In his application for a permit, Cayetano Orlanes alleges that:
a. he is the holder of a certificate of public convenience (PC) issued by the Public Service Commission (PSC) in case No. 7306, to operate an autobus line
i. from Taal to Lucena, passing through Batangas, Bolbok and Bantilan (in the Province of Batangas), and Candelaria and Sariaya (in the Province of Tayabas), without any fixed schedule
ii. however, he could not accept passengers from intermediate points in which Batangas Transportation Co. (Batranco) has authority to operate by virtue of a prior license
b. he then has applied for a fixed schedule for those lines in which his license is limited and requests that he be converted into a regular operator on a fixed schedule, thereby submitting a proposed schedule to PSC
Batranco appeared and filed an application for a permit, praying that the petition of Orlanes be denied, alleging that:
a. it is operating a regular service of auto trucks between Batangas and some parts in Tayabas
b. since 1918, it has been operating a regular service between Taal and Rosario, and in 1920, its service was extended to the municipality of San Juan de Bolbok, with a certificate of PC issued
c. in 1925, Orlanes obtained from PSC a certificate of PC, as aforementioned
d. Orlanes inaugurated operations in March of 1926, but maintained it on the part between Taal and Bantilan for only about three months, when he abandoned it in June; he did not renew it until five days before the hearing of case No. 10301
e. said case 10301 was filed by Batranco praying that:
i. its number of trip hours within the areas (conflicting routes) over which Orlanes likewise prays to be a regular operator be increased, and/or
ii. all irregular operators be prohibited from operating their respective licenses, unless they should observe an interval of two hours before, or one hour after, the regular hours of Batranco
f. from June, 1926, Orlanes and Batranco were jointly operating a regular service between Bantilan and Lucena, with trips every half an hour
g. Orlanes not having asked for a regular service between Bantilan and Taal, Batranco remedied this under authority and increased its trips between Bantilan and Tayabas to make due and timely connections in Bantilan to all other points in the Province of Batangas
h. the service maintained by Batranco is sufficient to satisfy the convenience of the public
i. the PC does not require the granting of the permit for the service which Orlanes applied for, since to do so would result in ruinous competition and grave prejudice of the company without any benefit to the public
PSC granted the petition of Orlanes, as prayed for. Batranco filed a motion for rehearing, which was denied. It then appealed to the SC.
Whether a certificate of PC to operate a public utility be issued to an applicant (Orlanes) thereof in a field where a person is already granted a license (Batranco)?
The decision of the PSC is revoked and set aside, the case being remanded for further proceedings. So long as an operator under a prior license complies with the terms and conditions of his license and reasonable rules and regulation for its operation and meets the reasonable demands of the public, it is the duty of PSC to protect rather than to destroy his investment by the granting of a subsequent license to another for the same thing over the same route of travel. The granting of such a license does not serve its convenience or promote the interests of the public.
The questions presented involve a legal construction of the powers and duties of the PSC, and the purpose and intent for which it was created, and the legal rights and privileges of a public utility operating under a prior license.
1. An autobus line is a public utility, a common carrier, and an important factor in the business conditions of the Islands, which is daily branching out and growing very fast.
It must apply for and obtain a license or permit from the PSC, and comply with defined terms and conditions before such a business can be operated. When license is granted, the operator must conform to, and comply with, all reasonable rules and regulations of the PSC.
2. The object and purpose of PSC, among others, is to look out for, and protect, the interests of the public, and, in the instant case, to provide it with safe and suitable means of travel over the highways in question, in like manner that a railroad would be operated under like terms and conditions. For many and different reasons, it has never been the policy of a PSC to grant a license for the operation of a new line of railroad which parallels and covers the same field and territory of another old established line, for the simple reason that it would result in ruinous competition, and would not be of any benefit or convenience to the public.
The PSC has ample power and authority to make any and all reasonable rules and regulations for the operation of any public utility and to enforce compliance therewith, failure of which permits the PSC to revoke the license. It also has ample power to specify and define what a reasonable compensation is for the services rendered to the public.
The fact that PSC has previously granted a license to any person to operate a bus line over a given highway and thereafter refuses to grant a similar license to another over the same highway, does not in the least create a monopoly in the person of the licensee, for the reason that the PSC has, at all times, the powers enumerated previously.
Act No. 3108, as amended by Act No. 3316, created the PSC. The supervision and control of public utilities under said law is very broad and comprehensive.
Section 15 of Act No. 3108 provides that the Commission shall have power, after hearing, upon notice, by order in writing to require every public utility:
a. To comply with the laws of the Philippine Islands;
b. To furnish safe, adequate, and proper service as regards the manner of furnishing the same as well as the maintenance of the necessary material equipment, etc;
c. To establish, construct, maintain, and operate any reasonable extension of its existing facilities, where such extension is reasonable and practicable and will furnish sufficient business to justify the construction and maintenance of the same;
d. To keep a uniform system of books, records and accounts;
e. To make specific answer with regard to any point on which the Commission requires information, and to furnish annual reports of finance and operations;
f. To carry, whenever the Commission may require, a proper and adequate depreciation account;
g. To notify the Commission of all accidents;
h. That when any public utility purposes to increase or reduce any existing individual rates, it shall give the Commission written notice thirty days prior to the proposed change; and
i. No public utility as herein defined shall operate in the Philippine Islands without having first secured from the Commission a certificate, which shall be known as Certificate of Public Convenience, to the effect that the operation of said public utility and the authorization to do business will promote the public interest in a proper and suitable manner. (emphasis supplied)
The power of the Commission to issue a certificate of PC depends on the condition precedent that, after a full hearing and investigation, the Commission shall have found as a fact that the operation of the proposed public service and its authority to do business is for the convenience of the public.
