Dagdag v. Public Service Commission
REITERATIONFacts
The Antecedents: Corazon de Castro filed a complaint for damages against Alfredo Formoso, Santiago Sambrano, and Virginia Sambrano due to the death of her husband while a passenger in their bus. The Court of First Instance (CFI) of Ilocos Norte rendered judgment condemning the defendants (except Formoso, who had sold his interest to Virginia Sambrano) to pay damages. A writ of execution pending appeal was issued, and the sheriff sold the certificate of public convenience to Corazon de Castro, who then sold it to the Estate of Florencio P. Buan. The Public Service Commission (PSC) initially dismissed the application for approval of this sale after a previous Supreme Court ruling (G.R. No. L-7868) indicated the certificate should have been attached, not sold, pending appeal. Procedural History: The Sambranos' appeal was dismissed, making the CFI decision final and executory. The sheriff again levied on the certificate of public convenience. A third-party claim was presented by Atty. Severino Dagdag, Jr., based on a compromise settlement in another case (Miguela Quirit, et al. vs. Sambranos) where the Sambranos conveyed the same certificate to the Quirits, who then assigned their rights to Dagdag. Dagdag filed a case to restrain the execution sale and secured a preliminary injunction. However, Dagdag's complaint was dismissed, leading the CFI to issue a third alias writ of execution. The sheriff sold the certificate to the Estate of Buan on November 12, 1956. The Estate of Buan filed an application with the PSC for provisional approval of the sale and authority to operate. Dagdag and United Northern Transit Co. opposed, arguing the PSC lacked jurisdiction pending resolution of a case filed by Dagdag with the Supreme Court (G.R. No. L-11554) questioning the sale's legality. The PSC granted provisional approval and authority to the Estate of Buan on January 24, 1957, subject to modification or revocation and any action by the Supreme Court. The Petition: Severino Dagdag, Jr. and United Northern Transit Co. filed the present petition for review (initially certiorari) with the Supreme Court, assailing the PSC's order.
Issue(s)
Whether the Public Service Commission has the power and authority to provisionally approve a sheriff's sale of a certificate of public convenience and grant provisional authority to operate, while the validity of the sale is pending determination by the Supreme Court. Whether the PSC order is void for not making sufficient findings of fact to justify the provisional approval. Whether the PSC abused its discretion in granting provisional approval to the respondent without considering the petitioners' priority of application and prior investments/operation.
Ruling
The Supreme Court affirmed the order of the Public Service Commission, holding that the Commission has the power to provisionally approve the sale and grant provisional authority to operate, and that its findings were sufficient to justify such provisional approval. The Court found no abuse of discretion and denied the petition.
Ratio Decidendi
On the issue of the PSC's power to provisionally approve the sale: The Court held that the Public Service Commission has the power and authority to approve a sale or transfer of a certificate of public convenience under Section 20(g) of the Public Service Act, provided there are just and reasonable grounds and it is not detrimental to the public interest. The pendency of a court case questioning the validity of the transfer does not deprive the Commission of its power to grant provisional approval to protect the public interest. This is consistent with the principle of modus vivendi to ensure continuity of service, as established in cases like Orlanes and Banaag Transportation Co. vs. P.S.C.. The provisional approval does not validate a void contract but serves as an interim measure. The Commission's functions are administrative and it cannot pass upon questions of contract validity exclusively within the purview of ordinary courts. On the sufficiency of findings of fact: The Court found the petitioners' argument that the order lacked findings of fact to be untenable. The PSC order made specific findings that the sale had been consummated and that the vendee (Estate of Buan) was qualified to engage in the transportation business, being a holder of several certificates of public convenience. These findings sufficiently satisfied the legal requirements for provisional approval, as the execution sale to satisfy a judgment is a reasonable ground, and the buyer's experience indicates no detriment to the public interest. On the alleged abuse of discretion regarding priority and investment: The Court ruled that these claims were not raised by the petitioners before the PSC when they opposed the application. Therefore, they could not be raised for the first time on appeal. Even if they had been raised, the Court doubted they would have altered the PSC's decision, as the controlling factor in approving a transfer is not priority but the stability, certainty, and superiority of one sale over another. The sale to the Estate of Buan, an experienced operator, was deemed superior to that of the United Northern Transit Co., a newly formed corporation. Furthermore, the petitioners' operation was deemed illegal as it was without Commission approval, and any injury from such illegal operation was self-inflicted.
Main Doctrine
The Public Service Commission has the power to provisionally approve a sale or transfer of a certificate of public convenience and grant provisional authority to operate, even if the validity of the sale is pending determination in the courts, provided there are just and reasonable grounds for the transfer and it is not detrimental to the public interest. This provisional approval does not validate a void sale but serves as a modus vivendi to protect the public interest.