Halili vs. Cruz

A finding of the Public Service Commission on public necessity and convenience, after weighing conflicting evidence, is conclusive on the SC when supported by evidence; an old operator cannot demand protection from a new certificate where it has not operated all authorized units and public convenience requires a direct service.

Fortunato F. Halili operated the bus service known as “Halili Transit,” while Ruperto Cruz was an applicant for a certificate of public convenience to operate a PUB bus service. The Public Service Commission was the regulatory body that granted certificates of public convenience for public utility bus operations.

On September 19, 1961, Ruperto Cruz filed with the Public Service Commission an application in Case No. 61-6113 for a certificate of public convenience to operate ten buses under PUB denomination between Norzagaray (Bulacan) and Piers (Manila), via Novaliches Road, A. Bonifacio Road, Blumentritt Street, Rizal Avenue, MacArthur Bridge, Aduana and 13th Streets, and on the return trip via Boston Street, MacArthur Bridge, Rizal Avenue, Blumentritt Street, A. Bonifacio Road, and Novaliches Road. The application was opposed by De Dios Transportation Co., Inc., Raymundo Transportation Co., Inc., PDP Transit Inc., Villa Rey Transit, Inc., and Fortunato F. Halili, operator of “Halili Transit.” Halili alleged that he operated a bus service on the line applied for and enumerated the other lines he operated that were traversed by the route; that his service and that of the other bus operators on the route were more than adequate; that the grant would result in wasteful and ruinous competition; and that Cruz was not financially capable of operating and maintaining the proposed service.

After several hearings in which the parties presented oral and documentary evidence, the PSC rendered its decision on February 13, 1963. It found that Cruz was applying for a service from Norzagaray to Piers and vice-versa; that not one of the oppositors operated a service up to Piers, with most going only up to Divisoria and the rest up to Folgueras; that there were commuters starting from Norzagaray up to Piers; that Cruz had experience in the operation of a PUB service and the means to operate and maintain the service applied for; and that the weight of evidence tipped in favor of the applicant. The PSC also found that Cruz was a Filipino citizen, financially capable, and that public convenience and necessity would be promoted by the approval of the application.

The evidence supporting public need showed that numerous students, professionals, merchants, and employees in both government and private concerns commuted daily between Norzagaray and Manila and the intermediate points along the line; that numerous centers of population, residential subdivisions, housing projects, and industrial projects such as the Republic Cement Factory, Angat River Dam Hydro-electric Power Project, and hollow blocks manufacturing establishments had emerged along the line; that commuters experienced difficulties in getting accommodated on buses traveling between Norzagaray and Manila; that Villa Rey Transit used to make two trips from Angat to Manila via Norzagaray, La Mallorca Pambusco made two trips from Norzagaray to Manila via Sta. Maria, and Halili Transit made two trips from Norzagaray to Manila via Novaliches Road; that these trips were fully loaded at Norzagaray so that many commuters had to take jeeps to Sta. Maria and Bocaue and wait for other transportation to Manila; and that commuters from Manila to Norzagaray also had to resort to broken trips for lack of direct trips.

Petitioner, for his part, argued that the 500 passengers found by the PSC as commuting daily from Norzagaray to Manila could easily be accommodated in the buses of existing operators; that the existing operators were authorized to operate 31 buses making around 100 round trips a day; that since a bus could accommodate about 50 passengers, the existing authorized services could accommodate not only 500 but even 5,000 passengers a day; that 200 of the 500 commuters worked at the Republic Cement Factory in Norzagaray, leaving only 300 commuters daily on the Norzagaray–Manila line; that the new terminal proposed in the application was not based on actual need because there were no importing firms, business establishments, or manufacturing concerns in Norzagaray whose employees had to make trips to the piers at the south harbor in Manila; that respondent’s evidence consisted only of the testimony of two witnesses who did not make any formal or systematic study of the movement and frequency of public utility buses and whose testimonies were based only on casual observations; that the oppositors presented five witnesses, two of whom made meticulous, systematic, and daily observations on the line applied for; and that Exhibits “1”, “1-A” to “1-R,” consisting of entries in a checkbook at the various PSC checkpoints, showed that buses passing the checkpoints carried only from 1 to 5 passengers, proving that existing operators more than adequately served the public.

