G.R. No.

L-7111

[ G.R. No. L-7111, May 30, 1955 ]

URSULA T. PAREDES, PETITIONER, VS. THE PUBLIC SERVICE

COMMISSION, ET AL., RESPONDENTS.

DECISION

BAUTISTA ANGELO, J.:

This is a petition for review of an order of the Public Service Commission denying the petition of
Ursula T. Paredes praying that she be granted an extension of time within which to effect the
registration of certain number of busses authorized in the certificate of public convenience
granted her in Cass No. 34415 which are necessary to operate on the ten lines mentioned in said
certificate.
Petitioner was the holder of a certificate of public convenience issued by the Public Service
Commission authorizing her to operate a passenger and freight service on several lines in the
City of Manila by virtue of a decision rendered on April 29, 1950 (Case No. 34415). Before the
approval of said certificate, petitioner was the holder of other emergency certificates of public
convenience wherein she was authorized to operate a total of seventeen (17) busses. When the
decision in said case was rendered, the Commission was of the impression that the seventeen
busses which were originally authorized were still in operation, so that, in addition, she was also
authorized to register other three (3) busses to complete the twenty authorized in the decision.
letitioner, however, was not able to register these three additional busses, nor to operate the other
busses she had been authorized, and so, on February 25, 1953. asha filed a petition requesting
that she ba allowed to re-register the total twenty units in order to enable her to operate the lines
granted her by the Commission. To this petition, Antonio Heras and Vicente Heras. who are
operating under the trade names MD and JD Transits respectively, as well as the De Dios
Transportation Company, also a TPU operator on several lines, objected in writing and joined
hands in petitioning for the cancellation of the certificate of public convenience granted to
petitioner for her failure to register the units authorized in her certificate.
This petition for re-registration as wall as the written opposition and petition for cancellation
were set for hearing to give the parties an opportunity to substantiate their respective contentions,
and, after due hearing, the Commission issued an order on July 3. 1953 wherein it not only
denied petitioner's request but amended its former decision by cancelling all the lines granted her
with the exception of the line Plaza Miranda-Balara, and granting her authority to operate only
one unit for that line. Her petition for reconsideration having been denied, she interposed the
present petition for review.
It appears from the evidence that o.a April 29, 1950 petitioner was granted a certificate of public
convenience to operate a total of twenty busses on various lines within the City of Manila and its
suburbs. When said certificate was granted, the Commission was of the impression that the
seventeen busses which were authorized her previously were still in operation so that, in
addition, she was also authorized to acquire other three busses within a specified period of time.
It appears, however, that nost of said seventeen busses were no longer in operation for, as the
record discloses, in 1949 she stored nine of her authorized units, in 1950 she placed in storage
five more units, and in 1951 she stored two additional units, with ohe result that in this latter year
sixteen of the units she vae required to register and operate were not in operation. It father
appears that the three additional units petitioner was authorized to acquire were never provided
for in spite of the many extensions of time granted her for that purpose. It vss likewise
established that in 1952 petitioner registered under her certificate only one bus and in 1953 also
one bus. Asked to explain why she failed to acouire the required units, petitioner attributed it to
"severe scarcity of trucks, accessories, tires, and materials as a result of the unsettled war
conditions", and to prove it she presented a letter of the International Harvester Company
wherein it appears that she placed an order for twenty-five units with which she intended to
comply with her commitment but that they were not then available, But this letter shows that
while the trucks were not then available the company vas however willing to deliver them by
lots, i.e., nine in March. 1952, ten in April, 1952 and six in May, 1952. And petitioner was not
able to explain why she failed to avail herself of this offer of the company. Upon these facts the
Commission concluded that petitioner not only failed to cor.ipiy with the conditions set forth in
her certificate but practically abandoned the service for a period of three years, Consequently, it
denied her petition for re-registration and cancelled her original certificate by limiting her lire to
one, with only one unit.
We find no reason for disturbing this finding of the Commission for tha same is based on a sound
principle. A grantee of a certificate who fails to comply with his commitment for reasons which
to the Commission do not appear justifiable does not merit any grace on grounds of enuity, for he
should be deemed to have forfeited the privilege he has been granted. A public service operator
assumes a commitment which cannot be taken lightly, nor be made dependent on whim or
caprice, for behind it lies the paramount interest of the public. Public necessity cannot be made to
wait, nor sacrificed for private convenience for, as the Commission has aptly said, "an operator
who unjustifiably abandons his service for two or three years by not registering the necessary
equipment forfeits his right to said equipment and the service authorized to him," Such is the
predicament of petitioner. She has neglected her duty for three years in disregard of the interest
of the public and such neglect amounts to a forfeiture.
It is true that petitioner made an attempt to prove at the hearing on her motion for reconsideration
that the reason for her failure to meet her commitment was because ths International Harvester
Company was not able to make goods its offer to sell her twenty-five units due to circumstances
beyond its control, but the Commission found the attempt futile not only because it was made
after the main case hs been submitted, but also because even if it be admitted as true it cannot
relieve her of her dereliction of duty for the simple reason that the Commission found that for
two whole years she had withdrawn her busses from operation and had placed them in storage
without its previous authority. Moreover, the failure of one company to furnish petitioner the
units she needs for her lines does not necessarily mean that she cannot obtain the same units
from other dealers or companies. And yet this she failed to do. She cannot now complain, after
jeopardizing public interest, that her request for equity has baen denied. She alone is to blame for
the consequences of her own act.
Petitioner contends that the order authorizing her to prerate only one unit out of the twenty she
had been previously authorized is unconscionable considering the heavy investment sh3 has
made which amounts to a total of P165,250. And. in this connection, she invokes the various
decisions of this Court wherein it was laid down as a basis principle underlying transportation
busines that it is the duty of the Commission to protect rather than destroy the investment of an
operator.[1]
The doctrine adverted to is sound but it has not application to petitioner. That refers to operate of
good standing and not to those whose investment has deteriorated or disappeared through their
own fault. In this respect we find fitting this comment of the Commission:
"x x x x There can be no investment to protect when tha physical property which constituted tha
bulk of that investment has already disappeared either because the applicant sold that property or
because they became obsolete and the applicant did not care to replace them at the time when she
could have done so. If she no longer has the trucks on which that investment was rrade, it is due
mainly to her own acts. The law requires the Commission to protect an investment which still
exists but if that investment is inexistent because tha property constituting it has been sold or
disposed of even to the detriment of the public service, then there is no investment to protect."
(Order of August 28, 1953)
Petition is denied, without pronouncement as to costs,
Pablo, Bengzon, Montemayor, Reyes, Labrador, and Reyes, J.B.L., JJ., concur
Concepcion, J., took no part.
[1]
The cases referred to are: Batangas Transportation Co. v. Orlanes, 52 Phil., 455; Ariaga v.
Javellana, G. R. No, L-4821, and Javallana v. Bariles, G. R. No. L-4347.
Digest

