Cebu Autobus Co. v. Viuda de Lozano
REITERATIONFacts
The Antecedents: Pelagio Lozano held three certificates of public convenience. Upon his death, his surviving spouse, Soledad Viuda de Lozano, as special administratrix, managed the business under these certificates. She obtained authority to sell the business, known as Lozano Transportation, which was purchased by Pedro M. Velez and subsequently conveyed to Filipino Bus Company, and then to Cebu Autobus Company (petitioner). Later, the minor children of Pelagio Lozano sought and obtained from the Court of First Instance of Cebu the annulment of the order authorizing the sale to Velez. The Cebu Autobus Company appealed this annulment to the Court of Appeals, which was pending. Procedural History: The minor children filed a motion with the Public Service Commission (PSC) asking that Cebu Autobus Company and Filipino Bus Company be declared without legal title to operate the business, that the fusion of Filipino Bus Company and Cebu Autobus Company be denied, and that the sale of Lozano Transportation be denied. In a decision dated November 3, 1936, the PSC disapproved the conveyance to Velez, held that subsequent conveyances were made without PSC approval, and declared Cebu Autobus Company without right to operate. Cebu Autobus Company sought a review of this PSC decision. The Petition: While the review of the November 3, 1936 PSC decision was pending, Soledad Viuda de Lozano, as special administratrix, filed two applications with the PSC: one to register five new autotrucks and another to increase her equipment by five autotrucks, basing her right on the same certificates of public convenience whose validity was in question. The PSC, in orders dated January 20, 1937, and February 24, 1937, authorized the registration and increase of equipment, respectively. Cebu Autobus Company protested these orders and moved for their revocation. After trial, the PSC, in a decision dated May 5, 1937, confirmed its two previous orders. Cebu Autobus Company appealed this confirmation.
Issue(s)
Whether the Public Service Commission (PSC) erred in authorizing the respondent, as special administratrix, to register new trucks and increase equipment under certificates of public convenience that were the subject of a previously disapproved sale.
Ruling
The Supreme Court affirmed the decision of the Public Service Commission in toto, finding no error in its confirmation of the orders authorizing Soledad Viuda de Lozano to register new autotrucks and increase her equipment.
Ratio Decidendi
On Issue 1: The Supreme Court held that the Public Service Commission (PSC) acted within its authority because the purported sale to the petitioner never attained legal permanence. Citing Section 16(h) of Act No. 3108, the Court emphasized that no public utility shall sell or alienate its franchises or rights without the prior approval of the Commission, and any transaction without such approval is null and void. Although the Commission had given the sale to Pedro M. Velez provisional approval, its subsequent definite disapproval rendered the entire chain of transfers to Cebu Autobus Company void and without legal value. Applying the rule in Zamboanga Transportation Co. vs. Public Utility Commission (50 Phil. 237), the Court reasoned that once a sale is disapproved, the certificates of public convenience (CPC) regain their former juridical status as part of the estate of the original holder. Since the Supreme Court had already affirmed the PSC's disapproval of the sale in a separate proceeding, Cebu Autobus Company had no legal title to operate or oppose the widow’s applications. Consequently, Soledad Viuda de Lozano, in her capacity as special administratrix, was the rightful party to manage the Lozano Transportation business and apply for the equipment increases necessary for public service.
Main Doctrine
The sale of a certificate of public convenience to establish and operate a land transportation business has no legal effect without the approval of the Public Service Commission; its provisional approval only grants provisional validity, and once definitely disapproved, the sale becomes void and without value or effect.