3. In the Philippines, the certificate of public convenience shows:
CERTIFICATE OF PUBLIC CONVENIENCE
To whom it may concern:
THIS IS TO CERTIFY, That in pursuance of the power and authority conferred upon it by subsection (i) of section 15 of Act No. 3108 of the Philippine Legislature,
THE PUBLIC SERVICE COMMISSION OF THE PHILIPPINE ISLANDS, after having duly considered the application of ................. for a certificate of public convenience the operation of ........................ in connection with the evidence submitted in support thereof, has rendered its decision on................, 192...., in case No. ............, declaring that the operation by the applicant ...................... of the business above described will promote the public interests in a proper and suitable manner, and granting................. to this effect the corresponding authority, subject to the conditions prescribed in said decision.
Given at Manila Philippine Islands, this ......... day of ....................., 192 .....
PUBLIC SERVICE COMMISSION OF THE PHILIPPINE ISLANDS
4. The certificate of PC granted to Orlanes expressly recites that it “will promote the public interests in a proper and suitable manner.” Yet no such finding of fact was made by the Commission.
There is no claim or pretense that:
a. Batranco has violated any of the terms and conditions of its license
b. PSC found the grant of a license to Orlanes as a regular operator over the conflicting routes is required or necessary for the convenience of the traveling public
c. The services of Batranco over the conflicting routes is subject to any complaint or criticism by the public
5. Where an operator is rendering good, sufficient and adequate service to the public, that the convenience does not require and the public interests will not be promoted in a proper and suitable manner by giving another operator a certificate of public convenience to operate a competing line over the same route.
It does not appear that the public has ever made any complaint of Batranco, yet on its own volition and to meet the increase of its business, it has applied to the PSC for authority to increase the number of daily trips, thus showing a spirit that ought to be commended.
6. The petition of Orlanes to become regular over the conflicting routes is largely based upon the growing demands of the public, as evidenced by the application of Batranco in case No. 10301.
However, Batranco operated its line five years before Orlanes ever turned a wheel, yet the legal effect of the decision of the PSC is to give an irregular operator, who was the last in the field, a preferential right over a regular operator, who was the first in the field. That is not the law, and there is no legal principle upon which it can be sustained.
So long as the first licensee keeps and performs the terms and conditions of its license and complies with the reasonable rules and regulations of the Commission and meets the reasonable demands of the public, it should have more or less of a vested and preferential right over a person who seeks to acquire another and a later license over the same route. This is for the protection on his investment, and for avoiding ruinous competition.
7. On the issue of the existence of monopoly if the certificate of PC is issued only to one operator:
In the National Coal Company case, the Philippine SC said: “When there is no monopoly. – There is no such thing as a monopoly where a property is operated as a public utility under the rules and regulations of the Public Utility Commission and the terms and provision of the Public Utility Act.” (emphasis supplied)
Section 775 of Pond on Public Utilities, recognized as a standard authority: “The policy of regulation, upon which our present public utility commission plan is based and which tends to do away with competition among public utilities as they are natural monopolies, is at once reason and the justification for the holding of our courts that the regulation of an existing system of transportation, which is properly serving a given field, or may be required to do so, is to be preferred to competition among several independent systems. x x x The prime object and real purpose of commission control is to secure adequate sustained service for the public at the least possible cost, and to protect and conserve investments already made for this purpose. Experience has demonstrated beyond any question that competition among natural monopolies is wasteful economically and results finally in insufficient and unsatisfactory service and extravagant rates.
8. No additional certificate of PC is necessary (citing various US jurisprudence), where:
a. existing certificate holders was not given an opportunity to render additional service desired
b. there is no complaint as to existing rates and the present company is rendering adequate service
c. one bus service would be ample for all requirements
d. no clear and affirmative showing that an existing is unable or has refused to maintain adequate and satisfactory service
e. existing operators equipped adequately to accommodate the public, no complaints having been received in regard to service rendered
f. after years of effort, an operator would be deprived of the fruits of his labor and of the capital he has invested by a larger concern desiring to operate between the same points
g. the admission of another operator into the territory served by present licensees would render their licensee oppressive and confiscatory because of further division and depletion of revenues and would defeat the purpose of the statue and disorganize the public service
h. the service within the territory proposed to be served appeared to be adequate and it was the policy of the Commission to protect the established line in the enjoyment of business which it had built, and in view of the further fact that it was very uncertain whether the applicant could secure sufficient business to enable him to operate profitably
i. it is not shown that the utility desiring to enter a competitive field can give such service as will be a positive advantage to the public, provided that the existing utility furnishing adequate service at reasonable rates at the time of the threatened competition
j. the existing service is reasonable, safe, and adequate as required by statue
k. no necessity is shown for additional service
l. the route is adequately served by a railroad and other bus line, although the proposed service would be an added convenience to the territory