PAREDES VS. PUBLIC SERVICE COMMISSION- MAY 30, 1955

Category: Transportation Laws
Originally, Pardes was authorized to operate a 17 buses. In addition, she was authorized
to register 3 more buses. However, she was not able to register the 3 additional buses nor to
operate the other 17 buses so she filed a petition requesting that she be allowed to re-register the
20 units.

Having found that petitioner had not only failed to comply with the conditions set forth in
her certificate of public convenience but practically abandoned the service for a period of 3
years, the Commission not only denied the petition but cancelled her original certificate except
for one unit.

Thus this petition for review to the SC.

A grantee of a certificate of public convenience who fails to comply with his commitment for
reasons which do not appear justifiable does not merit any grace on grounds of equity, for he
should be deemed to have forfeited the privilege he has been granted. The duty of the
Commission to protect the investment of an operator refers only to operators of good standing
and not to those whose investment has deteriorated or disappeared through their own fault.
MANDBUSCO INC. V. FRANCISCO - PRIOR OPERATOR RULE
Category: Transportation Laws

DOCTRINES:

1. Definition of “Prior Operator Rule:” before permitting a new operator to operate in the
territory of another operator already established with a certificate of public convenience, the
PRIOR operator must first be given the opportunity to EXTEND its service in order to meet the
public needs. Public operators must be shielded from ruinous competition by giving the prior
operator the opportunity to IMPROVE his equipment and services before allowing a new
operator to serve in the same territory.
2. An instance when the Prior Operator rule is NOT APPLICABLE is when the new operator is
only granted a MAIDEN franchise, or one which does not really overlap with the entire route of
the old operator but covers only a short portion of the old operator’s route AS A
CONVERGENCE POINT. (So if a maiden franchise is granted to a new operator covering a
portion of the old operator’s route, the Prior Operator rule cannot be invoked by the old operator
to contest the grant of the new franchise).
[Note: this second doctrine was not really in the case but it is in the book of Perez p. 292, which,
I think, more clearly emphasized the point of the case].

