San Francisco's Municipal Railway celebrated its 80th birthday yesterday with a rainy day ceremony to honor an elderly railcar that has been a drudge all its life.

Even decked out in brand new gray paint with gold trim and flying four little flags, car C-1 would never be mistaken for a thing of beauty. It looks a bit like an outhouse mounted atop a dump truck, the kind of thing a small child might make out of blocks of wood.

In its prime it hauled rails, ties, asphalt and odds and ends. Retired years ago, it is making a comeback at the age of 75.

Yesterday, car C-1 was the Muni's birthday gift to itself: The railway cracked a bottle of champagne over the car's prow, served up little cupcakes and coffee, and Mayor Frank Jordan issued a proclamation calling C-1 ''A working reminder of the city's colorful past.''

Honoring a 1917* vintage work car that did the railway's odd jobs is a fitting symbol for the unglamorous Muni, a favorite target for the city's politicians and civic complainers for 80 years.

A week seldom goes by that a newspaper does not publish a letter critical of Muni service, or some radio talk show does not get a call complaining about rude drivers, or graffiti, or bus service.

Yesterday, however, the Muni decided to toot its own horn. Standing just out of the rain on the front platform of another old streetcar, Patricia Carson, one of five public utilities commissioners, said the Muni had 860,000 passenger boardings every day, ''and only 150 complaints a week. An amazing statistic,'' she said.

Muni general manager Johnny Stein called the system ''probably one of the epitomes of public transit in the United States.''

Not only that, he said later, the Muni was ready with a money-back guarantee. Starting next month, the system will give out vouchers good for a free ride if a bus or streetcar is more than 15 minutes behind its published schedule.

There was widespread skepticism when the program was announced last fall, but Stein said ''we are confident'' it will work. The Muni, he said, runs on time 97 percent of the time. ''Why, on Geary Street,'' he said, ''We run every three or four minutes anyway. To be 15 minutes late would mean we are really screwed up.''

The city is putting its money where its mouth is, too: the PUC has voted to hold out $100,000 to pay for a year of the on-time program.

Yesterday's celebration was nothing if not thrifty. The city got the coffee and the cupcakes donated; the paint to make car C-1 look like new came from a couple of city contractors, the work fixing the car up was done by volunteers, and a group of streetcar admirers called the Market Street Railway Co. even paid the wages of extra Muni crews for the day.

Car C-1, which came out of a retirement home at the Western Railway Museum last spring, has even gone back to work for the Muni. Starting next month, it will become a test car for new tracks the city is putting on the Embarcadero and upper Market Street.

After the birthday ceremony yesterday, motorman Jack Smith took C-1 clanking down Market Street to Fremont Street and back to Duboce Avenue, tooting an air horn and waving to the people, like a drudge made queen for a day.

* Market Street Railway now believes that Car No. C-1 was built in 1916, not 1917.