Petitioner also asserted that public necessity did not require the operation of the ten buses applied for because on December 20, 1961, the PSC granted him authority to operate only 10 buses on the Norzagaray–Manila line in Case No. 61-5807 even if he had applied for 20 buses, and that out of the many applications to operate buses from Paradise Farms (Bulacan) to Manila, only 10 buses were authorized. The record also showed that petitioner did not have a direct line from Norzagaray to Piers, the line applied for by respondent; that petitioner was authorized 48 trips between Norzagaray and Folgueras but was making only two trips; and that the checker’s reports referred to trips of buses from Manila to Ipo, Sapang Palay, San Jose and back, and from upland to lowland and back, and none of the buses checked had trips along the Norzagaray–Manila or Manila–Norzagaray line. Halili then sought review of the PSC decision by the SC.

• Public Need and Sufficiency of Evidence: Petitioner argued that the PSC’s finding of public need for the operation by respondent of ten buses on the Norzagaray–Piers line was not supported by evidence; that the 500 daily passengers could be accommodated by existing operators authorized to operate 31 buses making around 100 round trips, with each bus carrying about 50 passengers; that only 300 commuters actually traveled because 200 worked at the Republic Cement Factory; that the proposed terminal was not based on actual need because Norzagaray had no importing firms, business establishments, or manufacturing concerns whose employees had to go to the piers; that respondent’s evidence came only from two witnesses who made no formal or systematic study and relied on casual observations; that the oppositors presented five witnesses, two of whom made meticulous, systematic, and daily observations; and that the checker’s reports showed buses carried only 1 to 5 passengers, proving existing service was adequate.
• Adequacy of Existing Service: Petitioner argued that he and the other existing operators were rendering sufficient and adequate service on the line, so the grant of respondent’s application would result only in wasteful and ruinous competition.
• Protection of Investment: Petitioner argued that the PSC failed to give him the right of protection to investment to which he was entitled as an old and established public service operator.

• Public Need: Whether the PSC’s finding that public need existed for respondent’s operation of ten buses on the Norzagaray–Piers line is supported by evidence.
• Adequacy of Existing Service: Whether the PSC erred in not recognizing that petitioner was rendering sufficient and adequate service on the line in question.
• Protection of Investment: Whether the PSC erred in failing to give petitioner the right of protection to investment as an old and established public service operator.

• Public Need: No. The PSC’s finding of public need is supported by evidence and is conclusive on the SC; the SC does not examine the proof de novo but only determines whether the decision might reasonably be based on evidence.
• Adequacy of Existing Service: No. Petitioner did not have a direct Norzagaray–Piers line and operated only two of 48 authorized Norzagaray–Folgueras trips, showing a shortage and inadequate service.
• Protection of Investment: No. Protection from ruinous competition yields to public convenience, and petitioner was not entitled to it where he had not placed all authorized units in service.

• Public Need: The SC applied the rule that the PSC’s finding on public necessity and convenience, after weighing conflicting evidence, must not be disturbed if there is evidence reasonably supporting it; the SC is not required to examine the proof de novo and only determines whether the PSC’s decision might reasonably be based on evidence. The record contained evidence of numerous students, professionals, merchants, and government and private employees commuting daily between Norzagaray and Manila and intermediate points; population centers, residential subdivisions, housing projects, and industrial projects such as the Republic Cement Factory, Angat River Dam Hydro-electric Power Project, and hollow blocks manufacturing establishments along the line; commuters had difficulty getting accommodated because the existing trips were fully loaded at Norzagaray, forcing passengers to take jeeps to Sta. Maria and Bocaue and wait for other transportation, while Manila-to-Norzagaray commuters had to resort to broken trips. The checker’s reports invoked by petitioner referred to trips from Manila to Ipo, Sapang Palay, San Jose and back, and from upland to lowland and back, not to the Norzagaray–Manila or Manila–Norzagaray line, so their non-consideration would not be reversible error. Petitioner’s contrary arithmetic about 31 buses and 500 passengers did not overcome the PSC’s factual finding.
• Adequacy of Existing Service: The SC held petitioner’s claim untenable because petitioner did not have a direct line from Norzagaray to Piers, the very line applied for, and the PSC found that none of the oppositors operated a service up to Piers—most went only up to Divisoria and the rest up to Folgueras. The record also showed petitioner was authorized 48 trips between Norzagaray and Folgueras but made only two trips, which indicated a shortage of transportation units or facilities and that the line was not adequately serviced. Citing Zarate vs. Rizal-Manila Transit Co., the SC reasoned that non-operation of authorized units supports the conclusion that there is a shortage of transportation facilities and that the operator cannot fully meet public convenience. Public convenience was served if commuters from Norzagaray going to Piers could reach their destination without changing buses; the existing service did not provide that direct convenience.
• Protection of Investment: The SC recognized the general principle that public utility operators must be protected from ruinous competition and that, before permitting a new operator to serve a territory already served by another, the old operator should first be given an opportunity to improve its equipment and service. That principle, however, is subject to justifiable exceptions, and the primary consideration in granting a certificate of public convenience must always be public convenience. Quoting Raymundo Transportation Co. vs. Perez, the SC stated that while government should protect operators as far as possible against unfair and unjustified competition, public convenience must have first consideration. The PSC may grant a certificate to a new operator, and the old operator cannot complain that it was not given an opportunity to improve if it has not placed in service all authorized units or has violated or not complied with important conditions in its certificate. Here petitioner had not operated all the units he was authorized to operate, so he was not entitled to the protection he invoked.