Facts:

Respondent Pablo Francisco applied for a Certificate of Public Convenience to operate 5

jeepneys along the Pinagbuhatan, Pasig – Shaw Blvd route which can be divided into 2 parts:
A. FROM: Barrio Pinagbuhatan, Pasig
TO: the poblacion of Pasig
B. FROM: the poblacion
TO: the INTERSECTION of Highway 54 (now EDSA) and Shaw Boulevard

Petitioners (all bus operators) contested the application of respondent and presented two
witnesses:
1. Dantayana, an official inspector of the Commission: in an effort to prove that the available
vehicles are in already in excess of the number actually needed to meet the needs of passengers
in that area, he testified that the route to and from Pasig to Shaw Boulevard is already being
serviced by buses that are usually left half-filled and jeepneys with only about 6 passengers each
2. Clemente, President of Mandbusco: testified that there was then about 125 buses operating
between Pasig and Quiapo and about 51 jeepneys servicing the area to and from Shaw Boulevard
to various parts of Pasig. He claims that this number of vehicles more than meets the
transportation need of the public. He adds that Mandbusco already made considerable
investments and the grant of the franchise to respondent would threaten his company’s financial
stability.

Petitioners argue that because of the facts testified to by the 2 witnesses, the franchise applied for
by respondent should not be granted.
The Public Service Commission granted the franchise to respondent, upon a finding that the
public will be benefited thereby because there was NO DIRECT SERVICE from Barrio
Pinagbuhatan to Shaw Boulevard at that time, and residents from Barrio Pinagbuhatan had to
take 2 rides to reach the intersection and some of the establishments near there like the provincial
hospital.

Petitioner filed an MR, which was likewise denied. They now file a Petition for Review with the
SC on the ground that the PSC violated the Prior Operator Rule when it granted respondent his
franchise.

Issue:

Whether the Commission erred when it granted the franchise to respondent

Ruling:

Decision of the Commission granting the franchise to respondent is affirmed.

The court found that the Dantayana testimony only covered Part B of the route applied for by
petitioner. As previously stated, Part B of the proposed route is a convergence point of
passengers coming from other barrios in Pasig (not only Pinagbuhatan) and also those coming
from Manila. His testimony failed to take into consideration the passenger traffic coming
directly from Barrio Pinagbuhatan. The application of respondent was made for the benefit of
those living in Barrio Pinagbuhatan so the testimony of Dantayana, not having included the
passenger traffic directly from there, is irrelevant to the issue at bar.

On the Clemente testimony, the court found that the buses and jeepneys referred to did not
actually run the full route applied for by respondent. The overlapping of service exists only with
regard to the second part of that route (Part B above), and this is clearly unavoidable since the
stretch of road from the Pasig poblacion to the intersection serves as a common access to
Highway 54 where passengers embark for separate destinations.

Lacking any positive proof that the petitioners already adequately served the transportation
requirements of the inhabitants of barrio Pinagbuhatan and other nearby places, the Court refused
to overturn the decision of the PSC, especially since that decision is reasonably supported by
evidence.

The petitioners invoke the "old operator rule," which is to the effect that a public utility operator
should be shielded from ruinous competition by affording him the opportunity to improve his
equipment and service before allowing a new operator to serve in the same territory he covers.

This rule has no application in this case because the certificate of public convenience granted to
the respondent is a maiden franchise covering a route that connects barrio Pinagbuhatan and the
intersection of Highway 54 and Shaw Boulevard. Mandaluyong Bus Co., Inc. operates about 3
buses on the line extending from barrio Pinagbuhatan to Plaza Miranda in Quiapo, which was
essentially intended to cover the great distance run between barrio Pinagbuhatan and Quiapo,
Manila (via all these roads: Pasig Boulevard, P. Sanchez, V. Mapa, Valenzuela, Old Sta. Mesa,
Sta. Mesa Boulevard, Legarda, Tanduay, P. Casal, Ayala Bridge, Concepcion, Arroceros,
Quezon Bridge and Quezon Boulevard…) On the other hand, the grant in favor of the respondent
covers only a brief shuttle run of 8 kilometers linking barrio Pinagbuhatan directly with the Pasig
poblacion and the crossing of Highway 54 and Shaw Boulevard.

Therefore, even though indeed overlapping with the route operated on by Petitioners, the route
granted to Respondent was only a mere portion of it, and cannot be said to encroach on the right
of Petitioners as prior operators