Mandbusco, Inc. vs. Francisco

A certificate of public convenience may be granted to a new operator notwithstanding the existence of other operators in the area, provided the Commission's finding of public need is reasonably supported by evidence; the "old operator rule" does not apply where the new franchise covers a maiden route that existing operators do not actually serve.

The petitioners were bus operators, including Mandbusco, Inc. and Mandaluyong Bus Co., Inc., holding certificates of public convenience for routes in the Pasig-Manila area. The respondent applied to the Public Service Commission for a certificate of public convenience to operate five PUJ jitneys on a route from barrio Pinagbuhatan, Pasig, Rizal to the intersection of Highway 54 and Shaw Boulevard, Mandaluyong, Rizal. The Public Service Commission had issued memoranda in 1963 suggesting suspension of action on pending applications for passenger service in certain enumerated areas, which the petitioners invoked in opposing the respondent's application.

Respondent Pablo Francisco applied for a certificate of public convenience to operate five PUJ jitneys from barrio Pinagbuhatan, Pasig, Rizal to the intersection of Highway 54 and Shaw Boulevard, Mandaluyong, Rizal, known as the "Crossing," and vice-versa. After due notice and publication, a hearing was conducted at which both the respondent applicant and the oppositors, Mandbusco, Inc., Mandaluyong Bus Co., Inc., and several individuals, presented their evidence. On June 15, 1964, a division of three commissioners granted the application, finding that the proposed service would benefit the people of barrio Pinagbuhatan because there was no direct service from that place to the crossing of Highway 54 and Shaw Boulevard, and that the provincial capitol, provincial hospital, and other big establishments were located past the poblacion of Pasig and nearer to the proposed terminal.

The petitioners presented two witnesses. Federico Dantayana, an official inspector of the Commission, testified that he conducted a survey of passenger vehicles along Shaw Boulevard going to and from Pasig, Rizal. His inspection sheets showed that buses with a usual loading capacity of 65 to 75 passengers were barely half-filled, while jitneys with a capacity of 13 passengers carried an average of only 6 passengers per trip. The petitioners argued this showed an excess of available passenger vehicles over actual needs. However, the route applied for was divided into two parts: the first from barrio Pinagbuhatan to the poblacion of Pasig, and the second from the poblacion to the crossing of Highway 54 and Shaw Boulevard. Dantayana's survey covered only the second part, which was a converging point for passenger vehicles from towns east of Pasig and from terminals in the Pasig poblacion itself, and thus did not indicate the volume of traffic coming from barrio Pinagbuhatan.

Arturo Clemente, president of both Mandbusco, Inc. and the Pasig-Manila Bus Operators Association, testified that 125 buses operated between Pasig, Rizal and Quiapo, Manila, all taking Shaw Boulevard, and that 51 jitneys served that portion of Shaw Boulevard, with an additional 171 buses from towns east of Pasig passing through daily. He argued that these conveyances were more than adequate and that allowing additional vehicles would result in ruinous competition. The Court noted, however, that all these vehicles, except possibly two buses, did not run the full course of the respondent's route, and the overlapping of service existed only with regard to the second part of the route, which was unavoidable since that stretch served as a common access to Highway 54.

The petitioners also presented a certificate of public convenience allowing Mandaluyong Bus Co., Inc. to utilize two buses, and a third as reserve, for the line from Pinagbuhatan to Plaza Miranda, Quiapo, Manila via Mandaluyong. The Court held that this certificate merely proved authority to operate, not actual use of such authority, and absent positive proof that the petitioners adequately served the transportation requirements of barrio Pinagbuhatan inhabitants, the Commission's finding of fact would not be overturned. The petitioners invoked the "old operator rule" and the Public Service Commission Memoranda of May 15, 1963 and July 22, 1963, but the Court found these inapplicable. The respondent had since registered the five units covered by the authority plus one reserve unit, rendering the issue of financial capability academic.

• Excess of Available Vehicles: The petitioners argued that the survey evidence of their witness Dantayana showed an excess of available passenger vehicles over the actual needs of the riding public, negating the advisability of allowing the respondent's jitneys to serve the route.
• Adequacy of Existing Service: The petitioners argued, through witness Clemente, that the 125 buses operating between Pasig and Quiapo, the 51 jitneys serving Shaw Boulevard, and the 171 buses from towns east of Pasig were more than adequate to meet the transportation needs of the riding public, and that allowing additional vehicles would result in ruinous competition threatening their substantial investments.
• Existing Certificate of Public Convenience: The petitioners argued that the certificate of public convenience allowing Mandaluyong Bus Co., Inc. to operate two buses on the line from Pinagbuhatan to Plaza Miranda completely negated the Commission's finding that there was no direct service from barrio Pinagbuhatan to the crossing.
• Old Operator Rule: The petitioners invoked the "old operator rule," arguing 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.
• Violation of Commission Memoranda: The petitioners argued that the certificate was issued in violation of the Public Service Commission Memorandum of May 15, 1963 and its Supplemental Memorandum of July 22, 1963, which suspended action on pending applications for passenger service in Manila and suburbs.
• Financial Capability: The petitioners questioned the respondent's ability to finance the maintenance and operation of the service applied for.