• Substantial Evidence Rule for Public Service Commission Findings — A finding of the PSC on public necessity and convenience, after weighing conflicting evidence, is conclusive on the SC when supported by evidence; the SC does not examine the proof de novo and only determines whether the PSC’s decision might reasonably be based on evidence. In this case, the SC upheld the PSC’s finding of public need despite petitioner’s contrary evidence because the record contained evidence of daily commuters and inadequate existing service.
• Public Convenience as Primary Consideration — The protection of old public utility operators from ruinous competition is a general principle subject to justifiable exceptions; the primary consideration in granting a certificate of public convenience is public convenience. The SC applied this by allowing a new operator to serve the Norzagaray–Piers line because public convenience required a direct service.
• Protection of Investment Subject to Exceptions — An old operator cannot demand protection from a new certificate where it has not placed in service all authorized units or has violated or not complied with important conditions in its certificate. The SC applied this to Halili, who was authorized 48 Norzagaray–Folgueras trips but made only two.
• Direct Service and Public Convenience — Public convenience is properly served if passengers who take buses at points in one part of a line can proceed beyond those points without changing buses. The SC applied this to Norzagaray–Piers commuters, who should not have to transfer to reach their destination.

• “where the Public Service Commission has reached a finding, after weighing the conflicting evidence, that public necessity and convenience warrant the operation of additional public utility service, the finding must not be disturbed as long as there is evidence reasonably supporting such finding.” — This states the standard of review that led the SC to affirm the PSC’s grant.
• “The only function of this Court is to determine whether or not there is evidence before the Commission upon which its decision might reasonably be based.” — This defines the SC’s limited role and rejects a de novo review of the evidence.
• “While it is the duty of the government as far as possible to protect public utility operators against unfair and unjustified competition, it is nevertheless obvious that public convenience must have the first consideration....” — This establishes that protection of old operators yields to public convenience.
• “the old operator cannot with reason complain that it had not been given opportunity to improve its equipment and service, if it is shown that the old operator has not placed in the service all the units of equipment that it had been authorized to operate, and also when the old operator has violated, or has not complied with, important conditions in its certificate.” — This exception defeated Halili’s protection-of-investment argument because he had not operated all authorized units.

• Red Line Transportation Co., Inc. vs. Matias Santo Tomas, G.R. No. L-18472, January 30, 1967 — Cited as controlling precedent that PSC findings on public necessity and convenience, after weighing conflicting evidence, are not disturbed if supported by evidence.
• Pineda vs. Carandang, G.R. Nos. L-13279-71, March 24, 1960 — Cited for the SC’s limited review; no de novo examination of the proof, only whether the PSC decision might reasonably be based on evidence.
• MD Transit & Taxi Co., Inc. vs. Pepito, G.R. No. L-16481, September 29, 1962 — Cited for the conclusiveness of PSC factual findings involving evaluation of evidence and witness credibility.
• Zarate, et al. vs. Rizal-Manila Transit Co., G.R. Nos. L-11300 and L-11301, May 29, 1959 — Cited to support the inference of shortage from non-operation of authorized units.
• Raymundo Transportation Co. vs. Perez, 56 Phil. 274 — Cited for the rule that public convenience has first consideration over protection from competition.
• Mindanao Bus Co. vs. Paradies, G.R. No. 38442 (1933); 58 Phil. 970 — Cited for the rule that public convenience is served when passengers can proceed beyond points without changing buses.
• Mirasol Transportation Co., Inc. vs. Negros Travelways Corporation and Matus, 64 Phil. 317 — Cited for the power to grant a new certificate and for denying protection to an old operator that did not place all authorized units or violated conditions.
• La Mallorca and Pampanga Bus Co., Inc. vs. Mendiola, G.R. No. L-19558, November 28, 1963 — Cited with other cases for the conclusiveness of PSC findings and the limited scope of review.