Service Commission upholding
the legislative franchise, the municipal council granted to Ong Hin
Lian a municipal franchise to install and operate an electric plant in
that municipality. The municipality also approved Ong Hin Lian’s plan
of distribution which was approved by the provincial board of Surigao
in which it was stated that the franchise was granted to the Pacific
Electric Light Company, represented by Ong Hin Lian. This uncertainty
as to the actual legal entity of the holder of the present municipal
franchise is shown by the title of this case in which, both in the
Public Service Commission and in this court, this petitioner-appellant
appears as Ong Hin Lian (Pacific Electric Light). The municipal
government of Surigao also appears as petitioner asking that the
municipal franchise be upheld and the legislative franchise declared
defeated by the action of the municipal council in refusing to approve
of any plan submitted by the appellee.

While the case was
pending in the Public Service Commission appellee secured permission of
the Public Service Commission to adopt as their own and submit for the
consideration of the commission the plan of appellant which had been
approved of by the provincial and municipal authorities. The Public
Service Commission granted this application, authorized appellee to
install his plan accordingly, and denied the application of appellant
to grant a certificate of public convenience and necessity to the
holder of the municipal franchise. From these orders the cases are
brought here for review.

During the last hearing appellee
challenged the personality of the Pacific Electric Light on the ground
that it was not a registered entity, whereupon the personality of the
Surigao Electric Company was challenged.

The record shows
that on February 14, 1928, five individuals joined together for the
purpose of organizing a company which they denominated the Surigao
Electric Company. The original of this document was filed with the
Public Service Commission. When its legal status was challenged the
articles of incorporation were properly filed with the Bureau of
Commerce and Industry and a proper certificate of registration was
obtained.

Act No. 3419 provided that the franchise was not
to take effect until the franchise was accepted, but made no provision
as to within what period of time such acceptance must be filed.
Appellee asserted good faith and claimed that the filing of the
articles of incorporation with the Public Service Commission was an
accident and even the appellants do not allege fraud. It is hard to
believe that these business men accidentally failed to create a
corporation. Appellants claim that a failure to incorporate within four
years standing alone renders the franchise null and void. Our attention
has not been called to any doctrine or authority that would prevent the
Government acting through the Public Service Commission of permitting
the appellee to cure this defect. The main contention of the municipal
government of Surigao is their claim of legal right to nullify the
legislative franchise by arbitrarily refusing to approve of the plans
of the company. This was not sustained by the Public Service
Commission, nor can it be sustained by this court. The provision was
inserted in the Act granting the franchise to protect the municipality
from unsightly or improper construction. By its very nature it
presupposes action in accord with the facts and in the exercise of
sound judgment. The action of a subordinate body must be taken with an
end to accomplish the legislative intent, not to frustrate it. On the
whole case we are of the opinion that the orders of the Public Service
Commission are not contrary to law and are reasonably supported by the
evidence.

There is one important feature of the case,
however, that has not been given adequate consideration by the Public
Service Commission. Apparently appellee has entered into an oral
contract with another company to construct and operate for the time
being the plant in which the electric power is generated. Being an oral
contract it is difficult to see how the public is to be protected from
excessive costs or an uncertain source of power.

The orders
appealed from are therefore affirmed with the modification that the
Public Service Commission will take proper steps at once to investigate
and make of record and to approve or disapprove of the contract between
the appellee and the Butuan Sawmill, Inc. Costs against the appellant.
So ordered.

Villamor, Villa-Real, Vickers, and Imperial, JJ., concur.