N/A — The decision does not recount the respondent's arguments in detail beyond the Commission's findings and the fact that the respondent had registered the five units covered by the authority plus one reserve unit.

• Sufficiency of Evidence of Public Need: Whether the Public Service Commission's finding that the proposed service would benefit the people of barrio Pinagbuhatan was reasonably supported by the evidence.
• Applicability of the Old Operator Rule: Whether the "old operator rule" barred the grant of a certificate of public convenience to the respondent as a new operator in the same territory.
• Financial Capability: Whether the respondent's ability to finance the maintenance and operation of the service was properly established.
• Violation of Commission Memoranda: Whether the certificate of public convenience was issued in violation of the Public Service Commission Memorandum of May 15, 1963 and its Supplemental Memorandum of July 22, 1963.

• Sufficiency of Evidence of Public Need: Yes. The Commission's finding of public need was reasonably supported by evidence, as the petitioners' survey evidence covered only the second part of the route and did not reflect the volume of traffic from barrio Pinagbuhatan, which was the primary objective of the grant.
• Applicability of the Old Operator Rule: No. The "old operator rule" had no application because the certificate granted to the respondent was a maiden franchise covering a particular line connecting barrio Pinagbuhatan and the crossing of Highway 54 and Shaw Boulevard, and the existing certificate of the Mandaluyong Bus Co., Inc. covered a much longer route to Quiapo, Manila.
• Financial Capability: Yes. The issue was academic because the respondent had actually registered the five units covered by the authority plus one reserve unit with the approval of the Commission, and these units plus his other assets were sufficient guaranty of his ability to sustain the service.
• Violation of Commission Memoranda: No. The territory applied for was not among those enumerated in the Memorandum of May 15, 1963, and even if the memorandum comprehended the application, public welfare and convenience, where positively found by the Commission to be subserved, should prevail.

• Sufficiency of Evidence of Public Need: The Court closely scrutinized Dantayana's testimony and found that his survey covered only the second part of the route, from the poblacion of Pasig to the crossing of Highway 54 and Shaw Boulevard. This second part was merely a converging point for passenger vehicles coming from towns east of Pasig and from terminals in the Pasig poblacion itself, and thus did not indicate the volume of traffic coming all the way from barrio Pinagbuhatan. The primary objective of the grant was the welfare of the inhabitants of barrio Pinagbuhatan and other inhabitants along the first part of the route. Similarly, Clemente's testimony suffered from the same oversight, as all the vehicles he mentioned, except possibly two buses, did not run the full course of the respondent's route. The overlapping of service existed only with regard to the second part, which was unavoidable since that stretch served as a common access to Highway 54. The certificate of public convenience presented by the petitioners merely proved authority to operate, not actual use of such authority, and absent positive proof that the petitioners adequately served the transportation requirements of the inhabitants of barrio Pinagbuhatan, the Court was not inclined to overturn the Commission's finding of fact, which was reasonably supported by evidence.

• Applicability of the Old Operator Rule: The Court held that the "old operator rule" had no application because the certificate granted to the respondent was a maiden franchise covering the particular line connecting barrio Pinagbuhatan and the crossing of Highway 54 and Shaw Boulevard. The certificate authorizing the Mandaluyong Bus Co., Inc. to operate two buses on the line from Pinagbuhatan to Plaza Miranda in Quiapo, Manila, while overlapping in a sense, was essentially intended to cover a great distance run through numerous streets in Manila. The grant in favor of the respondent covered only a brief shuttle run of 8 kilometers linking barrio Pinagbuhatan directly with the Pasig poblacion and the crossing. The Court stated it was not prepared to substitute its discretion for that of the Public Service Commission in determining what could best meet the requirements of public convenience.

• Financial Capability: The Court found the issue academic because the respondent had, since receipt of the franchise, actually registered the five units covered by the authority and one reserve unit for the same line, with the approval of the Commission. These units, plus the assets he proved he owned, were sufficient guaranty that the respondent could sustain the service.

• Violation of Commission Memoranda: The Court found that the territory applied for was not among those enumerated in the Memorandum of May 15, 1963, which covered Manila, Quezon City, Pasay City, Caloocan, Mandaluyong, Parañaque, San Juan, and Makati. The respondent's service stretched mainly across the town of Pasig in Rizal, and its incursion into a tiny fraction of Mandaluyong was incidental and did not render Mandaluyong the mainstream of the service. Moreover, even if the memorandum comprehended the application, public welfare and convenience, where positively found by the Commission to be subserved, should prevail.

• Old Operator Rule — 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. The Court held this rule inapplicable where the certificate of public convenience granted to the new operator is a maiden franchise covering a particular line that existing operators do not actually serve, and where the existing operators' routes only overlap with a portion of the new route that is a common access thoroughfare.

• Certificate of Public Convenience as Proof of Authority, Not Actual Service — A certificate of public convenience merely proves that authority has been given to the grantee to operate public utility vehicles in the designated territory; it cannot serve as proof that the grantee has made actual use of such authority. The Court applied this principle in refusing to overturn the Commission's finding of no direct service where the petitioners presented only their certificate of authority without positive proof of actual service to the area.

• Deference to Public Service Commission Findings — The Supreme Court will not substitute its discretion for that of the Public Service Commission in the determination of what can best meet the requirements of public convenience, where the Commission's findings of fact are reasonably supported by evidence.

• "The certificate of public convenience adverted to merely proves that authority has been given to the grantee to operate public utility vehicles in the designated territory. It cannot serve as proof that the grantee has made actual use of such authority." — This passage articulates the principle that a certificate of public convenience is not evidence of actual service, which was central to the Court's rejection of the petitioners' claim that existing service negated public need.

• "This rule has no application in this case because the certificate of public convenience granted to the respondent is a maiden franchise covering the particular line connecting barrio Pinagbuhatan and the crossing of Highway 54 and Shaw Boulevard." — This passage states the Court's holding that the "old operator rule" does not bar a new operator where the franchise is a maiden one covering a distinct route.

• "The Commission favored the respondent with the certificate of public convenience in question; we are not prepared to substitute our discretion with that of the Public Service Commission in the determination of what can best meet the requirements of public convenience." — This passage articulates the standard of judicial deference to the Public Service Commission's findings on public convenience.

• "Moreover, even if the memorandum in question comprehend the present application, still public welfare and convenience, where positively found by the Commission to be subserved, should prevail." — This passage establishes that public welfare and convenience prevail over administrative memoranda suspending action on applications, where the Commission positively finds that public convenience is served.

• San Ildefonso Electric Plant, Inc. vs. Baliuag Electric Light and Power Co., Inc., L-26770 & L-26771, March 25, 1969, 27 SCRA 404 — Cited in support of the principle that the Court will not overturn findings of fact of the Public Service Commission that are reasonably supported by evidence.
• Rizal Light & Ice Co., Inc. vs. Mun. of Morong, Rizal, L-20993 & L-21221, September 28, 1968, 25 SCRA 285 — Cited in support of the same principle of deference to Commission findings.
• Halili vs. Cruz, L-21061, June 27, 1968, 23 SCRA 1174 — Cited for the statement of the "old operator rule."
• Red Line Transportation Co., Inc., et al. vs. Santos Tomas, L-18584, January 30, 1967, 19 SCRA 148 — Cited in support of the holding that the issue of financial capability becomes academic where the grantee has registered the units covered by the authority.
• Pangasinan Transportation Co., Inc. vs. Tambot, 95 Phil. 661 — Cited in support of the same principle regarding financial capability.
• Valle Bros., Inc. vs. Public Service Commission, et al., L-18694, January 31, 1966, 16 SCRA 39 — Cited in support of the holding that public welfare and convenience should prevail over administrative memoranda.

• Public Service Act (Commonwealth Act No. 146) — The statute governing the grant of certificates of public convenience, under which the respondent's application was filed and granted. The Court applied its provisions in affirming the Commission's authority to grant the certificate based on findings of public need.

• Public Service Commission Memorandum of May 15, 1963 — An administrative issuance suggesting suspension of action on pending applications for certificates of public convenience for passenger service in Manila, Quezon City, Pasay City, Caloocan, Mandaluyong, Parañaque, San Juan, and Makati. The Court held it inapplicable because the respondent's service stretched mainly across Pasig, Rizal, and its incursion into Mandaluyong was incidental.

• Public Service Commission Supplemental Memorandum of July 22, 1963 — An administrative order enjoining the Secretary of the Commission from calendaring applications for passenger service in Manila and suburbs for hearing. The Court held it inapplicable for the same reason, and further held that public welfare and convenience should prevail even if the memorandum comprehended the application.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Fernando, and Villamor, JJ., concurred. Teehankee, J., concurred in the result. Barredo, J., took no part.

N/A — No dissenting opinions were noted in the decision.